Washington Lawyer

Legends in the Law: David Falk

From Washington Lawyer, March 2016

By David O'Boyle

David FalkSports agent David Falk has been in the game since the early days of the sports representation business. With a heavy focus on NBA players, his star-studded client roster includes names such as Michael Jordan, Patrick Ewing, Alonzo Mourning, and the NFL's Boomer Esiason. Falk has negotiated some of the most lucrative and eye-catching contracts for his clients.

Falk actively marketed his players, fielding shoe deals and even producing the movie Space Jam. Falk also is credited with dreaming up one of the most iconic marketing campaigns of the 20th century—the concept of "Air Jordan."

Immediately following his graduation from The George Washington (GW) University Law School, Falk was hired as a full-time sports agent with the firm Dell, Craighill, Fentress &Benton, which later became ProServ, Inc. Falk left ProServ in 1992 to create his own boutique firm, FAME, short for Falk Associates Management Enterprises, Inc. Just six years later, Falk sold his agency to SFX Sports Group for $100 million in cash and another $100 million in stock, and became its chair.

SFX was bought by Clear Channel in 2000. As chair, Falk oversaw approximately 900 employees and 1,100 clients. Frustrated with his role and the size of the new operation, he resigned in 2001 and took on a much smaller role, managing a small group of clients.

In 2007 Falk relaunched FAME as a boutique agency, where he now works with his partner, Danielle Cantor Jeweler. Washington Lawyer recently sat down with Falk to discuss his career.

Tell me about your upbringing and background.

I grew up in Seaford, New York, which is in Long Island. I went to school in Levittown, New York, a community built by William Levitt for GIs returning from the Korean War. My dad was a butcher, and my mom was a teacher, which was typical of the community. I'd say 80 percent of the families were working class. They were skilled laborers, carpenters, electricians, plumbers, and steamfitters. 

 I was always a pretty good student, one of those kinds of students who did really well without maximum effort. I liked to play sports and got pretty involved in extracurricular activities, and I always knew I was going to go to college.

What kind of values did your parents instill?

My mom had two master's degrees in classical languages and Spanish. She was an interpreter here in Washington, D.C., during World War II for Nelson Rockefeller and the U.S. Office for Inter-American Affairs. Both of my parents were first-generation Americans whose parents were immigrants from Poland.

My dad never finished high school, but he pushed education. My mom was highly educated, so she pushed it as well. My mom was very loving. She was my mentor. Nothing was ever enough, no matter what you did. My first SAT scores were just under 1,400, and she barely talked to me. She thought that was like failing. That's the way she grew up. It was in her DNA.

Growing up, did you have any experience with the legal profession? Did you have any interest in it?

Not really. It's funny—back in the day, it was a rite of passage at the end of fifth and sixth grades to get these little books with colored pages. You'd write something in them for your friends, goofy stuff like "Too young to drink Four Roses." One student in my class, Gregory Mallow, wrote in my autograph book, "You should be a lawyer because you're a good arguer."

Don't ask me why that stuck, but from fifth grade on, I always sort of expected to become a lawyer. It's something that I almost arbitrarily gravitated toward.

What led you to Syracuse University for your undergraduate studies?

I really wanted to go to Cornell University because it was an Ivy League school in New York. I also applied to Brown, Penn, and Yale, and I didn't get into any of them. I got into Cornell on the waiting list, and I was offered a scholarship at the State University of New York. 

I got into Syracuse the day after I applied. In hindsight, I would say it was the best thing that ever happened to me because I ended up studying economics, and they had a great economics department. The honors program had a bunch of students just like me: They could have gone to an Ivy League school, but for one reason or another, they didn't get in. 

Syracuse was so much fun. The social life was great. I met my wife there. My college roommate for three years is still one of my closest friends. Now I have my own college at Syracuse called the David B. Falk College of Sport and Human Dynamics, so it was fortuitous for me.

Why did you choose to go to GW Law School?

My best friend who I grew up with got into GW, and we thought it would be fun to live together.

I got into Boston University and on the waitlist at Boston College, but my wife is from Boston. We were pretty serious and lived together for a year in college. I love her parents, but I didn't want to be under their nose.

I also liked the idea of being in Washington, D.C.

Did you do legal work while you were at GW?

For my first job, I worked for the Bureau of Land Management at the U.S. Department of the Interior doing land leases for three or four months. Then I got a job at Sidley Austin LLP. Some of the work was administrative—doing filings and things—but the young associates let me do research.

Then the summer came and they hired two summer clerks from Ivy League schools, and all the research assignments stopped. I asked the associates what happened to the research, and they said, "Oh, we have the Ivy League guys now." And I asked, "Well, didn't I do a good job before the Ivy League guys showed up?" 

I wasn't jealous. I felt I was just as qualified. I don't believe in labels. I believe you hire people for their ability, but the law is traditional that way. When I started to become successful, some people suggested I come back and work for the law firm. I refused and said they could stick to their Ivy League types. They don't need black sheep like me who went to Syracuse and GW.

How did you get into the sports representation business?

Many of my networking connections within the business told me that if I wanted to be in sports management and representation, I had to meet a gentleman named Donald Dell.

Dell had a tiny firm that represented American tennis players. Of the firm's six lawyers, three had gone to the University of Virginia School of Law, one had gone to Tulane University Law School. So, again, it was a little bit like Sidley. I came in from Syracuse and GW, and I didn't exactly bowl them over with my credentials.

I couldn't even get Dell on the phone. I called him for weeks on end. It was classic. I was told that he was at lunch, at a meeting, out of town, with a client, in the bathroom. One day, I just got so frustrated that I went to the law library, which I rarely visited, and I called the guy every 15 minutes. When they ran out of excuses, he finally agreed to see me. He kept me waiting three hours in the lobby and then told me they weren't hiring. I told him that I would work for free and that I really wanted to try it.

So in the summer between my second and third years of law school, I got married, I took a course in negotiations at GW at night, I worked for Sidley Austin full-time in the day, and when I got done around 6 p.m., I walked across the street and worked at Dell, Craighill, Fentress &Benton until 11 p.m. for free. 

They hired me as a clerk at the end of my second year for $5 an hour. As a full-time student, they allowed you to work 20 hours a week, but I knew that this was my opening, so I worked full-time—about 80 hours a week.

I waited all year for them to hire me. As one of the ironies of life, I learned later on that they had put an offer in to a guy from Princeton, but he had accepted a job from a small firm in New Jersey. Fortunately for me, he honored his commitment.

They hired me a week after graduation for $13,000 a year. My friends at GW probably would have burned down the building if they hadn't hired me. They all knew how badly I wanted it and how hard I had worked for 15 months. It was a great introduction for me because when I started, I wasn't a rookie anymore. I had organized all the contracts in the firm, so I had a good feel for the marketplace.

My first mentor, an associate at the firm named Michael Cardozo, was hired right after I started. Mike was later hired by Jimmy Carter to run Carter's presidential campaign in Connecticut. Carter lost in Connecticut, and to reward him for the great job he did in that state, Carter hired him as deputy White House counsel.

When he left, the firm gave me Mike's 20 clients. It was like jumping into the deep end of the pool after only a few swimming lessons. My whole career accelerated immediately.

What would you say fueled your tenacity to get that position at Dell Craighill?

It's my DNA and the way my mom raised me. Her mantra was "Always shoot for the stars;never settle for second best." That's my life philosophy. I've come to believe that really successful people see obstacles as hurdles, as things that they're going to jump over. Most people see obstacles as barriers, and they think they can't get through them.

It never occurred to me that I wasn't going to find some way to make it work. I didn't know how—it wasn't like I had an amazing route to get to where I wanted to go—I just instinctively felt that I was going to get there.

Your career requires excellent negotiation skills. How did you hone those skills early on?

When I teach negotiations, which I do at GW and at Syracuse, I tell students you have to negotiate with your own personality. You have to be real. 

Donald and I met these two Ohio State football players in the mid-'80s, an All-Pro who played for the Washington Redskins named Jim Lachey, and Mike Tomczak, a quarterback who played for the Chicago Bears and Pittsburgh Steelers, among other teams. We were invited out to Columbus, Ohio, to meet with a screening committee of 10 local business leaders. They told Donald that he had an impeccable reputation and track record, but that we would be dealing with two young men from Ohio State, so he should dial back his personality.

So we went into the meeting and tried to be as lowkey as we could be. Afterward the head of the screening committee called me up and said we did a great job, but the players both picked another guy. When I asked what we could have done better, he said the guys thought we were too low key.

Now no one has ever told me that I'm too low key. I've been told a lot of things in my career, but no one has ever told me I'm too low key. It taught me that you just have got to be yourself. People are going to like you and respect you for who you are, or they won't. You can't play a different role every time you go to meet someone because then you'll have no credibility.

How did your relationship with Michael Jordan begin?

Back in the day, the [college] coaches would screen the agents. They basically said agents could have no contact whatsoever with the players.

Michael had left the University of North Carolina at Chapel Hill, and Coach Dean Smith invited all the agents that ever represented a Tar Heels player—there were only six of them—to make a presentation. He would then make a recommendation to the parents, which was like a recommendation from the Pope. Most of the time he recommended us and we got the player. Once or twice a player wanted to sign with us, but Coach Smith didn't recommend us, and we didn't get the player.

In 1977 we represented a Tar Heels player named Tom LaGarde, a 6-foot-10 center who blew out his knee right before the NCAA Tournament, which North Carolina lost in the finals to Marquette. LaGarde was the ninth pick of the 1977 draft, and we really did a great job on his contract. He got more money than Walter Davis, who had been the number five pick from North Carolina that same year. After that, we got every guy from Carolina.

When you first began representing Jordan, did you have any idea what kind of iconic figure he would become?

No. I don't think there's a human being on Earth who knew. He was the third pick of the 1984 draft—people thought he would be exciting, but nobody believed he would be the greatest player of all time.

In his own way, Michael is the most competitive human being I have ever met. His parents were really hardworking people, and they kept him both motivated and humble. They were like my mom. No matter what he did, his parents always felt he could do more, which is amazing. 

On the Air Jordan deal, why did you choose to go with Nike, a relatively unknown brand at the time?

Based on my experience representing tennis players, I wanted Michael to be treated as an individual athlete with his own line. Everyone scoffed at this idea and said it would never work in basketball.

Nike was tiny, and I had developed a strong relationship with a lawyer at Nike named Rob Strasser who became its head of marketing. We both thought we were instinctive marketers, and we were two lawyers who were sort of chiefs of staff to strong-willed CEOs who had never taken a course in marketing.

After all the recruiting by Nike marketing executives Sonny Vaccaro and George Raveling, Michael didn't even want to get out of the plane and visit the sports company.It was like a college coach recruiting a player for a year and the player doesn't even want to make a campus visit.

I went to Michael's parents and told them that if we were going to work together, they had to trust me. I thought that Nike was the best place for him because they would be the most aggressive, the most creative. I basically told Michael that he had to see Nike. It was his choice of who he wanted to go with, but he had to see them and understand what the opportunity was.

What effects did the contracts you negotiated for your players have on the market?

At the time—and I don't want to sound braggadocious—we were like the Warren Buffett of agents. We set the market. We had the best returns. We had the best track record in both contracts and marketing.

I'll give you an example: The last year before the wage scale was instituted was 1994, and we had a client from the University of Michigan named Juwan Howard. He was the fifth pick in the 1994 draft, and after being in the league for nine years, he had out-earned more than the four guys picked ahead of him.

Howard came to Washington [to play for the NBA's Bullets], and he ended up on a team with Chris Webber, Howard's college teammate who everyone always thought was better. Webber signed a deal in 1995 for $9.5 million a year for six years. Howard signed a contract one year later for $15 million a year for seven years. 

That was the best head-to-head comparison in the history of pro basketball. Two players who went to the same college, who were about the same height, the same weight, they played in the same position, their birthdays were weeks apart, and they both signed contracts with the same pro team. Most people would have said, "Yeah, Webber will get 60 percent more because he's better," but he got 60 percent less.

That all changed in 1995 because they established the wage scale and it homogenized the market. It turned into socialism. It's very hard to differentiate yourself today on the contract side, but not on the marketing side.

What role did you play in the NBA lockouts of the 1990s?

I encouraged my better players to get involved in the players' union so they could be involved in the decision making and know what was going on. Patrick Ewing was president of the union;Dikembe Mutombo, Juwan Howard, and Alonzo Mourning were officers. 

My job was to try to counsel players on how to evaluate what was going on with the league. While I always had tremendous respect and affection for David Stern, [the former commissioner of the NBA], I didn't want to go against Stern, but I wanted to try to educate the players on how to protect their rights.

The players went too far. It was all rhetoric. It was almost like suicide bombers. I told a few of the players to be prepared to be locked out for the whole year. You're not going to challenge someone as strong and smart as Stern. He's going to crush you.

The idea of having a lockout where players who are earning a few million dollars a year are trying to challenge owners who are worth billions is idiotic. The players don't have the staying power for that. Through the two lockouts, the players lost something like $1.25 billion that they will never get back. It was a gargantuan waste of time. It hurt the growth of the business. No one profited by that. I think the players' union dropped the ball on that twice, and I hope they don't drop the ball again.

Players said that I didn't want to fight, but there's no one who has fought harder than I have. I put my reputation on the line. I don't mind fighting, but I don't want to fight stupidly. My job is to make deals.

What was behind your split from ProServ and the launch of your agency, FAME?

I never had a great burning desire to be on my own. I expected to be at ProServ forever. I told Donald Dell that I would leave if I found out someone else was making more money than me, or if I had to put a gun to my head for him to be fair with me. I don't want to have that kind of relationship.

Dell broke both rules, and I knew I had to go out on my own.

How did Dell break your rules?

He had secret deals with people who would make more money than I was making, and I realized he would have never paid me what I deserved unless I told him I was going to quit. To illustrate that point, when I resigned, his counteroffer was four times more money than I was making. 

I told him I could always have made that money. I didn't want to have to threaten to quit in order to make it. That's not how you have a partnership. I don't believe in that. I wasn't angry or resentful. I just realized it was time.

Because I had a non-compete, I could never imagine walking away from it all, so I ended up doing a leveraged buyout and basically bought the business.

Did you enjoy developing your own agency?

I loved it. I loved having my name on the door. I'll give you an analogy: If you're a student in high school or college, and you think your teachers are really boring, and you complain to all your friends about how boring your teachers are, and one day lightning strikes and you decide you're going to be a teacher, you can be any kind of teacher you want except for one kind—boring.

Keeping in mind all the things that bothered me about ProServ or Donald's management style, I tried to do it differently—and I'm not saying I was always successful. I didn't want people to say I wasn't financially fair or that I didn't treat them properly or I was greedy and had secret deals. I tried to stay out of the management of the firm. I hired someone to be the chief operating officer to handle those tasks. I wanted to be the rainmaker. I wanted to bring business in. 

I was the rainmaker—the Mr. Outside—and my partner, Curtis Poke, was Mr. Inside. It worked. We had the company from 1992 to 1998, then we sold it for 20 times what ProServ sold for.

What was your role during the years between the sale of FAME in 1998 and the relaunch of the agency in 2007?

Bob Sillerman, who I'll always be grateful to for giving me lifetime security, told me he wanted to grow SFX Sports Group, so we went out and bought 14 other agencies. I bought my biggest competitor, Arn Tellem, who is a very good friend. We bought three baseball agencies. We bought a football agency with Jim Steiner and Ben Dogra, who I take license to call my protégé. We bought branding companies.

As chair of SFX, I went from having 24 employees and 40 clients in 1998 to 900 employees and 1,100 clients in 2001. I was working for a New York Stock Exchange company. I really didn't like it because you have to do earnings reports and all sorts of other stuff.

In 2000 SFX was sold to Clear Channel. The management of Clear Channel came to me and said I had to show them 50 percent year-over-year growth. The maximum increase in salaries that collective bargaining allows for is 10.5 percent, so they told me to sign more clients. I said, no, and explained that we're like Neiman Marcus, that's our brand. We're not going to become Wal-Mart.

After six years, I stepped down as the chair. The pressure from the top and the immaturity of a lot of the agencies we bought that didn't want to give up the titles or their autonomy of being a mom-and-pop agency became too frustrating. After that, I had a very loose work arrangement with Clear Channel and managed a group of my clients.

When they spun off the entertainment division of Clear Channel as Live Nation, which was the remnants of SFX, I got what was left of FAME back.

I hired Danielle Cantor Jeweler, who had done talent marketing for me, and told her FAME was going to be a boutique firm, just the two of us and my assistant. That's what it has been for the past eight years. I love being small and boutique. I love not having to work for anybody. I love not having personal management issues. I love working with women because there's less testosterone. It's really fun for me.

What significant changes have you seen in the sports management business?

Everything is different. Now you have a wage scale. I'd say 70 percent of the contracts in basketball are predetermined. There are minimums and maximums, mid-level exceptions, so there's a lot less negotiation.

The business has become largely corrupted. Many or most of the players are getting paid by the agents to sign with them. I wouldn't pay a penny to anyone because it goes against the grain of everything I believe. You can't start a relationship of trust when you're buying people.

You can't do the kinds of things that I've done in my career like telling guys like Alonzo Mourning to turn down their first $100 million contract, or telling Dikembe Mutombo not to marry his fiancée because she wouldn't sign a prenup, or telling Michael Jordan to go with Nike when he doesn't even want to get on the plane. You can't do those things for your clients if they don't really trust you. You lose all that trust at the outset when you buy them. 

Overall, I'm not angry. I had my run, and I enjoyed it. I don't think anyone will ever replicate it. At one time, I had Michael Jordan, Patrick Ewing, John Stockton, Dominique Wilkins, James Lofton, Chris Doleman, Boomer Esiason, Ethan Horton, Mike Krzyzewski, and John Thompson.

If I never have another client, I'll live a very long, happy life. I'll always be incredibly grateful to those people, who in my thirties made me who I am today. I have no allusions that I got here on my own. Those people established me, they trusted me, and they stood with me.

Do you think law school is the best option for someone who is interested in becoming a sports agent?

It was for me at the time I went in, but I'm not sure it is today. When I went into the business in the 1970s, it was a nascent field. I would say, respectfully, that Mark McCormack basically invented the business. People like McCormack, whose firm was IMG, and Michael Ovitz, cofounder of the Creative Artists Agency, enabled someone like me, with legal training, to spread my wings. If you had told me in college that I would become a movie producer, I would have said, "Yeah, after I grow hair." 

Those people were pioneers who pushed boundaries of what a representative could do and created a path for people like me who came after them to follow their own passion and creativity. I'm very grateful to those people. 

What's your take on the state of collegiate basketball?

I don't believe in the players coming out of school early. For every LeBron James there are 20 players who will fail within the first three years. Even though they're very talented, they either aren't physically ready or they aren't very well known.

If you study basketball from 1979, when Larry Bird played Magic Johnson in the NCAA Tournament, which at that point was the highest-rated basketball game in history, to 1995, when Kevin Garnett went to the NBA out of high school, almost every major star in the league played in the NCAA Tournament. 

The NCAA Tournament has been a springboard for average fans, not for whacko fans like me who live and die by this stuff. The average fan, over a three-week period of intense coverage from ESPN and other networks, connect with the players so that when they come into the NBA, they're well known.

That's not good for growing the business. It's not a question of civil rights, it's a question of sheer business. The NCAA Tournament is the best free advertising for the NBA, and we have diminished its role because we don't let the guys participate for long enough. I think that's foolish. That costs the players billions of dollars in revenue.

I don't believe that college players should be paid. I'm not saying they shouldn't be helped if they come from disadvantaged backgrounds. But either you're pro or you're an amateur. If people want to be pros, then we should have a D-League [developmental league] for that. If guys don't want to go to college, that's fine. I don't like the "one and done" rule [where players play one year of college basketball before declaring for the NBA draft], because I think the kids don't go to school. They know they're going to leave, and they're not committed.

What do you hope your legacy is defined by?

I hope I am defined as a person who is a passionate advocate, a loyal friend, a good teacher, and as someone who values relationships and who wasn't afraid to roll up his sleeves and advocate for his clients whenever the opportunity presented itself.

Reach D.C. Bar staff writer David O'Boyle at [email protected]. Follow him on Twitter at @d_oboyle.