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Sports Law Scoreboard

An Inside Look Into The Legal and Business Side of Sports

Be Creative But Be Careful with Copyrights and Trademarks in Your Designs

Posted in Intellectual Property, Sports Business and the Law

USA Today had a must-read article on Under Armour’s crazy uniform designs. Creative uniforms are wonderful, but as with all else in the world of intellectual property, care needs to be taken. Taking a copyrighted design from someone oftentimes results in a lawsuit.

If you see the other design, run it by your fellows to see if they think that one needs the permission of the other to be published, printed or knit. This formal exercise can save you a mound of trouble. If you get a cease-and-desist or lawsuit, run to your trusted legal counselor and do not attempt to handle it yourself. Last but not least. err on the side of caution. There are lots of creative designs that will not violate any intellectual property rights.

What To Do To Guarantee Privacy

Posted in Sports Business and the Law

No, this is not the umpteenth blog on the Sony situation. This is the one that Sony kept off the front pages. Adrian Peterson, the star running back of the Vikings, spoke with Troy Vincent, an executive at the NFL. There appeared to be an offer of a two game suspension, and now Peterson has lost his arbitration and is facing an indefinite suspension.

Lost in the discussion is that this was supposed to be a private conversation. I am now at the point of telling my clients to call people and not to email. Too much confusion and too much exposure. But when you call, ask the other person not to tape the conversation if it is sensitive. In California at least, both parties have to agree to the taping for it to be legal. However, if Peterson was in Texas at the time, his recording was legal, as the state requires only one-party consent, Absent that, there are criminal penalties that can be invoked. Not an absolute guarantee, but important as we feel our way around these issues.

Rory McIlroy v. Horizon Sports

Posted in Sports Business and the Law

This guest post is authored by Jason Hodges. Jason currently practices in the areas of litigation and real estate at Gilbert, Harrell, Sumerford & Martin, P.C. in Georgia.  Since graduating from Mercer University School of Law (2009), he worked as a player agent at Crown Sports Management and subsequently served as a Public Defender.

He ended his competitive golf career shortly after playing on the University of Georgia golf team (2005) under Chris Haack. He was right to choose another career path as he was deemed “the best 6 man in the country (only five make the line-up).”  UGA won the National Championship his senior year.


Weeks ago, Rory McIlroy took a self-imposed hiatus from tournament golf to prepare for trial against his former management company Horizon Sports. He has since played in tournaments, but will have to sit out again in February or March of 2015 for the trial itself.  Here are the general facts, which will be presented at trial. (1) 

At a Christmas party in 2011, Rory signed a representation agreement with Horizon Sports (the “Agreement”), which required him to pay Horizon 20% of off-the-course income (endorsement deals) and 5% of his tournament winnings.  While with Horizon, he signed a $20 million/year deal with Nike, had deals with Oakley, Santander, and Bose, and probably appeared at corporate outings for fees easily totaling over $1 million. On the course, he earned approximately $18.5 million in European and PGA Tour events in 2012 alone.

Early last year, Rory started his own management company, having spent only one full calendar year (2012) with Horizon.  Later in 2013, Rory sued Horizon, Gurteen Ltd. of Malta (controlled by Horizon), and Canovan Management Services (controlled by Horizon) in the Dublin High Court seeking a declaration to rescind the Agreement or that it was void for breach of fiduciary duty.  Rory’s grounds for suing are based on his contention the Agreement is invalid based on unconscionability.  Rory alleges the commission fees are “many times greater” than the industry standard and that Horizon is not entitled to certain future commissions from his Nike deal.  He alleges he was unduly influenced, was too young to fully understand it and should been made aware of his right to outside counsel.  Rory seeks $6.8 million (USD), which is the amount he paid Horizon under the terms of the representation agreement as written.

In response, Horizon denied Rory’s claims and countersued for approximately $3 million (USD) for breach of contract.  Horizon derived this figure from off-the-course income and other unpaid fees under the December 2011 Agreement and another executed in March 2013.  Horizon factored into its damages Rory’s non-payment of the residual income he continues receiving as a result of their alleged long term brand strategy.

The result of this lawsuit will depend on the enforceability of the Agreement.  Specifically, it will depend on whether the court agrees with Rory that it is unconscionable.  In layman’s terms, unconscionability is a catch-all term and exists when a contract’s terms or surrounding circumstances are so unjust that no reasonable or informed person would enter into it.  To back up this contention, Rory will allege he was duped into thinking his deal with Horizon was the same as Graeme McDowell’s.  McDowell’s deal required him to pay Horizon a smaller percentage of his income than Rory’s did.

As an additional argument, Rory may also point out that he signed the Agreement at a Christmas party where everyone, including him, drank alcohol.  If either party signs a contract while intoxicated, a question arises as to whether they could have understood its terms and knowingly signed it.  If they didn’t, unconscionability exists.  The alcohol argument is not as strong as the others, but it could have an impact at trial if the jury learns Rory or Horizon’s representative was drunk when signing the Agreement.

However, contracts that are deemed “unconscionable” in the United States are only voidable and are not automatically cancelled.  A ruling of unconscionability would merely give Rory the right to cancel the Agreement for a period of time, but not for an infinite duration.  Parties to an agreement cannot carry on under its terms for eighteen months like he did, and then take action to invalidate it.  To legally cancel the Agreement, Rory had to act as soon as he realized he misunderstood it.  He may have had the right to void it for a period of time, but that time expired before he filed suit.  Rory may prove facts, which show the Agreement was unconscionable, but that would not release him from any and all obligations under it.  Thus, I don’t like Rory’s chances of success at trial.

——
(1) I purposefully limited my research to common knowledge so as not to compromise the positions of any friends, former teammates, and colleagues in the golf world.

Leadership and the “It” Factor

Posted in Sports Business and the Law

Johnny Manziel is getting his first start this weekend. As profiled in the Bleacher Report, he has earned it. Respectful and patient are not the words that were associated with him in college. By the same token, I have never seen a more exciting college quarterback.

Back to law. Classes on how to train associates tend to repeat the mantra, “one third, one third, one third.”  In other words, one third of the associates are hopeless regardless of training, one third can be taught and one third just have that indefinable something. As one of my former managing partners put it, “you are hanging over a cliff, holding on by your fingers. Who do you trust to pull you up?”  In football and in law, we work very hard to identify those destined for leadership. Good luck Johnny.

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.