November 13th, 2013

Alex Rodriguez expected to testify in front of arbitration panel Monday

By Brian Cruikshank

At one of his last at-bats to save whatever is left of his career and public perception, Alex Rodriguez has to do something that the fourteen time all star has never been able to do on the baseball field: appear genuine. When his appeal of the 211-game suspension Major League Baseball handed down to A-Rod resumes Monday, Rodriguez is expected to testify that he never received steroids from Anthony Bosch, owner of the shady Biogenesis clinic in Miami.

From inside my Yankee Fan Cocoon, I want to believe that Rodriguez has nothing to worry about. I want to believe that when he appears in front of the arbitrator on Monday, all he has to do is say that he has never ever taken any performance enhancing drugs. I want to believe the 654 home runs he has hit had everything to do with his now surgically repaired hips and nothing to do with a similar substance to what Roger Clemens was putting in his ass. But, as it is always with A-Rod, it’s not that easy.

Bud Selig, commissioner of baseball, has been working to unseal testimony that Rodriguez gave at the hearing of another shady steroid provider, HGH smuggler Anthony Galea. If Selig can make that testimony public, he can compare it with Rodriguez’s testimony on Monday to look for discrepancies. A-Rod’s stories must match up or he risks perjuring himself on Monday, suffering the same fate that Home Run King* Barry Bonds did when he lied, under oath, about taking steroids.

Rodriguez’s best chance is to make a passionate plea that he ceased using performance-enhancing drugs after he moved to New York. Or that he rejected any further use when he realized that people looked up to him as the man that would wipe away the stain of the steroid era from baseball’s record books and assume his role as the clean option for the home run king title.  It shouldn’t be too hard to play the victim when Selig and Major League Baseball are coming at him for a suspension nearly a full season longer than the suspensions for all of the other Biogenesis patients. But, as it is always with A-Rod, it’s not that easy. Remember, this is the same guy who hung a painting of himself as a Centaur in his bedroom. The same guy who opted out of a $252 million contract only to sign a $275 million contract, which appear as numbers 2 and 1, respectively, on the list of highest athlete contracts of all time.  For Rodriguez to appear genuine in front of the arbitrator he will have to summon more effort and perseverance than he has in his entire twenty-year career, all in the hope that he can play for one more.

For my part, I hope Rodriguez wins his appeal and I get to watch one of the greatest players of all time hit a couple more home runs over the short porch at Yankee Stadium. I want this steroid era to be over so we can marvel at the accomplishments of players today, not the faults of players yesterday. I want A-Rod to apologize to his fans and teammates and make an impassioned plea for why he is a guiltless victim of Selig’s last attempt to fix the mess he presided over before Selig retires next year. But, as it is always with A-Rod, it’s not that easy.

February 14th, 2013

Update: Significant Victory for Steven Tyler’s Lawyer in American Idol Suit

Olivia Langford

Back in October I wrote about a suit by Aerosmith front-man Steven Tyler’s management group, Tenth Street Entertainment (TSE), against Tyler’s lawyer, Dina Lapolt of LaPolt Law, P.C. TSE sued for more than $8 million in damages, alleging (1) breach of fiduciary duty, (2) breach of the duty of confidence, (3) intentional interference with contract, and (4) intentional interference with prospective economic advantage. Here’s an update:

Judge Joseph R. Kalin of California’s Superior Court granted LaPolt’s anti-SLAPP motion earlier this month. A strategic lawsuit against public participation (SLAPP) is a suit intended to censor and intimidate critics by exhausting them with litigation until they cease their criticism. The California Anti-Slapp Statute allows people to file a motion to dismiss complaints filed against them for acts of free speech regarding a public issue. Attorneys’ fees and court costs will often be awarded to a defendant whose anti-SLAPP motion is granted.

The Superior Court also dismissed two other claims against LaPolt regarding Motley Crue for failure to properly plead the elements of the causes of action. One of Lapolt’s attorneys, Christine LePera of Mitchell Silberberg & Knupp, says they intend to go after TSE for legal fees. LaPolt has received quite a bit of support from her clients, including Steven Tyler and Motley Crue’s Tommy Lee and Mick Mars.

The case doesn’t end there though. One of TSE’s claims survived: that LaPolt owes them a portion of the commission from Tyler’s touring revenue. I will update with whatever I find out as the case unfolds.

For more information on the California Anti-SLAPP Statute, visithttp://citmedialaw.org/legal-guide/anti-slapp-law-california

Olivia Langford is the co-editor of the Sports and Entertainment Law Blog. She is a frequent contributor, mainly in the field of entertainment law. She can be reached at oplangford@email.wm.edu.

February 6th, 2013

Speaker Series: Howard Jacobs and Arbitrating Cases in front of CAS

Yesterday the William & Mary Law School was pleased to welcome to Mr. Howard Jacobs, noted sports law attorney and W&M law alum (’90) to give a presentation to interested students on arbitrating doping cases in front of the Court of Arbitration for Sport (CAS). Mr. Jacobs also met with students at a reception before the presentation, taking individual questions and discussing his route to becoming a sports law attorney.

For obvious reasons, the subject matter is extremely timely. It seems that every day a new story about doping and performance-enhancing drugs breaks, with the latest example being the investigation of a Miami clinic linked to at least 8 Major League Baseball players, including former MVPs Alex Rodriguez and Ryan Braun. While Mr. Jacobs works most often with athletes in Olympic sports, he has also been involved extensively in several high-profile cases involving major American team sports athletes.

Before delving into the subject-matter of the presentation, it may be helpful to briefly relate Mr. Jacobs background. A 1990 graduate of W&M law, Mr. Jacobs began his career as an admiralty lawyer, and still does some work in the field. A mixture of networking and fortuity allowed him to get into the field of sports law, doing work for the United States Triathlon Federation, which eventually led to his first doping case. This was before doping became the national and international story it is today. Slowly he began taking more and more cases, and then with the BALCO scandal and other high-profile events, this field expanded exponentially and Mr. Jacobs was one of the few attorneys with bona fide experience defending athletes. He is now renowned as one of the top lawyers defending athletes and his practice has expanded significantly.

As alluded to above, a majority of Mr. Jacobs work occurs in the Olympic sports. These athletes are governed by the World Anti-Doping Agency (WADA) as well as national anti-doping organizations. (You’ll remember WADA was very involved in the Lance Armstrong scandal). WADA promulgates its own code and list of banned substances. Violations of this code are based on a standard like strict liability — there is no intent prong, nor does it matter that the substance was not performance enhancing. To give you an idea of the scope of the WADA code, they have banned and are considering outlawing once again caffeine, a substance in any number of normal products like coffee or soda. (Let’s just say that avoiding caffeine would be quite difficult and leave it at that. I, for one, can’t even go to class without a little coffee in the morning). As a result, this system is quite difficult for athletes to navigate.

Further complicating matters is that athletes are not permitted to challenge the fact that a substance is on the prohibited list. While extenuating circumstances do matter, a prima facie violation is established immediately upon a positive test or designated missed tests. Much of the argument in these cases is about reducing the penalties, which the presumption being a two-year ban from competition. Being able to explain where the substance came from, how the athlete ingested it, and what precautions the athlete took in an attempt to avoid the violation are all quite important in seeking a reduction of penalties. Perhaps surprisingly, a majority of these cases are unintentional violations. The takeaway from the presentation, at least in my eyes, is that the structure and operation of this system is very pro-sport and anti-athlete. Perhaps that is a policy decision we support, in an effort to clean up sports, but it does also seem that some essentially “clean” athletes are punished for unintentional or unknowing violations in which the performance bump is speculative at best. In other words, not all these cases are well-orchestrated conspiracies to cheat.

As far as the procedure goes, CAS an arbitration body. Cases usually reach it on appeal from national hearings or arbitrations. For US athletes, the first level of the process is an arbitration in front of the American Arbitration Association, with the United States Anti-Doping agency doing the regulation and prosecution. Other nations have their own anti-doping structures. The panel consists of 3 arbitrator, sanctioned by CAS, in which each party may pick one arbitrator. The CAS process is largely modeled after the European justice system, requiring somewhat of an adjustment for American lawyers. Evidentiary rulings and procedural aspects are often quite different than in the American court system.

The above serves as just a brief summary of Mr. Jacobs presentation. It is clear that the field is constantly growing, as professional leagues and sports federations around the world continue to crack down on the use of illegal substances.

Samuel Mann is a third-year law student and editor of the Sports and Entertainment Law Society Blog at the William & Mary School of Law.

November 14th, 2012

The Miami Marlins and Public Fraud

For those of you who are not aware, last night the Miami Marlins agreed to trade 5 major league players to the Toronto Blue Jays for 7 players, a few of which have seen major league service time. All major sports media outlets have covered the trade in great detail, because this is not the ordinary baseball trade. (For what it’s worth, two of my favorite writers are Keith Law and Jonah Keri, who both had excellent takes on the trade and its implications beyond just the players and teams involved). While it is true that “small market,” low-budget teams often trade established big leaguers for prospects and salary relief in Major League Baseball, they usually do so to compete in the future and to improve the status of their organization. This trade does not appear to involve that motivation; instead this trade is purely about money.Ed’s Note: This is a great baseball trade for Toronto and this post is in no way directed at them.

Let me frame this discussion with two quick points. First, I am a huge baseball guy, a “homer” for the game, meaning that I am completely biased in that I want MLB to have the best possible reputation and be the healthiest game possible. If the NFL or NBA disappeared, I wouldn’t be nearly as disappointed as I would be if there was no more baseball. Second, I am extremely skeptical that anything will ever come out of this situation, meaning it is my belief that there will be zero reprucussions for the Marlins and those in charge. I mention these two things because it is quite possible that the explanation below will be affected by my inherent biases.Nonetheless, this is an extremely important situation to dissect, and it has nothing to do with what occurs on the baseball diamond.

The Marlins are owned by Jeffrey Loria. Loria used to own the Montreal Expos until he sold the club to MLB baseball. The reason he sold the team, after spending years trying to acquire an MLB franchise, was that he could not convince the city of Montreal to fund the construction of a brand new stadium. As a result, the Expos toiled under MLB’s control for two years and were moved to Washington. This is a polite way to say that the Expos no longer exist where presumably they would still be in Montreal if the city has agreed to publicly fund a new stadium. As part of the reshuffling, Loria acquired the (then) Florida Marlins in 2002, assisted in part by a no-interest loan from MLB.

Fast forward a few years, and Loria was again threatening to move an organization if it did not get public funding. The Marlins were playing in an NFL stadium and had major attendance difficulties. So Loria discussed other cities that were viable for an MLB baseball team, negotiated with city and county officials in Miami, and had MLB act as the muscle. Low and behold it worked, and Miami-Dade County agreed to help fund the new stadium. All sorts of factors went into the deal: it would keep the franchise in Miami, it would allow them to draw more fans and spend more money, it would guarantee that the Marlins would put a competitive team on the field, it would even be built in Little Havana to engage the large Latin American population, etc. This is not even to mention the supposed economic benefits of new sports facilities, a myth that has been debunked by every economist to study it. (See Phillip Miller, The Economic Impact of Sports Stadium Constructioni, 24 Journal of Urban Affairs 159).

At first, it seemed sincere. The Marlins went out and spent a significant amount of money on free agents: Mark Buehrle, Jose Reyes, Heath Bell. They were even the frontrunner for Albert Pujols, the prize of last year’s free agent class, for a while. Many analysts and commentators picked the Marlins to win their division this year. The only problem was the team didn’t play very well. So in response, they traded multiple players to contenders in July. While surely disappointing to the fanbase, it’s not uncommon to do during a losing season (high profile franchises like the Red Sox and Phillies did the same thing this past season). But then came the offseason: they traded Heath Bell, and then last night traded five more players, including their starting shortstop and two best pitchers.

The Marlins now have a miniscule payroll and are only committed to 8 players for next season (which means their labor costs are going to be extremely low). They just got a publicly funded stadium. Now add to that television money and revenue sharing payments, and, according to Jonah Keri, “the Marlins could expect to rake in about $70 million to $80 million before it ever sold a single ticket.” This is possible because the revenue-sharing system grants payments in which the richer teams (on-field, that is) subsidize the poorer teams. This is supposed to help competitive balance, but baseball lacks the structure necessary to force its franchises to reinvest their revenue-sharing dollars. Instead, certain ownership groups simply skim off the top (Pittsburgh and Kansas City know what that means to a franchise).

So to summarize: Loria threatened the municipal leaders with the prospect of the Marlins leaving town if they did not get a stadium, a threat that was very powerful with the backing of MLB leadership and the Expos cautionary tale; he succeeded in holding the county hostage and only had to contribute $125 million of the stadium’s $634 million price tag; he then signed free agents and made an effort to compete … for half a season before selling off almost all of the team’s assets, and certain each asset that came with a high price tag; and now is looking at a season where the team will be awful, attendance will be even worse and the organization is the laughingstock of baseball, yet he will still pocket tens of millions of dollars.

To me this sounds like public fraud. Obviously there is no cause of action that the people of Miami could pursue. Unfortunately they seem to be stuck with the approximately $2.4 billion in municipal bonds that the county will need to pay off over the next 40 years for the stadium. The lone hope is an ongoing SEC investigation into the stadium’s financing. While there are not a ton of public details on the case, see here for details, I remain skeptical that formal charges will be filed or that any sanctions will be leveled upon Loria and his associates.

What is disappointing about this is that MLB contributed to this public fraud, and the taxpayers in the greater Miami area are left footing the bill for an owner who obviously does not care at all about his organization or its community. Sports are a business, and I am as big a believer in turning a profit as anyone, but this type of conduct, purely motivated by the bottom line, cannot stand. Major League Baseball, the future of baseball in Florida, and most importantly, the taxpayers of the greater Miami area have been irreperably harmed by the conduct of Loria and his associates.

Sam Mann is an editor for the William & Mary Sports and Entertainment Law Society. He may be reached at sgmann@email.wm.edu or @SELSblogWM on Twitter.

 

October 24th, 2012

Entertainment Attorney’s Alleged Underhanded Dealings Cost Rocker a Multi-Million Dollar Contract

By Olivia Langford

During the previous season of American Idol, management for Aerosmith rocker Steven Tyler, Tenth Street Entertainment (TSE), hired West Hollywood entertainment attorney Dina LaPolt to negotiate Tyler’s return to the show for a third season.

LaPolt, who specializes in music law, allegedly botched the deal, worth an estimated $6-8 million. TSE filed a complaint in Los Angeles Superior Court alleging (1) breach of fiduciary duty, (2) breach of the duty of confidence, (3) intentional interference with contract, and (4) intentional interference with prospective economic advantage. The complaint seeks damages of more than $8 million.

TSE claims LaPolt was disloyal and violated her fiduciary duties to Tyler and TSE by angling for her own career at her clients’ expense. Tyler’s managers believed his rising popularity on the show would enable them to renegotiate a more lucrative contract, which in turn would earn TSE a greater commission.

TSE alleges LaPolt trashed the management company and revealed highly sensitive information to American Idol, thereby breaching confidentiality and fiduciary duty. These dealings undercut TSE’s position in the negotiations and resulted in a new contract almost identical to that of last season. The complaint rather colorfully accuses LaPolt of selling out TSE and Tyler in order to gain more business referrals from American Idol. In fact, LaPolt has arranged to represent several American Idol artists since the conclusion of negotiations.

The complaint also charges that LaPolt disparaged TSE to Tyler and Eric Sherman, one of Tyler’s managers, which resulted in Tyler firing TSE in August 2011. LaPolt then represented Tyler in an agreement to pay a portion of his commission to TSE for two years and in negotiating a new management deal for Tyler with X1X Entertainment, Inc.

But in early 2012, TSE claims LaPolt terminated the payment of management commission to TSE, in what they call a “blatant act of interference.” In addition, she allegedly skimmed money off the top of the commission on Tyler’s touring revenue and kept it for herself, thus chopping the portion to be paid to TSE in half. TSE estimates to have suffered actual damages in excess of $2 million and are also demanding punitive damages sufficient to“make an example of” LaPolt.

If these allegations are true, LaPolt has engaged in very serious ethics violations, which I expect will be reviewed by the California Bar. It will be interesting to see what kind of impact the suit will have on her contracts with other artists. It’s hard to imagine they would appreciate her lining her pockets at their expense.

Read the full complaint here.

Olivia Langford is an Editor for the W&M Sports and Entertainment Law Society. She can be reached at oplangford@email.wm.edu.

September 27th, 2012

Native American Inspired Sports Teams from an IP Perspective

By Dave Johnson

In his September 26, 2012 article on ESPN’s UniWatch[1], Paul Lukas put forth an argument to end the use of Native American inspired names for sports teams based on “intellectual property” issues. Unfortunately, Mr. Lukas is using the auspices of an important field of law related to branding to market what is essentially his view of political correctness. After briefly addressing the racism in the Washington Redskins’ name or the Cleveland Indians’ Chief Wahoo mascot, logo, and trademark, Mr. Lukas states:

I see this as more of an intellectual property issue. Basically, for those of us who aren’t Native American (which basically means the vast majority of the people who reading this), I don’t think we have the right to use images of headdresses, tomahawks, tribe names, and so on. It’s not a question of whether such symbols are offensive, or whether they perpetuate outdated stereotypes; it’s that they don’t belong to us.

Mr. Lukas’ argument continues more or less along a line of political correctness. However, from an intellectual property perspective, he is incorrect under the current laws. Pro Football, Inc., Dan Snyder’s company d/b/a The Washington Redskins, owns approximately 20 live trademarks covering the logos, insignia, team name, and various formative marks relating to the Redskins. The Cleveland Indians Baseball Company owns 41 live trademarks related to its logos, insignia, team name, and other formative marks, including for the Chief Wahoo logo in numerous classifications of goods. By going through the list of teams utilizing Native American inspired names and logos, the results will likely be the same. From an intellectual property perspective, the names and logos certainly do belong to the teams.

The question becomes one of equity. Soon, the two of the three prongs of the United States’ intellectual property system will exist as first-to-file systems. Trademark law depends on priority in filing for determining rights to a trademark, so long as the application is perfected through use of the mark in commerce. Patent law will also soon transition to a first-to-file system, bringing it largely in line with international patent laws. Copyright stands alone in not requiring registration in order to receive protection for a work, but there are definite advantages to publication or registration with the Copyright Office such as a definitive reference date related to the creation of the work.

What Mr. Lukas advocates in his article is that the Native American persona serves as a sort of “prior art” for the trademarks and copyrights and should invalidate the intellectual property rights of these sports organizations. [My apologies to intellectual property law purist for mixing terms].If it could be shown that Native American groups possessed prior similar trademarks and that the use by the teams caused consumer confusion, the trademarks should be invalidated. However, that would require prior use in commerce by the Native American groups. The same logic applies to copyright, whereby the local tribes would need to demonstrate that they had created a substantially similar work that the copyrights of the teams would infringe upon.

Mr. Lukas may not be speaking from a legal perspective, but he raises an interesting point about whether the intellectual property rights obtained by these organizations can or should be invalidated. A better analysis might be through each tribe’s right of publicity, a competing property interest that prevents the unauthorized commercial use of an individual’s name, face, signature, and “likeness” or persona. If a corporation can have personhood under the law, it is not a far leap to extend the same personhood to a group. As a person, a tribe should be able to protect its identity and privacy, including the misappropriation of the names and images related to that identity, a cause of action under tort law. Alternatively, a claim that the teams are trying to “pass off” the names and logos, and the products that display them, as an endorsement or source of origin might also be actionable. Use by the teams deprives the tribes from the particular commercial gain related to the infringement, namely using such names and images for their own sports teams, should they desire, or more realistically, merchandise.

If such a right of publicity exists for these Native American tribes, first a cease and desist demand must be issued, followed by an attempt to obtain injunctive relief, which might be granted alongside damages for emotional distress (usually for non-celebrities) or commercial loss (for celebrities). Whether such an action would be accepted would be interesting to see, but it should be noted that attempts to cancel the trademarks of teams such as the Washington Redskins on the grounds that the trademarks disparage Native Americans have failed, both for lack of showing of disparagement and laches issues. See, Pro-Football, Inc. v. Harjo, 567 F.Supp.2d 46 (D.D.C. 2008); and, Pro-Football, Inc. v. Harjo, 284 F.Supp.2d 96 (D.D.C. 2003). The Supreme Court refused to hear the Harjo case in 2009, effectively ending that dispute. But for the issue of laches (which is a time-bar doctrine to prevent “stale” claims), the right of publicity might be the best way to reclaim and prevent the use of Native American names and images by sports teams.

Dave Johnson, a 2L at the William & Mary School of Law, is a frequent contributor to the SELS blog. He may be reached at dcjohnson@email.wm.edu


[1] Paul Lukas, Time to Rethink Native American Imagery, ESPN.com (Sept. 26, 2012), http://espn.go.com/blog/playbook/fandom/post/_/id/12057/time-to-rethink-native-american-imagery.

April 19th, 2012

NCAA Basketball’s Transfer Restrictions: Valid?

The biggest story in College Basketball this week is not Kentucky’s starting five going to the NBA, but instead the debate over transfers. The story hit a fever pitch this morning when Wisconsin Head Coach Bo Ryan went on ESPN Radio’s Mike and Mike in the Morning, to justify his recent decision to “block” the transfer of Jarred Uthoff to twenty-five schools. (Listen to the interview here: ESPN). You can read the full story of the episode here, but basically, Uthoff, a redshirt freshmen has decided to transfer. Per the terms of his scholarship, Uthoff had to ask for a “release” to contact other schools. Bo Ryan, as many other coaches have done recently, restricted such release to dozens of schools, including all Big Ten teams, Marquette, Iowa State and the entire ACC. College basketball fans and media members seized on this story, bringing it to the forefront of sports news. Ryan, apparently feeling the pressure, agreed to go on Mike and Mike to clarify his position.

Let’s just say he did not engender much sympathy today. Ryan’s arguments can basically be summarized in two ways: 1) everyone else does this so I am doing it too and it’s not fair for me to be criticized; and 2) “the restrictions” exist solely to force the student-athlete to communicate with either the coach or administrator to tell “why they are transferring.” The theory behind excuse #2 is that there is an appeals process by which the student can speak to an athletic administrator and get the “block” removed.

Judging by the reaction of college basketball insiders/media members, those arguments don’t have a whole lot of merit. Here is a sampling from Twitter (we are now officially social media proficient here at SELS):

[Ed’s note: sorry if those aren’t clear. The point was that Twitter was very anti-Bo this morning. Check out feeds from Seth Davis, Jeff Goodman and Andy Glockner for more of the specifics.]

To be fair to Ryan, yes other coaches are restricting transfers. Michigan, South Carolina, Western Kentucky and others have similarly had issues with transfers and “blocked schools.” Though Ryan certainly overstated his case, based on this CBS Sports report. Last year there was a high profile incident at St. Joes with Head Coach Phil Martelli not releasing one of his players to any school (that story was big in the college basketball world but did not make into the mainstream sports media as this one has).

Ryan’s two prominent justifications, listed above, don’t move the needle too much. The fact that everyone else is doing it, even if true, is bogus. To make a parallel to antitrust law, cheating on an agreement is not an cognizable benefit. Same here, because others engage in arbitrary restrictions does not make it valid for the next coach to do it. Second, forcing a student to go through an appeals process is silly, for if the appeal process is going to make an difference, it would have to undo these restrictions. If the block on some schools will eventually be lifted, why put it on in the first place? Neither of those make any sense.

But Ryan did make reference to a valid argument: that scholarships come with restrictions governed by the NCAA, and the scholarship is a contract binding on both sides. In other words, these transfer restrictions are like the standard non-compete clause. And in some ways that makes sense. This school is paying for your education in return for your performance on the field; among the conditions of said agreement are transfer restrictions. The NCAA governs amateur sports and has valid interest in maintaining certain eligibility criteria, etc. Makes sense in some ways. The next question would be whether the ability to restrict where a student-athlete can transfer to are in this agreement, and if so, is it enforceable.

Now it is of course hard to answer this question without the actual scholarship agreement to look at, but we can draw some conclusions from what we know. Transfers are restricted by the NCAA as part of its determination of eligibility, completely apart from the standard language in scholarship agreement (though I am sure the language confirms this policy). Absent a waiver, every basketball player who transfers must sit out a full year, measures by the NCAA in semesters. That restriction, as alluded to above, is perfectly valid because the NCAA has an interest in promulgating eligibility requirements that incentivize stability and real reasons for preventing the free jumping of player from school to school. I’m not sure many would argue against this.

But this still leaves us with the issue of whether a coach/school can restrict transfers to certain other schools. I might accept such an argument if not for this fact: college scholarships are one-year renewable agreements. In other words, a school can cut any of its scholarship players lose at the conclusion of the academic year, leaving no recourse for the player. So the legal question would be, if these agreements are valid for one year, why should schools be able to control what the player does the following year? And really the question is two years down the line because in nearly all situations, the player must sit out the next year from competition.

The easy answer is that a school would exercise its renewal option to “hold” the player to his scholarship in order to continue to control his future destination. But if that is that case, especially in light of the fact that student athlete’s do not negotiate their scholarships (they are forced to sign a standard agreement in order to obtain scholarship money), this begins to look like a contract of adhesion. By that, I mean that there is no meeting of the minds, in that the player has not agreed to the conditions, he has instead signed an unfavorable deal due to a lack of bargaining power. I’m not sure the argument is perfect, but I do think a compelling argument could be made to a court that some conditions of the scholarship, like this one, are unenforceable.

Let me clarify by saying that the whole agreement is not unenforceable [Eds. note: apologies for the double negative; we are using the term of art here.] just that this particular condition, particularly if it is not spelled out in the scholarship agreement, is dubious. And the evidence seems to indicate that this power given to coaches and athletic departments is not prominently displayed or spelled out to the student athlete. Uthoff said that he was shocked about the list of blocked schools. Other players have made similar comments in response to their denied requests to contact certain schools. In light of this, I wonder whether a court would enforce this condition if a player were to challenge it in court.

As far as policy goes, we can all agree there must be some restrictions in player movement. An unregulated system of transfers would likely hurt the college game, both in football and basketball. But the one year waiting period seems like enough. I will even submit to the rule that many conferences have discouraging intraconference transfers. Many schools, according to the aforementioned CBS report, only restrict transfers to conference opponents. Practically, this makes sense. Restricting transfers to 25 schools or more, however, makes no sense, and seems like coaches and athletic departments asserting their dominance over college kids without real bargaining power, simply because they think they can. And in that case, I wonder how enforceable these “contract rights” (as Bo Ryan apparently would like you to believe they are) would be if challenged on legal principles.

 

February 25th, 2012

MLB Arbitration: Final Observations

In wake of the the Ryan Braun episode (I hesitate to call it a case yet, in that there is a substantial chance it ends up in District Court and becomes a true case), I guess need to be more specific when I say “MLB Arbitration.” We are still dealing with arbitration as it relates to player compensation, as opposed to the arbitration process for disciplinary matters like violations of the performance enhancing drug policy. Depending on how the Braun matter plays out in the next few days, we may very well devote a full post to it. For now, I will simply say it was unexpected to see Braun win his appeal, as no MLB player had successfully appealed a drug suspension, and I would be very surprised if the ruling were overturned.

Now, back to arbitration as it relates to compensation.The process of Salary Arbitration is fascinating, not because of its complexity (as you’ve seen in this series, it is really rather simple) but instead for how it operates practically. The system, like any legal mechanism, is set up to create incentives. And the incentive of this system is to avoid its use. In other words, MLB and its Players Association, through collective bargaining, have created arbitration to encourage teams to avoid the process. As previously described, both team and the player have to submit a proposed figure, and if the case goes before the panel, the panel must choose one of those two figures. We all know, basic logic dictates the team and the player will, all things equal, settle somewhere between the two numbers in order to manage the risk of an adverse decision by the arbitration panel.

But there is more to it than just that. As with any proceeding in front of a tribunal, court or otherwise, things tend to get contentious. Regardless of the outcome of this case, the parties have to resume their relationship after the case. This gives further incentive for the parties to settle. From the team side, this conclusion is obvious: in order to win an arbitration, the team has to effectively argue the player is not worth a certain amount. This almost always the team to point out the players flaws and explain why other comparable players have more value and are better than the team’s player. This is not an enviable position to be in. From the player’s side, the incentives are little less obvious, but likely no less powerful. First, the player does not want the team to argue against him any more than the team does. Second, players generally want their contract situations resolved as soon as possible. Arbitrations happen in February-by then players are in full-scale training mode for the upcoming season-players don’t want to be concerned about their salary in February. Third, the player’s leverage is strongest in advance of arbitration, because teams prefer to avoid the hearings whenever possible. (In fact, some teams have an express policy to avoid arbitration. The Red Sox, for instance, have not taken a case to the panel in 11 years). Lastly, the objectives of most players is to secure a multi-year, long-term contract; obviously that cannot be done in arbitration.

The final observation I would choose to make is that the composition of the panel is a huge factor. Some members of the panel are quite sophisticated in terms of baseball, but most are not. The result is that many decisions are made on the basis of the simple, counting stats like homeruns, runs batted in, pitcher wins and saves. Yet over the past several decades, the way we measure value and ability has evolved significantly. The “advanced” stats and “new” metrics are indisputably more accurate and more telling, yet the arbitration structure tends to reward these traditional stats, that in the context of the modern game, are not extremely accurate or telling. So stats like pitcher wins or saves, that have been empirically rendered less relevant are actually the ones that are used to determine compensation.

My personal take would be that the system needs to be tightened up to include a greater focus on advanced stats and accurate comparisons between players that go beyond the basic, superficial stats arbitration currently relies on. If that means MLB must ensure that its arbitrators are sophisticated in these metrics, then so be it. As for the system itself, I believe the incentives it creates are generally positive; the player control system does allow small and mid-market teams to hold onto their productive young players, while arbitration eligibility does allow the player to be compensated more in line with his level of production. So the system itself is successful, but it can be reformed and improved.

February 17th, 2012

Tulane Baseball Arbitration: The Players

We are back with the second installment of our Tulane Baseball Arbitration series. Today I wanted to talk about the three cases and the impressions we got from going through the process of preparing and arguing our cases.

Let me begin by saying this was an absolute pleasure. It’s not always possible to say that about things we do in law school, but this competition had the perfect mix of intellectual challenge and interesting subject. As I alluded to in my previous post, our three players were Andrew Bailey (Relief Pitcher, formerly of the Oakland A’s), Nelson Cruz (Outfielder, Texas Rangers) and Jordan Zimmerman (Starting Pitcher, Washington Nationals).

The arbitration process puts great emphasis on comparable players to determine the salaries of eligible players each year, so in a lot of ways, we were searching for legal precedent. In that respect, the process was fairly similar to typical legal research. The first step was to identify the player, his service time, and his statistics. The great thing about baseball, of course, is that statistical information is readily available at any of dozens of awesome websites. We spend most of our time combing through Baseball-Reference because it is user-friendly, and also relied heavily on Cot’s Baseball Contracts, formerly an independent site, but now under the direction of Baseball Prospectus.

From there, it is necessary to find other players who fit the same profile; that is, they had a similar level of years service time (YST) and signed a one-year contract that offseason. Obviously the more recent, the better because of inflation, both in the dollar and in big league salaries in general. The reason that one-year contracts are important, is because it is difficult to value multi-year deals. For an excellent example, let’s look at Nelson Cruz. For the purposes of the competition, the competitors had to ignore what actually happened to Cruz’s case, and precede based on the case given by the organizers. In our case, Cruz submitted a salary figure of $5.3 million, and the club submitted a figure of $4.7 million (he had 4+ years of YST, so was second-year arbitration eligible). But in reality, Cruz signed a 2 year deal worth $16 million to avoid arbitration. If were to use Cruz as a comparison in a future case, we could not accurately say that his salary after his second-year of arbitration eligibility would be $8 million, because the deal covered his third year of eligibility as well, in which he almost certainly would make significantly more. For valuation reasons, then, one-year deals are far superior, because it makes the comparison far easier for the two sides, and most importantly, for the arbitrator.

In preparation for a case then, again using Cruz as our example, you start to compile a list of players at the same position with similar service time. We started with just corner outfielders in the past two years (2009, 2010 seasons) and found a fairly long list of potentially comparable players: Luke Scott, Carlos Quentin, Ryan Ludwick, Josh Willingham, Delmon Young, Corey Hart, Jeff Francoer, etc. Then we had to look at how those players compared, and the effect on our case.

We represented the team, so we wanted our comparable players to have salaries lower than the midpoint of the two submitted figures ($5.0 million here). The problem for us was there were not many of those players. Quentin, Ludwick, Young and Francoer all made $5.0+ the year following arbitration. And a strong case could be made that Cruz was equal to or superior to each of those players. Willingham was a good comparison for us, because he made $4.6, and the players were similar in age, level of experience, batting average and total value statistics like WAR and OPS+. Cruz hit for more power, but Willingham had a higher OBP, and so on and so on. So we had our first comparable player, but we needed more. We then expanded the search and came up with BJ Upton, a centerfielder who made $4.8 million. This worked for us, because he was below the midpoint, and we could make the case that he was more valuable because of his position. But you have to be careful with the different position argument. It would make no sense to compare Cruz to an infielder for instance (which is why in my opinion, pitchers are the easier cases to handle).

So at that point, Willingham and Upton were our two most comparable players, but we also had to account for all the other similar players who made more than $5 million. As you can probably tell, this is very similar to analyzing legal precedent: find the cases that help you, and analogize; find the cases that don’t and distinguish. For this reason, we devoted time in both our brief and our oral argument to address a few of the other players, most notably Carlos Quentin, knowing that the opposition would bring those players up in their argument.

The final preparation step for us, and every other group in the competition, was to create exhibits, highlighting the statistical attributes and flaws of our player and his comparables. We made a number of charts and figures for each player. Unfortunately, it seems like this is where a lot of hearings were won and lost. For instance, we lost the Bailey case by 1 point, and the arbitrator specifically mentioned that he was persuaded with opposing counsel’s evidence. They had a number of statistical tables, but also bar graphs and color coded arrows indicating increasing or decreasing performance.

The actual arbitration hearing itself was a simple oral argument. Each side was given 15 minutes of oral argument and 7.5 minutes of rebuttal. The judges were permitted to ask questions at any point, but generally let each side present their case with limited interruption. The rebuttal time was dedicated to countering the opposing side’s argument, a challenge in that the time constrained how much you could critique of their argument. Here is a brief summary of our arguments for each of the three players:

  1. Andrew Bailey – For the competition, we had to assume Bailey was still a part of the Oakland A’s, despite the fact he had already been traded to the Red Sox. We represented Bailey against the A’s. The big sell for us was that Bailey was an established closer, with an excellent ratio of saves converted to save opportunities, who had a solid career ERA and opponents batting average. The two big factors going against us were his injury history and a regression in some stats, like ERA, in 2011. The other side hammered both those points, focusing on the fact he missed big chunks of time in both 2010 and 2011. We felt we still had an excellent case though, because closers are almost always rewarded just for being closers in arbitration. (Ah, the dreaded save stat, but that’s another whole post.) Also in terms of more reliable statistical indicators like WHIP, opponents BA, FIP it was clear Bailey was an above average closer. Other closers who had been compensated well in arbitration included Jonathon Papelbon, Brian Wilson and Houston Street. The other side used comparables like Carlos Marmol and Leo Nunez, less established players.
  2. Nelson Cruz – We represented the Rangers in the Cruz case, which was tricky because he is a very talented player, who has performed very well when healthy and made national headlines in the 2010 and 2011 Postseason by hitting a ton of homeruns. For Cruz, our strongest arguments were that he was oft-injured (never played more than 128 games in a season) and that he had a very low on-base percentage, and that his total offensive production is not as good as the homeruns would seem to indicate. Then we also had to deal with the comparable players earning a higher salary, as mentioned above. Opposing counsel had several players from which to make comparisons, and noted that Cruz has a unique blend of power and speed, and was also an excellent defensive player. We won this case, but truth be told, the other side probably had the stronger argument. They erred by giving too much on the injury front.
  3. Jordan Zimmerman – We represented the Washington Nationals for Zimmerman. The big issue for Zimmerman was the fact that he had Tommy John surgery and missed a whole year. Last season, in his return from the injury, he was very productive (though his innings were limited by the Nationals as a result of the injury). There were a long list of comparable starting pitchers first year eligible, so we focused on those who had suffered a Tommy John surgery and found that the injury had depressed the salaries of all right-handers entering arbitration. We also heavily used the stat ERA+, which adjusts a pitchers ERA for ballpark, opponent and era, allowing a reliable comparison among pitchers from different seasons, leagues and ballparks.  Because of the long list of comparable players, it was easy to come up with an ERA+ range of pitchers who had suffered Tommy John surgery, and show that the team’s offer was reasonable in comparison to other players.

Since this post ended up a bit longer than I intended (I’m not into that whole brevity thing), I will finish the series with a final post on my global impressions of baseball’s arbitration system and salary structure. Until then, make use of the comment section.

February 13th, 2012

Tulane Baseball Arbitration: A Primer

This is the first of a series of posts about MLB Arbitration and the Tulane National Baseball Arbitration Competition.

As you may know from our past post, William & Mary’s Alternative Dispute Resolution team sent a team of three individuals to Tulane’s National Baseball Arbitration this past weekend. The competition simulates MLB’s arbitration process by giving the competing teams the cases of three arbitration eligible players. This year the players were Andrew Bailey, Nelson Cruz and Jordan Zimmerman. All three players ended up signing contracts with their teams and avoiding arbitration, but for the purposes of the competition, those deals were ignored. (The competition gave a stop date of January 13. Anything subsequent was not allowed in the hearing). We will discuss these players’ cases in detail in a subsequent post.

The arbitration process is governed by the Major League Baseball Collective Bargaining Agreement (CBA). The CBA states that any player with three years of service time, and some with two plus years (known as super-twos) are eligible for salary arbitration. This is the first time that a player gets a true raise in compensation. For his first three years of service time, the player is paid close to the league minimum. Arbitration eligibility continues until the player has logged six years of major league service time. At that point, he becomes a free agent and signs with a big market club much to the chagrin of “competitive balance” advocates. (That of course is a generalization, but it shows why teams have become obsessed, rightfully so, with players under club control. Salaries begin to inflate in the arbitration years, increasing substantially in free agency).

The CBA further states that the criteria for determining player’s compensation is as follows:

“The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries, the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance.”

A full statement of the criteria and other information about the arbitration process is available on Tulane’s website here.

The most important factors of arbitration, both in reality and through our experience this week, are comparisons to other players, injuries, and the player’s performance in their “platform” year, the year immediately preceding the hearing. How much any of these factors are weighed is for the arbitrator to decide, and the advocates to debate within their arguments. The advocates are expected to bring evidence to support their positions, most of which are charts and graphs showing a player’s statistical performance in various circumstances. (What stats were used and in what capacity will be featured prominently in tomorrow’s post). Each side is given a set period to advocate their position, in which the arbitrator can ask any questions to counsel. Each side is then also given a short rebuttal period to engage opposing counsel’s argument. At the end of the hearing, the arbitrator chooses the figure of one side or the other. The key figure then, is not either of the two numbers offered by the parties, but rather the midpoint between the club’s figure and the player’s figure. If the arbitrator finds that the player is worth $1 dollar more than the midpoint, the player will win and get the number he has offered.

In terms of the competition, there were three rounds, for which each of the 36 teams divided into sub-groups. Among the sub-groups, half the teams were given 1 player and 2 teams, while the other half were given 2 players and 1 team. The competition tracked the record of the individual teams, as well as point differential. The top ranked team in each of the four groups advanced to the semi-finals. Unfortunately we did not advance to the semi-finals. This year’s competition was won by Thomas Jefferson Law School, who prevailed over the University of Virginia in the finals. Harvard and Wisconsin were the other two semi-finalists. The competition closed with a symposium featuring many of the arbitrators, all of whom are either in the baseball industry or have extensive experience in the industry.

Tomorrow, I will return with a review of each of our three cases, as well as some overall impressions of both the competition and the MLB arbitration process in general, as the competition is an effective approximation of the actual process (at least as far as we can tell from the outside looking in).

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