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Wednesday, May 24, 2006
 
What's in a Number? Apparently Tax and Contract Issues

Twelve days ago, I discussed Reggie Bush's challenge to a long-standing NFL rule requiring running backs to wear a number in the 20-49 range. Yesterday, the NFL's competition committee -- not surprisingly -- rejected his request that he be permitted to wear No. 5. A release by The Associated Press (reprinted in USA Today) noted that, since 1973, the only major change to the NFL rule was made last year, when receivers were given permission to wear numbers in the teens because teams were running out of numbers in the 80s due in large part to an increase in receivers and tight ends on rosters.

Interestingly, as noted in the press release, a player will often change a number to accommodate another player, often selling the rights. For example, New York Giants punter Jeff Feagles traded No. 10 to Eli Manning in 2004 in exchange for a family vacation, and then also traded No. 17 to Plaxico Burress last year in exchange for an outdoor kitchen addition on Feagles' home. Clinton Portis bought No. 26 for $40,000 from safety Ifeanyi Ohalete when he joined the Redskins. Portis paid $20,000 up front but declined to pay the rest after Ohalete was cut by the Redskins and picked up by Arizona. Ohalete then sued Portis for the balance and they ended up settling the matter for $18,000.

This is what I love about sports law -- something that seems so innocent, like one player simply permitting another to wear a jersey number, amounts to some complex legal issues. For example, what are the tax consequences on the exchange? In order to determine the taxable gain on the sale, the seller's basis needs to be determined. What's the selling player's basis in his number? Is it a cost basis? - which, presumably would be zero in which case the entire benefit received would be taxable. Or could the selling player argue that this transaction is nothing more than a non-taxable gift from the purchasing player (i.e. the payment was made out of "detached and disinterested generosity")?

Also, there are some interesting contract and property issues involved here. Why does a player even have the legal right to sell a jersey number to another player in the first place? Does the club own the rights to the numbers, and have the continuing exclusive authority to grant and condition the use of the numbers by the players? Is this a sub-license arrangement in which maybe the selling player (the licensee) needs to first get permission from the club (the licensor)? Assuming a player even has a property right in his number that he can sell, why would Ohalete have any further rights to his number with the Redskins after he was cut by them?





6 Comments:

Perhaps colleges and high school's don't have this rule because state institutions telling an athlete what number to wear might result in free speech challenges.

Anonymous Taco John -- 5/24/2006 8:45 AM  


Actually, there IS such a rule; but it is not as restrictive. The last I remember, the only restrictions are that offensive linemen must wear numbers between 50 and 79--this is to help referees determine who are ineligible receivers.

Second, the NFL rule was even more limiting when it came out in the early 1970's:

1-19: Quarterbacks and specialists (kickers and punters).
20-49: Running backs and defensive backs.
50-59: Centers and linebackers.
60-69: Offensive guards.***
70-79: Offensive tackles.***
80-89: Tight ends and wide receivers.
90-99: Only used during pre-season.
*** I think interior defensive linemen were 60-69 and defensive ends/tackles were 70-79.
AND, any player who wore an out-of-position number in the year prior to this rule change could keep the number (i.e. DE Jack Youngblood of the Rams wore #85; WR Charlie Joiner of the Chargers wore #18, as examples).
Melvin H.

Anonymous Anonymous -- 5/24/2006 10:11 AM  


I'd view the use of the numbers by the players as a transferable license from the team. Presumably the team has no interest in restricting transferability by "team consent" or otherwise, unless the team has invested substantial money in marketing a player and then he wants to switch numbers after the team has built equity through its marketing efforts.

My first thought when I saw the post was "Is this governed by Article 2 of the UCC?" In some ways it seems ridiculous to think it would be, and if it is a license, it isn't within Article 2.

However, arguably the player is really selling the uniform itself with the number on it. I don't think the player is selling any other use of the number, since the team retains all the marketing rights associated with the number. So maybe the player is really selling all his jerseys with that number on it?

Would it matter if it is governed by the UCC? Maybe not, although there is the pesky Statute of Frauds requirements for contracts of more than $500. In the Ohalete/Portis case, that would be a non-issue, since they essentially admitted there is a contract.

But what if Portis never paid a dime and then never acknowledged that he made the deal (assuming there is no writing)? Statute of Frauds defense?

Will we one day see a 2-207 battle of the forms over jersey numbers, where Portis submits his "standard" number purchase form and Ohalete sends his standard number sale form, each of which is signed but has differing terms or inconsistent terms? Are they merchants?

I don't really think Article 2 applies, but I'm starting to wish it did. :)

Blogger ChapelHeel -- 5/24/2006 2:09 PM  


To add to the outstanding comments above, I have a question: Are we sure that a player or his team or even his league actually "owns" his number, or his number part of the public domain?

I ask that because I remember playing the first John Madden Football videogame back in 1992, and the game was not licensed by either the NFL or NFLPA. The game did not contain team names/team images/player names/actual stadiums, but did contain player numbers--so, for instance, you had #80 receiving for San Francisco (but not Jerry Rice receiving for the San Francisco 49ers).

So are player numbers then simply part of the public domain?

Blogger Michael McCann -- 5/24/2006 3:17 PM  


Taco John, I'm not a constitutional expert by any means, but my gut tells me that there would be no first amendment violation if colleges and high schools implemented such a rule.

Chapel Heel, good stuff.

Michael, I would view the use of jersey numbers in a video game as involving a different situation (a misappropriation issue depending upon the circumstances). While a number in and of itself is part of the public domain, I would say that teams have the exclusive right to issue jersey numbers to players, and that the player (unless agreed otherwise with the club) obtains the exclusive right to use that number for only so long as the team permits him to use it. Thus, when Player 1 assigns his number to Player 2, Player 1 is assigning to Player 2 the right granted to him from his team to use that number for as long as Player 1 has the right to use that number. The team effectively consents to the assignment when it re-issues the number to Player 2.

Blogger Rick Karcher -- 5/24/2006 5:35 PM  


Michael--There are two circumstances where pro leagues have retired a number throughout the league (but allowing any current players wearing the number to wear it until they are done with their career):

MLB -- #42 for Jackie Robinson (the only players are Mariano Rivera and Mo Vaughn; there is a coach who has #42 as well I think).

NHL -- #99 for Wayne Gretzky (no player wears #99 now).

There have been circumstances where a team will ASK a player whose number was retired if he would O.K. another player wearing that number, but not too often.

In college and high school football, a number "retired" is retired only for five years, due to the large rosters; otherwise we'd be up to jerseys in three digits at the larger schools. The same applies to college/H.S. basketball, but there, the available numbers are severly limited by rule (0 or 00 [not both], 1-5, 10-15, 20-25, 30-35, 40-45, and 50-55 are the allowed numbers; this has been since the 1950's, I think.)

Melvin H.

Anonymous Anonymous -- 5/26/2006 2:52 PM  


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