by JSEL | Nov 19, 2019 | Highlight
The National Football League and Major League Baseball’s players associations have entered into a deal with RedBird Capital Partners to maximize profits from player likenesses, the Wall Street Journal reports. This agreement is a major milestone in cross-sport partnerships, as it “marks the first time players unions have joined forces across sports in this way.” With the amount of money that the players and RedBird are putting together, the possibilities are likely endless. I would recommend players focus on replicating the success of athletes like JuJu Smith-Schuster in reaching new fanbases across different platforms to truly see the biggest gains from this new arrangement.
The RedBird deal creates a new company called OneTeam Partners LLC—the company will look to facilitate revenue generation from player portrayals. Bloomberg notes that “[t]he sports unions will have 60% of [OneTeam’s] equity, with RedBird taking the rest.” These intellectual property rights are no joke; from video games to trading cards: usage of player names, images, and likenesses is the cornerstone of various sports products that third-party companies offer (Bloomberg cites Electronic Arts and Nike; while WSJ mentions Sony and Panini America). As the frequent JSEL reader knows, the NCAA has recently taken note of how important these name, image, and likeness rights can be for players.
That the NFL and MLB players are coming together demonstrates a shared understanding among players that pooling resources can have a profoundly positive impact on the overall bottom line. NBA players just “reclaimed their group licensing rights in the last round of labor talks with the league,” and could therefore be next in line to join. One could also imagine a scenario in which other players (such as those in the Women’s National Basketball Association, Major League Soccer and on the U.S. women’s national soccer team) join OneTeam, and the WSJ article states that some are already slated to be OneTeam investors.
RedBird will pool an initial investment of $125 million with annual revenue from the two players associations to get the company going. The players associations make roughly $120 million per year from standard licensing agreements—the players “will still receive their standard annual payouts from the deals, but RedBird will use the funds to invest in other opportunities.” The well-financed company will begin to pursue various opportunities, and in so doing, I would encourage the dealmakers to “Be like JuJu.”
Building a fanbase is key to financial success in the age of athlete celebrities on social media. One great example of this phenomenon is JuJu Smith-Schuster, a young wide receiver for the Pittsburgh Steelers who has already established himself as the third-most popular NFL player on social media. Smith-Schuster’s superstardom is actually no surprise when you consider how he has creatively expanded his potential fanbase past just Steelers or NFL enthusiasts. Smith-Schuster is a well-known Fortnite player and was part of a record-breaking 2018 Fortnite stream (with hip hop artists Drake and Travis Scott, along with streamer “Ninja”) that garnered over 600,000 viewers. As a result, he is reaching consumers that many other NFL players never would.
Smith-Schuster’s example is one to follow. NFL players should look into their contracts with Electronic Arts and see whether Madden NFL has the exclusive right to their portrayal in video games. If so, OneTeam could perhaps figure out a way to structure a limited use arrangement in which the players can become bonus characters in games like Fortnite or other popular titles. For example, maybe Call of Duty could add—as an in-game purchase—an unlockable Lamar Jackson character with turbo speed and extra distance/accuracy on grenade throws (thereby exposing Jackson to CoD players who might otherwise not ever hear of him or interact with him or his likeness in any meaningful, goodwill-inducing way). CoD has already included NFL players Le’Veon Bell and Alejandro Villanueva in a prior game, but it doesn’t appear they are playable characters. Another possible crossover would be encouraging more players to start streaming certain non-sports video games on Twitch, with a special card reward in Madden Ultimate Team (MUT) for those who subscribe to the player’s stream. Related to this, perhaps OneTeam cuts a deal with Panini and Electronic Arts to start putting special cards in actual trading card packs, redeemable for virtual cards on MUT (thus encouraging trading card buyers to buy and play Madden with this new found favorite player, and vice versa).
RedBird may have struck gold with this investment, if player rights stay as lucrative as they have been. With the right awareness of how to build fanbases up over time, OneTeam should be a highly profitable endeavor.
“JuJu” by Brook-Ward is licensed under CC BY-NC 2.0
Eli Nachmany is a Sports Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2022).
by JSEL | Nov 10, 2019 | Commentary
The National Collegiate Athletic Association (NCAA) on Friday made news for attempting to sideline two of its biggest stars. Memphis basketball player James Wiseman and Ohio State football player Chase Young each face allegations from the NCAA of financial misconduct that calls their respective eligibilities into question. The Ringer’s Rodger Sherman opines that the players “are arguably the top prospects in next year’s NBA and NFL drafts, respectively, and two of the most exciting players in all of college sports.” Young and Ohio State are playing it safe—the standout defensive end sat out the Buckeyes’ game against Maryland on Saturday as an investigation runs its course.
Meanwhile, Wiseman and Memphis challenged the NCAA in court and, for the time being, won. Wiseman took his case to a Shelby County court in Memphis, and the court granted him injunctive relief from the NCAA’s adverse eligibility determination—on the heels of this temporary order, Wiseman was able to play Friday night. Litigation will likely ensure, and The Athletic is reporting that a hearing has been set for November 18 on Wiseman’s eligibility. Still, regardless of the court’s ruling, Memphis took a risk by trotting out Wiseman if the NCAA ultimately deems the star ineligible. The NCAA issued a statement on Friday about the events: “The University of Memphis was notified that James Wiseman is likely ineligible. The university chose to play him and ultimately is responsible for ensuring its student-athletes are eligible to play.”
Sports Illustrated put together a tremendous primer on where, from a legal standpoint, we go from here; the piece is worth your time. Some highlights: The NCAA is likely to attempt removal from state court to federal court; SI’s Michael McCann opines that a federal judge may give the NCAA a fairer shake than would a local, elected judge against a popular basketball player on the hometown team. In order for the federal court (the U.S. District Court for the Western District of Tennessee) to have jurisdiction over the case, the NCAA will need to convince a judge that the case presents a federal question—namely, the NCAA’s ability to enforce amateurism rules. Next, both Memphis and Head Coach Penny Hardaway (who is at the center of the Wiseman allegations, for helping finance Wiseman and his family moving to Memphis—to the tune of $11,500—while still being considered a “booster”) may face NCAA sanctions, and the NCAA could vacate any Memphis wins that occurred while Wiseman was on the court. Further, “the NCAA’s ‘Restitution Rule’ provides that if an ineligible college player is able to play through a court injunction and if that injunction is later vacated, the NCAA can demand the school share television receipts for those games.”
Expert reaction to the Memphis decision has been that the university is taking a massive risk. Under the Restitution Rule, Memphis is also putting in jeopardy its ability to play in the postseason this March. The NCAA is clearly not pleased with Memphis’ open defiance of its initial eligibility determination. As Sherman’s piece in The Ringer notes, “the NCAA considers itself its own legal system[.]” Memphis may be thinking about recruiting, as sports lawyer Stu Brown noted for Yahoo!: “‘This is high risk and potentially high reward. But think about it from Memphis’ side. It’s a tremendous reward if he’s eligible when you are recruiting these high-profile kids. They’re saying, ‘We’ll stand up for you if you’re going to fight the NCAA.’”
All of this occurs against the backdrop of the NCAA’s recent promise to change its policies on student-athlete compensation (specifically, whether players may profit from their own names, images, and likenesses). I recently wrote about the player compensation issue for the JSEL blog. Situations like Wiseman’s, however, would probably not fall into the name, image, and likeness category. Assuming Wiseman did accept money in violation of the NCAA rules, the cash exchange was almost certainly not compensation for name, image, or likeness, even under the broadest interpretation of the words. Further, permitting these kinds of deals under the new rules might seriously threaten “the collegiate model” (with which the new rules are directed to be consistent), far more than third-party endorsement deals would; for example, boosters are usually close to individual universities (in this case, Hardaway, a Memphis alum interested in his alma mater’s success on the court) and loosening the rules around boosters could create an arms race. (To be fair, one may wonder how an arms race would change the landscape in a college football environment where the same two programs—Alabama and Clemson—have met in the national championship game in three of the last four seasons and standout teams—like UCF—from second-tier conferences are denied entry into the College Football Playoff even when undefeated.)
That being said, the rules today are the rules today, and CBS Sports’ Gary Parrish writes of the $11,500 that it was “a pretty clear impermissible benefit.” Still, the NCAA is undoubtedly aware of the critical reaction it is receiving from key influencers in the media. Yahoo Sports’ Pete Thamel tweeted that the Young/Wiseman news was “another searing reminder why NCAA rules needs [sic] to evolve, quickly.” Stephen A. Smith also criticized the NCAA harshly on Twitter. The Ringer‘s Sherman even called the NCAA’s very legitimacy as an organization into question (the title of the previously cited blog post stated that the Wiseman and Young rulings “Remind Us Why [the NCAA] Should Not Exist”). In the area of eligibility determinations, some reform could perhaps benefit the NCAA.
In a tweet from Friday, ESPN’s Jay Bilas touched on an area where compromise could be struck: due process. Bilas decried the NCAA system in which, as he put it, “Only athletes are presumed guilty, immediately suspended, and must prove themselves innocent. Quite a contrast to coaches facing allegations in the FBI investigations and federal prosecutions…they are presumed innocent until proven guilty. What an amazing concept.” It may well be logical that the NCAA extend an “innocent until proven guilty” concept to its players and reform the Restitution Rule to only apply after a final determination on eligibility has been made. The question of administrability looms large here—would the extra time required for due process frustrate the NCAA’s ability to adjudicate these questions quickly enough, given the shortness of college seasons?
Vice News ran an article in 2016 outlining the history of the Restitution Rule and the due process question in the NCAA. In the American justice system, procedural due process usually consists of notice and an opportunity to be heard. The Vice essay advocates that the NCAA “reform [its] disciplinary proceedings to provide full due process rights to athletes, including basic notice and a hearing in any infractions action.” In fact, according to Vice, NCAA outside counsel George Gangwere proposed this model in a 1973 memo to NCAA executive director Walter Byers; the NCAA went with the Restitution Rule instead.
The Memphis situation is developing in real time, and I suspect there is a lot more to come. But if schools like Memphis continue openly defying the NCAA, with the public (more specifically, fans of college sports) in their corner, perhaps it is time for the NCAA to re-evaluate its options. That would merit consideration of the more player-friendly “due process” approach (and delaying ineligibility determination until finality of proceedings) to blunt criticism, demonstrating a good-faith effort to achieving fairness in eligibility determinations that turn on unpopular rules necessary to the operation of the system. Such a shift may nudge public sentiment away from the Sherman belief that the NCAA shouldn’t exist and toward the Parrish view that, while unfortunate, the rules are the rules.
“2007-8 University of Memphis Basketball” by yakk0dotorg is licensed under CC BY-NC-SA 2.0
Eli Nachmany is a Sports Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2022).
by JSEL | Nov 6, 2019 | Highlight
With the 2019-2020 NCAA College Basketball season tipping off, most would expect the Kansas Jayhawks to be looking to make a run at the National Championship. However, amidst program allegations, could Kansas’s performance in the courtroom be more important than its on-court performance for the future of Kansas Basketball? When the National Collegiate Athletic Association (NCAA) handed down allegations on the storied, blue-blood basketball program of the University of Kansas in September, the administration at Kansas quickly acted not just to deny the claims, but to go on the offensive and point the finger elsewhere.
On September 21, the University of Kansas received notice of a list of violations against their basketball program citing recruiting violations and a lack of institutional control. The Hall of Fame coach of the Jayhawks basketball team, Bill Self, was also levied with a responsibility charge. These charges are the result of a “pay-for-play” investigation by the NCAA that was sparked by an FBI investigation into Adidas, where employees testified to making payments to college basketball recruits. Kansas has pointed blame at Adidas, insisting their own involvement is as a victim of the same Adidas scheme that the FBI investigated.
At this time, it is uncertain the exact defense that the University of Kansas will employ, but experts look to a similar defense the University of Missouri employed to represent themselves during their similar allegations scandal in early 2019. The University of Missouri, amid allegations of academic fraud with respect to their football program, hired a Kansas City law firm that specializes in cases involving the NCAA. More specifically, Missouri was looking to the expertise of Mike Glazier, who spent seven years at the NCAA dishing out allegations to collegiate sports teams and has since represented over 100 schools and coaches in NCAA related cases. Though an expensive defense to put on, costing the University of Missouri over $350,000, that was pennies in relation to the potential lost revenue the university could suffer depending on the severity of potential penalties. The University of Kansas will similarly have to weigh these options when deciding how to proceed with their defense.
As the Jayhawks gear up for their season, it will be interesting to see what happens as the NCAA continues to investigate and the University of Kansas begins to put on its defense. Will Kansas be willing, like Missouri, to pay hundreds of thousands of dollars to bankroll its categorical denial of the allegations, or will we see a new legal strategy, ushering in new standards for dealing with NCAA regulations? The allegations against the university are serious, and if Kansas is found guilty, the NCAA could choose to make an example out of them and impose strict penalties, thereby broadcasting to other schools that pay to play behavior will not be tolerated. In the end, Kansas’s most important victories this season might not end up coming from the hardwood.
“Basketball vs. Emporia State” by Kelsey Weaver is licensed under CC BY-NC-ND 2.0
Jason Fitzgerald is a Sports Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2022).
by JSEL | Nov 2, 2019 | Highlight
On Tuesday, the National Collegiate Athletic Association (NCAA) made headlines when its governing board voted to “start the process of modifying its rule to allow college athletes to profit from their names, images and likenesses ‘in a manner consistent with the collegiate model.’” This change comes on the heels of California passing the Fair Pay for Play Act into law. This legislation, set to take effect in 2023, would prevent the NCAA from prohibiting college athletes from profiting off of their names, images, and likenesses. I recently wrote a JSEL blog post on the implications of this law on EA Sports’ NCAA Football video game franchise returning; check that out here.
Chris Vannini, a reporter for The Athletic, cautioned on Twitter that mainstream media headlines are overstating what occurred. This news is a big deal, but the NCAA has only agreed to start a process of modifying its rule—a great deal remains to be determined. Key thought leaders in the sports business world, like Professor Andrew Zimbalist, have homed in on a specific clause in the NCAA’s announcement: the new rule will be created “in a manner consistent with the collegiate model.”
What does that mean? We don’t yet know. The “collegiate model” tends to point to the preservation of amateurism in college sports, which some may find incompatible with the concept of compensation altogether. The decision makers are sure to haggle over how the NCAA can reconcile amateurism with compensation in the new rules, consistent with the direction that this vote has given them. This is not the last we will hear of this question.
A recent post on Inside Higher Ed highlighted an interesting division on the political right regarding college athlete compensation following the NCAA vote. U.S. Senator Richard Burr, a Republican from North Carolina, tweeted: “If college athletes are going to make money off their likenesses while in school, their scholarships should be treated like income. I’ll be introducing legislation that subjects scholarships given to athletes who choose to ‘cash in’ to income taxes.”
U.S. Representative Mark Walker, also a North Carolina Republican, responded to his colleague in the upper chamber: “If scholarships are income, that makes them employees, not student-athletes. This isn’t about income. It’s about basic rights that every other American has to their own name.” Rep. Walker is the author of a bill that would amend the Internal Revenue Code to “prevent qualified amateur sports organizations from restricting student-athletes from using or being compensated for use of their name, image, and likeness.” Andrew Distell covered the Walker bill for JSEL back in April 2019. Walker’s point seems to be that the NCAA’s current model is anti-free market.
The NCAA vote likely buys the organization some time to figure out the issue of athlete compensation on its own terms, but the clock is certainly ticking. We are not out of the woods just yet.
Image: “SELU LSU 9718 037” by tammy anthony baker is licensed under CC BY 2.0
Eli Nachmany is a Sports Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2022).
by JSEL | Oct 29, 2019 | Interviews
Earlier this month, Jim Quinn sat down with members of the HLS community to discuss free agency, competition, and other topics covered in his new book, Don’t Be Afraid to Win: How Free Agency Changed the Business of Pro Sports. Jim fielded a variety of questions from the large and eager crowd over Indian food and a shared excitement of the future direction of the major sports leagues. Below are some excerpts from the Q&A portion of his discussion on campus.
The interview was conducted by Madison Martin ’21 (Online Content Chair, Sports) and Daniel Alford ’20 (Executive Editor, Online Sports Content), from the Harvard Journal of Sports and Entertainment Law. It has been edited for clarity.
Q: Didn’t Curt Flood bring about free agency in baseball?
A: The answer is no, Curt lost the case. The Supreme Court continued the baseball exemption … but it did not apply to basketball, hockey, and football, so as a result, we pressed forward under the antitrust laws. The biggest issue was the non-statutory labor exemption – the owners said this was all part of collective bargaining, so it should be exempt from the antitrust laws. The issue got to be “when does the labor exemption end?” Various cases (including Powell) said – as long as there was a collective bargaining agreement in place and a union remained a union, it was exempt under the antitrust laws. As a result of the McNeil agreement, we entered into what was called the White Agreement. For further reading, see http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1068&context=sportslaw.
Q: Could you speak a little more on the history of lockouts and free agency?
A: Ironically, the first lockout we had in 1994 turned out to be a disaster for the owners, and the teams collapsed – this was the first instance of free agency in the NHL. The reality is, once you have some level of free agency, some level where the competitive market sets the price, it impacts everybody along the line, because a player still under contract will say, “So and so got 5 million, and I am a better player than him so I should at least get that much.” As a result, it set a bar that impacted hockey and led to the year-long lockout in 2005, where (Gary) Bettman insisted he needed to get a salary cap in order to survive, which is where we live today.
Q: Do you think any leagues are headed toward a lockout or strike?
A: I don’t think any of them are. The money now is so huge on both sides, that having a work stoppage that actually effects revenue streams is unlikely. You can’t get that money back, no matter what you do, whether you are an owner locking out or you are a player and going to strike and forego significant salaries, it is very difficult. Is it possible? It may be possible in baseball, because they have some complicated issues now with the “youth movement” and the way their system worked. It has worked for a long time, but there is a question of collusion because older players aren’t getting the same level of compensation, and you have this whole question now of all these younger players just starting and becoming stars immediately and the league has to figure out have to deal with that. The chief negotiator for the union is one of my former partners, and I know that these are issues that they are wrestling with.
Q: In Chapter 9 of your book, you further discuss salary caps. Was the argument against salary caps based on the fact that there was a trust in regards to employment? And how does it matter that it is sort of a non-essential industry?
A: The owner’s argument always was that they needed all the restrictions to maintain competitive balance. The argument has always been bullsh-t and it is for the next 100 years because if you have competent people running teams, with the Tampa Bay Rays as an example, in a system where you have free agency and the draft in some form — and as an aside, the draft has become a little bit of a farce, it is little more than a marketing tool than anything else — all of this has been a huge boom to professional sports because it keeps the different sports in front of the public the whole year, because something is always going on, then you can’t lose that competitive edge.
Q: Any opinions on recent NCAA litigation in CA?
A: I am sure you are aware now, at least three states have passed laws relating to the use of likeness, which is just a disaster – because you can’t possibly have fifty states regulating an industry that is essentially a national industry. What happens when Auburn plays UCLA? Can the Auburn players now get paid? Legislation has to be on a federal level, or the NCAA has to get its act together and craft rules that will allow this. I tend to agree with the view that stipends serve as a possible solution. Putting the names and likeness issues aside, for the D1 schools and perhaps others, to give players a stipend to offset their inability to work during the summer — they can’t get jobs and vacation and so forth — this would go a long way to quelling this whole issue. However, the NCAA still hasn’t gotten their act together, it’s a horrible organization, the problem is it has 1100 members, and little schools have the same voice as Michigan. It makes zero sense, and maybe eventually it will be done out by a conference by conference basis.
Q: But what about players that contribute significantly more?
A: You can’t do it that way, it’s college sports. Unless you want to decide that it is just professional football, and nobody really wants that, you have to guide out a different kind of system. It can’t be just the NFL without steroids. The name and likeness thing is more confusing, and I am not sure how this will ultimately play itself out – you are really talking about nationwide, a couple dozen players that people care about, it’s not a lot of players.
Q: You worked on the Florette age eligibility case (on safety issues with younger athletes). I am curious your thoughts on the Women’s Tennis Association and Coco Gauff being 15, with regards to restrictions on how much she can play?
A: If someone wanted to bring a lawsuit they would probably win it, because obviously she can play. There is no competitive rationale to bar someone like her from playing. It is paternalistic. Similarly, in the NBA, there should be no “one and done”. It is different than football because it is not a safety issue. If you can play at 17, I mean just look at Kobe Bryant.
Q: Are there one or two important issues for students to keep their eyes on?
A: The continuing issues of IP and in a broader sense, you know that there is the DirectTV litigation in the West coast, which is an interesting piece of litigation. The economics of these sports are likely to change over time. Right now, the live sports are the lifeblood of the networks. At some point, there is going to be bidding from Amazon and Netflix and maybe even Disney as they create these streaming services. These people have incredible amounts of money, certainly long term, and I know talking to the head of NBC Sports, they see that as a long-term serious threat to their business.
For more information on these topics and others, feel free to check out Jim’s book, Don’t Be Afraid to Win: How Free Agency Changed the Business of Pro Sports. https://www.amazon.com/Dont-Be-Afraid-Win-Business/dp/1635766788
