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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.
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.
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.
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?
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.
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): |