February 8th, 2012

Programming Note

Hey everybody. I wanted to let you know that I, along with two of my esteemed classmates at William & Mary Law School, am currently on my way to New Orleans to participate in the annual National Baseball Arbitration Competition, a program sponsored by Tulane Law School. The competition simulates baseball’s arbitration process, and allows law students the opportunity to advocate on behalf of either the player or the team. We are truly excited about the opportunity, and will write several posts over the next few days about our experience in the Big Easy.

Also be sure to check out Joe Figueroa’s excellent article on Sunday’s Super Bowl if you have not already.

February 7th, 2012

How Equity Could Have Changed the Super Bowl

By: Joe Figueroa

 Lost in the dizzying final three minutes of Super Bowl XLVI was an oddity; a procedural quirk that was probably nothing, but could have had shocking consequences on the outcome of the New York Giants’ eventual 21-17 victory over the New England Patriots.  While discussed at length at parties across the country, Bill Barnwell of grantland.com put it succinctly:

With 17 seconds left, Tom Brady took a snap and desperately searched around for an open receiver. He eventually launched a pass to a well-covered Aaron Hernandez that fell incomplete, but not before eight seconds had passed and a flag had fallen to the ground. The penalty? The Giants had 12 men on the field, a five-yarder that would allow the Patriots to replay the down from their own 49-yard line, but not reclaim the time on the clock.

In a situation where a team needs a touchdown with 20 seconds or so left in the game, time can be far more important than yards. Trading eight seconds for five yards there is a decision the defense will take every time, and even if the Patriots had the ability to get off a free play, the Giants had 12 men on the field and were more likely to stop such a play from succeeding. It’s brilliant. It’s illegal. But was it on purpose?

Barnwell mentions how the tactic has been tacitly employed in the past, and how it is a tactically smart move—if you can get away with it.  The Giants were most likely caught up in the moment of the last two minutes of the Super Bowl, and had plenty of confused moments throughout the game to make one believe that this was a mix-up.  But the potential benefits are significant.

Barnwell also points out a quirk in the NFL rulebook that warns of potential consequences if you do not get away with it.  A little known (and never used) penalty exists in the rulebooks called “palpably unfair act.”  The explanation for the flag is expressed in NFL rule 12-3-3, and is potentially game-changing in breadth:

A player or substitute shall not interfere with play by any act which is palpably unfair.  Penalty: For a palpably unfair act: Offender may be disqualified. The Referee, after consulting his crew, enforces any such distance penalty as they consider equitable and irrespective of any other specified code penalty. The Referee could award a score. (Emphasis added by Author)

This rule uses the legal jargon of “equity” to basically declare that anything a team or player does that is so blatantly cheating as to make the play unfair is punishable by a penalty of any yardage, or the award of a touchdown.

That’s right, a touchdown on a penalty.

If the refs had somehow determined that the Giants put too many men on the field on purpose, for malicious purposes, they would have had the leeway to punish the Giants severely, and swing the game in the Patriots favor.

This isn’t the only rule in the NFL book that allows referees leeway in determining just penalties for infractions. Another penalty, “fouls to prevent score,” allows the referee to award a touchdown if the defensive team commits repeated penalties that prevent a touchdown from being scored naturally.

These rules, while almost never actually enforced, speak to a deeper truth at the heart of American sports.  Engrained in every sports fan’s appreciation for competition is a sense of integrity, and a need for impartial arbiters to enforce a fair fight.

These intrinsic feelings mirror the development of equity as an alternative to strictly legal remedies in the common law tradition.  Just as inflexible legal rules and the often unsatisfying monetary damages have lead courts to consider alternatives to the law model, events in sports sometimes suggest that the rules of the game do not always provide enough of an avenue to redress wrongs.

Flashback to 2010.  The World Cup is living up to its billing as one of the premiere sporting events on Earth.  The first World Cup to be held on African soil provided a particularly exciting Quarterfinal match between Uruguay and Ghana, who as the last African nation remaining in the Round of 8 took up the banner of the entire continent.

As the game remained tied at one at the very end of extra time, Ghana had a free kick and one last chance to avoid penalty kicks.  As the kick sailed towards goal, a scrum ensued, leading to one final glorious chance for Ghana: a blistering shot straight towards goal with the keeper caught out of place.  Uruguayan forward Luis Suárez, standing on the goal line, knew the only way to keep the ball from scoring was to deflect it with his hand.

A red card and penalty kick later, the Ghanans failed to convert on the penalty, and eventually lost in the tie-breaking shootout to the South Americans.  Say what you will about the play- Suárez was penalized to the fullest extent of the rulebook, Ghana has a golden opportunity to win and blew it, etc.  But something about the play did not sit well with many fans.  The illegal use of Suárez’s hand saved the game for Uruguay.  It just didn’t seem equitable.

(Consequently, many of the most infamous plays in the history of sport involving blatant unfairness have involved handballs in soccer.  Paging Sr. Maradona…)

It is true that the rules of sport help prevent serious injustice in the majority of cases.  Further, it is scary to think that a referee could make a split-second decision that changes the game on the basis of his own subjective sense of fairness, while a judge sitting in equity has time for reflection before making a decision.  But isn’t it nice to know that if an NFL team were to put 20 players on the field multiple times, that the refs can respond simply with the touchdown signal?

The same can be said for the landowner who just wants to keep and maintain his beloved property, and not just be paid damages by a wrongful trespasser.

December 28th, 2011

Playing Overseas During the NBA Lockout: Why Some Return and Others Do Not

By Nathan Yu

With the recent news that Kenyon Martin has put an end to his relationship with the Chinese Basketball Association’s Xinjiang Guanghui Flying Tigers, I want to discuss the issue of players who laced up their sneakers overseas during the NBA lockout and the possibility of them returning to the NBA now that the lockout has ended and the hoops season is scheduled to begin in a matter of days.

The list of players who have played or are currently playing overseas includes Deron Williams, J.R. Smith, Wilson Chandler, Chris Douglas-Roberts, Aaron Brooks, and the aforementioned Martin. While some, like Williams, have returned to the NBA and played in preseason games, others, like Martin, have not yet stepped onto an NBA court. That begs the question:  What, exactly, distinguishes Williams’s case from Martin’s? While the media attributes the difference to China’s supposed policy against opt-out clauses, that portrayal is sloppy at best. Instead, the important distinction is that Williams is under contract with the Nets (until the end of this upcoming season), whereas Martin is a free agent (his contract with the Denver Nuggets ended after this past season).

Let us start with some groundwork. The International Basketball Federation, more commonly known as FIBA, is a non-profit organization, based in Switzerland, that governs the sport of basketball worldwide. Think of FIBA as the basketball equivalent of the United Nations. FIBA establishes international rules for the sport, hosts wonderful international tournaments, and plays a big role in Olympic basketball. A total of 214 “national federations” are members of FIBA–they pay dues, agree to follow regulations, and receive certain rights in return. The United States is a member of FIBA, and so are countries like China, Germany, and Italy.

One of the rights that these FIBA members receive is a license restriction over players who wish to play basketball in their country. Volume 3, Article 66, of the FIBA 2010 Internal Regulations states, “A player may not be licensed by more than one national member federation at the same time.” In simpler terms, if you are under a contract to play for an NBA team (thus licensed by the United States), you cannot go to Germany and play for a team in the German professional league because Germany, as a party to FIBA, could not issue you a license to play. If they allowed you to play, you would be effectively licensed in two countries, which violates Volume 3, Article 66 above.

The obvious follow-up question is, “How does a player move from one country to another without violating the license restriction?” The new country has to obtain a “letter of clearance” from the prior licensing country. A letter of clearance “certifies that the player concerned is free to be licensed by another member federation.” Volume 3, Article 42. The Internal Regulations goes on to say that the ONLY reason for which a national member federation may refuse to grant a letter of clearance is if the player is under contract to play for his club beyond the scheduled transfer date. Volume 3, Article 46. And that is where the cases of Williams and Martin diverge.

Williams is under contract with the Nets for another season. Under normal circumstances, the Nets would not have allowed Williams to play in Turkey because they own his contractual rights and he would have been barred from playing in another FIBA country. However, when the NBA lockout began, his contract with the Nets was suspended. As a result, the Nets could not enforce the license restriction it normally would have to prevent Williams from playing in Turkey. In response to this issue, FIBA issued a policy letter on July 27, 2011, granting an exception for the NBA lockout. The letter stated that during the lockout, an NBA player under contract could play anywhere they wanted provided that the foreign country return the player to his NBA team when the lockout ended.

While this may seem similar to an opt-out clause, it is not. An opt-out clause is an option that can be exercised by whoever owns that right, whereas these contractual measures crafted by the lockout exception were mandatory. In other words, if these are truly opt-out clauses as the media portrays them to be, then Deron Williams COULD have decided to stay in Turkey and play instead of returning to the Nets; however, Williams could NOT have chosen that–FIBA would not have let Williams play in Turkey and Williams would have clearly violated his contract with the Nets at that point.

The NBA lockout exception to license restrictions does NOT apply to Kenyon Martin because Martin was a free agent at the end of last season. His contract with the Nuggets expired, so he did not belong to any team. Thus, when Martin signed with the Flying Tigers in China, there was no team to which China was obligated to return Martin. Instead, by signing as a free agent to play in China, Martin’s license to play basketball exists in China, and China must issue a letter of clearance to the United States in order for Martin to play for an NBA team. Looking at the situation, it comes as no surprise that China would be reluctant to issue that letter of clearance; I could imagine an NBA team doing the exact same thing if the roles were reversed. Furthermore, this is not particular to Chinese basketball; free agent forward Hilton Armstrong signed a one-year deal to play in France, and France, like China, is not obligated to return Armstrong anywhere; if Armstrong broke his deal with the French club, the NBA would need a letter of clearance from France for him to play in the NBA. I think China has gotten the media attention mainly because the biggest names are playing there (Martin, Smith, Chandler, Brooks) and those are the guys who are fighting the hardest to return to the NBA.

To summarize, the important thing to ask with regard to anyone playing overseas is whether they were a free agent at the end of last season. If the answer is no, then that player likely has returned or will return to the NBA this season. That should be an easy case. But if the answer is yes–that the player was a free agent–then the foreign country is under no obligation to return the player to the NBA, and any return to the NBA must be accomplished by a letter of clearance from the foreign country, in addition to any termination of contract.

Nathan Yu is a regular contributor to the William & Mary Sports and Entertainment Lw Society Blog. He can be reached at nyu@email.wm.edu

December 26th, 2011

Between Winning and Well-Being

By Dave Johnson

One of the shared attractions of football and hockey is that they are both are physical and fast-paced sports. Physical contact, often with violent force, is an integral part of each game, one that has been widely marketed and glamorized. The courts have even made it clear that these are not games for those with weak constitutions; referring to the nature of the NFL, the trial court held that the league “has substituted the morality of the battlefield for that of the playing field, and the ‘restraints of civilization’ have been left on the sidelines.” Hackbart v. Cincinnati Bengals, Inc. 435 F.Supp. 352 (D.Colo. 1977). Similar cases have been seen for incidents of on-ice stick swinging, and even in the last year when the Quebec police finally decided not to press criminal charges against Boston Bruins captain Zdeno Chara for shoving Montreal Canadiens forward Max Pacioretty into a stanchion and fracturing a vertebra in his neck. Mostly, incidents resulting from the violent nature of these sports have not ended up in court. There are exceptions, including the on-going civil action brought by Steve Moore (formerly of the Colorado Avalanche, who is still unable to play) against Todd Bertuzzi (of the Vancouver Canucks at the time of the incident). Violence is seen as an unavoidable part of hockey and football. The leagues, however, do not seem to be immune from actions regarding the injuries that occur within the normal rules of the game.

The current hot button topic is concussions. A quick look at the injured list for the NHL, as of today, includes Flyers captain Chris Pronger, Kris Letang, Marc Staal, Jeff Skinner, Milan Michalek (the league’s top scorer at the time of his concussion), Colby Armstrong, and Penguins captain and league poster-boy Sidney Crosby. The league’s current point leader, Claude Giroux, recently came back from a concussion. Similarly, in the NFL, the list includes Kevin Kolb, Chris Harris, and Colt McCoy, among many others. Colt McCoy and Colby Armstrong are particularly interesting individuals because, despite their respective league’s concussion protocols, they continued to play
in the game in which they were injured without being evaluated. In competitive sports where every minute of playing time makes a difference in getting signed, getting new contracts, and keeping their place on a team, players have learned not to complain of injury so that the coach does not sit them and they are not replaced by someone else (see: Drew Bledsoe and Tom Brady). The question is whether the leagues should have known, or did know, better but were too caught up in the business of sport to prioritize the well-being of their players.

Early this month a dozen retired NFL players sued the league, accusing it and its teams of repeatedly giving the players the NSAID Toradol, which inhibits platelet formation and can increase bleeding risk, in addition to masking pain. The suit alleges that the teams provided players with Toradol before and during games, making it harder for players to recognize when they have sustained serious injuries. The suit also alleges that the NFL suppressed evidence that repeated concussions can cause lasting and serious brain injuries, and failed to inform its players of the true risk of harm from playing their sport. The league of course, has a number of arguments on its side: assumption of risk, lack of causation (does playing in the NFL really cause head injuries?), and that the claim is barred under the collective bargaining agreement where the players should have negotiated for additional protection. On Thursday, December 23, nearly two-dozen NFL players filed a separate suit alleging that the league deliberately omitted or concealed evidence that concussions were linked to permanent neurological conditions. Suits over whether sports leagues knew of the risks of concussions and
failed to inform or take actions to protect players are growing in number, including other suits in the NFL and a recent class action against the NCAA. The NHL has not yet seen a similar suit, but it is certainly not immune to these actions.

Of all of the professional sports leagues, the NHL and the NFL have been leaders in concussion research, but clearly not enough has happened to prevent concussions. Celebrated enforcers have recently died, including some, such as Bob Probert and Derek Boogaard, who donated their brains to Boston University’s Center for the Study of Traumatic Encephalopathy, revealing extensive signs that the players suffered from chronic traumatic encephalopathy (CTE). Boogaard’s tests are still pending, but the expected results are not optimistic. So far the NHL has been fortunate in not being the beneficiary of types of lawsuits that other leagues are facing regarding their inaction toward concussions. In part, this is because the NHL has been incredibly proactive in their approach to the problem and consistently updates its rules and equipment standards to attempt to best protect its players. Most recently, the improved but imperfect Rule 48 banned targeted headshots. The league also adopted a new concussion policy requiring a “quiet room” evaluation by trainers of any player suspected to have sustained a concussion. As seen with Colby Armstrong, the NHL system is not
foolproof but certainly an improvement. Despite its improved concussion protocols including sitting concussed players for the remainder of the practice or game in which they show symptoms, the NFL has also had its slip-ups – notably with Colt McCoy. The CTE rate between hockey and football is among the highest in sports, though still trails boxing.

Undoubtedly, sports are a tremendously profitable industry. The suit against the NFL repeatedly calls attention to how much money the league makes and how much money each individual franchise is worth. Hockey is smaller, but its highest valued teams are each worth around $500 million. While making money is often going to be the primary interest for these teams, and players can be viewed as replaceable commodities, having star players lose time to injury is something that costs the leagues dearly. The leagues are willing to change their rules in order to protect their stars, as shown in the 2009 creation of the Brady Rule, protecting quarterbacks from hits to the knees after Tom Brady returned from knee surgery only to be targeted in the knees.

Leagues regulate everything from the color of the cleat their players wear to the minute aspects of each game. One of the consistently raised issues surrounding concussions is that their rise is tied to the improvement in protective equipment, particularly helmets in football and shoulder pads in hockey. Football helmet manufacturers have focused on increasing padding within a hard plastic shell, while hockey equipment manufacturers have inserted similarly constructed hard plastic shoulder caps into shoulder pads. The hard pieces provide players with a greater sense of protection, allowing them to take greater risks when playing. These risks have ended up manifesting
as injuries to other players, specifically in the form of concussions. Given its powers to make or change rules, a league could easily outlaw equipment found to contribute to concussions. The NHL is currently investigating and actively testing new types of shoulder pads designed to reduce the risk of concussion when a shoulder meets a head during gameplay. Can the leagues do more to protect their players? Certainly they have the incentive to do so since these stars draw the fans that bring the leagues money. Should the leagues do more? Absolutely. For as long as the leagues continue to allow the equipment and behavior that leads to concussions and lasting neurological conditions, they should expect to spend more time in court defending their inaction. The recent actions against the NFL are likely only a sign of things to come for both the NFL and the NHL.

Dave Johnson is a contributor to the William & Mary Sports & Entertainment Law Society Blog. He can be reached at dcjohnson@email.wm.edu, or below in the comments.

December 12th, 2011

The Veto Power

By Sam Mann

As you probably know by now, last Thursday David Stern, Commissioner of the National Basketball Association, vetoed a three team trade that would have sent star point guard Chris Paul to the Los Angeles Lakers, Pau Gasol to the Houston Rockets and several other pieces to the New Orleans Hornets. The NBA released a statement shortly after the news broke, saying it was a basketball move and that the team was better off with Paul remaining a Hornet. I’m sure at this point you are wondering how the commissioner has the ability to do such a thing; after all, each of the 30 NBA are independently operated and managed. The problem here is that the NBA bought the Hornets last year for $300 million, and has yet to find a buyer. Therefore, the Hornets are technically owned by the other 29 franchises in the league.

(Actually the part about not finding an owner is not entirely true. Reports have indicated that several potential buyers have shown interest, but most if not all would prefer to move the team out of New Orleans. Stern and the other owners are intent on keeping the Hornets in New Orleans for many reasons, some sentimental but mostly practical as the city and the state have been extremely cooperative in helping the franchise continue on in New Orleans. The financial challenges facing this franchise were behind the league’s purchase and are definitely a huge factor in this story).

In some ways then, Stern could be considered the “owner” of the franchise. The owner of an NBA team typically would have the final say over a major transaction like this. The problem for the NBA is two-fold: first, they have (had) made it perfectly clear that Hornets GM Dell Demps was 100% authorized to make any trades, including for Chris Paul. Those within the league have known for years that the Hornets would probably have to trade Paul at some point this season, as he is a free agent at the end of the year and will not resign. So the fact that trade discussions went so far shows that no one was really very concerned with the Hornets ability to make trades. The second problem for the NBA is that in the wake of this deal being announced, other NBA owners immediately complained to the league office, and those complaints have been made public. Cleveland owner Dan Gilbert, he of fame for lambasting former Cav Lebron James after James left Cleveland for Miami, sent an email to the league calling the potential trade a travesty. The email was promptly leaked. Other owners like Mark Cuban have also made it clear they opposed to deal. And of course, Stern has said that his decision was taken independently without consideration of the other owners.

There are a lot of levels and facets to this discussion. It would be nearly impossible to dissect all the moving parts, but it is necessary to highlight a few. The three teams involved reportedly filed an appeal and lobbied for the Commissioner to reconsider. This apparently was to no avail, as the Lakers soon dropped out of discussions, but not before upsetting Gasol and Lamar Odom, two of their key players. (Odom was subsequently traded to Dallas, as he requested a trade in the fallout.) Reports then surfaced this morning that the Los Angeles Clippers and the Hornets have submitted a trade for approval. Will the NBA let that deal go through? Rumors are that the Players Association was set to file a lawsuit against the league on behalf of Chris Paul if he was not traded by today. Is the threat of the suit enough to convince the NBA?

Let’s back up for a moment and ask why the NBA and its owners were so against this trade. There are two reasons:

  1. The NBA owns the Hornets and doesn’t want to own them forever. They want to complete a sale to a new ownership group and know that Chris Paul is the Hornets’ main asset. Without Paul, the league knows it would receive a lower price for the franchise. They also are worried about the effect of such a trade on attendance, sponsorship and the business end. In other words, they are trying to protect their investment.
  2. We just returned from an extended lockout, one of the “reasons” for which, according to the league, was to help small market franchises keep their star players. Owners are upset that Lebron and Carmelo Anthony and other stars are fleeing their small markets to team up with other stars in New York, Los Angeles, and the other big markets. Allowing a star player to be traded to the league’s signature franchise a week after this bitter lockout ended would cut at the owners’ credibility and suggest that the lockout didn’t solve one of the “problems” that we were all told needed to be solved.

As you can no doubt tell, there are significant flaws in both thse arguments. Looking at the Hornets rationale, this is one of the more short-sighted decisions in professional sports history. No owner is going to buy the Hornets based solely on this year, and no matter what happens with Paul and these trade scenarios, he is not playing in the New Orleans next year. So the choices are as follows: force Paul to play out the string this year and lose him next year with no compensation, or trade him now for 4 players and a first round draft pick. Tell me which is the better long-term scenario for the franchise?

As for the whole lockout and owner perspective, can we really say that is a legitimate argument? What kind of precedent does this set? Any time a trade appears to be against the interests of the league, the NBA should have the ability to veto it? What happens next? Dwight Howard is also on the trade block. Is the league going to try and stop that trade too? What this shows is a simple conflict of interest. If a team is owned by the league, the league should not be able to act as a typical owner would. It’s an interested transaction. There needs to be a veil between the two. Based on what we know now, it was clear that the owners were acting selfishly: to protect their investment in the Hornets, to make sure that big market teams like the Lakers couldn’t “steal” their players, to protect their credibility in the lockout. And David Stern chose to bow in the face of that pressure.

The other part of this discussion, not legally related, is the human side. You gotta feel bad for these players, who were traded, and then the trade was rescinded. It’s gotta be hard to walk back into the practice facility the next day, when the franchise clearly wanted to go another direction but was rebuffed. And you also feel for the front offices of these three teams for putting all this work in and having the rug pulled out from under them. I won’t get into the merits of the deal, but it looked a good trade for all three teams. It seemed like one of those rare trades that made everyone better, and the league couldn’t see that because they and their owners were short-sighted and self-absorbed.

As far as the legality of the veto, it’s not abundantly clear. The NBA will certainly argue it was acting as the Hornets owner and not as the Commissioner’s Office, which seem to legitimize the action in some way. At the same time, this clearly was not authorized under the CBA (at least as far as know) and seems like an artificial restraint. I would imagine a suit would focus on antitrust law, that this was collusion among the various franchises to prevent player movement. If that is how the issue is framed, I’m not sure how the league could effectively argue the restraint was reasonable. But, the realities of the situation will probably prevent a suit from ever reaching the courts. Paul may be traded to the Clippers by the end of the day, and the trade is dead. If not traded, Paul would be stuck in New Orleans pending a suit, which would take a long time. I expect a compromise, probably in the form of another trade, but I guess you never know.

Update: The Clippers-Hornets trade reported earlier today has fallen through, apparently because the Clippers think the NBA’s asking price is too high. So while this is not quite a “veto” it is still the league commandeering the process and removing any autonomy that GM Dell Demps could be thought to have. Maybe the lawsuit will happen after all, because it sure doesn’t look like Chris Paul is going anywhere anytime soon.

November 28th, 2011

MLB Labor Deal Struck

By Sam Mann

In case you didn’t notice, and you may not have because of the quiet manner in which the two sides went about negotiating, Major League Baseball and its Players Association came to an agreement on a new five-year labor deal. The deal guarantees labor peace will last at least 21 years, which is quite an accomplishment for Major League Baseball. Prior to the 2002 CBA, every labor negotiation since the union was formed in 1965 had resulted in a lockout or a strike. Considering that, as well as the labor troubles that the other major professional sports leagues have went through, the expediency of this deal should be commended. (The previous CBA was not set to expire until December 11). Some have said that MLB has set the new standard for labor negotiations, and that part of the motivation for the NBA to settle its lockout was seeing baseball negotiate a new deal with ease (courtesy of ESPN’s Ric Bucher).

Yet as big a “win” as this deal is on one hand, it is also a “loss” for the industry as whole going forward and competitive balance. Labor peace should be commended, of course, but the “system” of baseball regressed last week. The reason: the new deal extensively limits what individual organizations can do in the draft and amateur free agency, the lifeblood of all teams, but specifically small-market franchises. Before we get into that though, let’s tackle a few of the other issues that were resolved:

  • MLB will add a new wild card team to each league, meaning that there will now be 10 playoff teams, rather than 8. I personally don’t like it because one of the great parts about baseball is that its playoffs are not watered down and the regular season matters more because so few teams make the playoffs. At the same time, I can understand why the parties agreed to it. There are significant economic reasons: more teams in playoff race late in year should mean better attendance in more cities; adding extra playoff games increases the value of the national television contract, which is distributed evenly to all teams; more home playoff games means more revenue, etc. For the players, 25 more guys in each league get to play in the playoffs.
  • Re-worked draft compensation scheme for signing free agents. The process is much simpler now than it was, and the without the binding effects of losing draft picks, free agency should be more profitable for many of the middle-tier free agents. The previous system was tied into Type A and Type B compensation, determined by a complex statistical formula; the team who signed one of these free agents forfeited a high draft pick to the player’s former team. Under the current system, compensation is tied to a large qualifying offer (about $12 million). Much simpler and will apply to many fewer players.
  • Signing deadline for amateur draftees will be accelerated. This is good because it will force amateurs to decide whether or not to sign earlier, because all the big-time draftees sign minutes before the deadline.
  • Instant replay will be expanded. Seems reasonable.
  • There will be HGH testing and more stringent testing for amateur players.
  • The “Derek Jeter” rule was passed, mandating attendance at the All-Star Game for any players selected. Big deal. Let’s focus on more important things.

Where this deal goes off the rails, and thereby upsets nearly every club executive and general manager in the league, is that it completely ties the hands of franchises in the amateur draft and international free agent markets. I’ll spare you the boring details, but basically, MLB has instituted a series of “slot recommendations” for draft picks over the last several years. Before this deal, there was no penalty for exceeding slot, meaning that there were no caps on salary bonuses. Smart teams would spend “over-slot” to pick highly talented players who were considered “tough signs.” A lot of these tough signs turn out to be really good players, and everyone in the industry seems to agree that the best way to build a successful team, especially for small-market teams, is to spend like this in the draft.

Well, this deal has basically eliminated significant “over-slot” signings. The new system calls for a Signing Bonus Pool, calculated based on the recommended slotting for the first 10 rounds. Players drafted after the 10th round are not counted unless their bonus exceeds $100,000. Penalties for exceeding this bonus pool cap are extremely punitive. They are as follows:

B. Clubs that exceed their Signing Bonus Pools will be subject to penalties as follows:
Excess of Pool Penalty (Tax on Overage/Draft Picks)
• 0-5 percent; 75 percent tax on overage
• 5-10 percent; 75 percent tax on overage and loss of 1st round pick
• 10-15 percent; 100 percent tax on overage and loss of 1st and 2nd round picks
• 15-plus percent; 100 percent tax on overage and loss of 1st round picks in next two drafts

This is bad for a number of reasons: first, it is a clear attempt by owners to artificially limit the amount given to amateur players in the draft, with absolutely no indication that the money saved will be reinvested elsewhere in the organization. In other words, it’s a function of greed and an attempt to pocket a few million bucks at the expense of amateur players yet to be named who have just had their rights curtailed in an agreement in which they have absolutely zero representation.

Second, this will limit the talent pool going forward. Many of the best players and/or prospects in the game were two or three-sport stars in high school, who could have played another sport but chose baseball. Many of these individuals chose baseball because of the large signing bonuses they received. This was necessary to “buy off” the other sport. A great example is last year’s #5 overall pick Bubba Starling, who was committed to play quarterback at Nebraska, or Zach Lee, a Dodgers prospect who might be playing in the BCS National Title Game for LSU if not for his $5 million signing bonus a few years ago. More examples include Joe Mauer, Carl Crawford, and Matt Kemp, and going back a few years, Dave Winfield and Kenny Lofton. Do we want these players to choose football or basketball instead? In other words, you have to look at incentives. It’s cynical, yes, but elite athletes are likely to choose the sport with the greatest financial benefit to them and their families. Add in baseball’s nature, where it takes 3-4 years for even the best prospects to make the big leagues, and the number of prospects who ultimately fail to ever make the big leagues, and all of a sudden, the incentives to choose baseball have largely disappeared.

Along with this, we have a similar cap on international signings. International players are free agents and can get higher bonuses because multiple teams can bid on the player, or at least could. MLB has now chosen to cap international signings at $2.7 million, a paltry number considering 5 teams spent over $10 million internationally last year alone. Here, it’s no so much that those athletes internationally will choose other sports, though they might, it is more that baseball has now stripped some of the incentives of its teams to develop overseas academies and invest scouting resources there. Instead of investigating a resource that was near limited, teams are now incentivized to sign a very small number of international players, limiting the number who are able to come to the United States and join affiliated organizations. That means less foreign players, at least initially.

Finally, the third consequence, and most importantly,  this rule will help destroy competitive balance. Small-market teams that can’t afford to spend big dollars in free agency could afford to spend big dollars in the draft and acquire premium talent, because the total value was lower. The Pittsburgh Pirates, for instance, spent $17 million in the draft last year, and from most expert’s opinion, did very well in bringing talent to their organization. In other words, the only way the Pirates, Royals or Rays can compete with the Yankees, Red Sox and Phillies, is to spend in the draft, get premium talent, develop it and then try to win in the first 4-6 years of the player before he gets too expensive to keep. That job just got a lot harder, because now every team plays by the same rules in the draft. (Prior to this deal, some teams elected to spend in the draft while others generally stuck to slot. Also, teams willing to spend took the opportunity to draft player’s unlikely to sing late in the draft and offer 1st, 2nd or 3rd round money in the hopes the player would reverse course. Based on those rules, that is no longer possible.)

These are relatively subtle differences, which is why many are calling this deal a big win for baseball. But industry insiders and those who follow them have indicated that the changes will have a negative effect on the competitive balance and the health of the sport going forward. And to me, there was no real need to drastically change either the draft or the international signing system, because both made it possible for low-revenue teams to compete with large market teams. Without the previous system, the Tampa Bay Rays never would have made the playoffs 3 out of 4 years. Those teams were largely comprised of home-grown players drafted by the team and paid big bonuses that under this system, might not be possible.

For a more thorough analysis of all these issues, read Keith Law’s and Buster Olney’s analysis here and here. Like them, I am worried about the ramifications of this system, both for how it stands to dilute the talent pool and for how it affects competitive balance.

November 22nd, 2011

Packing More than a Punch: Feds Seize 500 lbs of Cocaine from Boxer’s Home

 By Nathan Yu

Unknown to the average sports fan, Iván Calderón, a Puerto Rican professional boxer, is an accomplished individual. Inside the ring, Calderón has tallied 35 victories against only 2 defeats. He has held and defended championship titles, and he has represented Puerto Rico in international boxing contests. Outside the ring, Calderón is known for his involvement in several youth charities, as well as his massive real estate investments. This week, one of his investments has drawn the attention of the federal government.

This past Tuesday, Federal agents seized nearly 500 pounds of cocaine from a house owned by Calderón in Humacao, a city on the eastern coast of Puerto Rico. The 225 kilograms of cocaine is worth over $4 million.

This news has not received much press coverage from sports outlets for two reasons. First and foremost, no charges have been filed against Calderón, who is the only sports figure mentioned in the story. Second, even if charges will be filed, Calderón is probably not high enough on the boxing totem pole to warrant headlines from a major sports network. Regardless, the case caught my attention specifically because of its rudimentary nature.

I am most interested to see if prosecutors go after Calderón, and if they do, for what charges. After the raid, Calderón issued a press statement denying any *knowledge* of the drugs. Calderón said the house was just another investment of his and that he was *not aware* of any illegal activities there. The words/phrases “knowledge” and “not aware” are critical.

In my first-year criminal law course, we just finished covering the issue of group criminality. For the sake of discussion, let us give Calderón the benefit of the doubt and assume that he had no knowledge or awareness of the illegal activities in the house. What are the prosecutorial options from there?

The lack of knowledge or awareness is disastrous to the mens rea component of any group criminality charge. To prosecute Calderón as an accomplice or a conspirator to drug trafficking, prosecutors would have to prove that Calderón 1) intended to assist the drug traffickers and 2) intended for the drug trafficking to succeed. Without knowledge or awareness of the drugs, it would be difficult for prosecutors to prove either of the two mens rea requirements for accomplice liability. At this point, analysis of the actus reus component is trivial.

But the lack of knowledge or awareness does not necessarily mean the Feds are out of options. This situation reminds me of cases involving the willful blindness doctrine or an ostrich instruction. This doctrine is designed for cases in which there is evidence that the defendant, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings. To clarify, this does not mean the defendant simply lacked curiosity, but rather it means he actively avoided the truth.

The case United States v. Giovannetti offers a decent comparison to this situation. In Giovannetti, the defendant rented a house to some gamblers, who then used the house to run an illegal gambling ring. The facts stated that the defendant made no inquiries about their intended use of the house. The court held that the defendant did NOT display willful blindness; the court relied on the sharp distinction between lack of curiosity and active avoidance. In this case, the rented house was a short way down a side street from the route which the defendant used to commute to work. The defendant could have driven by the house from time to time to see the activities of the lessees, but he did not.

I am not exactly sure of the possible interplay between willful blindness and group criminality that I have toyed with in this analysis. Accomplice and conspirator liability have very high standards of mens rea (intent), and the willful blindness doctrine addresses the concept of knowledge, which is a lower level of mens rea. Based on that understanding, it is tough for me to see a charge given these facts. Assuming what Calderón said in his statement is true, he probably does not have the requisite level of mens rea even with a willful blindness instruction.

Looking at Calderón’s case, how the Feds proceed will really depend on what an investigation uncovers. Some important questions–to identify a few–will be whether Calderón had prior relationships with the lessees and the extent of those relationships; how often, if ever, Calderón visited the house; whether Calderón conducted background checks on the lessees prior to renting and what the checks revealed. The answers to these questions will help establish whether Calderón knew, or at least had awareness of the high probability of the existence, of drug trafficking. If the feds discover facts that are contrary to Calderón’s statement–in other words, facts that demonstrate knowledge, awareness of probability, etc.–then it is a whole different ball game.

Nathan Yu is a regular contributor to the SELS blog. He can be reached at nyu@email.wm.edu.

November 18th, 2011

Accusations Against Fine

As I’m sure you all have heard, Bernie Fine, the assistant basketball coach at Cuse, was recently accused of molesting a child in the 1980’s. Bobby Davis, a ball boy at the time, and his stepbrother, Mike Lang, are saying that Fine molested them while on team field trips and in the Syracuse basketball facilities. In 2005, the University did a four-month investigation that involved speaking with every person that Davis identified and said would corroborate his story. SU reps said that no one would corroborate his story or would say anything about Fine doing anything wrong.

I think you all should know that this is a difficult post for me to write because I am a Cuse Grad and a diehard Orange basketball fan. I do, however, feel as though these accusations need to be addressed. Although they have not caused the same media frenzy that Sandusky/Joe Pa did, they are still very serious.

It seems that at this point these story could go one of two ways, and neither way is good. First, the allegations may turn out to be true, and if that happens, it will be devastating. It would mean that there are two more men in the world who have had to live with this abuse. Additionally, if the allegations are true, college sports fans will once again be confronted with a harsh truth – there is a dark side to college sports. Some coaches, who are legends and celebrities in their respective communities, are not the role models that they are portrayed as and that we want them to be.

If the allegations aren’t true, it will also be devastating. It means that Fine’s reputation will be tarnished forever. It may also mean that victims, who were really harmed, may be less likely to come forward because they fear being labeled as “liars” or “fame whores.” Truly, nothing good can come from this situation.

I do believe that Syracuse University has handled the situation well. Nancy Cantor, SU’s Chancellor, sent an email to all alum and was completely open and honest about the situation. You can tell that the University is upset with the allegations and is taking them very seriously. SU also placed Fine on administrative leave.

Jim Boeheim, on the other hand, has not handled the situation so well. I respect the heck out of this man, and I generally love his feisty and controversial statements (remember when the Daily Orange called G-Mac overrrated?), but I believe he overstepped his bounds this time. Boeheim addressed the media and called Davis and Lang liars who are looking for money. While this may turn out to be true, it may also turn out to be false. Loyalty is wonderful, but until the allegations are investigated more, I think it may be best for Boeheim to keep his opinions more private. Besides looking bad in the future, he also may have discouraged victims from coming forward. Many victims already fear speaking out, so fear of assault in the media may further discourage their coming forward.

Any thoughts from you all?

November 18th, 2011

The NBA Lockout’s next opponent: Federal District Court

Ed’s Note: We are going to skip for now any coverage of the impending Syracuse allegations because I am probably unable to discuss it rationally. I am a biased Syracuse fan who loves Jim Boeheim and Syracuse Basketball. Moving on to regularly scheduled programming: the NBA Lockout once again…

By Sam Mann

A few days ago, the National Basketball Players Association (NBPA) elected, through its Executive Committee, to reject the League’s latest proposal and not send it along to its full membership for a ratification vote. They further announced that the NBPA would de-certify as a union and launch an antitrust action against the league. If that sounds familiar, it’s because it is the same thing that the NFL Players Association attempted last summer. Two suits were filed, one in Minnesota, the other in California.

Speaking of the NFL, the big “legal news” surrounding this event was an announcement of who the NBPA has hired as its legal representation. The union’s main lawyer through most of this had been Jeffrey Kessler, Global Litigation Chairman at Dewey & Lebouf. Mr. Kessler is a veteran of these matters and was a big player for the NFL Union in their decertification battle as well. Which brings us to his new co-counsel, superlawyer David Boies (who was on campus here at William & Mary two weeks ago for the McGlothlin Leadership Forum). Boies was also involved in the NFL labor dispute, but as counsel for the league. This brings up certain conflict of interest questions, laid out in the above AmLaw article. There are two owners, Paul Allen and Stan Kroenke, who own teams in both leagues. Boies has also previously served as counsel to Allen in the Microsoft antitrust litigation.

What does it mean that Boies has “switched sides?” I’m not entirely sure. Maybe this gives the NBA a better chance to win the antitrust suit, which the NFL players were unable to do on appeal. The biggest major difference is that the players negotiated, presumably in good faith, for months before decertifying and filing suit. No one can really be sure whether this will change the opinion of the court.

Referring back to Kessler, he has been heavily criticized in the media recently. First, by David Stern and then also by media members themselves. He also made headlines with a particularly inappropriate comment comparing Commissioner Stern to a plantation owner last week. Kessler has since apologized, but it is clear that his role in this situation has been justifiably questioned.

The following are my thoughts on this process, and the lockout in general:

  • Why is every sports antitrust suit filed in Minnesota? I’m sure there is a reasonably answer out there somewhere, but I haven’t found it yet.
  • Both sides are risking a great deal of goodwill right now. Up until recently, there was still a possibility of a long season. That is now gone. In all likelihood, this season will be canceled. A miracle deal sometime in January could bring us a 40-50 game season, but even that seems like a remote chance. This coming off one of the more successful NBA seasons since the Jordan era.
  • I believe decertification and filing suit means that negotiations are on hold until after the Holidays. The owners are likely to be pretty upset, and the union would be a little silly to decertify and then run back to bargaining table. This has become much more the legal settlement of a case than a collective bargaining negotiation.
  • The NBPA are suffering from a crisis of leadership. Billy Hunter has not handled this situation well. It is clear that the Owners held most of the leverage, but Hunter has made this whole process about himself. Clearly his emotions and personal interest have come into play. He doesn’t want to “lose”  or “back down,” and wants to make sure whatever happens he keeps his job as head of the Union (when it reconstitutes, I guess). The same can be said for Kessler. He has done nothing but inflame the situation.
  • The NBPA should hire an outside negotiator or committee to handle the rest of this process. They cannot allow Hunter, Kessler and the Player’s Executive Committee to handle this going forward. Hunter and Kessler are too emotional and the Player’s Committee just does not have the business savvy to understand all the working parts. These players don’t even handle their own contract negotiations. How can they expect to handle league-wide negotiations? Their agents need to get more involved.
  • Which brings us to the next point: all sides in this are fractured. The owners have significant dissension. Large-market, small-market, hardliners, etc. The Players, despite their portrayal to the media, are not unified either. Apparently a great deal wanted decertification in August, while others wanted to vote on the deal the other day and just get back to playing. Their agents also have divergent interests. It’s kind of a mess.
  • Finally, if the Players truly wanted to decertify, they should have done so in August or September. Now that the legal process is involved, everything will slow down. The possibility of missing the whole season is very real, perhaps even likely. That hurts the players more than it hurts the owners.

I don’t know what will happen going forward, but I highly doubt any positive news will come out before the Holidays. Not good for NBA fans.

November 16th, 2011

The First Punch: UFC Sues State of New York

By Nathan Yu

Ultimate Fighting Championship, known colloquially as UFC, is accustomed to fights. It is the leading mixed martial arts (MMA) organization, and has millions of fans–including myself–worldwide. As evidenced by its recent mega television deal with Fox Sports, UFC is arguably the fastest growing brand in sports. But that growth has never crossed the borders of New York. In 1997, the Empire State enacted a statute that banned live professional MMA events. After years of lobbying to repeal the act, UFC has decided that it has had enough, and has commenced a lawsuit against the State of New York, its Attorney General, and its District Attorney in Federal Court.

The lawsuit is being framed as a constitutional question. Specifically, UFC alleges that New York’s complete ban on live MMA events is an unconstitutional restriction against UFC’s freedom of speech. The complaint, which is a daunting 124-page document that you can read here, explains the two main points made by the MMA giant:  1) The controversial New York statute, § 8905(a), was initially adopted not out of concerns over the sport’s safety, but instead because legislators did not agree with the sport’s “violent” message;  and 2) Regardless of how “violent” the sport’s message is (more on this below), completely banning a form of entertainment based on its content and message is unconstitutional.

While I have not taken Constitutional Law, and thus do not have an adequate foundation to predict the court’s outcome on this issue, my intuition tells me that UFC has a solid case. Just some thoughts about the case and the parties involved:

First, I have to clear up the issue on the sport’s “violent” message. After its inception, UFC was tagged with a terrible reputation for being a blood sport. John McCain even went so far as to call it “human cockfighting.” But that was a long, long time ago. Since then, the UFC has undergone new ownership, new leadership, and a number of significant rule changes that have made the UFC less blood sport and more testosterone-driven art form. While the sport is certainly violent in nature, it does not necessarily mean the message is one of promoting or condoning violence. People will absorb what they want from any form of entertainment; I myself enjoy watching the rigorous training and discipline that fighting demands; I also enjoy the chess-like strategy that goes into a fight. Most importantly, the original proponents of the ban now acknowledge that the sport has in fact cleaned up its act.

Second, regardless of what the sport’s message is, you cannot ban it based on its message alone. All forms of entertainment qualify for this freedom of speech protection, and I do not think anyone will argue that MMA is not a form of entertainment (whether one enjoys it or not). If New York tries to argue that the issue is safety, UFC will counter that safety can be ensured through regulations, and that a ban is not necessary.

Third, the New York statute is perplexing. The statute allows boxing, wrestling, and certain types of martial arts (judo, tae kwon do, karate, kenpo). MMA is simply a combination of all of the previous combat sports that the state condones. Furthermore, the statute only prohibits professional exhibitions. In fact, Plaintiff’s complaint alleges that New York is home to countless amateur mixed martial artists and New York venues have held viewing parties for out-of-state MMA events.

Finally, this case has huge implications for the UFC. New York is the biggest media market in the nation, and opening the state to UFC events would help propel the UFC into even greater prominence. I can already think of the buzz that a UFC pay-per-view event would generate if held at the iconic Madison Square Garden. The UFC is already sanctioned in all but a few states, and has already reached many corners of the world, so New York remains the last meaningful domino to fall. Should the court grant UFC’s demand for an injunction, we could see a live event in New York sooner than anyone ever thought.

Nathan Yu is a regular contributor to the SELS Blog. He can be reached at nyu@email.wm.edu

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