Category Archives: Events

Event Review: UVA Symposium “The State of Sports Law”

Today’s post is a guest post by Austin Atkinson reviewing the UVA “The State of Sports Law Symposium.”

Austin Atkinson is a securities litigation consultant and investment advisor in Charleston, South Carolina. Austin graduated from The
Citadel with a B.A. in Political Science in 1999, and earned his Juris Doctor from the Charleston School of Law in 2011. Before entering law school, Austin served in an advisory capacity at UBS PaineWebber, Charles Schwab & Co., Inc., and Merrill Lynch, Pierce, Fenner & Smith, Inc. Austin holds his Series 7 and Series 66 designations, and currently serves on an advisory team at Legacy Wealth Management.

Austin also consults with a number of law firms on FINRA disputes relating to the alleged mismanagement or unsuitability of brokerage
and trust assets. Follow Austin on Twitter at @LegalVest.

The State of Sports Law

Presented by the Virginia Sports and Entertainment Law Journal and the Virginia Sports Law Society

March 16, 2012

University of Virginia School of Law

Caplin Pavilion

Panel 1: NCAA Conference Realignment

Panel Members:

Christian Dennie: Attorney, Barlow Garsek & Simon

Mark Levinstein: Partner, Williams & Connolly

Michael McCann: Professor and Director of the Sports Law Institute, Vermont Law School

Ed Pasque: Associate Commissioner for Governance and External Affairs, Atlantic 10 Conference

Moderator:

J. Gordon Hylton: Professor, Marquette University Law School; Visiting Professor of Law, University of Virginia School of Law

Question: Why are we seeing the realignment mania now?

Dennie: “Football is king. The realignment mania traces its roots to the Supreme Court decision in NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984).” (Ed. Note: The Supreme Court held that the National Collegiate Athletic Association (NCAA) television plan violated the Sherman and Clayton Antitrust Acts. The case dealt with television rights to college football games, which until the lawsuit were controlled by the NCAA and limited the appearance of university teams in each season. The Board of Regents of the University of Oklahoma and the University of Georgia Athletic Association sued to force the NCAA to stop the practice. The Supreme Court held that the NCAA’s actions were a restraint of trade and ruled for the universities.) “The football institutions drive television, and television drives money.”

Levinstein: “We are seeing the magic number of twelve teams per conference now because of the NCAA rule requiring twelve teams to hold a conference championship game. Conferences used to primarily have seven or eight teams, and the reasoning behind that was primarily based on scheduling. There was no national television influence. There is no foreseeable change in the status quo unless conferences demand membership status be tied to television contracts.”

McCann: “Students ultimately have little say in the matter.”

Pasque: “Realignment isn’t necessarily bad. Consolidation is healthy. There was concern when the PAC 12 wanted to go to sixteen teams and get Texas. Now, conferences are making their intentions known to the market clearly. For example, the ACC announced that it was adding Syracuse and Rutgers, and that was it, at least for the immediate future. That let the other conferences know where they stood.”

Regarding methods of ensuring stability: “The Big Ten and PAC 12 have given all school media rights to the league. If a member school leaves, those rights stay with the league. That serves as an incentive not to leave.”

Question: Would government involvement help?

Levinstein: “Fans don’t like change.” “No one is less-suited to regulate conference realignment than Congress.”

McCann: “The government probably won’t get involved. But the Department of Justice has expressed concerns over the Bowl Championship Series (BCS). Antitrust issues with the BCS are a possibility. Also, the legal mechanisms to regulate the conferences are limited.”

Pasque: “At issue is the balance of school and sports.”

Dennie: “The Texas state government was heavily involved at the outset of the conference realignment craze.” Regarding the inclusion of Baylor in the Big 12: “There are a lot of Texas A&M grads in the Texas legislature who went to law school at Baylor. They threatened to mess with the endowment to ensure that Baylor, a private school, remained protected by inclusion in the Big 12.” (Ed. Note: The ‘Permanent University Fund’ referenced here is a sovereign wealth fund established by the 1876 Constitution of the State of Texas that provides extra money (above money from tax revenues) to the University of Texas system and the Texas A&M University system. Much of the funds come from oil and mineral rights. Baylor, as a private school, would not benefit from the Permanent University Fund.)

Question: Could NCAA be authorized to return to the 1983 status (pre Regents case)? How would process of member institution separation go? Issues?

McCann: “It is essentially a contract issue. As technology emerges, how will that effect contract structure? Can the contracts keep up with technology? Now that content is being delivered in 3D, on handheld devices, and through computers, how will the contracts reflect that?”

Pasque: “The Atlantic 10 and other leagues are looking at how the departure of one school leaves the remaining members. Are they better or worse off?” “One aspect of contract law that has been raised is the concept of tortious interference with contractual obligations. This arises when the meddling of one conference allegedly interferes with the contractual obligations of one conference member to the other conference members.”

Dennie: “A novel approach to the West Virginia University lawsuits was that they alleged that the Big East breached its fiduciary duty to the conference members by allowing itself to be poached by other conferences.”

Levenstein: “A big issue is jurisdictional in nature. Where will the dispute be decided? And what law controls?” “Also, conference exit fees are essentially liquidated damages clauses. How high can they be without being unreasonable?”

Panel 2: Legal Implications of Financial Distress in Professional Sports

Panel Members:

Mark Levinstein: Partner, Williams & Connolly

Michael McCann: Professor of Law and Director of the Sports Law Institute, Vermont Law School

Tom Ostertag: Senior Vice President and General Counsel, Major League Baseball

Moderator:

J. Gordon Hylton: Professor of Law, Marquette University Law School; Visiting Professor of Law, University of Virginia School of Law

 

Ostertag: “MLB monitors clubs carefully for financial stability.” “No teams were moved from 1903 to 1953. The move from Montreal to Washington has been good for MLB.”

Question: Relationships between owners and the League?

McCann: “Franchise agreement is key. The relationship became clear in the American Needle case.” (Ed. Note: The Supreme Court overturned an earlier District Court decision in the American Needle vs. NFL case, ruling that the NFL must be seen as 32 separate teams and not a single entity for antitrust purposes.)

 

Question: Is there a better model of governance?

Ostertag: “MLB doesn’t want government involvement at all.”

 

Question: Did the NHL experience during recession show that system was working or not?

Levinstein: “There was such a long lockout because ultimately it was actually better for the owners not to play the games because they lost less money. Fewer games meant fewer losses.”

McCann: “The idea of players going to an alternative league, i.e. Europe, etc., hasn’t panned out yet. This gives the owners leverage. Also, because most players haven’t saved their earnings, they are not in as good a position to ride out a protracted lockout.”

Ostertag: “MLB remembers the bad years in the mid 1990’s and doesn’t want a repeat of that. MLB would prefer to have the teams continue to play.”

Question: Role of bankruptcy process in league operations?

Ostertag:  “The MLB Constitution is a contract. When you come out of bankruptcy, you can’t pick and choose the terms of a contract. An important principle of MLB is that members adhere to ALL provisions of that contract.”

Levinstein: “During normal bankruptcy process, you are allowed to challenge provisions that would affect you getting the maximum value for your assets.” “In the NHL case (Ed. Note: Phoenix Coyotes, I think?), the league got involved and took care of all the creditors. They were able to strike a deal in bankruptcy court, which doesn’t always happen.”

Question: Effects of Recession on professional sports?

McCann: “The same issues will continue to occur. They have only been amplified by the Recession.”

Ostertag: “MLB relies heavily on history and tradition. They are vital to the marketing of the sport. No substantial changes as a result of the Recession except that teams are going to further lengths to entertain fans. They realize that there is a real competition for entertainment dollars.”

Levinstein: “Bad team owners lead to distress.” “All professional leagues have gotten better at screening potential owners.”

McCann: “The internationalization of professional sports will continue.” (examples given: NFL holding games in Europe, NBA China being developed, the notion of baseball possibly being played in Havana when/if Cuba is ever opened to trade again). “But with the internationalization, there is always the risk of it not working.”

Question: Effect of players conspiring, a la LeBron, Wade and Bosh?

McCann: “The loss of LeBron was historic for the City of Cleveland. They will, in reality, probably never attract another player of his caliber again.”

Levinstein: “Players take lots of factors into account when considering what team to sign with. It is not necessarily bad for the leagues to have ‘superteams’ like the Los Angeles Lakers.”

Keynote Address: DeMaurice Smith, Executive Director, NFLPA

Theme of speech is that “NFL has a duty to be a good sport”

“There are three ways to ensure that we have failed to meet our duty to be a good sport”:

1)      If we treat our participants as athletes first, and people second. We can’t treat them as less than people.

Ex. Under the new CBA, there is an obligation that every league medical professional adhere to ALL relevant ethical standards (Federal, state, local)

2)      If we view that athlete as being fungible. Where their social worth is only defined by their participation in the sport at that particular time. We can’t be done with them once they are done playing.

3)      If we discuss athletes as objects. *Mr. Smith noted that the quickest way to get on his bad side was to refer to the players as ‘gladiators.’

In reference to proposed 18 game schedule, he stated that “people ignored what was happening to our players during a normal 16 game schedule.”

He also stated that “Our men leave the game broken.” He noted that there are currently over 400 active workers compensation claims against the league by players and former players.

Mr. Smith said a major question facing the NFLPA was how do they challenge the league management to ensure that the game is safe? One of their major complaints was that the league hasn’t explained the long term effects of Toradol (common painkiller/anti-inflammatory) to its players, although it is frequently administered by team doctors.

Smith further explained that the NFLPA uses player surveys throughout the season to collect data on how the players felt, recovery times, etc.

Asked about the current relationship with league management, Smith described it as a “history of warfare with a respite of deals.”

*He also discussed books he was currently reading and fielded other questions about his time at UVA Law, but for the purposes of remaining relevant to the field of Sports Law, I’ve excluded those comments from these notes.

Panel 3: Amateurism and the Student Athlete

Panel members:

Christian Dennie: Attorney, Barlow Garsek & Simon

Roscoe Conklin Howard Jr.: Partner, Andrews Kurth; Member NCAA Division I Committee on Infractions

J. Gordon Hylton: Professor of Law, Marquette University Law School; Visiting Professor of Law, University of Virginia School of Law

Alan Milstein: Shareholder and Co-Managing Shareholder; Member, Executive Committee, Sherman Silverstein

Rob Slavis: Assistant Athletic Director, University of Virginia

Moderator:

Michael McCann: Professor of Law and Director of the Sports Law Institute, Vermont Law School

Question: Should We Pay Athletes?

Dennie: “No. The students already receive payment in the form of a scholarship.”

Howard: “We need to treat them like students. They already eat, live, and study in separate places from the rest of the student body.” “We also need to make sure they are prepared for something other than professional sports.”

Hylton: “We need to give them walking-around money.”

Milstein: “The crime is that athletes don’t get paid.” “The NCAA receives $771,000,000.00 from CBS for the right to broadcast March Madness.”

Slavis: “No. The small schools will be at a disadvantage to come up with the funds to pay athletes. Most sports are not profitable.”

Question: What about family influence/poor background of the athletes?

Howard: “These kids are put in tough situations. If paid, they would use to the money to buy rims for their cars, iPads, and iPhones.”

Milstein: “After the fall of the Soviet Union, the NCAA is the most autocratic, dictatorial organization in the world.”

Question: Are students disenfranchised?

Hylton: “People ask, ‘What is wrong with giving money to an athlete to sway him to attend a school?’ The problem is that the schools with wealthier boosters would have the best teams.” The biggest question that arises is ‘How much can be given until competitive balance is threatened.’”

Question: The O’Bannon Case? Issues with players being paid after they leave school?

Hylton: “The perpetual assignment of a right is against public policy.”

Milstein: “Ideally, funds would be set up and administered. And those funds would issue money to players.

Slavis: “The students are at a disadvantage when not able to have representation at table when signing their scholarship offers.”

Panel 4: Sports Law Analytics

Panel Members:

Robert Forbes: Associate, Proskauer

Ryan Rodenberg: Professor, Department of Sport Management, Florida State University

Kelly Wilson: Assistant Counsel, Under Armour

Moderator:

Thomas Nachbar: Professor of Law, University of Virginia School of Law

Question: Role of Analytics in Negotiating Marketing Agreements With Players?

Wilson: Numbers that are important for salary arbitration will become more important. Right now, Under Armour looks primarily at traditional numbers like RBI, ERA, etc. Small number of players are nationally marketable. Under Armour is looking for different type of athlete. Ones that are gritty and tough. Different from the type of athlete that Lacoste, for example, might choose.

Topic: Legality and Efficacy of Age Eligibility Rules in Sports

Rodenberg:  Late bloomers in women’s tennis do not exist. A player is highly unlikely to crack the WTA Top 50 rankings in their lifetime if they haven’t already done so by the age of 18.

For NBA, the minimum age rule would have made players like LeBron James, Kobe Bryant, and Dwight Howard initially ineligible.

Summary

The symposium was well run, and the members of the Virginia Sports & Entertainment Law Journal conducted themselves in a highly professional manner throughout the day. Many of the panelists already knew each other both personally and professionally, so there was an air of collegiality amongst them. Rather than listening to a lecture, I felt as if I was sitting in on a genuine conversation. The passion of the panelists about their respective topics was revealed as the conversations migrated from lighthearted exchanges to more contentious debates and back again. The keynote speaker, DeMaurice Smith, was greeted with a standing room only audience, and used his allotted time to spread the message that his organization intends to challenge the management in the NFL to ensure that the game is safe for current players, and that the league is fair to former players. Boasting an impressive lineup of speakers and beautiful facilities, I would recommend that anyone interested in sports law consider making the trek to scenic Charlottesville, Virginia to attend the next symposium put on by the Virginia Sports & Entertainment Law Journal.

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