Sports Law Blog

Sports Law Blog

All things legal relating
to the sports world...

Saturday, May 18, 2013

"Pros or Cons" Thoughts For The Modern "Sports Attorney" - Part V

Sports Law Blog is publishing a 5-part series on the practice of sports law. The series is co-authored by Peter Jarvis, a legal ethics and professional responsibility attorney with Hinshaw & Culbertson, LLP in Portland, Oregon and Jason Davis, a California attorney currently residing in Seattle, Washington. These posts will appear on Saturdays. These posts appear on Saturdays. First post can be read at this link, the second at this link, the third at this link, and the fourth at this link. Here is the fifth:

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"Pros or Cons" Thoughts For The Modern "Sports Attorney"

( jason.a.davis.esq@gmail.com, @JasonDavisEsq1 & pjarvis@hinshawlaw.com)

(ARTICLE #5)

Know Your Role

On occasion, an oversized lineman may find the football bouncing into his arms on a fortunate bounce from a fumble to which he may then lumber anywhere from a few to more than he thought he was able, yards into the end zone for an awe-inspiring score. However, this is not his expertise and far from the position assigned which he has spent in years of training, practice and preparation.

So what happens when you find yourself with the "perfect client" but the client needs work in a field in which you lack essential experience? Do you run with it and hope for the best? In the alternative, do you take a look at the clock, use your last time out and confer with the coach?

The prior installments should suggest the answer. Although a lawyer need not have sufficient competence to handle a matter before taking it on, the lawyer must either be prepared to acquire the competence on a timely basis or to bring in someone who already has the competence. And just as quarterbacks do not necessarily make the best tackles, so too a lawyer-client team may be best served if each player fills the role, and only the role, for which that player has the greatest expertise. An attorney's job is to put the client's goals first and foremost. And even from the attorney's selfish point of view, time spent by an attorney to learn what other lawyers already know may be time that the lawyer simply cannot bill to the client. In other words, both Al and Mega may be best served if Al is, and remains, quarterback rather than trying to play eleven positions at once.

-- Posted by Michael McCann @ 5/18/2013 10:00:00 AM -- Comments (0) -- Post a Comment

Tuesday, May 14, 2013

Sports Illustrated: The 15 Most Influential Sports Agents

For Sports Illustrated, I write and discuss who I consider to be the 15 Most Influential Sports Agents.

Here's my entry for Scott Boras, #2:

2. Scott Boras

Boras Corporation President
60 years old

You know you've made it when teams' personnel decisions are shaped by whether players have you as their agent. And you know you've really made it when a league changes its draft rules because they don't know how to beat you in a free market. "He's a Boras client" is a phrase uttered by baseball executives with irritation, fear and admiration. It means the player is likely to test the market whenever he can become a free agent and will probably go to the highest bidder. It also means the player's advocate will make a sales pitch like no other. Scott Boras negotiated Alex Rodriguez's 10-year, $252 million deal with the Rangers, Barry Zito's 7-year, $126 million deal with the Giants and literally dozens of other free-agent contracts that seemed over-priced then and now. He also arranged for top draft picks -- including J.D. Drew and Jason Varitek -- to play in independent baseball leagues as a way of obtaining negotiation leverage. Baseball has instituted new rules capping how much teams can spend on drafted players, rules which Boras derided as "mockery" but were in fact a tribute to him.

To read the rest of the list, click here.

-- Posted by Michael McCann @ 5/14/2013 08:46:00 PM -- Comments (0) -- Post a Comment

Saturday, May 11, 2013

"Pros or Cons" Thoughts For The Modern "Sports Attorney" - Part IV

Sports Law Blog is publishing a 5-part series on the practice of sports law. The series is co-authored by Peter Jarvis, a legal ethics and professional responsibility attorney with Hinshaw & Culbertson, LLP in Portland, Oregon and Jason Davis, a California attorney currently residing in Seattle, Washington. These posts will appear on Saturdays. First post can be read at this link, the second at this link and the third at this link. Here is the fourth:

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"Pros or Cons" Thoughts For The Modern "Sports Attorney"

( jason.a.davis.esq@gmail.com, @JasonDavisEsq1 & pjarvis@hinshawlaw.com)

(ARTICLE #4)

The Lateral Pass (Association and Networking)

The quarterback throws, the running back runs, and the kicker kicks. Each member of a team serves a distinct and valuable purpose. Although a sports attorney may at times need or be tempted to wear a number of different hats, it is important to remember which hats are the most important, which are necessary, and which are problematic.

In our continuing hypothetical, Mega Star's requests of Attorney Al include the organization of Mega's motivational speaking business and the filing of Articles of Incorporation for Mega's motivational speaking business in Delaware and legal advice in connection with Mega's purchase of a vacation home in Florida.

As a first question, one might consider whether Al already has the legal competence to handle these Delaware and Florida matters. If not, then he will either have to take the time to learn enough law to make himself competent or, alternatively, to associate with someone who already has the requisite degree of competence.

It does seem highly unlikely, however that Delaware would view Al's formation of a Delaware corporation as the unauthorized practice of Delaware law. If Delaware law did so, the state could not play the preeminent role that it plays in corporate formation on a national level. Whether Al's involvement in a single real estate transaction for a non-Florida resident would provide him with sufficient Florida contact to subject him to the Florida RPCs would have to be addressed under Florida RPC 4-8.5, though it seems to us that that should not be enough. It should be clear, however, that Al's likelihood of being subject to the Florida RPCs will be materially greater if he regularly helps clients buy Florida real property.

In our next and final installment in this series, we will look at a further real reason why Al may want to "share the glory."

-- Posted by Michael McCann @ 5/11/2013 10:00:00 AM -- Comments (0) -- Post a Comment

Thursday, May 09, 2013

Ending home-game blackouts?

Introducing legislation is easy, enacting it is hard. So an all likelihood this is not going anywhere. John McCain today introduced the Television Consumer Freedom Act of 2013, which primarily would allow cable companies to offer channels a la carte, rather than exclusively in packages.

But buried in § 5 of the bill is a provision that would eliminate blackout regulations for games played in stadiums that were financed, in whole or in part, by federal, state, or local government. This would repeal a portion of the Sports Broadcasting Act of 1961, passed at the urging of NFL Commissioner Pete Rozelle, which allows teams to blackout home games in local markets. McCain described the practice of preventing taxpayers from watching games played in arenas that their tax dollars had paid for as "unconscionable." Many of my ideas on fan speech depend on legal consequences and limitations attaching to public financing of sports venues, so I am glad to see the bill relying on the same idea.

Of course, most legislation is introduced for show and there is no apparent groundswell of public or legislative support for this, so I do not expect the bill to go anywhere. And it has more than a little whiff of McCain trying to play populist maverick against the broadcast/cable industries (recall that McCain criticized radio stations for the boycott of the Dixie Chicks in 2003). Still, it is an interesting proposal to watch.

-- Posted by Howard Wasserman @ 5/09/2013 10:34:00 PM -- Comments (0) -- Post a Comment

O'Bannon Case Update: Discovery

The O'Bannon v NCAA case crawls along. Presently the courts are trying to determine the scope of discovery leading up to the trial itself. There was a hearing yesterday (May 8th) in San Francisco before U.S. Magistrate Judge Nathanael Cousins, in part, to determine from whom the plaintiffs would be allowed to take depositions. This is an important step in the process as the case heads progresses towards the June 20th hearing before U.S. District Judge Claudia Wilkins on class certification.

In terms of depositions, Judge Cousins decided that:

The plaintiffs MAY depose:

1. Big Ten commissioner Jim Delany
2. Horizon League commissioner Jon LeCrone
3. Frenso State president John Welty

At this time, the plaintiffs MAY NOT depose:

1. Texas athletic director DeLoss Dodds
2. Missouri Valley commissioner Doug Elgin
3. Big 12 commissioner Bob Bowlsby
4. NCAA managing director of research Todd Petr.

For a detailed report on yesterday's proceedings, and comments from both sides, you can read the excellent piece by Steve Berkowitz of USA Today here.

Additionally, Jon Solomon of the Birmingham News write about the fact that a former EA Sports employee admitted in his deposition that the programmers absolutely tried to replicate college players.......conflicting an initial defense offered by the NCAA. In his story, which can be read here, Solomon says:

"Jeremy Strauser, who worked at EA from 1995 until 2011, testified last December that computer-game avatars were linked to specific player identifying numbers and biographical information, such as team depth charts, was used to make the game realistic. "We generally tried to make the players perform as their real life counterparts, short of their name and likeness," Strauser testified."

Stay tuned.....

-- Posted by Warren K. Zola @ 5/09/2013 12:00:00 PM -- Comments (0) -- Post a Comment

Sports, video, and procedural rules

This story captures why people like me like using sports to illustrate legal ideas.

1) The umpires went to video review of a disputed non-Home Run call. And despite everyone (including the opposing team's announcers) believing the ball was a home run, the umps upheld the call. Why? Because video review still involves judgments and inferences, depending on the angle and what each individual sees. Contra Justice Scalia, the video does not necessarily speak for itself; someone has to figure out what the video is saying and that is going to vary on the viewer. Video just gives sports fans another thing to argue and complain about with respect to umpires.

2) The manager for the losing team was thrown out after this happened. Baseball has specific rules on what and how you can argue with umpires. One rule is that if a manager requests video review, he cannot argue over the results of that review (much as he cannot argue balls and strikes). Nor can he protest the review decision to the league, which is a non-reviewable judgment call. So you can make a motion, but not a motion for reconsideration. And you cannot appeal.

-- Posted by Howard Wasserman @ 5/09/2013 10:32:00 AM -- Comments (0) -- Post a Comment

Legal Analysis of Vijay Singh v. PGA Tour

I have an article for Golf.com on Vijay Singh's lawsuit against the PGA Tour over his would-be suspension for using deer antler spray (which he admitted to in a Sports Illustrated story by David Epstein and George Dohrmann).

Here's an excerpt of my article:

He also takes sharp aim at what he portrays as a disingenuous right to appeal the suspension. According to the lawsuit, the PGA Tour told Singh in February that if he appealed the 90-day suspension, the suspension would not begin until after an appeal was heard in May and was found unsuccessful. Pending the appeal, Singh could continue to play on the PGA Tour. Singh, however, claims the PGA Tour told him that any money he earned during the pending period would have to be put in escrow and subject to forfeiture if he lost the appeal.

In other words, if Singh appealed and lost, he would have lost more than 90 days’ worth of money: he would have forfeited any money he earned while pending appeal, plus money he could have earned over the 90-day suspension.

In Singh’s view, the message was clear: he would be punished for appealing. Singh insists no other golfer has been subjected to this arrangement and that it constituted bad faith.

To read the rest, click here.

-- Posted by Michael McCann @ 5/09/2013 09:05:00 AM -- Comments (0) -- Post a Comment

Tuesday, May 07, 2013

Flood v. Kuhn Reenactment

Readers in the Washington, D.C. area may be interested in attending an upcoming event organized by the Supreme Court Historical Society where the oral argument from the 1972 Supreme Court case of Flood v. Kuhn -- affirming baseball's historic exemption from antitrust law -- will be reenacted. The event is scheduled to be held at the Supreme Court on Wednesday May 22nd, with Justice Sonia Sotomayor presiding. More information for the event, which costs $75 to attend, is available here.

-- Posted by Nathaniel Grow @ 5/07/2013 07:00:00 AM -- Comments (0) -- Post a Comment

Monday, May 06, 2013

The truth about past relationships

NBA player Jason Collins famously came out as gay last week, the first active player in a major U.S. team sport to do so. The reaction was the expected mixed bag. One mini firestorm erupted over comments by media critic Howard Kurtz, who chastised Collins for not owning up to his having been engaged to a woman. Unfortunately for Kurtz, Collins actually mentions his engagement (along with the fact that he dated women) in the eighth paragraph of the Sports Illustrated cover story. Kurtz apologized--initially in a typically half-assed fashion, then more unequivocally--and was grilled about it on CNN, stating "I deserve the criticism, I accept it and I am determined to learn from this episode." He also was terminated from The Daily Beast, although he insists this was in the works for a while and the timing was a coincidence.

Criticisms of Kurtz, and his apology, all focus on the factual error of his criticism. But this suggests that had Kurtz been correct and Collins had not mentioned the engagement, Kurtz's criticism would have been justified. Is that right? hat bothered me about Kurtz's initial story (but that I did not see discussed) was the stupidity of his premise: Collins was not being completely honest or forthcoming in excluding the detail of his engagement from the SI story. When a public-figure comes out, does the story really have to be "complete" and does that completeness necessarily include details about past heterosexual sexual activity? And how deep does this run--what is it, exactly, that Kurtz believes the public is entitled to know? Is it only the engagement about which Collins was obligated to "come clean"? Is it all dating? Is it the number of heterosexual sexual partners? Collins is 34 years old and only recently (within the past several years) came to understand his sexuality. It stands to reason that in the decade-plus between puberty and his coming out, he dated and had relationships, perhaps even long-term and serious relationships, with women. But why is that fact remotely relevant to the story of his coming out? Does it make him less gay? Does it make his story less sympathetic that he behaved as many closeted (or unrealizing) GLBT people do and as people have been forced to do by society, particularly in the world of team sports?

-- Posted by Howard Wasserman @ 5/06/2013 02:35:00 PM -- Comments (0) -- Post a Comment

Additional Thoughts on the Economics of College Athletics

To follow up on Warren's and Rick’s informative posts, I thought I’d add a couple of somewhat countervailing thoughts to the discussion (I haven't had a chance to fully digest the expert reports linked to in Warren's post, so some of these points may be addressed in those filings). I’ll preface this by stating that I completely agree with the critics of the NCAA that the organization is woefully in need of significant reforms, and also agree as a matter of fairness that college athletes deserve a greater share of profits they generate.

Nevertheless, it seems that the debate over whether to pay college players often broadly generalizes the issue across all 340+ Division I schools. In reality, though, the profitability of university athletic departments varies greatly across Division I. While the SEC, ACC, Big 10, Big 12, Pac 10, and former Big East programs all undoubtedly make significant profits when their football and basketball revenues are accurately accounted for, that is not the case for many of the so-called mid-major and low-major Division I schools. For instance, USA Today compiled a chart for all Division I public schools listing the percentage of each athletic department’s funds that came directly from the college or university from 2006-2011:

http://usatoday30.usatoday.com/sports/college/story/2012-05-14/ncaa-college-athletics-finances-database/54955804/1

As the USA Today chart reveals, as much as 70-80% of the athletic budgets for many mid- to low-major schools is diverted from other university funds (in many cases, coming directly from student fees). While this data is a little dated, I do not believe the situation has appreciably changed over the last two years. So I think there is some merit to the argument that paying college athletes would have a significant impact on the continued feasibility of many Division I athletic programs, as that added expense would likely make continued participation at the Division I level impractical, if not impossible, for many lower ranking Division I institutions.

Of course, one could easily imagine a scenario in which only those schools that make a profit in football or basketball would need to pay their players. But that would, for better or worse, undoubtedly result in a very different structure for college athletics than the one we have today. For instance, it would almost certainly entail splitting the so-called BCS conferences off from most of the rest of the mid-major and low-major conferences – effectively creating an additional tier within Division I – as it would be nearly impossible for these lower ranked schools to effectively compete with programs that pay their players. As a result, I fear that at a minimum the NCAA college basketball tournament would lose a lot of its current appeal – at least in the early rounds – without the participation of the Cinderella teams that make the first weekend of the tournament so exciting.

Moreover, I suspect that paying basketball and football players would also result in a number of schools (including many of those belonging to BCS conferences) reducing the number of non-revenue generating sports that they offer. This ripple effect seems to go overlooked at times in these discussions.

None of this is necessarily intended to argue that these considerations should outweigh the fairness issues involved in depriving college football and basketball players a greater share of the revenue they produce. I'm merely contending that paying college athletes would in fact have a profound effect on college athletics in a number of ways that, it seems to me, are not always fully discussed in this on-going debate.

Finally, on a different note, I can't help but wonder how college basketball and football players themselves come down on these issues. In my (admittedly limited) experience, many athletes do not necessarily want a significant share of the revenues they generate, but rather would simply like to receive an additional stipend enabling them to live more comfortably on campus, and perhaps receive some financial assistance so that their immediate family and friends -- who can't otherwise afford it -- can travel to see them compete in big games. In fact, my sense is that many athletes don't mind that a significant share of the profits they produce help subsidize the vast array of non-revenue generating sports programs at most D-I schools. I'm not sure if anyone has completed a survey of college athletes' perspectives on these issues, but I think that the data from such an undertaking would be enlightening.

-- Posted by Nathaniel Grow @ 5/06/2013 07:00:00 AM -- Comments (0) -- Post a Comment

Saturday, May 04, 2013

"Pros or Cons" Thoughts For The Modern "Sports Attorney" - Part III

Sports Law Blog is publishing a 5-part series on the practice of sports law. The series is co-authored by Peter Jarvis, a legal ethics and professional responsibility attorney with Hinshaw & Culbertson, LLP in Portland, Oregon and Jason Davis, a California attorney currently residing in Seattle, Washington. These posts will appear on Saturdays. The first one is available at this link and the second at this link. Here is the third one:

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"Pros or Cons" Thoughts For The Modern "Sports Attorney"

( jason.a.davis.esq@gmail.com, @JasonDavisEsq1 & pjarvis@hinshawlaw.com)

(ARTICLE #3)

Know the Rules - "The Immaculate Misconception" (UPL)

One of the most dramatic moments in football is when a wide receiver leaps for a long pass in the end zone. His arms outstretched, while attempting to drag his feet to stay in bounds, he maintains control long enough to complete a touchdown. Similarly, a sports attorney may find him/herself having to stretch to their capacity for the benefit of the client, while staying within the limits of the law (ethical or otherwise).

The determination of what is and isn't the practice of law is not subjectively determined by the attorney, but rather by the jurisdiction to which activity transpires. In our sample scenario, Mega Star asks Attorney Al to negotiate possible contracts with the California and Texas teams. Such negotiations may well require Al (and certainly Mega, if he signs) to travel to those states and could, for that matter, lead to contracts governed in whole or in part by the law of those states.

Suppose, then, that Al negotiates and Mega signs a contract with either the California or Texas team, and suppose further that all reasonable minds would agree that the choice of ethics law rules would require the application of California or Texas law. Does that mean that Al would be guilty of the Unauthorized Practice of Law in either of those states? Not necessarily.

In either jurisdiction, the negotiation of a contract for a third party would likely be considered a part of the practice of law. In other words, the practice of law is not limited to litigation. At risk of some potential oversimplification, it also includes advising others for a fee about their contract rights in negotiations. Almost all states now recognize at least some degree of "temporary" in-state lawyering which does not violate the state's Unauthorized Practice rules. In California, for example, Al might have a solid argument that since his client, Mega, was a New York resident at the time and since he was only occasionally in California for purposes of those negotiations, he should not be subject to the California RPCs. See, e.g, Estate of Condon (1998) 65 Cal. App. 4th 1138, 76 Cal. Rptr. 2d 922. See also, 2013 California Rules of Court, Rule 9.48.

In Texas, the result may be less clear, but one can at least hope that the same result should follow. Cf. Texas RPC 5.05. To the extent that Al has doubts under either state, he certainly could cut his risk by associating a lawyer licensed in the state in question.

-- Posted by Michael McCann @ 5/04/2013 10:00:00 AM -- Comments (0) -- Post a Comment

Friday, May 03, 2013

Comparing the Economic Investment and Incentive of Universities and Professional Teams in the Context of Licensing Broadcast Rights

Furthering the discussion of the topic of Warren's post yesterday, the economics of college athletics calls into question the exclusive right of universities, conferences and the NCAA to sell and license the broadcast rights. This purported exclusive property interest in college sports has never been challenged. The rationale for protection of the right to exploit game broadcast rights is presumably based upon the professional sports broadcast licensing model and the underlying rationale set forth in the Pittsburgh Athletic case, which is that protection provides an economic incentive to make the investment required to produce a performance of interest to the public (which is essentially the underlying rationale for copyright protection) as well as the prevention of unjust enrichment due to the substantial investment required to produce the event.

But college and professional sports are not at all similarly situated in terms of the extent of the investment made or the incentive to make it, which makes recognition of the exclusive property right less compelling. First, the extent of the investment made in college sports is much less because the producers do not compensate the players who make the live event possible. Indeed, in justifying a professional team's property right in Pittsburgh Athletic, the court specifically mentioned the substantial expense of professional team owners in paying the players whose performances are what drive consumer interest and demand and thereby contribute substantially to the monetary value in the broadcast for which networks are willing to pay substantial rights fees. Additionally, professional team owners, unlike the producers of college sports, make a substantial investment in the purchase price for their ownership interest in the club.

Second, the for-profit/not-for-profit distinction between professional and college sports changes the economic incentives to make the investment, in that professional team owners put their personal funds at risk for the prospect of earning a profit and return on their investment. In college sports there is no expectation of return on investment in an ownership sense. The individuals who support and make monetary investments in a university's athletic program are taxpayers, students, and private donors. However, unlike professional team owners, the investment of these individuals is certainly not based or dependent upon the university's ability to exploit game broadcast rights. Moreover, universities, unlike for-profit professional teams, do not need an economic incentive to produce a game of interest to the public. Indeed, according to the NCAA and its member institutions themselves, athletics is an integral part of the university's educational mission and the purpose of intercollegiate athletics is not to profit but to enhance the educational experience and the student body.

In my view, the economic reality of Division I college football and basketball presents a classic unjust enrichment scenario in which the exponentially increasing rights fees the NCAA, conferences, and universities continue to engorge at the players' expense is increasingly becoming more unjust.

-- Posted by Rick Karcher @ 5/03/2013 08:37:00 AM -- Comments (0) -- Post a Comment

Thursday, May 02, 2013

The Economics of College Athletics

As the O'Bannon v NCAA litigation progresses, ever so slowly, through our legal system, there is one defense that gets tossed around quite a bit--very few football or men's basketball programs actually make money. The argument, ergo, is that schools would be unable to compensate these athletes their fair market value without jeopardizing the existence of their entire athletic departments.

Recently, the NCAA released their latest "Division I Intercollegiate Athletics Programs Report on Revenues & Expenses" which can be accessed here. John Infante on the Bylaw Blog, an expert in NCAA issues, summarizes this report as follows:

23 athletic departments operated in the black last year, same as in 2011. By the NCAA's definition, this means the school's athletic department generated revenue exceeded expenses, and the athletic department needed no allocated revenue (i.e. subsidy) from the school to break even.
While revenues are going up, expenses are rising faster. Expenses in FBS were 10.8% in the last year, while revenues increased only 4.6%.
The median negative net generated revenue (generated revenue minus expenses) was a "loss" of over $12 million while the median positive net generated revenue was a "profit" of $8 million.

Not surprisingly, there is another opinion. Expert witnesses for the plaintiffs in the O'Bannon case submitted a document that describes a far different economic reality within Division I athletics. Dr. Daniel Rascher, a partner at OKSR, LLC, an leading economic consulting firm specializing in applying economic analysis to complex legal issues, submitted this document supporting the plaintiff's claim. While you are welcome to download this entire submission, and if you do pay careful attention to pages 59 through 99, Rascher argues a few main points:

1. The NCAA's financials are intentionally inaccurate:
2. Athletics departments operate within non-profit universities, thus there is less of an incentive (and mechanism) to show a profit;
3. That "athletic deficits" reflect the accounting practices of universities or the flow of revenues back into expenses rather than the inability of revenues to meet costs.....Within athletic departments it can flow into salaries for athletic staff (coaches, athletic directors, support personnel) or into facilities;
4. And finally a market in which all but a dozen or two programs out of 340-plus are losing money does not experience the sort of entry we have seen in Division I sports since the Board of Regents case ended the NCAA's television cartel in 1984.

Bottom line is we all know the quote "Lies, damn lies, and statistics...."

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While we are talking about the never ending legal case of O'Bannon v NCAA, documents were filed in court last week in anticipation of the June 20th class certification hearing. For those of you captivated by the arguments, or writing semester ending analyses of this case, I wanted to provide two important documents for your review.

1. Here is the "Reply Brief of Antitrust Plaintiffs in Support of Motion for Class Certification." This document supports the O'Bannon plaintiff's efforts for class certification. You can download this document here.

2. Please find the "Rebuttal Report of Dr. Robert McCormick in Support of Antitrust Plaintiffs' Motion for Class Certification. You can download this document here.

-- Posted by Warren K. Zola @ 5/02/2013 03:00:00 PM -- Comments (0) -- Post a Comment

2. Scott Boras

Boras Corporation President 60 years old

Boras Corporation President
60 years old