Bad Bunny’s Sports Agency Tests Authority Of Baseball’s Players Union

Benito Martinez-Ocasio, better known as “Bad Bunny,” is a Puerto Rican rapper and one of the world’s most popular artists. He sought to capitalize on that fame by co-founding a sports agency, Rimas Sports, to represent Latin American athletes. However, the Major League Baseball Players Association (MLBPA), which governs player agents, has effectively banned the agency, leading to dueling legal actions which will test the scope of the MLBPA’s authority.

Labor Law Context

The National Labor Relations Act (NLRA), passed in 1935, was one of several major pieces of legislation enacted as part of President Franklin D. Roosevelt’s New Deal. The NLRA protects the rights of private sector employees to come together, unionize, and collectively bargain with their employers about their wages, hours, and other terms and conditions of employment.

By the 1960s and 70s, players in the major American professional sports leagues began to avail themselves of their rights under the NLRA by unionizing and collectively bargaining a range of issues with the leagues and teams.

The MLBPA was formed in 1966 for purposes of negotiating with Major League Baseball (MLB) and its clubs. In 1968, the parties executed their first collective bargaining agreement, which set minimum salaries at $10,000 and established a pension fund. That collective bargaining process continues to this day and is a cornerstone of sports and the law across all of the leagues.

The NLRA not only empowers employees, but also the unions formed or selected by them for representation. Specifically, Section 9 provides that the union “shall be the exclusive representatives of all of the employees in [the employee] unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment.” In other words, both employees and employers are prohibited from negotiating the terms of an employee’s employment without the union’s involvement or permission.

The Sports Agent Legal Framework

Everyone is familiar with agents representing athletes in negotiations with teams. What is less understood is their legal basis for doing so.

As stated above, unions have the right to be the exclusive negotiator on behalf of unionized employees. In sports, this means, for example, that the MLBPA has the right to negotiate all of the contracts of the more than one thousand players on MLB rosters. Such a workload is impractical. Consequently, the MLBPA and the other unions in professional sports (such as the NFL Players Association), effectively delegate some of that negotiating authority to agents pursuant to a certification process.

In the collective bargaining agreement, the MLBPA and MLB negotiate numerous parameters around player employment, including minimum salaries, the terms of the uniform player contract, dispute resolution, benefits, work schedules, and more. Nevertheless, there is still a considerable amount of room left to individual negotiation between the player and his agent and the team, notably the annual salary and length of the contract.

The union certification process varies across the unions but generally requires an extensive background check, sometimes an exam, and the agreement to abide by the union’s agent regulations. The regulations are extensive and intended to ensure that agents represent players competently, zealously, and ethically. The unions’ authority is further cemented as part of the collective bargaining agreements, in which the teams agree not to negotiate player contracts with agents not certified by the relevant union.

Failure to abide by the union’s regulations can lead to substantial penalties (as in the case of NFL agent Todd France) and the revocation of your certification.

The MLBPA Strikes Rimas Sports Out

Bad Bunny formed Rimas Sports in 2021 with Noah Assad and Jonathan Miranda. William Arroyo later joined as the firm’s lead baseball agent. According to a recent legal filing, the agency currently represents 68 baseball players, including 14 in MLB and the rest in minor league baseball.

Nevertheless, the manner in which it apparently grew drew the attention of the MLBPA. The union determined that Rimas Sports was providing benefits to players to induce them to become clients and also using unauthorized recruiters (i.e., “runners”) to secure clients, actions which violated the MLBPA’s agent regulations.

On April 10, 2024, the MLBPA revoked Arroyo’s agent certification and denied the pending certification applications of Assad and Miranda. The trio were also fined a combined $400,000. Finally, the MLBPA prohibited any certified agents from working with Arroyo, Assad, Miranda or Rimas Sports and informed MLB clubs that they could not negotiate with them.

The MLBPA’s decision may result in the end of Rimas Sports’ baseball player representation business. On April 15, 2024, Arroyo, Assad and Miranda filed an appeal of the MLBPA’s decision and requested the appointed arbitrator to issue an injunction preventing the discipline pending the outcome of the appeal. The arbitrator refused and, on April 22, 2024, the MLBPA filed an action in a New York federal court to confirm the arbitrator’s decision.

Rimas Sports Swings Back

On May 16, 2024, Rimas Sports filed a lawsuit against the MLBPA in a Puerto Rico federal court. Rimas Sports argues that the MLBPA has exceeded its authority under the NLRA and in so doing has tortiously interfered with the agency’s contracts with its player-clients and its agents.

Specifically, Rimas Sports argues that the MLBPA has the authority to regulate individual agents insofar as they are involved in negotiating player contracts but has no authority to regulate agents or agencies when they are involved in negotiating marketing and endorsement deals on behalf of players. Nevertheless, the disciplinary action taken by the MLBPA effectively prevents Rimas Sports from providing these services as well.

The court denied Rimas Sports’ request for a temporary restraining order against the MLBPA’s discipline but set a hearing to consider whether to grant a request for a preliminary injunction for June 18.

At that hearing, the court will almost certainly ask why the action should proceed given that there is an appeal pending before an arbitrator. Rimas Sports’ response is that the parties to the appeal are Arroyo, Assad or Miranda while only it is the plaintiff in the lawsuit. The court may think this to be a difference in form, not substance. The real parties-in-interest are the same in both cases and consequently the court seems well positioned to stay the lawsuit pending the outcome of the arbitration.