Sports Law Blog
All things legal relating
to the sports world...
Thursday, April 29, 2004
Judge Rules in Jockey Case: A federal district court judge ruled this morning that jockeys cannot be prevented from wearing patches while riding in this weekend's Kentucky Derby. In two separate cases, the judge upheld the right to wear advertising patches and the right to wear the patch of the Jockey's Guild, their union. The former decision applies only to the litigants in the case, but the latter applies to all jockeys in the Guild. The ruling forestalls any talk of a jockey boycott of this weekend's Derby.
You can read more on the case here. For more on the issue of advertising and logos detracting from a sport, please see this earlier post.
Wednesday, April 28, 2004
Who Says There is a Problem? The NBA play-offs on Saturday (1.3 rating) were definitively trumped in the ratings by the NFL Draft (3.8 rating). As a reminder, the NFL has an age-limit on its draft, and the NBA does not. And just so you don't think the NFL is alone in whipping the NBA, three regular season baseball games all received a national rating of 1.3 or higher, including the always popular Giants-Padres match-up. The NCAA play-in game between UNC-Asheville and Texas Southern got a 1.0.
My point is this. A number of people have made compelling economic and legal arguments against an age-limit (freedom of contract, private rights of choice), but the fact is that the NBA has suffered, both in the quality of play and the television ratings. The NBA Finals ratings have dropped significantly since 1998, achieving an all-time low of 6.5 last summer. In comparison, the low World Series rating in history is a 12. People just don't want to watch the ugly basketball being played.
You may not agree with me that the play is ugly, but the numbers indicate a strong negative trend. If the NBA wants to do something about this (say, put an age-limit into the CBA) and this is a legal labor exemption to anti-trust law, as the Second Circuit claims, then I see no problem. The NBA is a business and it produces a product. It has a right to pass rules that will protect this product, and ultimately, allow the league to remain a profitable business. General managers are not concerned about the "product" of the NBA - they are concerned first about keeping their jobs and second about winning. Passing on a high schooler that turns out to be a superstar in three years helps neither. Thus, the argument that "a player won't be drafted if he is not ready" does not really work.
But this may not be good for the league as a whole, which is where the union comes in. A number of unions in other industries have age-limits, either to protect their older workers or ensure that the work product of union members remains consistent and dependable. If the NFL or the NBA union agrees to adopt a similar limitation, even if at the league's request, then there is really no difference.
Yes, there are exceptions (see Lebron and Carmelo). Yes, it's paternalistic. Yes, it goes against many ideas of a free market. But yes, it might just be necessary to protect the NBA.
Thanks to the Sports Business Daily for the numbers.
Tuesday, April 27, 2004
Article on Twist and the Right of Publicity: A while back, I noted that the Supreme Court chose not to review a right of publicity case involving former NHL player Tony Twist and a comic book character based on him. A friend of mine at this esteemed institution has written a case commentary on the issue, which I recommend to everyone. The cite is 117 Harv. L. Rev. 1275 and it is available for those with Lexis or WestLaw. It begins:
The extent to which the First Amendment protects a defendant in a right of publicity case is an issue that has vexed courts and commentators: whereas some authorities have adopted tests that tend to favor speechmakers, the Missouri Supreme Court in Doe v. TCI Cablevision recently created a test that tends to protect celebrities. The Missouri test is vague and unworkable, however, and the court should have held that publicity rights are subject to the "actual malice" standard of traditional First Amendment scrutiny.
While I agree with the author that the test is difficult to administer, I am not certain that the "actual malice" standard is where the line should be drawn. A celebrity's image is a valuable property right that should be protected, even against 1st Amendment expression. While the California standard draws the line at whether or not anything was added to the copy of the figure's image, a more intricate test should be used to determine the value to the creator of using the image of the public figure. Creators should be allowed to use public figures in creative works, but they should have to compensate the figure for a portion of the benefit gained from using the famous likeness. Through this rule, the right to free expression can be protected, as can a celebrity's right to be compensated for the use of his or her image.
I recommend the entire article.
Update on Chargers Lawsuit: The San Diego Tribune reports that the San Diego City council voted to approve a new Chargers lease at Qualcomm Stadium, thus paving the way for the team to drop its lawsuit against the city. The team has stated that the new lease is much more favorable. The Chargers have 45 days to accept the proposal from the city, and if it does so, it will also drop the lawsuit.
You can read more on the suit here.
Update in Jockey Case: A federal district judge heard arguments yesterday in the case of the jockeys suing to be allowed to wear patches while riding. The patches include both advertising and Jockey Guild patches, which have been forbidden because they are "not in keeping with the traditions of the turf." The judge, though, was skeptical of this argument:
"The regulation doesn't seem to be designed for that reason," Heyburn said at the end of the 5 1/2-hour hearing. "If that reason was on anybody's mind when they wrote the rule, I'd like to know. But all you've shown me today is that you put the rule on the books and intend to enforce it. Unless you can show me something else, that won't cut it."
A ruling is expected later today or tomorrow after closing arguments are heard. You can read more here.
Extreme Skiing and Assumption of Risk: The increase in extreme and out-of-bounds skiing has prompted a group of Colorado resorts to ask the state legislature for a bill limiting their legal liability.
The bill would include "cliffs and extremely steep slopes" in the list of the inherent risks of the sport, letting resorts off the hook for injuries people suffer while skiing them. The list already includes everything from trees and rocks to hydrants and lift towers. It would also protect resorts from being sued for injuries suffered on equipment in freestyle terrain parks such as rails, half-pipes, quarter-pipes and fun boxes - which didn't exist when the ski safety act was first passed in 1979.
Appeals Court Rules Against Price: The 11th Circuit court of appeals upheld a ruling that former Alabama football coach Mike Price was not entitled to a hearing before or after being fired last year. The court ruled that Price had no right to such a hearing because he had not yet signed an employment contract. Thus, the decision of the lower court to dismiss Price's lawsuit was affirmed. Price had sued for $20 million, claiming defamation and wrongful termination.
His lawsuits against the University President and Sports Illustrated are ongoing. You can read more on that case here.
Former Softball Coach Sues UW: Claiming breach of contract, wrongful termination and violation of due process, the former softball coach at the University of Washington sued the school on Monday following her termination earlier this year. The coach was dismissed when allegations surfaced that she knew about systematic stockpiling and overprescribing of pain medication in treating the players. A report released Monday describes these allegations.
Tax Breaks for Stadiums: The Sports Economist has an interesting post describing the tax breaks that accompany stadium construction. These breaks can be in the tens of millions in many cases.
Fans Reaction to Steroids: Despite cries that the apocalypse is upon us, Murray Chass reports that fans do not seem to care about the steroid scandal, turning out in record numbers.
As I wrote in this post last month, this follows the trend of sports fans ignoring many problems of the players they cheer:
By and large, fans see the uniform and not the person underneath. They cheer #8 because of his spectacular plays, but do not care about what Kobe Bryant does in his spare time. They cheer the team to the victory, while looking past the fact that human beings with human problems comprise the victors. Now it seems that fans are willing to accept steroid use, so long as their heroes continue to hit monstrous home runs. This is a disturbing trend in sports, and ultimately, the victims will be the athletes themselves. Steroid abuse has been shown to have horrible consequences, even leading to serious illness and death, and the negative effects of newer drugs are not even known. Players may be leveraging their long-term health for current glory, and fans are willing accomplices by turning a blind eye to such abuse.
Baseball should make strides to curb drug testing on its own. The adoption of the World Cup of Baseball, and the accompanying drug testing procedures, is a good start.
Hat Tip: Business of Baseball
Baseball and Legislation: Doug at Business of Baseball offers a good summary of the proposed Minnesota stadium bill. Despite what they teach you in law school, judges don't make all of the law.
Limit on Work Visas Could Hurt Leagues: Phil at Beyond the Score has a link to an interesting article concerning visas for foreign-born workers. Apparently, the quota for work visas (66,000) for the entire year of 2004 was reached on March 9, meaning that no visas can be issued to baseball players or anyone else. This has the potential to severely harm baseball, whose June draft often includes numerous foreign-born players.
But the larger problem seems to be on the quota. How can a number be set so low that it is exceeded three months into the year? And, if needs to be set low, should not the authorities be more selective in granting approvals to ensure that qualified workers for the last nine months of the year are turned away? This "first-come, first-serve" basis will only encourage companies to bring workers into the country quickly, no matter their qualifications, for fear that the limit will be reached and the employer will be out of luck. These unqualified workers are more likely to be let go and less likely to be re-hired, resulting in the exact problem this legislation hopes to prevent: a high number of unemployed aliens draining government resources.
Saturday, April 24, 2004
NFL Draft: Well, the NFL Draft took place today without Mike Williams or Maurice Clarett. But the legal battle will continue. Clarett's legal team will try to get the ruling reversed in the 2nd Circuit or the Supreme Court. If he wins, there will be a supplemental draft. Williams continues his suit against the NFL for monetary damages and will also petition the NCAA for reinstatement.
The legal arguments raised in this case are much larger than football. Huge precedents of antitrust and labor law could be decided, which could be very good for the legitimacy of "sports law." Stay tuned.
Thursday, April 22, 2004
What Happens If... I do not know a lot about NFL by-laws, so I am hoping someone can help me out with this one. What happens if a team ignores the NFL and selects Mike Williams? Perhaps more realistic, what happens if a team signs him as a non-drafted free agent? I know the league has its list of "draft-eligible" players, but would a team be forbidden or punished in any way for signing a player such as Williams? I am not sure if there is a gentlemen's agreement governing this or actual rules -- and if so, the legal force of these rules.
Any thoughts would be appreciated.
Response: Thank you to everyone who wrote in with the answer, which goes something like this. An amateur player cannot enter the NFL unless he is first made available through the NFL Draft. If a team selected him in the draft or signed him as a free agent, the league would not recognize his NFL rights as being allocated to that team. Thus, the NFL would not approve any contract between that team and Williams, and he would not be eligible to play in games.
Clarett Appeal Denied- End of the Road? As expected by most, Justice Ginsburg has denied Maurice Clarett's motion for an emergency lifting of the 2nd Circuit's stay that will prevent him from entering this weekend's NFL draft. Ginsburg focused on the NFL's willingness to hold a prompt supplemental draft for Clarett and Williams should the ruling be overturned, thus finding no risk of irreparable harm.
The Clarett team has not given up and has filed another emergency appeal with Justice Stevens. I am not sure why Justice Stevens would have any authority in this matter (Justice Ginsburg oversees the 2nd Circuit, thus, her initial involvement). But barring an unprecedented move by Stevens, the draft will continue without Maurice Clarett. And the word from the Ohio State camp is that he will not be welcome back on campus. Other options include Canada and a non-NCAA college.
The NFL still has yet to decide on the case of Mike Williams. As I stated previously, I think the NFL should grant an exception for Williams because of his reliance on the temporary rule change instituted by the league. The only leg the NFL would have is if it warned Williams that his fate was tied to Clarett's, but even then, the league really loses nothing by making an exception. It serves as no precedent, given the unique facts of the matter, and shows that the NFL really does have the players' interests in mind. If the NFL does not grant this exception, I think Williams has an excellent claim against the league for monetary damages.
Update: Justice Stevens also denied the Clarett appeal last night, meaning the decision is final: Clarett will not be in Saturday's draft.
Clarett Update: Justice Ginsburg has asked the NFL to file a response by this morning in the Clarett matter. Clarett filed a brief a few days ago for an emergency lifting of the 2nd Circuit stay keeping him out of this weekend's draft. Ginsburg can decide whether to act and lift the stay, or do nothing, which would mean Clarett will not be eligible for the draft.
Legislative Action: Doug at the Business of Baseball Blog points to legislatures in two states taking actions with sports implications.
In Minnesota, the state is attempting to step in to get Twins games on television. Right now, 105 of the Twins games are slated for the Victory Sports Network, which is owned by team. VSN, though, is trying to charge $2.20 per subscriber and cable networks are balking at the demand. The price seems clearly high, as Fox Sports charged $1.70/subscriber last year for the Twins, Timberwolves and Wild and the Yankees on TV was just judged to be worth $1.93/subscriber. Now, the Twins are willing to provide VSN free of charge to any cable operator that will agree to mediation. The cable companies are staying away, though, telling the Twins to go back to Fox Sports. Why does all of this matter? Because the television fight could overshadow the legislation designed to give the team a new stadium.
In California, a legislator has proposed AB 3003, which would require any city in California that lures a team from another area to reimburse the community losing the club for lost revenues. Does this bill have any legs? In a word, no:
The Oakland Raiders and Oakland Athletics say they're not concerned about the bill, which suggests how likely it is to become law. A good thing, since a law like this would have the perverse effect of encouraging California sports teams dissatisfied with their current lease to leave the state entirely. Moreover, most sports economists question the existence of the "economic loss" which this bill is designed to compensate.
The only effective way to prevent local governments from subsidizing pro sports monopolists would be a federal law forbidding the use of tax-exempt bonds for anything to do with stadium construction or other incentives used to lure franchises from one market to another. I doubt that a President who owes most of his own personal wealth to the generous taxpayers of Arlington, Texas will be in any hurry to support such a bill.
Wednesday, April 21, 2004
Clarett's Appeal: Courtesy of FindLaw, you can now view Clarett's brief for Emergency Lift of Stay filed with the US Supreme Court. As stated yesterday, the chances of the Court taking any action on this are probably zero.
Court: Coaches' Salaries are Public: Maryland's top appellate court has held that the salary information of coaches at public schools and universities is public information and must be made available. The suit dealt with the coaching contracts of University of Maryland basketball coach Gary Williams and football coach Ralph Friedgen. While the university made available the amounts paid to the two coaches, it refused to release the contract specifics, saying the information represented a private dealing. The court ruled otherwise, saying that the actual contracts themselves are public records.
This court is not persuaded by the appellants' personnel records argument. Moreover, the MPIA clearly requires, as all of the parties agree, the disclosure of the "salary of an employee of a unit or instrumentality of State government." That certainly would include the dollar amount paid. W e believe that the requirement must include, in addition, disclosure of any document evidencing the employment arrangement and how the state-funded salary is earned.
The ruling could have implications beyond the sports world. Many legal experts believe the ruling makes available the contracts of every taxpayer-funded employee in Maryland, revealing all the benefits and perks often bestowed on such officials as college presidents. Eric B. Easton, a media law professor at the University of Baltimore, said of the decision: "I don't see anything in [this ruling] that necessarily limits it to these two coaches or athletic coaches generally."
The court also discussed the issue of coaches' contracts with third parties, such as apparel manufacturers. The opinion noted that many of these agreements were for "private business affairs" and nothing in the law required their disclosure. However, the court pointed out that many of these contracts may be "so connected with, and related to, the coach's public employment as to be, in effect, authorized by, and thus, a part of, the University contract." In determining if the details of a third-party contract need to be revealed:
The terms of the third party contract must be reviewed in order to determine whether the income derived by that contract is closely connected with, and related to, the coach's employment with the University, to determine, in other words, whether, but for the coach's employment with the University, the third party contract would not have been made, or many of its terms included.
The court did not decide the issue, but rather remanded it to the lower court for a determination of the relationship between the third-party contracts and the coach's positions.
I agree with the first part of the court's decision, but not the second. Salaries paid to the coach's come out of public money, and the public has a right to know how their tax dollars are being spent. This could encourage universities to include performance clauses tied to player graduation or academic performance, items people may be more willing to pay for. I do not, however, believe that agreements with third-parties should be made public. No tax dollars are funding these contracts, and thus, I do not see the public interest that outweighs the coaches' right to privacy. The public often has an insatiable thirst to know, but some limits must be imposed, no matter how public the figure.
You can read the full opinion here.
Jockeys Sue to Wear Patches: Three jockeys have sued the Kentucky Horse Racing Authority over a rule that prevents them from wearing a Jockey's Guild patch when they race. The jockeys say the rule violates the 1st Amendment right to free speech and free expression. The KHRA was established by the Kentucky governor as the Kentucky Racing Commission (the name has since changed), which means it will probably be viewed as a state actor. This distinguishes this case from other organizations, such as the PGA Tour and Major League Baseball, that restrict a player's uniform.
The outcome of the case would appear to hinge on the breadth and application of the rule. If jockeys are allowed to wear some patches, i.e. for advertisers, but not a patch for the Guild, this appears to be a content-based restriction and could be struck down. If, however, no patches of any kind are allowed, the rule seems to be content-neutral and merely an administrative regulation that would be upheld.
Soccer News: Cameroon has been fined US$154,000 and was docked six points from their World Cup qualifying group for wearing a one-piece Puma uniform during the recent African Cup of Nations in Tunisia. Apparently, FIFA warned the team beforehand that the uniform was not sanctioned, but team wore it anyway. Cameroon disputes this, saying that the warning came too late for replacement uniforms could be produced.
Puma, the manufacturer, claims that the uniform violates no rules of the sport.
With regard to basic equipment that a footballer must wear, Law 4 of the Laws of the Game states: 'The basic equipment of a player is a jersey or shirt, shorts, stockings, shinguards, footwear'. "Nowhere in the rules is it mentioned that shirts and shorts (must be kept separate)," added Widmann.
Puma has indicated that it will take FIFA to court over the ruling.
Patent Matters in Sports: Patently Obvious (all about patent law) points to a new case in the sporting world. The case is Fieldturf Int'l., Inc. v. Triexe Mgmt. Grp., Inc. in the Northern District of Illinois.
Fieldturf alleges that Triexe infringed its patents, intentionally interfered with its prospective economic advantage and committed common law conversion by selling or offering to sell synthetic turf to the U Wisc, UC Berkeley, the Baltimore Ravens, and a fourth project in Ireland. Triexe has denied the material allegations and has asserted counterclaims.
The patent at issue is No. 6,338,885.
Tuesday, April 20, 2004
More on Clarett: I hope to have more in-depth on the Clarett case and its implications tomorrow, but here is a news update. Clarett has appealed his case to the Supreme Court. The case arrives on Justice Ginsburg's door and she has a number of options. One, she can choose to do nothing. In this case, the stay stands and the draft will go on without Clarett and Williams. Two, she could overrule the stay, but not until after the draft. The Clarett team obviously hopes for three, which is Ginsburg overturning the stay prior to Saturday. Even though the Clarett attorneys have argued that a decision after the weekend will result in "irreparable harm" to the running back, the chance of quick action is almost zero. Usually the Supreme Court reserves its power for quick rulings to issues such as the death penalty or national security. While football is important, it probably does not reach the same level.
What are Clarett's options? His legal team will continue to fight, and if he wins, a supplemental draft will be held for Clarett and the other players. If not, Clarett could play football in Canada or for a non-NCAA member college in order to keep his skills up. In an extreme case, he could be reinstated by the NCAA, but this seems unlikely.
In Mike Williams news, he has filed his suit and probably has the best chance of hearing anything before the draft. The Pac-10 commissioner hopes that if Williams cannot join the NFL, the NCAA will take him back due to the extraordinary circumstances of this case. I think Williams has a very compelling argument for the NCAA to make an exception. This could be an excellent opportunity to prove that the association does have the best interests of student-athletes in mind, even those that want to pursue a professional career.
The NCAA has expressed some willingness to be flexible on the issue. Wally Renfro, an NCAA Senior Adviser, stated: "There's a philosophy in place that looks for ways to grant benefit of the doubt to student-athletes different than what we have had in the past. You still have to look at the circumstances. You still have to look at how the rule was violated. What you're looking for are gray areas as opposed to application of the rule in very black-and-white terms." Another NCAA official said that the players "would have to repay their agents for whatever gifts or cash advances they may have received before they would be allowed to compete as amateurs."
More tomorrow, including how this ruling could potentially impact the NBA's proposal to impose an age limit.
Stay Issued in Clarett Case: The 2nd Circuit Court of Appeals shocked much of the sports world on Monday, issuing a ruling that will likely keep Maurice Clarett and Mike Williams out of this weekend's NFL draft. The court granted a stay of the District Court's decision, meaning it cannot be enforced pending a full argument and decision by the appellate court. While this decision could come down prior to Saturday's draft, the chances are almost non-existent. In addition, even if it did, by issuing the stay the court indicated that the NFL has a strong likelihood of succeeding on the merits of the case, which would keep Clarett and Williams out anyway.
The outrage against this decision has been swift, but not legally based. Most commentators have made the policy argument that no matter the law, these players should be able to enter the draft. The most common line of reasoning is that if these players can enlist and go to Iraq, why should they not be able to play pro football? (Note: How do these same people feel on the 21-year limit on buying alcohol?) The market will decide whether or not these players are good enough -- if they are, then they will be drafted and if they are not, then they will return to school.
While intriguing, these arguments miss a number of key points. One, the NFL is a business. It puts a product on the field and wants to produce the best product possible. It has decided that it wants a more experienced and better trained level of player, and the best way to ensure this is a bright-line rule. Second, this decision came as part of a negotiated and agreed-upon Collective Bargaining Agreement. Legally, the NFL stands on very firm ground.
Of the major commentators, only Michael Wilbon decided to comment on the law. He spoke with Sports Law Professor Gary Roberts, who stated that the District Court's decision was akin to approving separate but equal buses for different races. In short, many law-minded people expected this decision to be overturned. Unions bargain for conditions that affect future employees all the time, and these conditions are binding on individuals before they join the union. In this case, Clarett is not precluded from ever playing in the NFL, but he must follow a rule that will later benefit him as a member of the union. The labor agreement should exempt the league from the antitrust argument, which the District Court failed to do. Legally, it appears the 2nd Circuit will side with the NFL and there is strong support for doing so.
For Clarett, this will mean one more year of waiting. Now that he has "professionalized" himself, it will be hard for him to return to Ohio State. The NCAA could make an exception for him, noting the exceptional circumstances in the case, but this seems unlikely. In addition, it is not even clear that Ohio State would want Clarett back, as his previous stay included allegations of taking money and never going to class.
The much tougher case is that of Mike Williams. Williams has filed his own suit, claiming in essence that the NFL changed its policy following the District Court decision, Williams detrimentally relied upon that change, and now the NFL must allows him in the draft. The key question seems to be: what did the NFL represent to Williams? His camp would have you believe that the NFL called Williams, told him of the rule change and asked him to be in the draft. This is about as likely as me being taken with the first overall pick on Saturday. In reality, the Williams team (if they were smart), spoke at great length with the NFL about the new policy and its implications for underclass players. If the NFL did indeed change its rule, as is indicated by its acceptance of Williams and a few other underclass players, then it should not be allowed to change it back at the 11th hour. Williams could argue that the form he submitted for early entry into the draft, which was approved by the NFL, along with his signed agreement with the NFLPA (for licensing), constitutes an agreement by which Williams is eligible for the draft. Under this line of reasoning, the NFL would breach its contract by refusing to make Williams available for the draft. There could also be separate legal liability if a team attempts to draft Williams, but is thwarted by the league.
Damages, though, is a much trickier beast. Williams wants specific performance -- he wants the court to tell the NFL to let him into the draft. This remedy is difficult to get and is rarely granted. It also can only be granted in the negative. Thus, the NFL cannot be mandated to include Williams in the draft, but it could be required not to prevent Williams from being drafted by a team. This toes a touchy legal line and courts may be leery of such a mandate. If found to be in breach, though, the NFL could be liable for monetary damages. These could include his lost salary for this season, lost endorsement deals and other income Williams would have to forego, especially if he returns to USC. Unlike Clarett, USC is dying for Williams to return, and the chance of the NCAA granting a special exception seems much greater due to the flip-flop of the NFL rule and Williams's popularity.
No matter it may look from the outside, legally it appears that the NFL will triumph in this case and underclassmen will have to wait three years from high school graduation to enter the draft.
Editorial Note: I will have more on this, and the impending Williams situation, later today and tomorrow. Please email me if you have any comments on the case, the law or the application of the law to the case. I will compile the best into a reader response post.
Monday, April 19, 2004
Life would be so much easier. . . if I didn't like sports. Sports are more than just a hobby- they dictate our schedules, manipulate our emotions and influence entire days. Sure, I am supposed to be reading for Tax class. But what's going on in the NHL playoffs? Yes, I should be writing the memo for my boss. But I have to check on the stats of my fantasy team.
How much more time would I have if I was not consumed by sports? I took the first day of the NCAA tournament off -- I mean, I already think it should be a national holiday. Was I productive during my off day? Absolutely, if you count ten hours of intense tournament action as productive. A week ago, I was supposed to be working on an article I am writing. But how could I not watch Phil Mickelson and Ernie Els duel it out in the Masters final round? This weekend- Yankees/Red Sox all three days, and in the interim, NBA and NHL play-offs.
On average, sports probably consume 2-3 hours of my time each day. This includes checking sports websites, watching SportsCenter or PTI, watching games, or writing posts on this site. Two to three hours a day. That's 18 hours a week. 75 hours a month. Over nine hundred hours a year. Imagine if I devoted that time to learning, or researching, or writing. I could learn entire languages, immerse myself in the writings of the classic authors or master areas of the law I had never before imagined.
How much easier would life be? I wouldn't have to plan my schedule around the Super Bowl, college basketball games, the British Open or the World Series. Weekend afternoons would be free year-round. There would be no fights over watching a movie versus Monday Night football. I wouldn't have a day of mourning following the elimination of my favorite team, nor a day of headaches after a night spent celebrating victory. My blood pressure wouldn't rise and fall with the score of an NBA game. My carpet wouldn't have a soda stain from the celebration of a made field goal. I would never get into any arguments over the greatest outfielders in baseball history, or the best quarterbacks for a fourth quarter comeback. My hands would have no blisters from golf clubs or a tennis racket. Most of all, I wouldn't have to spend hours a day checking scores, comparing stats and analyzing the amazing performances of gifted athletes.
Yes, life would be easier if I didn't like sports. But it sure would be boring.
Picking Your Opponent? Stuart Benjamin of Volokh has an interesting proposal: allow play-off teams to select their first round opponent, in the order in which they finished in the regular season.
Friday, April 16, 2004
For Readers in the Boston Area: The public is invited to attend the 2004 Harvard Sports Law Conference, next Friday, April 23 at 1:00 pm. There will be two panels, one focusing on the Olympics and the other focusing on the ACC/Big East lawsuit and other conference wars in college athletics. I will post a list of the speakers very soon. If you have questions about logistics or anything else, please email me.
Protests and Golf Tournaments: In a decision of relevance to both sports fans and 1st Amendment scholars, the 11th Circuit has struck down the Augusta, GA anti-protest ordinance. The law, which was passed in advance of Martha Burk's protest of Augusta National's all-male policy, prohibited any group of five or more people from engaging in "[a]ny expression of support for, or protest of, any person, issue, political or other cause or action which is manifested by the physical presence of persons, or the display of signs, posters, banners and the like."
In a 2-1 decision, the court wrote that the statute unfairly targeted "political" speech, regulating it more harshly than other forms of speech. As a result, the ordinance was content-based and subject to a strict scrutiny analysis. Because the regulation was not narrowly tailored to further a compelling government interest, it violated the 1st Amendment and must be struck down.
While I agree with the court's ruling in this case, its reasoning is not sound and evinces the myriad of cases that constitutes 1st Amendment jurisprudence. In two recent decisions, the Supreme Court carved out 1st Amendment exceptions for the regulation of protests and demonstrations. While the 11th Circuit distinguished these cases, its analysis was misguided and incomplete.
In Hill v. Colorado, the Supreme Court upheld an ordinance banning demonstrations outside of health facilities, including abortion clinics. The statute was designed to protect the health of the patients entering and exiting these facilities. As a result, the Court ruled that the law did not limit the content of the speech, but merely "the place where the speech occurs." The 11th Circuit, however, stated that, unlike in Hill, the Augusta ordinance was not narrowly tailored to achieve a specific goal. In contrast, the "place" at issue in the current case was limited differently depending on the type of expressive activity at issue.
However, was the regulation in Hill truly content-neutral? One questions whether enforcement would have been uniform had the gathering of people outside of the abortion clinic been cheering and supporting the patients entering the clinic, rather than booing and protesting their actions. In this sense, enforcement becomes not only content-based, but also viewpoint-based, which receives the harshest form of constitutional scrutiny. Likewise, would the police act as quickly to break up a group of six people celebrating the history of the Masters and Hootie Johnson, as it was to disperse a group of protestors? One thinks not, lending support to the government's argument that Hill could control.
The court likewise missed the mark in its analysis of Frisby v Schultz. In Frisby, Court upheld an ordinance that prohibited "targeted picketing" of a residence. The court in this case wrote:
The County errs by failing to appreciate the difference between picketing -- which is a method of delivery of speech involving conduct without regard to any particular message or subject matter -- and the County's definition of "Protest/Demonstration," which expressly targets all expression on a certain
subject matter, political speech. Of course, people engaging in picketing nearly always intend to send a message of some kind along with their acts. However, the acts themselves -- standing, marching, or holding a sign, for example -- do not involve any particular expressive content, and the conduct may therefore be regulated without burdening any particular viewpoint or subject.
This analysis has numerous holes. One, the court overly limits the reach of the Augusta ordinance. It does not, in fact, limit only "political" speech, but also limits shows of protest or support for "any person, issue, political or other cause or action." Looking at the definition in its entirety, it begins to look very similar to a common definition of "picketing." In addition, the court's comment that the acts of picketing -- standing, marching and holding a sign -- "do not involve any particular expressive conduct" and can be regulated is just wrong. The conduct most certainly is expressive, no matter the message behind the actions.
However, while I disagree with the court's rationale, its ruling was most likely correct and could have been supported on other grounds. First, the history of the statute gives strong evidence that it not only is content-based, but also viewpoint-based. The statute was passed only one month prior to the 2003 Masters, after Burk and her supporters made clear their intentions to protest the tournament. In addition, the discrepancy within the same statute for "protests and demonstrations" and other events indicates a 1st amendment problem.
The court correctly points out that while the statute pertaining to protests and demonstrations limits groups to five or less, a group participating in any other form of speech is covered by the "mass gathering" statute, which has a limit of 1000. If the purpose of the statute, as claimed by the government, was to avoid traffic congestion, maintain the peace, it seems to make little sense to limit protests to five people, but not other forms of speech such as "a street party, a tail-gating party, a sidewalk performance by a five-person musical group, or even a high school band."
The court could have distinguished Hill and Frisby, not on the basis of content-neutrality, but rather on the nature of the government interests at stake. In both cases, the government had a compelling interest for limiting the 1st Amendment rights of the speakers -- in Hill, to protect the health of the patients of the clinic, and in Frisby, to protect the sanctity and privacy of the home. Neither of these interests is implicated in the protest of a golf club, and the one proferred interest, maintaining public order, is belied by the statute's own double standard.
In the end, though, the statute served its purpose. Burk was prevented from protesting the tournament in 2003, when the public attention was at its peak. It is almost a year until next year's Masters and so only time will tell if this decision has any impact on next year's tournament, or on the policies at Augusta National.
Thursday, April 15, 2004
Tax Day in Sports: In honor of Tax Day, I am reposting this earlier story on Tax Law and Sports:
This is an area of the law I do not cover much, despite the fact I am currently learning a great deal on the subject. But a good friend sends this along from her tax textbook:
Allocation issues have been particularly contentious when a professional sports franchise is purchased. For example, in Laird v. United States, 556 F.2d 1224 (5th Cir. 1977), cert. denied, 434 U.S. 1014 (1978), the Atlanta Falcons professional football team was acquired for about $7,750,000. The purchaser allocated $50,000 of the cost to the National Football League franchise and $7,700,000 to the players' contracts. Under IRS rulings, the franchise was treated as a nonwasting asset, but the players' contracts were wasting assets with an estimated useful life of 5.25 years. The court held that $3,500,000 should be allocated to the players' contracts and $4,250,000 to the franchise. See also Section 1056(d), which now establishes a presumption that no more than 50% of the price of a sports franchise is allocable to players' contracts.
Why is this important? Well, it is pretty complicated and has to do with Section 197 of the Tax Code. Eric A. Thornton of Williamette Management Associates explains it best:
Section 197 provides that the franchise agreement intangible asset acquired in the purchase of a professional sports team is not amortizable for income tax purposes.
However, other intangible assets acquired with the purchase of a sports team (but not components of the national franchise agreement) may be amortizable for income tax purposes. These acquired intangible assets may be amortized if the intangibles (1) have an identifiable value separate from any acquired goodwill, going-concern value, and the franchise agreement intangible asset and (2) have a determinable remaining useful life ("RUL").
Thus, the value of the franchise itself is not amortizable (meaning it cannot be depreciated over time for the tax benefit), but other intangible assets, such as player salaries, television rights and sponsorship agreements, can be amortized. Of these, the most valuable by far are the player salaries. As a result of this rule, purchasers of sports franchises have an incentive to allocate as much of the cost as possible to other intangible assets and not to the value of the franchise itself. The IRS knows this as well and closely scrutinizes acquisitions of professional sports teams.
Perhaps the most fascinating part of the textbook excerpt is that the Falcons were sold in 1975 for $7.5 million. Adjusting for inflation, this is $26 million in 2002 currency. Coincidentally, that is the year Arthur Blank bought the team for $545 million.
See, even tax law can be interesting when it deals with sports.
Update: ESPN chimes in, reporting that the value of the sports write-off has declined and describing tax day in sports.
Yankees: No Way Jersey: New Jersey has expressed an interest in bringing a baseball team to the Meadowlands, but they may face substantial opposition. Major League Baseball has said that New Jersey is not on the list of candidates for a team. In addition, the Yankees have expressed strong opposition to a team in the Garden State, for obvious reasons.
Could the New York area support three teams? It supports three hockey teams, one in Manhattan, one on Long Island and one at the Meadowlands. It also supports two football teams and two basketball teams as well. Attendance wise, baseball falls in between basketball/hockey and football, at about 40,000 a game. Season wise, though, there are twice as many baseball games in a season than basketball/hockey, and ten times more than football. This makes a large difference in the total number of fans that need to be attracted to a team to make it successful. Combine that with the current success of the Yankees and you see a difficult road ahead for a New Jersey baseball team.
Wednesday, April 14, 2004
On Baseball and Steroids: I have a post up at Only Baseball Matters concerning the current steroid crisis in baseball. Here is an excerpt:
Murray Chass of the New York Times has called the owners out for not testing players under the “reasonable suspicion” clause in the CBA. This clause, however, is a trap for owners. Any attempt by an owner to test a player will surely be challenged by the union. If the player tests positively, then that owner, or a fellow owner, loses the player. This could create considerable dissension among owners and possible goals of retribution. The results could be even worse if the player tests negative. In that case, the accusing party will be chastised for sullying the name of a player, especially if the allegation is made public (as is wont to happen). The player will harbor bitterness towards the accuser and towards the process.
What is the solution to these problems? One, baseball needs a policy for random, systematic testing of players. This would eliminate the accusation and “reasonable suspicion” problem of the current CBA, which Chass points out is completely ineffective. Two, baseball needs a disinterested party to make the decisions regarding its drug policy. The owners are in no way disinterested and must be as removed from the process as possible. Many people also doubt the independence of Bud Selig, though that is a subject for another day.
You can read the entire post here.
Random Drug Testing for High School Athletes: Florida is considering legislation that would mandate randomized drug testing of all high school athletes. The bill specifies that a school district must test five percent of student-athletes. Most of the opposition to the bill is because of the considerable cost this would impose. Individual tests are expensive, costing approximately $50, and so it would take over half a million dollars each year to implement the bill.
Legally, there appears to be no challenge to the proposal. In a series of three cases, the Supreme Court has said that searches high school students are subjected to a much lower standard under the 4th Amendment than are police searches of other individuals.
In New Jersey v. TLO, the Court held that a school needs only reasonable suspicion, and not probable cause, in order to search students and their belongings.
Ten years later, in 1995, the Court upheld a local school board policy under which all students wishing to participate in interscholastic athletics had to agree to be drug tested at the beginning of the season and throughout the year (Vernonia v. Acton). The majority focused on three factors in reaching this decision: (1) the relative unobtrusiveness of the submission and collection of urine samples, (2) the “decreased expectation of privacy” of student athletes in the school environment, and (3) the important interest of school officials to take necessary steps to deter drug use.
Finally, in 2002, the Court in Board of Education of I.S.D.No 92 v Earls upheld a policy that required drug testing of students as a precondition of participation in all competitive extra-curricular activities, including non-athletic ones. The majority focused on the immediate and important need of preventing drug abuse and the more limited privacy rights of high school students. As one commentator notes, the decision seems to indicate a shift from a more reactive, disciplinary (search and seizure) approach to a more proactive, preventive, remedial (early identification) approach.
Although the Earls decision was 5-4, its combination with the earlier cases shows conclusively the constitutionality of randomized drug testing in high school athletics. This is bolstered even more by the evidence of steroid abuse by high school athletes, which moves well beyond "reasonable suspicion."
Having known one high school student whose steroid use contributed to his death, the danger posed by high school drug use is great. From an early age, athletes are told that they need to get bigger and stronger in order to make varsity or impress college scouts. High school coaches are often complicit in these schemes, turning a blind eye to obvious drug use because their players become that much better. Only through legislation will drug testing replace drugs as a key part of high school athletics.
Details of Hockey Death Settlement Released: The terms of the settlement between the NHL and the family of the girl that was killed at a Columbus Blue Jackets game in 2002 was made public this week. Overturning a previous decision, the Ohio Supreme Court ruled that the family's interest in privacy did not outweigh the public interest in viewing the settlement, which is a public record.
Compare this to yesterday's post, which discussed the Vince Foster case. In that case, the US Supreme Court ruled 9-0 that the family's privacy interest trumped the public interest when it came to photos of Foster's suicide. In the wake of that ruling, a group of Florida newspapers dropped its case seeking to obtain the Dale Earnhardt autopsy photos.
These cases indicate that the nature of the documents is a key issue in determining the scope of the family's privacy rights. Photos of a deceased relative obviously implicate a greater invasion of privacy than does an enumeration of a financial settlement. In addition, knowing the terms of a settlement can serve as a vital tool for attorneys in future similar cases, whereas photos of an autopsy and a crime scene seem to do little to advance the public interest.
My question -- many settlements stipulate that the agreement must remain confidential. Why was such a clause not included in this case?
The family received approximately $700,000 of the $1.2 million settlement, with the attorneys taking a fee of $500,000. Gotta love that forty percent.
NBA's Business Success: Sportsline has an article on the booming business of the NBA.
Retro-craze Heads to High School: The Washington Post reports today that the retro jersey phenomenon has spread to high school gear, with the high school jerseys of NBA and NFL stars becoming hot items. However, not all of the jerseys being sold or worn are legal. Websites such as 818jerseys.com and Schoolyardlegends.com have not obtained the rights to the players, a clear violation of their rights of publicity. There are also copyright violations and trademark infringements with respect to the high school team's name, logo and jersey design.
"Just like with actors and actresses the names and images of these athletes has significant value," said [one attorney]. "The value is diluted by people who act without authorization, and numerous laws prohibit the use of unauthorized materials."
One company, Taylor & Madison, is following the law and has obtained permission from 65 current and former players. Hopefully, the infringers will be snuffed out. Imitation merchandise is often of lower quality, which hurts consumers that often do not know better.
Clarett Team Files Brief: The lawyers for Maurice Clarett, including at least one reader of this blog, filed their brief yesterday in the 2nd Circuit. I have not been able to find a copy of the brief, but USA Today excerpts it as follows:
"While Major League Baseball teams spend an average of $9 million annually for the minor league system, the NFL teams spend virtually nothing on a player development system," Clarett's lawyers wrote in a legal brief. "NFL teams take no financial risk ... all the risk is on the player. College football is a willing partner in this arrangement, as it generates millions of dollars for colleges without their having to incur player salaries."
In other Clarett news, the NCAA filed an amicus brief earlier this week. In a statement explaining the NCAA's position, Myles Brand said:
"If not reversed, this decision is likely to unrealistically raise expectations and hopes that a professional football career awaits graduation from high school and that education can therefore be abandoned. The result could be a growing group of young men who end up with neither a professional football career nor an education that will support their life plans."
On the sports side of things, Clarett's draft status is up in the air, as a number of teams are questioning his talent (with only one year by which to judge) and his maturity level.
More on the Stringer Case The companies that manufactured the equipment that former Vikings player Korey Stringer was wearing when he died have asked the court to dismiss them as defendants in the wrongful-death suit. Riddell and All American Sports Corp. contend they are not parties to the league's collective bargaining agreement, which is the main issue in the case. Say the companies: "Claims against non-signatories can be preempted where their resolution will invoke interpretation of a CBA. The plaintiff's claims cannot be decided without running into provisions of the CBA."
You can read my earlier posts on the Stringer case here and here.
If you have a Westlaw account, you can read the motion here.
Tuesday, April 13, 2004
Has Tiger Found His Brooke Shields?: A lot has been made about Tiger Woods's recent struggles, especially in major tournaments. Tiger has just one win and two top-ten finishes this season and has not won a major since the 2002 US Open. Now, perhaps the media is just being ridiculous. I mean, Woods won five tournaments last year, which is a good year for any player on Tour. But is Woods just any player? In the past seven years, no one has dominated a sport like Tiger Woods has dominated golf. Some argue that no golfer has ever been as dominant as Woods was from 1999-2002.
Perhaps Tiger's recent "slump" (if you can call it that) is due to Woods returning to mortal status, or other players hitting their strides, or injuries, or bad karma. Yes, people may argue that, but I have a different theory. Call it the Brooke Shields theory.
In 1994, Andre Agassi returned from surgery to win the US Open, which was another in a long string of tournament wins. Soon after, though, he met actress Brooke Shields. While Agassi had a few successes on the court, including winning the 1996 Olympic gold medal in Atlanta, his career went into a nosedive. While his relationship with Shields continued to grow -- she was on the sidelines of his every match and the two were married -- he did not win any tournaments and fell out of the world rankings. Then, his relationship with Shields began to decline, culminating in a divorced in 1999. Boom. Agassi is re-born, moving back into the Top 10 and winning five tournaments. He won both the French and US Opens in 1999 and the Australian Open the following year. Since that time, he has one two other Grand Slams and became one of only four men to win all four Grand Slam singles titles in a career.
Some will read this and think I am off my rocker. Maybe. But there is a clear connection between the beginning of the Agassi-Shields courtship and Agassi's career going down and then an upswing as things get rocky, leading to a divorce.
Now, Tiger. Much ado was made last year of his new love, Elin Nordegren. Unlike his previous girlfriend, Nordegren follows Tiger on tour and can be seen cheering for him behind the ropes. In addition, Tiger has admitted that he now has other priorities in life, spending less time on the greens and at the driving range. Perhaps as a result, other players have caught up to him, lessening his dominance in the sport.
As anyone who has begun a new relationship knows, they take time and attention. During the "honeymoon" period, you often want to spend as much time with a person as you can and other activities seem to take on less importance. Perhaps this is what happened to Agassi, and perhaps that is what is happening to Tiger now. You cannot blame them -- after all, there is more to life than just sports. But you also have to wonder -- how long can an ultra-competitor like Tiger continue to barely make the cut at Augusta before he starts focusing more on golf?
Astros, Rockets Win Suit Against FSN: The Houston Rockets and Astros scored a major victory in their attempt to start their own regional sports network, as a Texas state court judge granted the teams' motion for summary judgment in their lawsuit with Fox Sports Net. Fox Sports had accused the teams of breach of contract and attempting to defraud the network by announcing their plans to begin their own Houston Regional Sports Network next year. The new RSN would carry Astros and Rockets games, taking away a large percentage of the Houston-area Fox Sports Net.
Update on Arrington: The Lavar Arrington case just keeps getting more and more bizarre. First, the Sports Business Daily reported that Arrington had signed the NFLPA group licensing pact, ending his status as the only holdout from group licensing rights. Then, Arrington filed a grievance against the Redskins, saying a roster bonus agreed to orally was not included in the final written contract.
Now, the Washington Post and Sports Business Daily (subscription required) are reporting that in that same contract, Arrington may have inadvertently agreed to join the NFLPA licensing group. Arrington's attorneys disagree, saying that section 4b in the standard player contract, which Arrington did not cross out but grants licensing rights to the NFLPA, is superseded by a separate agreement all players sign with the players association, which governs only licensing.
I have two general thoughts on this. One, Arrington should fire his attorney, or whoever drafted/reviewed his latest contract. A $6 million bonus was omitted? A key section on licensing was not crossed out? Arrington signed the contract anyway? This borders on malpractice. Two, why does the NFL have 2 separate agreements concerning licensing? I suppose that one is with the team and one with the NFLPA, but this seems to create a lot of unnecessary confusion. In the end, it may take a judge to decide which of the agreements actually binds the player to the NFLPA licensing pact.
Also, is there such a hot market for Lavar Arrington gear? He may be a good player, but he is no Barry Bonds.
Nuggets Coach Guaranteed Money Next Year: ESPN reports that the job of Nuggets coach Jeff Bzdelik is in jeopardy next year, despite the team's improbable run from worst in the conference to making the play-offs. However, this should not worry Bzdelik, because either way he will get paid. A clause in the coach's contract was triggered when the team made the play-offs, making his $1.5 million salary next year guaranteed. This just goes to show the power of optimism and incentives clauses when drafting a contract.
Newspapers Drop Earnhardt Photo Case: A group of Florida newspapers has dropped its lawsuit attempting to gain access to the Dale Earnhardt autopsy photos. The newspapers made a claim under the Freedom of Information Act, but were deterred by a recent Supreme Court ruling in a different case.
In National Archives and Records Administration v. Favish, the Court ruled 9-0 that the photos taken at the scene of former White House adviser Vincent Foster's suicide did not have to be released. The court held that exemption 7(c) to the FOIA, which protects the "personal privacy" of individuals could also be extended to family members. The court also held that 7(c) could only be trumped by a showing that the information is likely to advance a significant public interest, which much be more specific than just having the information for its own sake.
I agree with the Supreme Court's decision. There is no need for the press, or anyone, to see photographs of the deceased unless there is a significant interest at stake. Yes, a free press is vital to an open society, but lines must be drawn to protect the privacy rights and feelings of families. This case seems open-and-shut, and the Supreme Court agreed.
Masters and Television Commercials: Over on Per Curiam, there is a post discussing why the Masters is such an enjoyable viewing experience: namely, there are no commercials. Obviously, advertising dollars are a part of sports, but it sure is nice to watch a great round of golf without being interrupted by dancing monkeys and "low carb" beer commercials. A preview:
The difference from normal television is startling. Studies show that viewers are being inundated by more and more commercials and "clutter" during television programming. Twenty years ago, the FCC deregulated restrictions on commercialization, eliminating the 16 minutes per hour limit. As one of its reasons, the FCC stated that networks showed only 11 minutes of commercials per hour. In the past two decades, though, this number has risen to 16-20 minutes per hour, including 17 minutes per hour during prime time on the four main networks. Thus, nearly one-third of all television time consists of car ads, promotions for the latest sitcom and plugs for the "most important news story of the year - film at 11."
Monday, April 12, 2004
Judge Lifts Injunction Against Coach: Superior Court Judge Thomas E. Connolly lifted the injunction he had imposed against UMass coach Don Brown for "willfully and intentionally" breaching his contract with the school he had coached formerly, Northeastern. No reason was given for the lifting of the injunction.
Perils of Blogging on Stocks: From the Baseball Crank, an article on Mark Cuban and the dangers of blogging about financial interests. An interesting read.
Cubs Settle with Last Rooftop Owner: Avoiding costly, though potentially interesting, litigation, the Cubs have settled with the last rooftop owner, avoiding the need for any screens or vision impediments at today's opening home game. The terms are undisclosed.
For more on the legal issues, here is an interesting article, "Who Owns the Rooftop?" from the new Northwestern Journal of Technology and Intellectual Property.
Hat tip: Armchair GM and Baseball News Blog.
New Design: I have re-designed the site, and I think it looks better. Please let me know if you disagree- I want it to be as user-friendly and easy to read as possible.
Friday, April 09, 2004
Law Firm Sponsors NASCAR Teams: The law firm of Jenkins, Jenkins & Jenkins has found a new way to reach potential clients -- putting their name on race cars. The Maryland-based firm now has its name on cars in the Nextel Cup, Busch and Craftsman Truck series. So far, the firm claims the experiment has been a success and client inquiries are up.
I see two interesting themes here. One is the growing diversity of the NASCAR audience. Law firms, especially ones in Maryland, would have been wasting their money advertising with NASCAR as little as ten years ago. But the sport has become national and the fans have become more diverse -- encompassing all income brackets and professions.
Second, this also showcases the increasing business focus of law firms. In the past, only "ambulance chasers" advertised in the yellow pages or during daytime television; however, even major firms have realized the benefits of branding and advertising. Firms now have marketing departments and elaborate plans to increase their presence and client contacts. For better or for worse, law firms consider themselves businesses and are acting accordingly.
Thursday, April 08, 2004
Rooftop Owner Asks Judge to Stop Cubs: The owner of the one rooftop that has not signed an agreement with the Cubs has asked a federal judge to prevent the team from building a wall that would block the views from their building.
The rooftop owners claim that the Cubs are trying to delay the trial, allowing them to block the views in the interim. You can read my earlier post on the Cubs "blocking" plans, and on the case.
Hat Tip: Business of Baseball
Preparing for the Worst: In a move expected to be followed by other teams, the Carolina Hurricanes have let go fifteen percent of their staff in anticipation of the impending NHL labor problem. The Phoenix Coyotes are considering a similar move.
Sabernomics writes that labor shortages do not harm attendance, but I don't think the NHL wants to find out. Especially in much of the United States, fans will not wait long before turning to basketball or other sports to fill the hockey void. I have never feared for the fate of baseball or any other sport due to a labor stoppage, but hockey could be in real trouble. Teams could be forced to cease operations or fans could disappear and never come back. It will be both interesting and possibly sad to watch.
A Step in the Right Direction: For the first time in over a decade, the average baseball salary declined, dropping nearly three percent. But cry not for baseball players -- the average salary is still $2.49 million a year.
Bloom Case Argued: Saying the trial court judge put the NCAA "above the law," Jeremy Bloom's attorneys argued his case in front of a Colorado state appellate court. Bloom's attorneys pointed out that NCAA Bylaw 12.1.2, which stipulates a student-athlete can be a professional in one sport and an amateur in another.
Attorneys for the NCAA acknowledged Bloom's extraordinary talent, but said that all 360,000 student-athletes need to play by the same rules. If students promote commercial products, the NCAA argued, it blurs the line between amateur and professional.
ESPN has more. A decision is expected before the beginning of football season.
Winslow's Agent Choice Could Affect Draft Status: According to the Washington Post, the Washington Redskins are hedging on whether to draft Miami tight end Kellen Winslow based on his choice of agent. The team is concerned that Winslow's representatives, Carl and Kevin Poston, will affect the team's ability to sign Winslow. Teams have become more and more concerned with "signability" of their top draft picks, often passing on players if they do not believe they will be able to sign them.
Thanks to reader John Stoner for the tip.
Wednesday, April 07, 2004
Profile of a "Sports Lawyer": The Atlanta Business Journal has a profile of Mike Egan, an Atlanta attorney at King & Spalding that has structured the deals for the sale of the Falcons, Hawks and Thrashers as part of Atlanta Spirit LLC.
Bonds Signs Solo Licensing Deals: After pulling out from the MLBPA licensing scheme in January, Barry Bonds has signed twenty solo licensing deals. Bonds raised some ire by being the only player not to sign onto the MLBPA agreement, which gives the association the power to market each player's name or image, often for apparel, trading cards and video games. Because of his stardom, Bonds has the ability to negotiate individually, thus receiving better terms on his own than he would have gotten as part of the MLBPA. Legally, all players individually own the rights to their names and images, though baseball and the MLBPA own the rights to the team names and logos.
Some companies, however, have refused to negotiate individually with Bonds, stating that it sets a bad precedent:
Baseball card companies like Fleer/SkyBox International LP and Topps Co. won't have Bonds on cards. Major video game makers like Electronic Arts Inc., ESPN Videogames and Midway Games Inc. won't have a Bonds player in their offerings.
"It would set a bad precedent if we worked around" the baseball players union licensing agreement and struck an individual deal with Bonds, said an executive at one game maker. "It would give other players the idea to do" the same, which would make it more difficult for game makers to include pro players in the future, the official said, speaking on condition of anonymity.
Hat Tip: Sports Business Daily.
Ads on Major League Uniforms?: Calling it a "matter of time," Major League Baseball's executive vice president for business Tim Brosnan has admitted that baseball has looked into selling advertising space on player's uniforms. Brosnan has said the practice could bring in $500 million a year. "We're unashamed of the fact that we are a business," Brosnan said. "I don't think this is unreasonable."
Many fans, including Senator Charles Schumer, disagree:
"Imagine Willie Mays bearing an ad for Exxon on his back as he turned to make 'the catch.' Envision Jackie Robinson stealing home with a Budweiser logo on his cap," Schumer wrote. "Picture Lou Gehrig declaring himself the luckiest man on the face of the earth with a Coca-Cola banner across his chest. It's just wrong."
While the images Schumer invokes are powerful, the fact remains that professional sports are a business. Professional golfers wear hats and shirts adorned with logos and manage to look classy at the same time. The fear, of course, is that all athletes will look like NASCAR drivers, but there is little reason to believe baseball would allow uniforms to devolve to that point. Similar cries have been heard over stadium advertising, but signage behind home plate and on outfield walls has not taken away from the sport.
Would I rather see players salaries go down than see advertising everywhere? Yes. But this might not be realistic, and if this practice can drive down the cost of attending a baseball game, making it affordable for all family sizes and income brackets, I say bring it on. But baseball must keep in mind -- it can only ask the fan for so much before needing to give something back. Otherwise, the fan might just walk away forever, rendering meaningless those expensive walking billboards.
Updates in Jeremy Bloom Case: A Colorado state appellate court will hear arguments in the case of Colorado football player and professional skier Jeremy Bloom. Bloom is challenging the NCAA's rules, which prevent a collegiate player from accepting money from endorsements, even if the sponsorships are for a different sport than the athlete participates in as a collegiate. Professional skiers rely on endorsements to pay for their training, which is expensive and cannot be covered by stipends or competition winnings.
NCAA rules allow players to earn a salary as a professional athlete in a different sport, but not to accept endorsement money. The NCAA has stated that Bloom is allowed to keep prize money and any stipends from the U.S. ski team. The distinction seemingly creates an incredible inequity. Why should a player be allowed to accept money for playing a sport, but not any endorsements in that sport?
The reason given by the NCAA for the distinction makes sense: it does not want athletes receiving endorsements for a "different" sport that in reality are compensation for his or her performance in the college sport. For example, imagine a star college basketball player that also plays rookie league minor league baseball. The player could receive an endorsement from a soft-drink maker under the guise of his role as a professional baseball player. But, in reality, the company is capitalizing not on the player's status as an unknown baseball player, but on his stardom in the college sport. The potential for abuse in endorsements is much greater than for the salary or competition prize money received in a sport.
The Bloom camp has submitted an affidavit from former professional football player Tim Dwight, who claims the NCAA allowed him to receive endorsement money in football while running track as an amateur. Jim Smittkamp, one of Bloom's attorneys, said, "The NCAA specifically granted Tim Dwight an exemption and reinstated him as an amateur to run track and found that the monies he received were related to his football status. That is exactly what Jeremy has argued from the beginning." The NCAA, however, has distinguished the cases, stating that Dwight applied for reinstatement as an amateur, and that once reinstatement was granted, his endorsements ceased.
It does seem, however, that special exceptions could be made on a case-by-case basis. The chances of abuse in this case are exceedingly low. Bloom has two endorsements, both from manufacturers of ski-related equipment. The companies would be sponsoring Bloom, even if he did not play football for Colorado. In fact, while Bloom's story has generated some publicity, the companies probably prefer that Bloom not play, so that he does not run the risk of injury on the football field.
For the NCAA, there seems to be little practical reason to keep Bloom from playing football. Unlike many of his fellow athletes, he plays for the love of the sport and not for publicity that will lead to a professional contract. This is the very purpose of amateur sports, and the NCAA should not be blinded by black-and-white rules that draw permanent distinctions. Cases such as this are rare, and it would not be burdensome for the NCAA to consider each on a case-by-case basis.
You can read more on the Bloom case here, here, and in my article focusing on paying college athletes.
News Corp Moving to US: News Corp, the media empire run by Rupert Murdoch, will reincorporate in the United States. The company, which recently sold the Dodgers but has significant sports ties, is one of the largest media conglomerates in the world. Previously, News Corp has been based in Australia.
Monday, April 05, 2004
Lloyds of London Sues Marlins: An often-overlooked part of sports economics is the business of insuring large player contracts. All teams insure their large (and sometimes all) guaranteed player contracts in case of injury. A summary of this case: Marlins sign pitcher Alex Fernandez (who helped them win the 1997 World Series) to a lengthy contract on the basis of one good season. Fernandez gets injured and cannot play, but the Marlins must pay this guaranteed contract. Because of the injury, the team makes a claim with Lloyds, who funded the insurance policy on the Fernandez contract.
But, Lloyds claims the team also had the contract insured with Hartford Life Insurance, and made claims with both companies without disclosing the double coverage. Now, Lloyds is suing the Marlins for fraud. The case is set for arbitration this fall. You can read more here.
Hat tip: Business of Baseball Blog (recommend his post).
Opening Day: Never mind the two-game series in Japan and the made-for-TV game last night, today marks the beginning of the baseball regular season. Opening day has always been one of anticipation and excitement for baseball fans, as all teams have a shot at having a great season and making a play-off run. And as much as some (myself included) may lament the dominance of certain teams in baseball, I believe that at least twenty (and maybe more) teams have a legitimate shot at not only making the play-offs, but also winning the World Series.
Look at the past three seasons. In 2003, the Florida Marlins came from nowhere, capitalizing on great young pitching, a few key free agent signings, and a wise managerial change to defeat the giant Yankees. In 2002, it was the Anaheim Angels coming from nowhere to defeat the Giants and Barry Bonds in a thrilling Series. In 2001, the duo of Schilling and Johnson carried Arizona to a seventh game, final at-bat win. Are the Yankees always good? Yes, but they don't always win.
It seems like a long time until October (and it is-- like most professional sports, baseball's regular season goes on too long) but there is a great deal to look forward to in the mean time. Can the Cubs and red Sox live up to expectations? Will there be a "shortstop controversy" in the Bronx? What young players will step into the spotlight for the first time? Can the teams in Philadelphia, Arizona, Cleveland and Seattle bounce back and make the postseason?
Baseball needs to act quickly to dispose of the steroid scandal -- passing regulations on drug testing so that this story can be moved to the back burner and the country once again can focus on the greatness of the sport. Nothing beats going to the ballpark on a sunny afternoon or turning on a game when there is nothing better to do on a hot summer night. Let's hope this season focuses on the game and new teams continue to emerge as play-off contenders.
For all of your baseball needs, I recommend Only Baseball Matters, Baseball Musings, the Baseball Crank, Sabernomics, and the Business of Baseball Blog. Each of these sites also has links to team-specific sites and other great places for baseball news.
Court to Hold Hearing in Clarett Case: The Second Circuit Court of Appeals has agreed to an expedited hearing in the Maurice Clarett case and will hear arguments the week before the NFL draft. While the court did not grant a stay of Judge Scheindlin's decision, the NFL remains confident that the court will rule against Clarett, keeping him out of the 2004 NFL draft.
But what of the other players, most notably Mike Williams, the star USC receiver, who gave up their collegiate eligibility based on the original court's decision. More likely than not, if the NFL wins in the 2nd Circuit, the league will keep Clarett out but will allow Williams and the few other players to continue in the draft. This will save the league countless headaches and legal battles, while still punishing the player that caused all of this trouble. If the league takes a hard-line stance, though, or if it feels allowing even one younger player in will harm its position, then Williams and the others would have to sue for the right to be in the draft. Gary Klein reports, though, that Williams could be successful if he petitioned the NCAA for the right to be reinstated.
The NFL plans to appeal up to the Supreme Court if it loses again. It has said, however, that if players are drafted and then the league wins a subsequent decision, contracts will be honored and players will remain with their teams. If a stay is granted, but the original ruling is subsequently upheld, then the NFL will hold a supplemental draft for Williams and the other players.
Court Upholds PGA's Right to Real-Time Scores: A unanimous panel of the 11th Circuit has affirmed a granting of summary judgment in the Morris Communications v. PGA Tour case. The case dealt with the issue of whether the PGA Tour could prevent media outlets from selling compiled real-time golf scores to third parties violated antitrust law. The Tour has employees at each whole of its tournaments that collect real-time scores for placement on its website. Once the data is collected and posted, it is made available for dissemination by the news media. The Tour balked, however, at the attempt of Morris to sell the information to a third-party, who then wanted to create a rival website also containing real-time tournament scores.
The court made clear that this was an anti-trust case only, and did not deal with copyright law or the 1st Amendment. The scores are a product, which the PGA Tour has a right to control. The opinion states in part (internal citations removed):
The compiled real-time golf scores acquired through RTSS are not a product that Morris has a right to sell because they are a derivative product of RTSS, which PGA owns exclusively. We agree with the district court that PGA "has a right to sell or license its product, championship golf, and its derivative product, [compiled] golf scores, on the Internet in the same way the [PGA] currently sells its rights to television broadcasting stations."
If Morris wishes to sell PGA's product, it must first purchase it from PGA. Section 2 of the Sherman Act does not require PGA to give its product freely to its competitors. PGA is willing to sell its product to its competitors, including Morris, thereby allowing credentialed media organizations like Morris to syndicate compiled real-time golf scores after paying a licensing fee to PGA. Accordingly, we conclude from the record that PGA has satisfied its burden to show a valid business justification.
Jeff Mishkin, a renowned "sports lawyer" of Skadden Arps represented the PGA Tour. You can read more here.
NIT v. NCAA: Skip (aka the Sports Economist) links to a story about the NIT, which has filed an antitrust suit against the NCAA. The summary of the lawsuit (as written by the lead attorney for the NIT) is that the NCAA prevents teams from entering the NIT if it receives an invitation to the NCAA tournament, under pain of NCAA penalties.
Dave Gavitt, a former commissioner of the Big East, responded to the story in an article this weekend. His argument is less of a legal one, and more one of common sense and sports:
The model Mr. Kessler promotes of competing tournaments would lead to a chaotic championship selection process, rife with special deals, special payments and competing titles, as has been the case in other sports such as boxing. This, of course, is not what the N.C.A.A. membership requires or demands. In fact, the antitrust lawsuit is merely an attempt by a small minority to force through pressure what it was unable to persuade the majority of the membership to do more than 20 years ago.
Imagine, if you will, a group of sports promoters deciding to put on an invitational tournament at the end of the N.B.A. season and then suing the N.B.A. because the league would not let its best teams participate in the new event. Except for its historical presence, that is exactly what the postseason N.I.T. attempts to argue in its antitrust litigation against the N.C.A.A.
When the players on the 2004 N.C.A.A. championship men's team begin cutting down the nets tomorrow night in San Antonio, they want to know Â and basketball fans want to know Â that they are the best because they beat the best. A true national champion will have earned that high honor on the court.
That is not a monopoly. That is the difference between an invitational tournament geared to promote basketball in Madison Square Garden and a true national championship.
I agree with the realistic arguments made in the Gavitt piece. Can you imagine the shady dealings that would emerge if teams could jockey for spots in the NIT versus coming to the NCAA? It would only take a few high-profile teams jumping ship (perhaps because of some hefty pay-out guarantees) for the NIT to regain its previous prominence. While this may not seem likely, there are a number of high-profile coaches that could protest a poor seeding, a perceived unfair bracket or a number of other NCAA actions by moving over to the NIT. In addition, the NIT could make under-the-table financial payments to schools or athletic departments. Once again, the players would be the ones hurt, as they most likely would have no choice in the matter and could possibly lose out on their chance to play in the NCAA Tournament.
Legally, though, there may be an anti-trust problem. The NCAA sanctions the NIT, and allows its teams and players to participate, so long as it does not interfere with their own tournament. By seeming to selectively grant permission, there seems to be a legal issue. I do not know a great deal about anti-trust, but perhaps the NCAA could avoid this problem by not sanctioning the NIT. The NCAA should not be forced to sanction events; all of its members are in the association voluntarily and if they do not approve, they could pull out. Many schools threatened to do this in football before the NCAA sanctioned the Bowl Championship Series (a group of games the association does not run). I would love to learn more about this, so please email me or post comments if you have insights.
In the end, there is probably little threat, because almost every team (and definitely all from the 10's down) thinks that they have at least an outside shot at advancing, giving its team invaluable exposure and a chance to play for a championship. This would not be present in the NIT. So, even if the NCAA loses this lawsuit, or settles and changes its rule, the sport should not change greatly. At least I hope not.
Correction: In the original post, I misread the Sports Economist's take on the issue. His quote: "A simple requirement that a school commit to the NCAA tournament if an invitation were accepted would have been sufficient, and lawful." Thus, the key is that once a team accepts a bid to the NCAA tournament, they should not be able to pull out (which makes perfect sense). I have updated the above post accordingly.
Accountability for Problems in College Sports: Michael Granof, a professor of Accounting at the University of Texas suggests that the theories behind Sarbanes-Oxley should be used to hold university presidents responsible for the athletic scandals occurring in their schools.
The key to the law is accountability. Directors and senior executives must be answerable for what goes on in their organizations. The usual defense of being oblivious is no longer acceptable: senior executives must not only certify to the accuracy of their firm's financial statements, but they must also show that a system is in place to track and control costs.
Big-time athletic programs are often the most visible and high-risk activities of a university. Whether the president of a scandal-ridden college actually knows about any charges of rule violations is beside the point. He should know. Basketball and football programs, after all, are more likely to embarrass a university than its art history department.
I am not sure if this is the answer, but Granof is absolutely correct: there must be greater accountability for scandals that rock college sports. Too many times, athletic directors and coaches are given a free pass, so long as they continue to win. Sarbanes-type regulations may be an over-reaction, but they may be exactly what is needed to ensure the integrity of college athletics.