This is How Klutch Wins

Only Klutch can stop itself now

First, I want to thank readers for their suggestions on the weekend “What should I write?” thread. Impressive responses. While I was surprised to see that level of subscriber interest in Klutch Sports Group, the agency LeBron James co-founded, I also believe the interest to be warranted. Every year it seems to build power. It just gained yet another client in the Bulls’ Zach LaVine on Tuesday.

Here’s what Klutch does, beyond perhaps what the others do: Relentless, audacious influence peddling. Some might call it corruption, but it’s also the seizing of a market inefficiency. A player-as-agent creates a whole new dynamic to exploit and monetize. However you feel about Klutch, its role in the modern NBA is a fascinating business story.

Also, I’m still working out which content I’m making available to all versus which content I charge for. I think the deeper industry cuts will get paywalled more often, save for this first foray. If you wish to read everything, including sports business insider gossip, subscribe here and support the site. Anyway, without further ado, on to this story on Klutch …

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So today’s post is about symbiosis. I love a good symbiosis. For instance, I’m a big fan of how grouper fish cooperate with moray eels for maximum hunting efficiency. It all begins with the big grouper swimming over to some dark, dank eel outpost in the reef. The grouper then does a little dorsal fin wave at the eel, a nudge to come out and play. So the eels swivels out and follows the grouper to a spot in the reef. The grouper is good at sniffing out prey and this is of help to the eel, who is lean enough to get at prey in crevices too small for the grouper to probe. If the eel catches the prey, game over. If the prey flees the eel into open water, then the grouper snatches it. Game over either way. 

I doubt that the eel and grouper are close friends. I’m unaware of any evidence to suggest they hang out socially, apart from this little game. But they recognize that they need one another and complement each other so beautifully. So, the grouper will beckon the eel to come out from the shadows, and the eel will happily do the dirty work asked of it. Repeat the game enough times and everyone eats. 

With that in mind, let’s talk about NBA superagents Rich Paul (Klutch co-founder along with LeBron) and Andy Miller. The former is now famous and dates the singer Adele. The latter is hardly a part of public life, despite a legendary status within the league. Together, they have formed a formidable bond within the sport’s most talked-about agency. The arrangement will have ramifications.

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Influence Over Precedent

When I talk to people around the league, they speak as though Klutch now has an obvious trajectory, such that it’s preordained. Klutch’s hiring of Andy Miller informs a belief in its near term, but also belief that a time bomb ticks. Rich Paul, a savvy, gate-crashing outsider himself, has brought an outcast back into power, after a sordid FBI investigation banished Miller to the league’s periphery. It’s all part of the Klutch ethos. If, in Silicon Valley, they “move fast and break things,” the motto at Klutch might as well be, “influence over precedent.” If you’ve got the juice, use it, regardless of rules. Then let the chips fall where they may.

Rich Paul, Photo by Michael Reaves/Getty Images

I’ve spoken to league insiders who believe that Andy Miller is actually running Klutch Sports Group day to day. I’ve spoken to others who believe he merely has an influence on the player side of things. Officially, Miller was brought on in May of 2021 to run the coaches and executives branch of Klutch, which would make him ineligible to represent players, even if he was certified to do so (which he no longer is). But the man has negotiated over $2 billion in player contracts over the course of his career. Do we really think he’s just going to train that expertise only on suit wearers when there’s so much money tied up in players and so much of the agent game is unseen?

Andy Miller, Photo by Jemal Countess/Getty Images

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The Andy Scouting Report

So who is Andy Miller and why did Rich Paul find it wise to bring him into the fold? Well, Miller is two things: 

1. A brilliant, storied “top-5 NBA agent,” by his own frequent admission, like the way Tony Allen would yell, “First-Team All-Defense!” The guy is cocky but he’s probably correct in that self-assessment.

2. A man who ceded his certification to represent players after a highly publicized FBI investigation into college sports corruption that included a raid of his office. 

That raid on Miller’s ASM Sports office happened September 26, 2017. It appeared to be the end of his career, and that’s putting it lightly. ASM wasn’t just a peripheral target, but theoretically the center of a Department of Justice probe into a whole black-market operation for financially influencing college basketball players. Christian Dawkins, a Miller employee and eventual central protagonist of the HBO documentary about the probe, was, at one point, facing up to 200 years in prison. 

So what did the raid turn up? In the end, not a single charge for Andy Miller, which is notable from an investigation that put prison sentences on three men.

And looking back, you have to wonder about the Englewood, New Jersey office that the FBI cased. The place is so nondescript that it’s amusing. From the Washington Post article on the day of Miller felt the heat: 

With tinted windows, no signage and a slightly cracked brick facade, the small, nondescript building on an otherwise nondescript street in this New York suburb seemed unusually modest for a sports agency that had negotiated hundreds of millions of dollars in contracts for NBA players, including Kevin Garnett, Kyle Lowry and Serge Ibaka.

The poorly lit brick box doesn’t look like a real place of business, frankly. It could be a red herring of a location and it could just be so that Andy Miller preferred operating out of a rundown building in the burbs. Either way it’s very Andy Miller, a man so deep behind the scenes that you can forget he’s a director. Somehow Miller, a known micromanager, evaded the consequences that bore down on his key employee. In the aftermath of calamity, he changed his company’s name to YouFirst, the European agency that bought a stake in ASM back in 2011.

Jeff Goodman @GoodmanHoops

I’m still baffled why/how NBA agent Andy Miller has managed to stay out of this entire mess — while his “runner” Christian Dawkins is heading to jail. Do we really believe Miller wasn’t complicit in some manner with Dawkins’ deals?

On the witness stand, Dawkins revealed the origins of his relationship with Miller and it’s like something out of Tinker, Tailor, Soldier, Spy. According to the testimony, Miller observed Dawkins’ talent as a player recruiter and paid him to be a double agent on behalf of ASM. From WaPo:

Dawkins previously had been working as a recruiter for International Management Advisors, a Cleveland-based financial services firm seeking to work with NBA players. In 2016, however, IMA discovered Dawkins essentially had been double-dipping for several months, earning his $50,000 annual salary from IMA and traveling the country as a recruiter while actually steering players to sign with Miller, who also was paying him, according to a lawsuit IMA filed against Miller. The suit was settled, and no terms were made public.

On the stand, Dawkins was asked, “So Andy Miller had you do his dirty work for him. Would you say that’s true?”

“That’s fair to say,” Dawkins replied.

And yet, again, Miller emerged unscathed, apart from giving up his player representing business. But for how long?

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“We need to get him rewired” 

It wasn’t Andy Miller’s first brush with fallout over some allegedly bent rules. He’s been here before, perhaps from the beginning. Basketball historians will recall that the Minnesota Timberwolves once were dealt a devastating “death penalty” blow of five lost first-round picks as punishment for offering Joe Smith a secret contract, back in 2000. This all came to light because Andy Miller, then a young protégé of veteran agent Eric Fleisher, betrayed his boss by making off with his top clients.

From a look back at the mess: 

According to J.A. Adande, then of the Los Angeles Times, the entire plan was blown open when agents Eric Fleisher and Andrew Miller parted ways. Miller retained Smith and superstar teammate Kevin Garnett in the split, which prompted a lawsuit that led to the unearthing of many documents, including those detailing the Timberwolves’ illegal agreement with Smith.

Andy Miller ended up losing the lawsuit to Fleisher, to the tune of $4.6 million. That was merely a speed bump for Miller, who went on to indeed become a top-5 agent in the NBA, year after year.

Miller might have broken rules and burnt bridges, but few would deny that he was a good agent for his clients. There’s a clear distinction between his brand of ethical breach and what others in this sphere were capable of. For instance, Miller represented Kevin Garnett through many ups and downs, including Garnett’s losing $77 million to a fraudster of a financial advisor. According to sources, Miller had disliked the fraudster early on and opposed his influence. Basically, Andy might have had his moral failings but he wasn’t that type of villain. 

Yet, the man has left many enemies in his wake. Former NBA agent Matt Babcock wrote an illuminating post on what it was like to work for Andy Miller and ASM sports at the peak of Miller’s powers. It’s the portrait of a highly competent man, operating a complicated machine with the utmost skill. It’s also the portrait of a malignantly negative rule breaker, someone who condescended to and demeaned those who could not get on his level of cynicism.

From Babcock (emphasis mine):  

I sat next to Andy at that dinner and at one point he said “we need to get him rewired” when talking about me. He used that phrase somewhat regularly throughout the time I worked for him. Andy was certainly taking me under his wing, which I appreciated, but I felt extremely uncomfortable with the idea of being “rewired.”

Babcock, a coach’s son, describes Miller as someone who didn’t just make him feel uncomfortable, but who also was witheringly dismissive:

Andy seemed to thrive off of negativity. He was never a yeller or screamer type of guy with me, but just about every sentiment that came out of his mouth was abrasive and condescending. For example, if I ever brought up any type of scouting or basketball-related opinion, Andy would tell me “you’re not your dad; I don’t care.”

Agents typically hate one another, but other agents really loathed Miller. He was reputed to be a constant recruiter of other peoples’ clients, leveraging his machine-like operation into a constant assault on competitors’ business. His employees would start off recruiting rookies, making inroads into families and friends, establishing connections. If the star rookie ended up signing with someone else, then no biggie. Just keep recruiting him, relentlessly, because that second contract is bound to be bigger than the first anyway.

Andy Miller was far from alone in this practice, but his doggedness and brazenness were differentiating qualities. Suffice it to say, not everybody gets successfully sued for $4.6 million in one decade and becomes the center of an FBI investigation in another. At root, in both instances, the cause is probably this: The maniacal pursuit of clients, in defiance of norms and conventions.  

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The Return

After the FBI investigation and Miller’s subsequent decertification, he retreated to the shadows, electing to represent coaches and other guys in basketball ops. Whereas you might be able to look up an agent’s NBA client list on HoopsHype, the basketball ops side is more informal. The banishment served Miller well, though, allowing him to build up points of contact and influence in other realms. (His fingerprints are all over Chauncey Billups’ hire in Portland, for example.)

While he was doing this, Rich Paul brought Miller in from the dark parts of the reef, asking him to play a role. This is where the symbiosis starts. Rich Paul, who also plays a bit fast and loose with norms, likely wanted someone to help run operations day-to-day. Paul needed Miller’s skill and Miller needed Paul’s power. Marriage made.

From early on, Paul, despite his iconoclasm, has leaned on grizzled veterans in the field. For instance, the hardball negotiation methods that became Klutch’s calling card were supposedly new school, but they had an old-school origin story. The tactics were mostly informed by veteran agent Mark Termini, he of a legendary iron will. Back in 1992, Termini held out then-star rookie Jim Jackson for an astounding 54 games. In the end, Jackson got his money, receiving a handsome starting payout of six years, $20 million, with no punishment for largely missing his first season. At Klutch, Termini helped pioneer the “one-plus-one” contracts and other hardball methods of exerting maximum player leverage. Termini had a lot to do with Paul’s quickly acquired infamy as negotiator.

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Move Fast and LeBreak Things

With Termini having since moved on from Klutch, it’s Miller who provides ballast. Rich Paul is a bonafide famous person with many commitments and agenting is a dirty, draining, awful business to be in. Why would Paul bother with the nitty-gritty at this point?

So Paul has all the reason to take a step back and enjoy the bigger picture. After Hollywood behemoth United Talent Agency bought a stake in Klutch back in 2019, the once small-scale agency has operated on a different level. LeBron’s pet project had officially gone from indie to a major brand, set to do ultimate battle of empires with the CAA leviathan. Klutch subsequently gained a significant talent haul on June 24th of 2020, when it poached super-recruiter agent Omar Wilkes from Octagon. Overnight, Klutch devastated a rival agency by not only gaining a respected up-and-coming agent, but also reaping his rich client list of Trae Young, Anthony Edwards, Cam Reddish, and OG Anunoby. 

So why are so many NBA insiders pessimistic about Klutch in the long run? Is it just sour grapes? Is it the Nerlens Noel lawsuit, where Noel alleges that Paul lied to him about his prospects? I think it’s the fundamental belief that their Wild West operation is too much, even in a business replete with “too much.” Some point to how the guy Paul tapped to pioneer Klutch NFL operations ended up getting fined and suspended. And, now you’ve got a guy in Andy Miller who, despite renouncing his certification to represent players (while the FBI was rummaging through his garbage), is now back in the mix, like Napoleon fresh off the Elba adventure.

Sure, there are no rules, not really. But you also break them at your peril. When you make so many gains by flouting constraints, you could be destined for that Icarus moment. The principals involved at Klutch are so ambitious absent limits that you can see this going like so many of our favorite mob movies. You have the fast rise and the salad days, followed by the crash and subsequent betrayals.

That might be inevitable because, well, the grouper and the eel don’t love each other and they just barely trust each other. They probably won’t stick together under pressure. The Miller and Paul marriage is a brilliant one, but it’s one of convenience. They’ve got a symbiosis today but who knows about tomorrow when we’re talking about so much money, ego and opportunity? It could go extraordinarily well in the end. Then again, it could go extraordinarily well, just before ending like so many interactions in the animal kingdom do: With someone getting eaten alive.