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Sports Law Scoreboard

An Inside Look Into The Legal and Business Side of Sports

Mayweather-Pacquiao Fight: Why a Promise Is a Promise

Posted in Sports Business and the Law

The fight is on, but the fight over the contract continues. Mr. P announced that Mr. M would not agree to a $5 million penalty if either of them had a dirty drug test after the fight. You flat out cannot do that in a negotiation. Once terms are agreed to, adding terms is a non-starter absent extraordinary circumstances. What might that be? If you add value from your side, MAYBE the other side will agree to modify a contract. So here, for example, would it have been worth some extra money to have obtained the drug test promise? Or the promise of an added return fight? Perhaps joint appearances in Vegas?

The lesson is that if you want something, ask for it, but the ask had better be before the contract is inked.  By the same token, if you hold back on the “ask” until the end of a negotiation, be prepared to walk away from the deal.

 

New Jersey and Sports Leagues Set to Resume Sports Betting Battle in Federal Appellate Court Today

Posted in Sports Business and the Law

Today is a crucial day for New Jersey in its mission to legalize sports betting, as it will argue its position on the issue against attorneys for the four major American professional sports leagues and the NCAA this morning in the Third Circuit Court of Appeals in Philadelphia, Pennsylvania.

Attorney Theodore B. Olson, who represents New Jersey in this action, plans to argue that U.S. District Court Judge Michael Shipp erred in ruling that that New Jersey’s partial repeal of its prohibition against sports wagering violates the federal Professional and Amateur Sports Protection Act of 1992 (“PAPSA”).  New Jersey will likely also assert that the professional sports leagues have “unclean hands” due to their partnerships with fantasy sports websites.

While it is true that some sports leagues have recently embraced pay-fantasy sports websites, the leagues remain steadfast in their quest to thwart New Jersey’s legalization efforts.  They believe that PAPSA clearly prohibits the 46 states not exempted from the act’s application from legalizing sports betting in any fashion.

The Third Circuit has previously ruled in favor of the sports leagues, but the Court’s prior Opinion potentially provided the state with a loophole – it acknowledged that even under PAPSA, states have “much room . . . to make their own policy” and can establish their own parameters of sports betting prohibitions.  New Jersey will assuredly use that language in support of its argument today.

Led by Governor Chris Christie, New Jersey has been undeterred by many unfavorable court decisions in the two-plus years since the sports leagues initially sued to prevent the state from commencing sports betting.  While nearly all casinos and racetracks in New Jersey have seen revenues decrease each of the last few years, the state and its casino/racetrack owners believe that sports betting could reverse their fortunes and bring in millions of dollars yearly.

Whether the Third Circuit will continue to affirm the sports leagues’ position that PAPSA prevents New Jersey from having authority to legalize sports betting remains to be seen. What is certain is that today’s oral argument and the resulting decision is extremely crucial in determining the future of potential sports betting in New Jersey, in addition to many other states that may wish to follow its lead.

Why Juries Like or Dislike Clients

Posted in Sports Business and the Law

Christian Laettner at Yahoo event

Christian Laettner (photo by Steven Buyansky (Flickr: YahooMadness-53) [CC BY 2.0, via Wikimedia Commons)

“30 for 30” on ESPN is always worth a watch. On Sunday, they aired a show on why people hate Christian Laettner.  For those who never saw him, he was a 6-foot 10-inch center who in the ‘90s was the dominant player for the dominant team, Duke University. He was a tough kid with Abercrombie good looks. While he looked like a choir boy, he played like a street kid. The show points out his contradictions. First and foremost, Duke is and was an elite school and the assumption was that he was a rich hid. His dad is a printer and his mom an elementary school teacher. He grew up in Buffalo, not Beverly Hills. He went to a prep school but did janitorial work to defray the cost of tuition.

We face these issues as lawyers. The megastar who is actually shy. The Gatsby, a self-made man who comes across as royalty. Teaching a jury who your client is represents the art of trying a case. If you cannot peal back the layers and present the real person, perhaps you should be writing wills.

Dean Smith, Tark the Shark and the Power of Mentorship

Posted in Education, Sports Business and the Law, Sports History

I never knew Dean Smith, but his former players worship him. Jerry Tarkanian was a client. He may not have taken Phi Beta Kappas in but he dearly, truly cared about his “boys,” including having tutors for them.

I owe a huge debt to my Dean/Shark, whose name was Norm Peek. Peek was the supervising deputy at the California Attorney General’s Office and one of the finest trial lawyers I have ever met. He taught me how to do everything from trying a case to ethically fighting one. He always would say, “give people an out as you are going to need one yourself one day.”  Notoriously anti-social, he honored me by coming to my wedding. What little contribution I have made to the profession I owe to his care and feeding. All young attorneys should be as lucky. Firms grow and prosper (or not) to the degree that senior lawyers invest in their young charges. A good lesson for us all.

Major League Baseball and its Clubs Defend Wage-and-Hour Class Action Brought by Former Minor Leaguers

Posted in Sports Business and the Law
Source: Pixabay

Source: Pixabay

On October 24, 2014, Aaron Senne and several former minor league baseball players filed a consolidated amended class action complaint against the Office of the Commissioner of Major League Baseball, former Commissioner Bud Selig himself, and the 30 major league clubs.  The amended complaint alleges in its introductory paragraphs that the defendants “openly collude on the working conditions for the development of [their] chief commodity: young baseball players.”

Despite this introduction, and unlike prior and pending cases brought by professional baseball players, the 100-page amended complaint in Senne does not make claims for antitrust violations.  The complaint instead consists of claims under the federal Fair Labor Standards Act, state wage-and-hour laws, state unfair-business-practice laws, and equitable state theories such as quantum meruit.  In short, the players allege that they are paid significantly less than what is fair and/or what is required by laws governing minimum wages and overtime.

The lawsuit is generating publicity not merely because of its subject matter, but also because of the media relations efforts of one of the plaintiff’s lead attorneys, Garret Broshuis, a 33-year old former minor leaguer and recent (2013) law school graduate.  In addition to the sports-related periodicals one would expect to cover this case, Broshuis has recently been featured in the Village Voice, the Daily Beast, and  Mother Jones – publications with decidedly non-jock audiences that are not known for their coverage of either sports or the business thereof.  Broshuis explains in these features that minor leaguers typically earn $1,000 or less per month, and then are expected to purchase their own equipment and pay for their own lodging.  [side note: The New York Mets have generated some recent negative press for requiring their minor leaguers to pay for use of Mets training facilities in the offseason – something which their co-defendants would privately concede is not helpful to MLB’s p.r. efforts in justifying the defendants’ stance in this Senne case].  Defendants and their proponents argue that the minor league experience is not run-of-the-mill employment but is instead designed to be a training ground for the major leagues; in short, minor leaguers are provided with more than what can be measured in their paychecks.

While opinions abound about the plaintiffs’ likelihood of success, it would seem that the federal claim, at least, will turn on the applicability of the exemptions in the Fair Labor Standards Act that are geared toward certain types of seasonal employees.  Plaintiffs are aware of these exemptions but argue that they are inapplicable.

The case is Senne et al v. Office of the Commissioner of Baseball, et al, Case Number 3:2014cv00608, United States District Court for the Northern District of California (San Francisco).  Motions to dismiss and to transfer venue are pending.  To the extent that the case is not cut short by dispositive motions or a settlement, an 8-week trial is set for early 2017.

Chris Paul and a Post-Sexist Technical

Posted in Labor & Employment, Sports Business and the Law

As heard on The Herd (note: the linked ESPN radio interview plays automatically), Clippers point guard Chris Paul been fined by the NBA for allegedly dissing a female referee. Generally considered a very good, very bright guy, and the union rep, Paul has been criticized for criticizing.

Absent other details of which this lawyer has not been informed, sometimes a cigar is a cigar. We’ll know we’ve reached an egalitarian society when everybody can be criticized equally. In SoCal, the public tends to understand all of this. I have found that employment cases are much easier to litigate where there is not one dominant ethnic group. Jurors run the gamut from Aussies to Zanzibarians, who tend to understand that it is a big world out there.

NCAA Cannot Hide Behind Their Claim of Fear or Privilege in Reggie Bush Investigation

Posted in Sports Business and the Law

In a case that may go to the California State Supreme Court, the Court of Appeals has denied the NCAA’s blanket claim of protection for its internal investigation interviews. Mr. McNair, the former USC running backs coach, alleges in his lawsuit that the college body ruined his career in the Reggie Bush investigation.

The NCAA based its claim on the supposition that witnesses came forward because they had been promised protection pursuant to the NCAA’s bylaws guaranteeing secrecy. The Court did not buy it, holding that there is a presumption of open records in judicial and quasi-judicial proceedings. As featured in the Los Angeles Times, the Court felt that sunshine overrode secrecy. As a trial lawyer, and a second guesser, it might have been better for the NCAA to have argued for certain records to have been kept confidential, rather than for 400 pages of materials to be kept secret. The ruling follows non-binding but influential other cases in other jurisdictions. To be continued….

Hernandez Murder Trial Commences as Former Teammates Prepare for Super Bowl

Posted in Sports Business and the Law

While his former New England Patriots teammates were rotating between the circus that is Super Bowl Media Week and actually preparing to face the Seattle Seahawks in what would become one of the most captivating Super Bowls of all-time, Aaron Hernandez sat in a courtroom last Thursday for the first day of his trial for the 2013 murder of Odin Lloyd.

The prosecutor in the trial, District Attorney Patrick Bomberg, indicated during his opening statement that the government has an extremely strong case against Hernandez.  Among the evidence the prosecution will offer is video footage from Hernandez’s house that links him to the murder by showing Lloyd stepping into a rental car that Hernandez was driving, and Hernandez later returning without Lloyd.

Hernandez’s counsel, on the other hand, seemed to focus his opening statement on the investigation into the murder as much as the events on the night of the murder.  Defense attorney Michael Fee, Esq., argued to the jury that the investigation was “sloppy and unprofessional” and that the evidence will demonstrate that his client was innocent, but he did not indicate the content of the alleged exonerating evidence.

Mark Geragos, a criminal defense attorney with experience in high-profile cases, believes that the prosecution will find it difficult to convince a jury to convict Hernandez.  Geragos said last Thursday night on CNN that the prosecution is relying too heavily on circumstantial evidence.  He also cited Hernandez being an attractive male before a female-majority-jury as a factor that could lead to him being found not guilty.

Despite Geragos’s assertions, it appears to me that Hernandez’s chances of being found innocent are slim.  As noted by Sports Illustrated writer and Massachusetts sports law attorney Michael McCann here, in Massachusetts a defendant can be convicted of murder under a “joint venture” theory—a defendant who significantly assists in carrying out a murder can be convicted, without actually physically committing the murder.  Accordingly, to convict Hernandez, jurors will only be required to believe he was intimately involved with Lloyd’s murder.

Hernandez’s trial is expected to last between six and ten weeks.  While a conviction is not guaranteed by any means, the weight of the evidence discussed in opening arguments suggests a high likelihood that Hernandez’s shocking and tragic downfall from a talented football player with a $40 million contract to a murder convict is inevitable.

UFC Hit with Antitrust Suit: Take That You Pencil-Necked Geek!

Posted in Sports Business and the Law

Mixed martial arts is now the site for an antitrust suit. Over the last few years, the UFC has consolidated the competition and now arranges fights in a boxing-like fashion. Senator McCain once described the sport as little more than cockfighting by humans, but the sport managed to establish guidelines that eviscerated threatened regulation. Perhaps the competitive spirit migrated to anti-competitive practices. The smart money says that management should be seeking legislative exemption a la the NFL or the de facto exception for baseball, which has been a favorite of appellate judges who have declared it a game and not a business.  The case is pending in San Francisco, where I am spending the holiday. To be continued.

Coaches and Schools Play Fast and Loose with Contracts

Posted in Sports Business and the Law, Sports History

Leaving a job is easy – if not stressful – for almost the entire population: you leave on your own accord or are asked to leave by your employer. Some people have employment contracts which provide specific compensation or benefits upon separation; other people sign agreements with specific clauses which bar them from using their skills in a specific geographic location or directed at a certain clientele (aka, “non-compete clauses”). 

Employment contracts are a powerful instrument. They dictate the conditions of employment, the compensation of the employee and the circumstances which could result in their dismissal. The idea of termination by “cause” is usually defined by the employment laws of the state, but typically means behavior which any reasonable person would identify as “wrong.” It usually doesn’t mean incompetence, though gross negligence would fall into that category. An employment contract serves to secure both the employer and the employee in the employment arrangement.

All of those concepts, however, go out the window in the world of professional and college athletics. Everyone knows and basically understands that contracts in the world of professional athletics are ruled by the collective bargaining agreements of the sport. Football is notorious as being the most dangerous sport with the least amount of guaranteed money. Seeing a player cut from the roster one year into their three year “contract” happens all the time.

Increasingly, however, is coverage of the machinations of how coaches change jobs. The NFL has had “Black Monday” coverage for years – when coaches get fired the Monday after the last game of the year. Like the athletes they coach, coaches, typically sign multi-year contracts.  These “employment contracts” offer some security, yet every year at this time the proverbial “coaching carousel” starts with coaches fired and others hired away from their jobs in the middle of their contracts.

Let’s use college football as an example. Having just finished the regular season, college football programs began firing and hiring their coaches (some before the season ended) immediately. Athletic Directors hoped onto their schools private plane to begin recruiting other coaches to fill their vacant positions. How can this happen so easily? How can Wil Muschamp be fired with three years left on his contract? He wasn’t fired for “cause” (Florida fans would argue losing to Vanderbilt and Georgia Southern – in the same season – were crimes in of themselves), but he was nevertheless terminated from his job and will be paid $2 million per year until his contract expires in 2017, notwithstanding any off-set from his contract to be the defensive coordinator at the University of Auburn.

Coaching football is not too different in some respects than many jobs, except the determination of success or failing to meet expectations can be easily identified in the Win/Loss column. A college coach – be it head coach or assistant – signs a contract with the university. It is often a multi-year contract with incentives for specific achievements and other benefits beyond their salary.

Unlike almost any other industry, however, college football coaching appears to skirt all the accepted contract principles when it comes to hiring and firing. As seen by the situation with Wil Muschamp, and his successor, former Colorado State University head coach, Jim McElwain, universities do not honor contracts or have any issue actively recruiting a new coach away from his current employer. Jim McElwain had Florida’s athletic director, Jeremy Foley and his staff at his house December 1st – despite that CSU still had a bowl game to play (which they lost). Five days later, he was announced as their new head coach. How can it not be said that Florida has tortuously interfered with McElwain’s contract with CSU? The easiest – and probably the truest answer – is that no one cares enough to raise, let alone enforce, that issue. In other words, this is the business of college coaching. If CSU pursed damages or an injunction against Florida for stealing their coach, how attractive will that job be for the next coach if he knows the university will actively try to block his chance at a higher profile job? Not only that, CSU would effectively be hobbling itself in its coaching search by not being able to do to some other university exactly what Florida did to them.

Schools and coaches do have additional options, however. A great example of the fluidity of coaching is at Arkansas State which has seen three coaches leave in the past four years for high profile jobs: Hugh Freeze went from offensive coordinator, to head coach, to his current position as head coach of Ole Miss; Gus Malzahn took over for a year before leaving for the head job at Auburn University, and; Bryan Harsin spent a year as head coach before moving up to Boise State.  Rather than fight against their coaches signing multi-year contracts and leaving after a year or two, Arkansas State and other universities have established buy-out figures paid by the hiring university to release the coach from their contract. Coaches, meanwhile, have negotiated into their contracts “dream job” clauses which allow for them to void their contracts if a particular school offers them a job. Reportedly, Jim McElwain had such a clause with Colorado State.

For schools like Florida or Notre Dame, who allegedly paid the $1 million buyout payment Brian Kelly owed the University of Cincinnati – a pittance compared to the $4.75 million the University of Texas paid the University of Louisville for Charlie Strong’s services, who then turned around and paid $1.2 million to Western Kentucky University to hire Bobby Petrino. Petrino, ironically enough, left Louisville in 2006 for the Atlanta Falcons shortly after signing a contract extension. Confused, yet? These are just a few examples among many which occur every year. And we haven’t even touched the concept of “dead money” paid to coaches who were fired, but by contract are owed money by the university. Some schools continue to pay millions of dollars to coaches who they fired in addition to the millions of dollars they are paying to coach they replaced him with (and, of course, the money paid to the university they hired him away from).

College football is a huge business and the coaches deserve the money they earn. Coaching is a tough job and the money involved in the industry makes it a high pressure, performance focused job. Alumni pressure, administrative pressure, and the pressure to keep 17-22 year old young men in line could be a full-time job itself. Long hours and long years of climbing the coaching ladder for opportunities at “dream jobs” is standard. If not for the fluidity with which coaches can change jobs and pursue the best situation for them, the sport and the industry would not nearly be at the level it enjoys today.