Category Archives: NFL

June 3, 2013 · 5:42 am

John McCain Seeks To Eradicate The NFL’s Blackout Rule

By:  Jared Berman, Ruling Sports intern (Twitter:  @RealSportsNLaw)

Last month, Senator John McCain introduced the Television Consumer Freedom Act of 2013, which would thwart the NFL’s infamous blackout rule. The blackout rule, which dates back to the 1950’s, stringently requires a game be at least 85% sold out on non-premium seats (i.e. box suites) 72 hours before kickoff; otherwise the game is not televised in the teams’ local market. Last season, the rule effectively blacked out fans for fifteen games, the brunt of which was felt by Tampa Bay Buccaneers’ fans that were denied six games, including their season opener. The NFL justifies the rule, insisting that it promotes ticket sales and the overall stadium experience.[1] However, McCain, like many NFL fans, fails to see the connection.

In fact, McCain’s bill is not the first attempt to reform sports blackouts. On February 13, 2012, five U.S. senators (Blumenthal, Harkin, Stabenow, Brown, and Lautenberg) petitioned the FCC asserting the league’s blackout rules harm the fans. The senators pointed out that the blackout rule makes little sense, in light of our country’s struggling economy weighed against the rising prices of tickets, because for many fans, attending a football game is an “unaffordable luxury.”[2] Surely, it is not difficult to imagine a scenario where a father spends his week working hard to provide for his family, in hopes of watching his favorite NFL team on Sunday with his son­­­­–the same football team he used to watch with his father, only to discover the game is blacked out.

In a plea for the fans, McCain’s bill asks for the removal of the blackout rule for any team whose stadium was funded with taxpayer money. “When the venue in which these sporting events take place has been the beneficiary of taxpayer funding, it is unconscionable to deny those taxpayers who paid for it the ability to watch the games on television when they would otherwise be available,” he said, via the Los Angeles Times.

McCain’s argument is a compelling one, regardless of ones’ political allegiance because it does not affect privately financed stadiums. However, the bill addresses much more than the NFL blackout rule and therefore, its implementation by the House and Senate may rest on the reception of its core (which will be influenced by NFL lobbyists).

The NFL receives a cut of the profit from each ticket that a team sells for its games.  As such, the NFL uses the blackout rule as a tool to promote ticket sales and increase its revenue. Often it works, because the local station that plans on televising that game will buy-out the remaining tickets to ensure the broadcast, and ultimately help its ratings.  In addition, it is in the NFL’s best interest to broadcast games with the roar of a sold-out crowd, because it makes for more entertaining television.

On the other hand, it is time that the NFL refocuses its efforts on television contracts and not put such a heavy emphasis on ticket sales. Make no mistake, ticket sales are vital to an NFL team’s economic success, but not at the price of blacking out the game and losing revenue from commercial sponsors. In today’s sports world the fans watching the Buffalo Bills are not limited to the northeast region, but also reside in California, Texas, and even Alaska. Indeed, many fans are only watching as “fantasy fans,” who watch every NFL game to keep track of their fantasy football team’s players’ statistics. These fans will never be influenced by the NFL’s blackout rule, because attending the game is geographically undesirable and arguably, economically impossible.

It will only be a matter of time until McCain’s bill, or one like it, will pass and destroy the blackout rule once and for all. The issue is really gaining momentum and public opinion undoubtedly supports the rule’s destruction. Perhaps this is one time where Republicans and Democrats can come together, since McCain is leading the charge and President Obama notoriously enjoys sports.

[1] Assael, Shaun. “NFL Fans Blacked Out, Riled up.” ESPN.com. Disney, 18 Sept. 2012.

[2] United States Senate. (2012, February 12). Letter to FCC for reformation of blackout rule.
http://espn.go.com/pdf/2012/0918/espn_otl_Doc%201-%20Senate%20Letter%20to%20FCC.pdf

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April 25, 2013 · 12:11 pm

How NFL Draft Picks Affect An NFL Team’s Salary Cap

As the names of young men are called from the podium on the Radio City Music Hall stage tonight, draft experts and team’s front offices will consider how their picks will impact their team’s salary cap.  The 2013 NFL salary cap is set at $123 million.  The rookies a team drafts and subsequently signs to a contract will have salaries that will be counted under their respective team’s salary cap.  Given this, an understanding of the salary cap and the role rookies’ contracts play in it is important going into the NFL Draft.

First, one must consider how the NFL arrives at its salary cap.  The salary cap is a collectively bargained amount that is a percentage of what the NFL calls “all revenues.”  Article 12 of the NFL collective bargaining agreement defines what is considered “all revenues.”  Essentially, “all revenues” equals gate receipts + copyright royalties + concession revenues + parking revenues + local advertisement and sponsor revenues + internet operations and program sale revenues + novelty revenues + NFL Ventures revenues + barter income + equity instruments + revenues related to stadium releases based on non-NFL activities + recoveries under business interruption insurance policies + expense reimbursements from government entities + proceeds from rights to receive.

After accountants determine the “all revenue” number, that amount is subdivided into three categories to calculate something called the “player cost amount.”  We’ll discuss the “player cost amount” in greater detail below, but it is one factor used in calculating the NFL’s salary cap.  The three sub-categories that “all revenue” is divided into are:  league media, NFL Ventures/postseason and local all revenue.  Specific revenues that make up “all revenue,” as calculated above, are put into each of the three buckets.

Once “all revenue” is subdivided into the three buckets, “player cost amount” is calculated.  “Player cost amount” equals 55% of league media all revenue + 45% of NFL Ventures/postseason all revenue and 40% of local all revenue.

Accounts also calculate the amount of benefits teams pay to players.  These benefits include:  pensions, insurance, injury protection, workers’ compensation, preseason per diem accounts, travel expenses for offseason workouts, rookie orientation program expenses, postseason pay, medical costs, moving and travel expenses, severance pay, annuity programs, tuition assistance, minimum salary benefits, performance based pools, health reimbursement accounts, payments to players suffering from dementia, legacy benefits and the neuro-cognitive disability benefit.

The salary cap can be calculated once the values described above are determined.  The salary cap amount equals the “player cost amount” for the year – the projected benefits for the year divided by the number of teams in the league for the given year.

Once the salary cap is determined, teams must begin working to comply with the salary cap.  The collective bargaining agreement defines salary as “the compensation in money, property, investments, loans or anything else of value to which an NFL player. . . is entitled to. . . but not including benefits.”  Teams must comply with the salary cap on the first day of the league year.  No team can exceed the amount of the salary cap.  Additionally, the new collective bargaining requirement requires each individual team to spend at least 89 percent of the salary cap’s limit.

While a team must comply with the terms of the salary cap, there is a sub-category of the salary cap that relates especially to rookies.  Teams must not only be under the NFL salary cap, but they cannot spend an amount greater than the “rookie compensation pool.”  The rookie compensation pool was a term negotiated during the course of the most recent collective bargaining negotiations, which essentially limits the amount of money all NFL rookies can earn during the course of their first four seasons in the NFL.  Each year, the NFL designates an amount for the total rookie compensation pool and teams are told, based on their draft slots, how much money they get from the pool.  Teams are given enough from the pool to pay players at least the NFL minimum salary ($405,000 in 2013) plus, if applicable, bonuses based on a sliding scale depending upon a player’s draft spot.  Thus, teams must work to comply not only with the salary cap, but to ensure that the contracts they offer rookies are within the limits of the rookie compensation pool is applicable to their team.

Upon drafting a rookie, a team is charged with that rookie’s salary under its cap space immediately.  The amount charged to the team is the minimum active list salary.  This year, that amount is $405,000.  For each rookie a team signs, this amount will count against its cap space until the player, the team waives the player or the player remains unsigned through the tenth week of the regular season.  If the player is signed, the amount of cap space taken by the rookie could increase, as bonuses or incentives may be included in the player’s contract.  If the player is waived or unsigned, the $405,000 will not count against the team’s cap space.

The fact that only the minimum active list salary counts against a team’s salary cap space upon drafting a rookie is notable.  There are a handful of teams that have very limited salary cap space presently available.  Thus, if these teams had to add in bonuses they plan on paying rookies at this point, they would be over the salary cap.  Furthermore, it is also of note that only the salaries of a team’s top-51 paid players count against the team’s salary cap during the off-season.  Thus, teams have a fair amount of time to cut players, renegotiate contracts or make trades to get under the salary cap before all players’ salaries count against the cap when the NFL season begins.  It is for this reason that although drafted by a team, most rookies do not sign contracts until later in the summer or after training camp.

While the NFL salary cap is a complicated topic which takes years of training to understand, the basis of it and how it impacts a team’s rookies is relatively simple.  Given this, it will be interesting to watch and see when teams actually sign their rookies and the amount of bonuses they receive.

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April 15, 2013 · 11:46 am

The Impact Of A $3.1 Million Verdict Against Riddell On Future Football Concussion Litigation

Jurors in a small southern town in Colorado found that Riddell Helmets contributorily negligent in the head injuries a former Trinidad High School (CO) football sustained in 2008.  As a result of its verdict, the jury awarded damages in the amount of $11.5 million, of which Riddell is responsible for paying $3.1 million.

The lawsuit arose after Rhett Ridolfi participated in a “Machine Gun Drill” during an early morning practice.  During the course of the drill, Ridolfi allegedly made helmet-to-helmet contact with another teammate.  This contact resulted in Ridolfi sustaining a serious head injury, which according to Ridolfi’s attorney, has left Ridolfi with impulse and behavioral problems and has left in a walking brace and with limited functions on his body’s left side.

Ridolfi’s mother filed the lawsuit on his behalf in March 2010.  The lawsuit alleged negligence not only against Riddell, but also against six of Ridolfi’s football coaches.  Three of the coaches were found by the jury to be negligent.  However, reports indicate that damages were not ordered to be paid by them.  Ridolfi’s attorney told the media that he will be filing a motion to have Riddell pay all of the $11.5 million in damages awarded by the jury.  Riddell plans to appeal the verdict.

While the court transcript has not been reviewed, it appears that Ridolfi’s attorney argued that the defendants were liable for two types of products liability negligence:  product defect and failure to warn.

With respect to the product defect claim, Ridolfi’s attorneys argued that the padding in the front of Ridolfi’s helmet which was manufactured by Riddell wasn’t safe enough.  They also argued that another type of padding could have been used which would have protected Ridolfi.  This argument was rejected by the jury.

However, the jury found that Riddell was negligent in the type of warning it provided on its helmet, which was worn by Ridolfi.  Under tort law, a product may be defective as a result of the manufacturer’s failure to give adequate warnings as to the risks involved in using the product.  For liability to attach, the danger must not be apparent to users.

Reports indicate that Riddell has included a warning label on its helmets since 2002.  However, in this instance, it appears that the Colorado jury found that the warning label present on Ridolfi’s helmet in 2008 was inadequate.  This was likely due to the fact that the warning label did not warn against the possibility that the helmet would not protect against concussions and serious bodily injury sustained from instances including helmet-to-helmet contact.

A statement released by Riddell indicated that it believed that if testimony from a “warnings” expert would have been admitted by the judge, that it would have been fully exonerated in this case.  It is likely that Riddell’s appeal will argue that point, as well as the damages awarded and that its warning was sufficient.

This case, which arose out of a small town in Colorado, likely has larger implications than the damages which Riddell is facing paying.  First, it demonstrates juries’ willingness to hold helmet manufacturers liable for failing to adequately warn of the injuries football players can sustain even while wearing a helmet.  This factor is relevant as Riddell is currently facing at least two other cases on this issue, one of which is brought by 4,000 former NFL players.  Whether juries in other jurisdictions–where the other cases against Riddell are located–will find similarly will only be determined by time.  Furthermore, it is to be seen whether other courts allow Riddell’s “warnings” expert to take the stand and how that testimony may impact the outcome of the trial.

Riddell, however, can likely breathe a small sigh of relief that the Colorado jury did not find the design of its product to be defective.  Thus, Riddell may feel fairly certain that the product design defense it has created may be successful in other jurisdictions and in front of other jurors.

Nonetheless, the road for Riddell is not clear.  In coming months, it faces cases against plaintiffs who are more well-known (for example, the family of the late Junior Seau), have deeper pockets and greater media attention on their sides.  It is to be seen whether given these factors, juries return similar verdicts to that reached by the Colorado jury.

Alicia Jessop is a Colorado-based attorney and the founder of the sports law website RulingSports.com.  Nothing in this article is legal advice and no attorney-client relationship is intended to be created by this article.  Follow Alicia @RulingSports and at AliciaJessop.com.

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March 12, 2013 · 12:25 pm

The Effectiveness of the NFL’s Three-Day Unrestricted Free Agent Negotiating Window

At 4:00 p.m. ET today, the 2013 NFL free agency signing period kicks off.  For NFL fans, general managers and players alike, the signing period marks one of the most exciting times of the NFL year.  It is a time where teams can rebuild rosters to further Super Bowl hopes and players can seek out new opportunities to build a lasting legacy in the league.

This year, the possibility exists that there will be a flurry of activity shortly after the start of the signing period.  This is due to the fact that this year marks the first time that a three-day negotiating window was opened before the start of the signing period.  During this time, NFL teams were allowed to contact and negotiate with agents for this year’s unrestricted free agents.  This period served only as a negotiation window, and teams and agents were not allowed to execute contracts until 4:00 p.m. ET on March 12.  In fact, the NFL even sent out a memorandum warning teams of “tampering” and reminding them that agreements between players and teams could not be reached during the three-day window.

Due to the fact that teams and agents had a chance to possibly hash out many of the details surrounding a player’s contract, chances are that some players will be ready to sign shortly after 4:00 p.m. ET.  However, signing an unrestricted free agent quickly after the start of the signing period may lead the NFL and other clubs to believe that tampering occurred.  As such, it is to be seen which team announces that it has signed the first unrestricted free agent of the 2013 free agent class.  Then, it will be seen whether the NFL and other clubs are satisfied that the respective agreement was made outside of the course of the three-day negotiating window and within the signing period.

Another reason why the three-day negotiation window may preclude a flurry of activity today, is during the window, unrestricted free agents were not allowed to visit other teams and could not have direct contact with team employees.  Thus, chances are that this negotiation window only represented a chance for agents to better test the market for their clients.  Due to the fact that many players are hands-on when it comes to selecting where they play, chances are most players want to get on the ground at a potential team’s site and visit with personnel from the team to learn how their presence on the team will be utilized.

Given these factors, the question exists as to whether this three-day negotiation window was necessary.  If teams and players were unable to reach agreements on various terms of a prospective contract, what is the point of negotiating?  If anything, the purpose the three-day negotiation window serves for both sides is an information grab.  By negotiating with a variety of teams during the window, unrestricted free agents can get a jump on getting an idea of where their best offer may lie.  Similarly, by negotiating with a variety of players, teams can get a sense of who best fills their team’s position needs and at what price tag.

Most agents and team executives would tell you that too much information is never a bad thing.  As such, it’s likely that the NFL will continue allowing the three-day negotiation window.  However, expect teams and agents to press forward for the right to reach agreements during the course of the window.  The NFL is unlikely to allow this, as it will argue that in doing so, the negotiation window essentially becomes a signing period.  Nonetheless, the three-day negotiation window has presented one more story line for NFL fans to watch this season, as they can now wait to see which unrestricted free agent is scooped up by a team the fastest.

 

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January 6, 2013 · 10:12 am

NFL Injury Report: Rob Ninkovich’s Hip Injury

Each week, RulingSports.com will analyze one NFL player’s injury.  Sports Medicine doctor, Dr. Mandy Huggins (Twitter:  @HugginsMD), will provide medical analysis of the injury.  Alicia Jessop will then break down some of the contract ramifications of the injury.

Dr. Mandy Huggins’ Medical Analysis

New England’s Rob Ninkovich made Patriots fans worry last Sunday when he left the game with a hip injury. He had to be helped off the field and did not return to the game. Recent reports, however, have indicated that the injury is not serious and he strained muscles in his hip. Unfortunately, it’s difficult to break down this injury with such a vague report, but it leads one to believe that Ninkovich will be able to return for the playoffs, especially with a bye week. He may be moving more gingerly than normal, however, as the muscles around the hip are critical for every movement he will make, such as sprinting, lateral movements, and sudden starts and stops.

Alicia Jessop’s Contract Analysis

In 2011 Ninkovich signed a two-year contract extension worth $4 million.  It marked the second time that the Patriots signed him to a two-year contract extension, the first coming in 2009.  Given this, it appears that the team is committed to him as a linebacker.  Furthermore, because it does not appear that he will miss any games because of this injury, his place on next season’s roster is as safe as it can be for an NFL player.

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December 19, 2012 · 7:37 am

NFL Injury Report: Ryan Matthews’ Collarbone Fracture

Each week, RulingSports.com will analyze one NFL player’s injury.  Sports Medicine doctor, Dr. Mandy Huggins (Twitter:  @HugginsMD), will provide medical analysis of the injury.  Alicia Jessop will then break down some of the contract ramifications of the injury.

Dr. Mandy Huggins’ Medical Analysis

San Diego Chargers RB Ryan Mathews unfortunately suffered yet another injury on Sunday, this time a left clavicle (collarbone) fracture. As you may recall, he suffered a fracture of the right clavicle during the preseason. Clavicle fractures are classified by location of fracture: distal (outer) third, middle third, or proximal (closer to the midline) third. The location of Mathews’ fracture has not been reported, but it is most likely in the middle third. These fractures occur with direct trauma or after a fall onto the shoulder and are very painful. Localized pain, swelling, and a deformity (bump) are seen, and x-rays confirm the diagnosis. Unless the ends of the bone are significantly displaced (do not line up with one another), most clavicle fractures heal fairly well in 4-6 weeks. There is a period of immobilization, though, to allow the bone to heal back together. Needless to say, Mathews will be out for the remainder of the season.

Alicia Jessop’s Contract Analysis

Matthews was signed to a five-year deal by the Chargers in 2010.  Matthews’ contract is worth $25.65 million contract and includes $15 million in guarantees.  The good news for Matthews, thus, is that a significant portion of his contract is guaranteed, so he arguably will not be hurting financially.  The bad news, though, is several things.  First, the bulk of Matthews’ base salary in his contract comes in the 2013 and 2014 seasons, where he’ll earn $1,195,500 and $1,478,250 in base salary, respectively, on top of other bonuses built into those years.  Thus, it is of utmost importance that Matthews fully rehabs so that he can come back in 2013 and play through 2014.  Additionally, another issue is that his continuous bouts with injuries may hurt his earnings potential moving forward.  Matthews was targeted as being the “heir apparent” for LaDainian Tomlinson.  If he continues to be dealt the blow of injuries though, he may not surpass L.T.’s career success.

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December 12, 2012 · 10:02 am

NFL Injury Report: Fred Jackson’s MCL Injury

Each week, RulingSports.com will analyze one NFL player’s injury.  Sports Medicine doctor, Dr. Mandy Huggins (Twitter:  @HugginsMD), will provide medical analysis of the injury.  Alicia Jessop will then break down some of the contract ramifications of the injury.

Dr. Mandy Huggins’ Medical Analysis

Fred Jackson, RB for the Buffalo Bills, left the game Sunday with a right knee injury. It was later reported that he has a grade II medial collateral ligament (MCL) injury and will not return for the rest of the season.

The MCL provides stability on the medial, or inside, portion of the knee joint. It originates on the end of the femur (thigh bone) and inserts onto the tibia (shin bone). Similarly, there is a lateral collateral ligament (LCL) on the outside portion of the knee that provides lateral stability. Injuries to the MCL usually occur as a result of valgus force to the knee (think of this as pressure from lateral to medial; for example, in the right knee, the force would be from right to left). They are classified into grade I, II, or III injuries. A grade I injury is a mild sprain with pain but no laxity or instability. A grade II injury involves more severe injury to the ligament with some medial laxity seen, whereas a grade III injury involves more extensive or complete tearing of the ligament. Fortunately, surgery is typically not required, but the length of recovery is more prolonged with more severe injuries. Treatment includes a hinged knee brace for support and protection, as well as a period of rehabilitation for range of motion and strength.

Alicia Jessop’s Contract Analysis

While there arguably is never a good time for an injury in the NFL, the good news for Jackson is that he just signed a three-year contract extension in May.  That contract extension was worth $8.7 million.  This is arguably good news, as if he were looking for a contract extension or new contract after this season, he would likely be offered significantly less money.  Jackson was plagued by injury throughout the season, which is demonstrated by his career-low 3.8 yards per carry average. 

Even though Jackson signed a contract extension, only $3 million of the $8.7 million is guaranteed.  His base salaries in 2013 and 2014 are $2.15 million and $2.45 million, respectively.  In each of those years, his contract also allows for extensive bonuses.  Thus, in order for him to truly receive the “bang” out of his contract extension, Jackson needs to return next season.

One thing about Jackson, is that he is certainly a fighter.  Originally undrafted out of a Division III school, in his five seasons in the NFL, Jackson has racked up impressive stats.  Furthermore, he has previously suffered and returned from a season-ending leg injury.  So, one can expect that Jackson will rehab and be back on the gridiron next year.

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December 11, 2012 · 12:21 pm

The Logic Behind Paul Tagliabue’s Saints Ruling

Nearly nine months after the NFL announced it had evidence demonstrating that the New Orleans Saints engaged in a pay-for-play program, former NFL commissioner Paul Tagliabue overturned the suspensions of four players allegedly involved in the program.  In making his determination, Tagliabue acknowledged that three of the four players engaged in “conduct detrimental to the league” and that current NFL commissioner Roger Goodell could have punished this conduct with fines.  However, Tagliabue’s decision to overturn the players’ suspensions appears to rest heavily upon his findings that it was team personnel and coaches who were at the helm of the pay-for-play program, rather than players.

Tagliabue’s findings are notable, because they were likely determined by a logic that was dictated by his professional background.  Tagliabue is an attorney.  It was likely Tagliabue’s legal background and a legal doctrine learned during the first year of law school which likely guided him in reaching his decision today. 

The doctrine which Tagliabue likely relied upon is called respondeat superior.  Under the theory of respondeat superior, an employer is responsible for the actions of an employee that are performed within the employee’s scope of employment.  Respondeat superior allows a third-party wronged by the acts of the employee to commence legal actions against the employee and its employer.  Arguably, the actions allegedly committed under the alleged pay-for-play scheme occurred within the scope of the Saints players’ employment.  Tagliabue likely found that unless Saints coaches and personnel were allegedly encouraging the players to engage in the pay-for-play program, that they would have been unlikely to have done so themselves.  While using respondeat superior as an approach to decide the case before him would have arguably allowed Tagliabue to find both the Saints personnel/coaches and players liable, it appears that Tagliabue found that the players were merely just following their principals’ orders.

Tagliabue’s findings today present some concerning possibilities.  By vacating the players’ suspensions in their entirety, Tagliabue arguably sent the message that players do not need to fear suspensions when they follow their coaches’ orders–regardless of how dangerous those orders might be.  This possible precedent is somewhat scary, as coaches may recognize that they can push the limits when it comes to what they ask players to do, and only risk their own career stability.  Arguably, this in and of itself would prevent most coaches from engaging in the type of behavior that allegedly occurred in New Orleans.  However, for those whereupon the pressure to win is great enough, today’s ruling might give them enough of an incentive to move forward with dangerous plans.

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December 4, 2012 · 11:36 am

NFL Injury Report: Brian Urlacher’s Leg Injury

Each week, RulingSports.com will analyze one NFL player’s injury.  Sports Medicine doctor, Dr. Mandy Huggins (Twitter:  @HugginsMD), will provide medical analysis of the injury.  Alicia Jessop will then break down some of the contract ramifications of the injury.

Dr. Mandy Huggins’ Medical Analysis

The media is already speculating about the leg injury sustained by Chicago LB Brian Urlacher on Sunday, reporting today that the team has already signed another linebacker. Apparently Urlacher sustained a right hamstring injury late in the game against the Seahawks, although this has yet to be confirmed.

Hamstring strains are usually classified as grade I (mild), grade II (moderate), or grade III (severe). The hamstring muscle group consists of three large muscles: biceps femoris, semimembranosus, and semitendinosus. Strains most commonly occur in the biceps femoris, and the onset is usually sudden, for example, while sprinting. Age (Urlacher is 34), fatigue, and a history of previous hamstring injury increase one’s risk for another injury. After a hamstring injury, the athlete will complain of difficulty walking, localized pain (followed by swelling and maybe bruising), and decreased strength against resistance. Imaging is not required unless a complete tear (grade III) is suspected. However, ultrasound or MRI can be used to help determine the extent of the injury and predict length of recovery. Imaging in Urlacher’s case has not been reported. Treatment includes rest from competition, stretching, and soft tissue therapy followed by progressive strengthening and core stability work. Specifically, eccentric exercises (slow, controlled lengthening of the muscle) have been shown to decrease the risk of hamstring injuries. There is no set time table for return to sport, as all hamstring injuries are different. However, full range of motion, full strength, and optimal performance on functional testing must be demonstrated before return can be considered.

Alicia Jessop’s Contract Analysis

Urlacher is in the final year of his deal with the Chicago Bears, and as such, this injury arguably could not have come at a worse time.  However, the one upside of the timing of his injury is that it comes late in the season and he will have an entire off-season to heal, if need be.  The Bears’ defense has largely relied upon Urlacher’s talents in recent years, so he and his agent can use this, along with status updates on his recovery to negotiate a new contract with the Bears or other teams.  However, as with any player, injuries factor heavily into a team’s decision as to whether or not enter into a lengthy and lucrative deal.

 

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November 21, 2012 · 8:51 am

Guest Post: A Proactive Cure for the Athlete Wealth Disease Epidemic – Part 2

By:  Todd Burach (Twitter:  @ToddBurach)

Todd Burach works in wealth management in New York City. He specializes in asset allocation and investment strategy for upper high net worth clients, including corporate executives, professional athletes and entrepreneurs.  He is a 2007 graduate of Syracuse University where he was a member of Coach Boeheim’s back-to-back Big East championship teams. In 2012, Todd completed his MBA at New York University with concentrations in Finance and Economics.

2. Facilitate and encourage the conversation.

The NFL is currently working vigorously to improve player safety as it relates to concussions. In June of 2012, 2,000 NFL players filed a unified lawsuit against the league “alleging that the NFL failed to acknowledge and address neurological risks associated with the sport and then deliberately failed to tell players about the risks they faced.”  The NFL would be wise to apply lessons learned from the concussion epidemic to its current experience with ‘Athlete Wealth Disease’. Both issues impact long-term player health and can be minimized, altered, and arguably avoided when players are armed with relevant knowledge. Further, in both cases, many of the negative outcomes are born from a pervasive culture that exists amongst players – on the playing field, it is the machismo culture of hitting, while off the field, it is the ‘baller’ lifestyle. Both the concussion and post-career financial problems that result can impede the ability of players to live normal, productive lives. What we need is for players, leagues, media outlets and fans to discuss all aspects of Athlete Wealth Disease, especially solutions, in the same manner in which we discuss concussions.

We demand that athletes be role models on and off the field, at all times. We demand that athletes do the right thing. As a result, we discuss, dissect and debate players’ offfield behavior, good or bad. However, these discussions tend to shy away from the facts that Sports Illustrated brought to light three years ago. Our heroes are going broke just as much if not more often than they are debilitated by playing injuries. (65% of NFL players retire from the league with permanent injuries). So why don’t we talk about it? ESPN’s 30 for 30 film “Broke,” directed by Billy Corben, could be seen as a step in the right direction. The film offers the usual examples of athletes who have struggled financially and certainly encourages the conversion. However, the discussion needs to shift towards solutions. And, rather than an occasional headline about a former star who has fallen or a documentary on the sexy lifestyle that carries players into bankruptcy, this must become an ongoing conversation. Embracing the discussion will force the hand of players associations, leagues, media and fans to find solutions and accountability for this epidemic – just as we have begun to do with respect to concussions.

3. Nudge

In “Nudge: Improving Decisions About Health, Wealth, and Happiness”, University of Chicago economists Richard Thaler and Cass Sunstein discuss innovative ways in which to encourage people to follow the most advantageous path. The trick is simple: start them on it. Thaler and Sunstein suggest ‘nudging’ people in the right direction with what they call ‘libertarian paternalism’. According to the libertarian paternalist, “one must not just maximize choice for others, but must set a default or no-action-required option that will cause people to make optimal choices (i.e., those widely agreed upon to make one better off, e.g., saving money for retirement)”.  In studying 401(k) retirement plans, for example, Thaler and Sunstein found that the vast majority of people never adjust the allocations of their 401(k) retirement portfolio after the initial set-up. The authors attribute this inaction to the tendency of individuals to become too overwhelmed by the decision making process, choosing instead to avoid it altogether. Therefore, when one starts a job and is required to enroll in a retirement portfolio, the libertarian paternalist recommends that the default option be set for a ‘Target Retirement Date’ fund, a portfolio that reallocates holdings automatically as retirement approaches. This ‘default option’ would help to steer those too overwhelmed with making big financial decisions to paths widely considered optimal.

Nudge-like provisions have, in fact, begun to emerge in sports. As a result of negotiations for the most recent collective bargaining agreement, the NBA Player’s Association will now default players into a league retirement plan, with the option to opt out. Those who go through the effort to opt out tend to be those well versed in personal finance, while those who do not know to opt out or do not want to deal with it have been nudged to the right path (and Thaler and Sunstein are somewhere smiling).  What the NBA has quietly done represents an important step toward preventing Athlete Wealth Disease. We need more nudges, in more forms, and next time it should not be so quiet.

For a long time we have known that professional athletes struggle with money and with the growth of sports business, we are talking big money. Occasionally, when financial market news becomes Main Street news, we will read a headline about a Mark Brunell or a Terrell Owens. Yet, when markets turn around, and Wall Street worries subside, we too quickly stop talking about a very correctable problem that still exists. The Athlete Wealth Disease epidemic is preventable. We should demand more out of the players associations whose mission is to ensure “that every conceivable measure is taken to assist players in maximizing their opportunities and achieving their goals, both on and off” the playing surface. We need to give the issue a voice – on TV, in the papers, in the blogosphere – the way we talk about and worry about concussions. Finally, leagues should follow the lead of the NBA and continue to ‘nudge’, by being more thoughtful in the structured programs used to secure the financial futures of our sports heroes.

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