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Sports Law Scoreboard

An Inside Look Into The Legal and Business Side of Sports

Federal Judge Enjoins New Jersey from Permitting Sports Betting – Will Other Leagues Adopt the Position Taken by NBA Commissioner Adam Silver?

Posted in Sports Business and the Law

On Friday, Judge Michael Shipp granted the NCAA and four major professional sports leagues a permanent injunction to prevent New Jersey casinos and racetracks from offering sports betting.  The decision was unsurprising, but still extremely disappointing, to New Jersey state officials who have been attempting to establish legalized, regulated sports betting in the state for over three years.

New Jersey should, and it appears will, exercise any and all legal options it has in fighting to establish sports betting in the state.  State Senator Raymond Lesniak, the leader of New Jersey’s campaign to legalize sports betting, told ESPN on Friday that New Jersey would appeal Friday’s decision to the Third Circuit Court of Appeals this week.

Regardless of the outcome of the appeal, hopefully other leagues will follow the lead of National Basketball Association Commissioner Adam Silver.  Eight days before Judge Shipp’s ruling, Silver, whose league ironically is a party fighting against sports betting in New Jersey, wrote a heavily-discussed op-ed in the New York Times calling for Congress to “adopt a federal framework that allows states to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.”

Silver acknowledged that sports betting in the United States currently operates mainly through “illicit bookmaking operations and shady offshore websites.”  Why not legalize and regulate the industry so governments and legitimate businesses can be the beneficiaries instead of underground bookmakers and offshore websites?

If the NCAA and other professional sports leagues adopt Silver’s position, Congress would be more inclined to pass legislation revoking the outdated Professional and Amateur Sports Protection Act.  The benefits of an industry that will continue to thrive whether or not it is operating legally should shift from underground bookmakers and offshore businesses to governments and legitimate businesses.

Oral Argument Set to Address Sports Leagues’ Application for Preliminary Injunction in New Jersey Sports Betting Case

Posted in Sports Business and the Law

Tuesday, federal judge Michael Shipp set Oral Argument for November 20, 2014 to address an application for a Preliminary Injunction by the NFL, NBA, NHL, MLB, and NCAA in the latest litigation over the potential legalization of sports betting in New Jersey. In the underlying lawsuit, the Court will eventually determine whether New Jersey can legally repeal its ban on sports betting and permit private entities to conduct the activity.

New Jersey has been attempting to legalize sports betting for nearly three years. The Third Circuit Court of Appeals, the highest court to address the issue to date, has determined that New Jersey legalizing sports betting would directly violate the Professional and Amateur Sports Protection Act of 1992, but it stated that the federal law only prohibits state-regulated sports betting. Governor Chris Christie accordingly repealed New Jersey’s ban on sports betting two weeks ago to permit private entities to engage in sports betting without state regulation. The sports leagues then quickly applied for a temporary injunction, which Judge Shipp granted last Friday.

The leagues assert that sports betting in New Jersey would harm the integrity of their games. They could not in good faith deny, however, that the league enjoys significantly increased interest, television ratings, and therefore profit due to individuals gambling on sports, whether through fantasy sports, online betting sites based outside of the United States, or illegal bookmakers within the country. The league also fails to acknowledge that sports betting in New Jersey would provide much-needed revenue to the struggling economy in places such as Atlantic City, where casino revenue has sharply decreased in recent years and thousands of employees – many of whom are fans of the very leagues challenging New Jersey’s actions – have been laid off.

If Judge Shipp denies the request for an injunction, which he should, he will effectively force the leagues to see how harmless sports betting in New Jersey would be to their games. Sports gamblers today have no difficulty wagering on sporting events, so why not permit legitimate businesses in New Jersey to profit from the activity?

With the NFL playoffs beginning in January and the NCAA Basketball Tournament occurring in March, a denial of the leagues’ request for a Preliminary Injunction would force a “test period” of sports betting pending the underlying suit during a period that includes two of the most heavily-wagered events in the country. During this period, the leagues would likely learn that the integrity of their games would not suffer, while New Jersey racetracks and casinos would likely generate much-needed income. This would help the individuals these businesses employ maintain their jobs and have more money to spend on leisure activities, which often include paying these very leagues to attend sporting events and purchase memorabilia. It truly would be a win-win for both sides.

Razorback Alex Collins: Chaotic Signing Day Leads to Productive College Career

Posted in Education, Family Law

Since I wrote this post in February 2013, Alex Collins has weathered his mother’s attempt to keep him from enrolling at the University of Arkansas and become one of the best, if not perhaps the most underrated, running back in the country. Through eight games this year for a surprisingly competitive (they lost to Alabama 14-13 and beat Texas A&M 35-28) Razorbacks team, Alex has rushed for 747 yards on 118 carries (6.3 yards per carry) for scored 9 touchdowns. In his freshman year, he justified his choice by carrying the ball 190 times for over a thousand yards. He is clearly a talented running back, even if he’s splitting carries with a talented upperclassman (Jonathan Williams, 830 yards).

After the news of Alex’s mother running off with his letter of intent and reports of family pressure to play close at home at the University of Miami broke, I think many felt like there were uglier issues at play: promises from boosters; favors; money. In the end, Alex followed the coach, Bret Bielema, and switched his commitment from Wisconsin to Arkansas. His mother wasn’t in that decision-making process and acted irrationally. Considering Arkansas’s struggles at that point, she might not have been unjustified in her concern.

While no similar issues about parental interference have emerged lately, it is an issue we can expect to see again in the future. For now, the next question may be whether Alex turns pro after next year. We’ll see what his mother thinks about that…


For more back story and a bit more information on letters of intent, please see below my interview on the topic with LXBN TV.

When Athletes Break The Law, Should They Be Stripped Of Their Titles?

Posted in Sports Business and the Law

suzyfavor

Suzy Favor was three-time female track athlete of the year in the Big Ten.

After her career was over, she was a call girl at a billable hour rate that exceeds most attorneys.  I find this a sad, bizarre story and not one that should make her the butt of jokes.  What seems to be missing here is any form of justice or due process.  Leaving aside whether athletes should be role models, she earned her medals and awards and did so before she did anything outside the law.  As did 30-game winner Denny McClain.  He did not have his Cy Young or Most Valuable Player trophy taken away despite his underworld activities.  Ron LeFlore was allowed to play baseball after he served a sentence in prison.  Reggie Bush lost the Heisman because of what he did while he was playing.  As we’ve seen writ large this year, it can be a fool’s errand to look for consistency when it comes to crime and punishment in sports.

You can argue that athletes should be role models; but should we take away the accolades they’ve earned for unrelated reasons?

Five Takeaways From The State of Sports and Bullying

Posted in Sports Business and the Law

bully

I recently attended the Sports Law and Ethics confab at Santa Clara University, which was brimming with current content.

Here are some of the gems regarding bullying that were covered:

(1) Don’t call it bullying. That smacks of English childhood mischief. Much more accurate to think of it as workplace harassment. Even if the conduct is not against a protected class (sex, race), it puts the situation in more accurate context. While the speakers questioned whether it is illegal, I would argue that it amounts to intentional infringement of emotional distress. (2) Jonathan Martin had multiple harassers.  While the press reported that he is of mixed race, this was a reporting mistake that was oft repeated. He is African American. Two of the attackers were themselves African American. (3) Why Martin did not “report” the offense? The attacker was the person that the team had designated as the person to whom offenses were to be reported. (4) Who does such things? Most people who harass were themselves  bullied as children. (5) How powerful are the attackers? Research shows that a show of support from others will make the combatant “stand down” in most instances.

A ”boys will be boys” attitude is not acceptable.  This is real issue, and deserves a real response.

Diversity, Criminal Penalties, and the NFL

Posted in Sports Business and the Law

Goodell

Interesting discussion this past Friday on ESPN’s The Herd.  Host Colin Cowherd pointed out that the league had to grow in diversity before it was able to come up with stiff penalties for violent incidents.  Increased diversity among an organization’s leadership can directly contribute to better thinking, better policies and better overall results.  Here’s hoping it becomes part of the conversation.

 

Kluwe Kicks Dispute In Exchange For Charitable Donations

Posted in Sports Business and the Law

Ex-Vikings Punter Supports Same-Sex Marriage

Last week, former NFL punter Chris Kluwe and the Minnesota Vikings reached a settlement of Kluwe’s dispute with the team over what he characterized as the organization’s homophobic environment and release from the team due to his activism on behalf of marriage equality.

Kluwe’s revelation of serious homophobic behavior and an institutional attempt to freeze him out of the team and, ultimately, his release created a firestorm of media coverage and an investigation into the behavior by special-teams coordinator Mike Priefer.  Kluwe went public in his allegation on January 2nd and made specific allegations about the comments and behaviors of several Minnesota Vikings coaches and front office personnel. The settlement, which includes an initial $100,000.00 contribution to charities supporting the lesbian, gay, bisexual, and transgender communities, puts aside Kluwe’s demand for the full disclosure of an independent investigation into his release and the impact his political activities had on his job. The settlement also appears to include Kluwe’s waiver of any other liability he may seek against the Vikings in the form of a threatened wrongful termination suit.

After Kluwe’s allegations to Deadspin, the Vikings launched an independent investigation to determine the veracity of his comments and ultimately released a small portion (29 pages) of the report in July. The truncated report appeared to give some credence to Kluwe’s allegations, but also demonstrated that Kluwe’s May 2013 release from the team was motivated by performance, rather than his political beliefs and efforts. Kluwe made a public demand for the full-release of the report, citing a promise made to him by the Vikings, however, after reviewing the full-report with counsel, Kluwe and the Vikings restarted settlement negotiations.

Though the terms are reported to be confidential, Kluwe commented that his main concern was to see whether there was a “systematic problem in the Vikings organization” and having reviewed the report, he accepts that wasn’t the case. In addition to the financial and charitable aspect of the settlement, the Vikings also plan to enhance sensitivity training in the organization. Kluwe confirmed he will not receive any money from the Vikings. Separately, the Vikings had previously announced a three-game suspension of coach Mike Priefer and a week of sensitivity training, though that suspension can be shorted to two-games if the team finds it appropriate.

This settlement eliminates what would have been an intriguing legal issue for professional sports: termination (release) due to political activities. Kluwe had made comments about suing the Vikings for religious discrimination, sexual orientation discrimination, defamation, and tortious interference of contract.  Tortious interference of contract, a legal concept by which a third party intentionally induces a contracting party to break the contract, would have been particularly interesting in the context of professional sports where any number of reasons could result in a player’s release.

Kluwe’s threat of a lawsuit on those grounds created very little leverage, if any. Even if the report did not reveal performance issues or an allegation of Kluwe’s own embarrassing behavior, settlement was likely a foregone conclusion in this case.

The reality is that the likelihood of success of any lawsuit Kluwe would have filed would have been low. NFL teams and the NFL Players Association have a collective bargaining agreement and procedure for bringing grievances, including those over the release of a player. Kluwe never filed a grievance with his union over his release and it is unlikely that the union could stop a team from releasing a player due to political activities, speech, or religious beliefs (or lack thereof).

In the final analysis, Kluwe’s allegations and settlement reached by the Vikings will prove to have an overall positive effect. Charities benefit from the contributions made by the Vikings and the punishment of a coach which will hopefully deter players and coaches from engaging in such behavior in the future (though Michael Sam making the Rams roster will probably go further than any mandatory sensitivity training).

 

Trademark Battles Are For The Birds

Posted in Sports Business and the Law, Sports History

On August 11, 2014, the ownership group for the Toronto Blue Jays, Rogers Blue Jays Partnership, filed a Notice of Opposition with the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, opposing the registration of Creighton University’s redesigned Bluejay logo.

On September 18, 2013, Creighton filed a trademark application with the USPTO for the new logo, described as a “stylized capital C with the head of a bird placed over top of the letter C,” to appear on shirts, pants, jackets, footwear, hats and caps, and athletic uniforms. As depicted in the logo evolution below prepared by Creighton fan site, White and Blue Review, the new logo is quite a departure from 1972 iteration, which resembles a surly, hand-drawn Peanuts character:

 Jays

Toronto apparently believes that the new Creighton logo hits too close to home, with its “thick, clean lines and outline with no gradient or shading,” which “results in a bold, two-dimensional mark” that is substantially similar in design to the Toronto Blue Jays recently-refreshed logo:

Twin Jays

This isn’t the first time Toronto has sought to protect its trademark against a college/university.  In 2001 and 2002, Toronto opposed (or threatened to oppose) an attempt by my alma mater, Elizabethtown College, to register its flying jay and fighting jay marks, depicted below in all their black and white, pixelated glory:

Etown

(Elizabethtown has since adopted a much cooler and far-more aggressive representation of the otherwise harmless acorn-eating Corvidae.)

In fact, Toronto has filed or threatened approximately a dozen trademark oppositions since 2000, including a joint effort with the Tampa Bay Rays baseball club in 2010 to prevent a Virginia-based entertainment vendor known as “Ray Jay’s” from using this iconic mark for the following highly-specialized and succinctly-stated business purpose:

Amusement arcades; Arranging and conducting nightclub entertainment events; Arranging and conducting special events for social entertainment purposes; Arranging, organizing, conducting, and hosting social entertainment events; Booking of entertainment halls; Bowling alleys; Children’s entertainment and amusement centers, namely, interactive play areas; Entertainment in the nature of a bicycle park; Entertainment in the nature of baseball games; Entertainment in the nature of basketball games; Entertainment in the nature of hockey games; Entertainment in the nature of laser shows; Entertainment in the nature of light shows; Entertainment in the nature of roller skating competitions; Entertainment services in the nature of providing outdoor facilities for playing paintball; Entertainment services, namely, a video arcade housed in a mobile trailer; Entertainment services, namely, conducting contests; Entertainment services, namely, conducting parties; Ice skating instruction; Leasing of figure skating equipment; Movie theaters; Organisation and provision of sports installations for figure and speed skating championships; Organising and holding figure and speed skating championships and competitions; Organizing and conducting a bowling event the proceeds of which are donated to charity; Providing bowling alleys; Providing children’s party centers for the purpose of entertaining children and celebrating birthdays; Providing facilities for movies, shows, plays, music or educational training; Providing facilities for playing paintball games; Providing skating rinks; Rental of roller skates; Rental of skates; Roller skating instruction; Roller skating rinks; Video arcade services

Ray Jay’s abandoned the ship approximately two years after filing its application.

Travolta Pulp: Can Contract Trump Freedom of Speech?

Posted in Sports Business and the Law

778262-travolta-plane

We previously took a brief look at this question.  Travolta’s attorney is trying to stop publication of a purported tell-all book based largely on a contractual provision.  No dice, says the Court of Appeals.

Is anyone really surprised?  Public figures have a hard time keeping any private life.  I have had better luck arguing for the privacy interest of relatives or even in one case, the rights of an unborn child.  While the sisters Kardashian have no claim absent malice, arguably their distant cousins are just simple folk like you and me.

This is a rote occurance:  Earlier this week, the NY Times ran an expose article on Neon Deon’s school in Texas that is arguably simply a football and  basketball factory.  While truth is a defense, the Times may have had a harder time if it had taken oonon some lanky kid athlete.

Wang Sued For Allegedly Backing Out Of Deal To Sell Islanders

Posted in Sports Business and the Law, Sports History

Yashin

The NHL’s illustrious New York Islanders:  winners of four consecutive Stanley Cups in the early 1980s.   Coached by the immortal Al Arbour and propelled by five future Hockey Hall of Famers, the Isles and their fans in Nassau and Suffolk Counties enjoyed one of the greatest runs in hockey history.  The names still resonate:  Bossy, Gillies, Potvin, Smith, and Trottier.

In 2000, businessman Charles Wang purchased a stake in the team.  Wang co-founded Computer Associates International, Inc. (now known as CA Technologies), and was integral in dictating the company’s direction until his sudden departure in 2002 under intense scrutiny.  In 2004, Wang obtained majority interest of the Islanders in a buy-out of his partner and convicted fraudster, Sanjay Kumar.

Since 2000, the Islanders have seen a dismal run of 431 wins in 1032 regular season games, five playoff appearances, and eight playoff wins.  The Islanders have watched numerous superstars come and go in deals that turned out to be complete laughers.  See, e.g., Bryan McCabe, Todd Bertuzzi, and a third round selection (Jarko Ruutu) for Trevor Linden; Zdeno Chara, Bill Muckalt, and a first round selection (Jason Spezza) for Alexei Yashin; Olli Jokinen and Roberto Luongo for Mark Parrish and Oleg Kvasha.  From a fan relationship standpoint, Wang’s ownership of the team has been troubled to say the least.  (To be fair, the 1990s were not exactly kind to the Islanders.)

Enter Andrew Barroway, a successful Philadelphia securities lawyer and co-founder of Merion Investment Management, LP.  Mr. Barroway has been linked to a purchase of the Islanders for months.  On August 11, 2014, Barroway’s entity, NY ICE, LLC, sued Wang and his various holding entities in the Supreme Court of New York, New York County (Manhattan), alleging that Wang reneged on a partially-consummated contract to sell the team to NY Ice for $420 million.

The lawsuit alleges that, after nine months of negotiations, Barroway and Wang memorialized their agreement in a 70-page Securities Purchase Agreement (the “SPA”).  The deal purportedly included a $100 million up-front payment, an $83 million promissory note, and assumption of $125 million in debt owed to Bank of America.  Wang’s ownership entities would, in turn, receive a 25% ownership interest in NY ICE.

Wang purportedly committed verbally and in writing to the deal, and the parties began the process of fulfilling the conditions of closing, including (a) seeking approval of the deal from the NHL, and (b) securing a $125 million credit facility to satisfy the Bank of America debt.

In June 2014, the parties met in New York City, at which time Wang allegedly pulled Barroway into a side room and expressed that he could command a much higher price for the team following Steve Ballmer’s $2 billion bid for the Los Angeles Clippers.  The parties met again in July, at which time Wang allegedly “blindsided” Barroway with a new $548 million demand.  Two days later, Wang announced his intention to sell the team to another investment group.

The seven-count Complaint sets forth claims for breach of contract (numerous grounds), promissory estoppel, and a permanent injunction.  The Complaint is aimed at compelling the sale of the franchise to NY Ice.  The lead count seeks specific performance in the form an order compelling a sale on the terms set forth in the SPA.  Further, the claim for injunction seeks to bar a sale to any other party.  In the alternative, NY Ice seeks liquidated damages under the SPA in the amount of $10 million, which it dubs a “break-up fee.”

Lost in the coverage of this dispute is the fact that Forbes recently valued the Islanders at $195 million.  Wang, who was purportedly to receive $183 million in cash for the team under the SPA, thinks the enterprise value of the New York Islanders is just shy of the NHL record $575 million paid by Molson for the iconic Montreal Canadiens in a 2009 leveraged buyout.  Putting all of this into perspective, Red Sox minority shareholder Jeffrey Vinik purchased the Tampa Bay Lightning in 2010 for $93 million – less than the up-front cash Barroway agreed to pay under the SPA.