Thursday, May 31, 2012

Did Non-Guaranteed Contracts Play Role In Saints Bounty Program?

NFL players don’t have guaranteed contracts, which means they can be cut if they are under performing. While it may not seem reasonable or fair, this condition of employment was collectively bargained by the NFL and players, and as a result, that’s how things are for the players.

However, it is reasonable and fair to ask whether non-guaranteed contracts make events like the Saints Bounty program more likely. 

When you look at the surrounding circumstances, it’s possible that they are contributing factor.

NFL Coaches Are Powerful

Perhaps more than any other sport, NFL players fear their coaches. NFL coaches often act as de facto general managers. They can cut or sit players if they are not performing as directed. Indeed, NFL coaches wield a lot of power. Players appreciate that coaches have the power to impair their careers, or worse, end them.

Average NFL Salary & Career Span

About half the NFL population makes about $500,000 or less, and the average playing career is somewhere around 3.5 years (depending on who you ask). Agreed – some NFL players are very well paid, like Brees, Manning and Rodgers. However, many players don’t play long and don’t make a lot of money, which can represent an added incentive to follow the direction of the coaches.

Socio-Economic Status

A number of players come from disadvantaged backgrounds and want to avoid a return to that life.

Take DE Anthony Hargrove, who was suspended 8 games for his role in the Saints Bounty program.

When Hargrove was 6 years old, the Brooklyn tenement where he lived with his mother and two of his four half-siblings burned down. He ended up living in homeless shelters and foster care homes until his mother died when he was 9 years old. Later, an aunt in Port Charlotte adopted him. In June 2011, Hargrove's older brother Terence Hargrove died after being stabbed numerous times in North Port Florida. Hargrove himself has suffered from drug addiction and spent a year in rehab.

Was the incentive there for Hargrove to follow orders and injure other players (assuming the allegations are indeed true)? We can’t know for sure since we can’t crawl into his head. However, you have to wonder if the threat of being cut or benched, together with all that comes with it, may have encouraged his compliance.

Background aside, many players may think twice about not following the game plan. Players who make it to the NFL want to stay there – irrespective of background or previous socio-economic status.

Ultimately, in light of a player’s limited earning potential and limited career length, non-guaranteed contracts may make players more likely to ignore their better judgement and comply with orders to injure other players.

Or at the very least, non-guaranteed contracts may create an environment where a player would think about it.

Further Comment - From One Reader

Eric, great article. Another issue is how replaceable typical NFL players are. With the available talent provided by the NCAA programs, average LB's, D-Lineman, etc. can be cut and replaced too easily thereby compounding the non-guaranteed contract issue. Everyone, but a few, play in fear of being cut or benched and having their replacement take their job. Happens all the time. Ask Drew Bledsoe.

Wednesday, May 30, 2012

Offside: Podcast of Show - Economics of Danica Patrick, NFL Collusion Case and World's Richest Sporting Events

Last night on Offside, Lee Versage and I talked the NFL collusion case, the many challenges facing Roger Goodell, the economics of Danica Patrick and the world's richest events.

Danica gets elevating her name to a brand or trade-mark. She has done very well leveraging her brand to secure multiple sponsor deals, including with Coca-Cola and GoDaddy. 

She summed it up well when she said this: 
I’m a girl, and to say that I can’t use being a girl doesn’t make any sense. In this world, there is so much competition out there and you have to use ... everything that you have to make sponsors happy, to attract them and to be unique and different”.

Tuesday, May 29, 2012

Thursday, May 24, 2012

While Fehr Says No More "Massive Concessions" Lockout Talk Remains Premature

This past weekend, Stephen Fehr, brother to NHLPA executive director Donald and special counsel to the Union, gave a talk in San Diego at the Sports Law Conference. This is according to Liz Mullen of the Sports Business Journal.

He declared that the players made “massive concessions” in 2005 and that they were not inclined to give up their current share of revenue.

The massive concessions he speaks of are the 24% rollback in salaries and the hard salary cap.

The NHL will likely take aim at reducing the players’ share of revenue from the current 57% to something in keeping with the other leagues – about 50% or so. The NBA is at about 50% (give or take a point depending on league revenue), the NFL works out to about 48.5% and MLB is at about 47% (there is no cap in baseball so this is where the approximate number falls).

A drop in revenue share from 57% to 50% is significant and represents a serious point of contention. This will lead to some tense moments complete with the ebbs and flows of negotiations.

So where does that leave us? Is a lockout in the cards?

At this point, it remains premature to conclude that the league is headed for a lockout. The NHL is enjoying an unprecedented level of success, and more importantly serious momentum in the U.S. The league is in the first year of its $2 billion TV deal with Comcast, where for the first time, all playoffs games are available nationally. As well, the league has seen a $1 billion increase in revenue since 2005 (under the capable watch of NHL COO John Collins).

So the NHL likes where it’s at right now and doesn’t want to see a labor disruption. The system isn't broken; it just needs to be refined.

As for the players, they are weary – very weary I suspect – of losing part of, or an entire, season. For many, the lost 2004-05 season remains fresh in their minds. This will be a real incentive for the players to work out a compromise.

One more point for the players – decertification may not be a viable option (blowing up the Union like the NFL players did with a view to bringing an antitrust or anti-competition lawsuit). The Court of Appeal decision during the NFL lockout significantly reduced the strength of a union’s antitrust claim and sent the message that the sides are best served working things out at the bargaining table and not a federal courtroom.

While the other leagues share about 50% of revenue with players, remember that the NHL generates significantly less revenue then these leagues. So while 57% is a high number, it must be considered in the context of the amount of revenue generated by the league.

Ultimately, the sides will find an area of compromise. It may be somewhere around 52.5% of revenue or so together with some creative math to amplify that number under certain circumstances.

Until there is evidence to the contrary, lockout talk is premature.

Wednesday, May 16, 2012

Source: NHL Gives Notice To Bargain

Today, I secured a copy of the NHLPA’s memo to its players advising that the NHL has issued its notice of CBA termination. This means that the NHL has given its notice to bargain (this is the legal term), or put another way, has indicated to the NHLPA that it wishes to negotiate a new CBA. The impact of notice is that it ensures that the current CBA won't be renewed for another year. If notice was not given in the allotted time, then the current CBA would have been renewed for another year.

The NHLPA’s Memo

Advising of the Notice to Bargain

Donald Fehr’s memo to the players informed the players of the NHL's recent move:
"Today we received written notice from the NHL that it wants “to terminate and/or modify” the CBA when it expires at midnight on September 15, 2012.   Had no notice been given by either party, under CBA Article 3.1(a) the CBA would have remained in place for another year.  As you know, this is not a surprise; we have anticipated this for some time.”
So if the NHL had not provided this notice, then the current CBA would have stayed in place and the players and teams would have operated under the existing rules next season. That would include a 57% share of revenue for players. You can see why the NHL had to provide this notice; the players were probably quite happy with the status quo (and therefore saw no reason to provide notice).

As for Article 3.1(a) of the CBA, it provides that the CBA “shall remain in full force and effect until midnight New York time on September 15, 2011, and shall remain in effect from year to year thereafter unless…either party shall deliver to the other a written notice of termination of this Agreement at least 120 days prior to September 15, 2011 or not less than a like period in any year thereafter”.

So again – no notice means the CBA is renewed for a year. Given that that the NHL wants to see changes to a few terms in the CBA, including revenue sharing and restrictions on long term deals, the NHL was going to provide notice. For that reason, the NHLPA advised its members that notice was not a surprise.

All Aboard Please

Fehr continues in his memo by encouraging players to attend bargaining sessions as that is an effective way to send a message to the League that the players are taking this very seriously: 
“We have been continuing to meet with Players to discuss your ideas and suggestions for a new CBA.  Stay tuned and we will notify you as soon as we have information about when and where the negotiating sessions with the League will take place. As I’ve said on many occasions, all Players are encouraged to attend as many of these bargaining sessions as possible.  In fact, there is no better way to send a message to the League that Players are engaged in the process of bargaining for a fair new contract.”
Given that notice has been provided, the next step is for both sides to meet. The NHL has said for a while that it has been prepared to negotiate and this should get things rolling. Ultimately, notice to bargain preserves the NHL's position as it looks to start negotiations.

Offside Radio Show: Podcast

Yesterday on the Offside radio show, AJ and I covered the basics of the NFL concussion lawsuits, the role of non-guaranteed contracts in the Saints Bounty program, the latest on the Roger Clemens trial, the firing of MLB arbitrator Shyam Das and the impact of a potential Coyotes/Devils final (which would be played out in bankruptcy court).

We also hit on the smash hit show The Magic Hour.

Tuesday, May 15, 2012

Our Interview With Graham James Sexual Assault Victim Greg Gilhooly

Recently on Offside, we interviewed Greg Gilhooly.

Greg was allegedly sexually assaulted by convicted pedophile Graham James over a period of 3 years beginning in 1979 when he was 14 years old.

In 2010, criminal charges were filed against James stemming from his sexual assault of Gilhooly, as well as Theoren Fleury and Todd Holt. Ultimately, the charges against Gilhooly were stayed, and Graham James pled guilty to sexually assaulting Fleury and Holt and was sentenced to 2 years in jail.  James can apply to be released within 8 months and within 16 months will likely be free.

Greg is quite articulate and well-spoken and speaks on this topic with great clarity. Greg is also a lawyer. He went to Princeton, then followed that up with University of Toronto Law School and articles at Torys. After that he worked in-house at CanWest and Cookie Jar Entertainment.

It is important that we remind ourselves of the utterly devastating effects of child sexual assault.

Here is our interview with Greg Gilhooly:

Thursday, May 10, 2012

TSN Radio Clip: We Hit Newest Saints Developments and NFL Lawsuits

TSN's Scott MacArthur and I drill down on the Saints appeals and their impact on the NFL concussion lawsuits. Click here if you want a listen.

We also talk about non-guaranteed contracts and how that may have encouraged Saints players to ignore their better judgement. 

Wednesday, May 9, 2012

Bottom Line Breakdown: NFLPA Challenges NFL Suspensions

In connection with the Saints Bounty gate issue, the NFLPA is challenging the suspension of 4 of its member players, namely, Jonathan Vilma, Anthony Hargrove, Will Smith and Scott Fugita.

Two separate arbitration proceedings were filed by the NFLPA challenging Commissioner Goodell’s authority to punish the players.

First, the NFLPA is arguing that the NFL is prohibited from disciplining players – period. The NFLPA is saying that as part of entering into the new CBA, the NFL released all players from conduct that occurred before August 4, 2011.

Since the pay-for-performance program occurred before that date, the NFL can’t punish players.

This exclusion aside, the Union is arguing that on-field conduct is governed by a different set of rules and as a result Goodell is not the right person to hear the appeal. On-field conduct, as argued by the Union, is addressed not by the Commissioner but an arbitrator  jointly appointed by the NFL and the Union. This is why the Union has requested that Shyam Das, a non-injury grievance arbitrator, hear the appeal.

So under this first part, the NFLPA is saying that the NFL was prevented from punishing the players and that Goodell should not hear the appeal.

On the second arbitration, the NFLPA is taking the position that the discipline deals with non-contract bonuses. Remember you can’t pay players outside the four corners of their contracts; if you do that constitutes a violation of the NFL By-Laws and Constitution and CBA.

The NFLPA argues that in cases on non-contract bonuses, the case should go to an arbitrator and not Goodell. So it’s being argued that Goodell didn’t have the authority to punish the players.

In response, the NFL is saying that the players are not barred from being disciplined for this type of conduct even though it occurred before August 4, 2011. The players engaged in dangerous conduct directed to other players, and is conduct which was detrimental to the integrity of the league. As a result, this matter is something Goodell could rule on.

It is difficult seeing these punishments being significantly amended – irrespective of who hears them. Intentional attempts to injure other players (and members of the same Union) will not be seen as acceptable and does not appear to be captured by any deal cut between the NFLPA and NFL regarding disciplining players for problematic conduct.

Friday, May 4, 2012

Offside Exclusive: Review of Raffi Torres Appeal Documents

I have secured a copy of the NHLPA’s request for an appeal of the Raffi Torres 25 game suspension for his hit on Marian Hossa. As per Article 18.5 and Exhibit 8 (3)(f) of the CBA, the decision is being appealed to the Commissioner. Ultimately, the NHLPA is challenging the length of the suspension, while also taking the position that the manner in which the hearing was conducted was unfair.

Here are the important points:

(a) Torres is not appealing the NHL’s decision that his hit on Hossa constituted a violation of the rules. Rather, he is appealing the length of his suspension.

(b) Torres is taking the position that the 25 game suspension is “excessive and arbitrary”. It is argued that the suspension is “more than double the length of any ever issued by Brendan Shanahan and is one of the longest suspensions in the history of the NHL”.

(c) Shanahan denied Torres’s request that he be permitted to view video evidence of similar or worse hits and how they “have been treated in the past”. This precluded Torres from making out a full defence.

(d) Torres is requesting an in-person hearing so that he may “present this evidence to the Commissioner”.

(e) The NHLPA is noting that a “de novo” standard should be applied to the appeal. The phrase “de novo” is a Latin term that means “anew” or “afresh”. When this standard is applied, the case is heard all over again as if it had not previously been tried. The de novo standard of review may be applied to the law of the case, the facts of the case, or both.

(f) The NHLPA argues that supplementary discipline must be imposed by the NHL in a “consistent manner” so that players have a clear understand and expectation as to how on-ice transgressions will be treated by the league. In this case, in the view of the NHLPA, the ruling was not consistent with previous cases and the hearing and suspension “violated the very basic requirements of a fair process” which is a “matter of concern to all Players”.

Here is some more detail:

In its letter to the Commissioner, the NHLPA writes that Torres “regrets his actions” and is “extremely sorry for the injury caused to Marian Hossa. However, Mr. Torres does appeal and request review of the length of the disciplinary suspension imposed upon him” and “seeks an appropriate reduction”.

The NHLPA goes on to argue that supplementary discipline needs to be imposed in a “consistent manner” and that the “discipline imposed on Mr. Torres manifestly was not”.

The NHLPA has characterized the suspension as “excessive and arbitrary in that it is entirely inconsistent with the League’s past treatment of similar incidents”. The NHLPA also wrote as follows:

On several occasions during the 2011-2012 season, conduct of a similar or even more serious nature, including like conduct by repeat offenders, eventuated in markedly shorter suspensions. Other similar on-ice plays resulted in no discipline of any kind. Mr. Torres suspension also is more than twice as long as any other issued by the Department since its inception. Importantly, such a departure from established guidelines undermines the Department’s responsibility to provide all Players with objective and reliable standards by which their conduct will be assessed for disciplinary purposes.

During the hearing, the NHLPA intends to “present videotape evidence of recent incidents involving similar or more egregious misconduct that resulted in substantially less or no Player discipline”.

With a view to properly preparing for the appeal, the NHLPA has requested that the NHL provided it with all relevant information and documents, including things like emails, memos, notes of conversations and any summaries relating to the proceedings and any investigations.

As per Exhibit 8 of the CBA, the Commissioner “will endeavor to rule promptly on any such appeal”.

Wednesday, May 2, 2012

CFL In Ottawa One Step Closer: Court Says No To Friends And Will We See Appeal?

By Graydon Ebert

Ottawa is one step towards the redevelopment of Lansdowne Park and the return of CFL football to the city. On Monday the Ontario Court of Appeal rejected the appeal of Friends of Lansdowne Inc., a community group, to strike down the by-law passed by City Council in June 2010 which gave approval to the Lansdowne Park partnership with Ottawa Sports and Entertainment Group (OSEG).

This decision was the latest in a long line of court action with Friends of Lansdowne losing at both the Ontario Municipal Board and Ontario Superior Court of Justice before its recent loss at the Court of Appeal.

The 3 Big Issues That Were Appealed

The Friends of Lansdowne appeal was based on three grounds:

Issue 1: Unfair Bonus?

They challenged certain aspects of the plan as being against anti-bonusing provisions in the Municipal Act. These provisions prohibit a municipality from providing a bonus to a commercial entity.

The real purpose of this is to prevent municipalities from providing unfair incentives to businesses to come to their municipality or favouring one business over another. The court has said that you look at whether an unfair advantage has been given by the municipality and in doing so you look to both sides of the arrangement to ensure the municipality’s obligations are matched by benefits flowing to it.

The Friends argued at trial that when you look at certain aspects of the plan, the city favoured OSEG. The Court disagreed saying that there were benefits and obligations going both ways. The risk and the reward of the partnership was reasonably balanced between the City and OSEG. That was key.

Issue 2: Bad Faith?

They Friends also alleged that the City negotiated in bad faith. The Court said there was no bad faith. The court had some concerns about the plan negotiation and approval process but when you looked at the plan as a whole, these concerns did not amount to bad faith.

Issue 3: Competitive Bidding

Finally, the Friends argued that the by-law was outside of the City’s jurisdiction because the partnership agreement breached how the City is supposed to buy things. The City has a policy and by-law in place for the purchasing of goods, construction and services. It’s supposed to mark it a competitive process. The policy, though, does allow for a waiver of the competitive bidding process and replacing it with negotiation where there is an absence of competition and there is really only one supplier of the goods or services.

The City relied on that exception believing that the proposal was for land development rather than for the purchase of goods, services or construction and that negotiation was an acceptable replacement for competition because OSEG was the only entity that could bring a sports franchise to the table. The Court declared that the City complied with the law - the negotiation and evaluation of the proposal essentially met the required process under the procurement policy.

Not Surprising Decision

The Court of Appeal’s decision is not surprising. Courts are loathe to quash a by-law without any evidence of illegality or bad faith. It is the municipality’s jurisdiction to decide what is best and court will only encroach on that jurisdiction if the by-law is illegal or if is unreasonable and passed in bad faith.

Is An Appeal Likely?

Probably not.

The Friends can request that the Supreme Court of Canada hear the case. Problem is that Court typically only hears cases of national importance and in areas of unsettled law.

Since this case is not of national importance (except maybe to CFL fans) and does not touch on any areas of unsettled law, it doesn’t seem like this case fits the profile of a case the Supreme Court would hear.

Friends of Lansdowne may be left with no alternative but to live with the Lansdowne Park plan, a plan they have fought hard to defeat both legally and politically.

The Optics: Billy Hunter & Employing His Family Members

The NBPA is being investigated by U.S. Attorney’s Office in Manhattan for its finances and business practices. Since 2001, the Union has paid about $4.8 million to family members of Billy Hunter, the head of the Union. This is according to Mason Levinson’s recent article.

The Union has Hunter’s son, 2 daughters and daughter in law on the payroll. It’s a family affair it seems.

NBPA President Derek Fisher has insisted that an audit of the Union’s financials be conducted. His reward – he was asked to step down. Fisher, though, has refused, and now we have word of the investigation.

As per Mason Levinson’s article, here are some of the financial details:

Son Todd

He joined the investment firm Prim Capital in 2002 but didn’t work on Union matters until 2008. Prim has been working for the NBPA since 1999, which has over $200 million in assets. Since 2005, the Union has paid Prim about $3 million and is paid about $45,000 a month to run the Union’s financial affairs.

It is good that Todd was recused from working on Union matters until 2008. However, it is reasonable to ask to whether he was hired because he was Hunter’s son. As well, was it appropriate to have him work at Prim in the first place?

Daughter Alexis

She joining the law firm Howrey in Spetemvber 2007. That same month, the Union made its first payment to Howrey in the amount of $380,000. Thereafter, it is reported she left Howrey and went to another law firm named Steptoe in 2011. The next month that firm was retained by Union. 

Daughter Robyn

She works as the Union’s benefits director and has been paid $201,000 since 2009.

Daughter-In-Law Megan (Todd’s Wife)

She is the Union director of special events. She was on the payroll before she met Todd. She was paid $173000 in 2011.

Marvin Miller Speaks So We Listen

The godfather of sports unions, Marvin Miller has come out and said that “it’s not a criminal act but it’s not something I would do”. Miller has been touted “along with Babe Ruth and Jackie Robinson” as one of the “three most important men in baseball history.” He transformed the baseball union into the most powerful sports union on the planet and set the gold standard for sports unions. If Miller thinks this looks off, he probably has a point.

Appearance of Justice

Paraphrasing an old legal expression, the one thing that is more important than justice being done, is the appearance that justice has been done (the actual line is this: not only must Justice be done; it must also be seen to be done").

Here, the optics are not good. Hunter’s family members are being paid to work for the Union. The Union has retained the executive director's law firm and is using the son's investment firm. In cases like this, it is of paramount importance that there be no perception of a conflict of interest and that the union not distract from its ultimate objective of furthering the goals of the union - and only the union. 

The Union is under Federal investigation, which is highly problematic.

This is serious – very serious. Hunter may not escape unscathed here. 

The Sale of the Dodgers & McCourt's Legacy

The $2.15 billion sale of the Dodgers officially closed yesterday as new owner Guggenheim Baseball Management (which include Magic Johnson from the Magic Hour) wired the remaining funds to former owner Frank McCourt. McCourt sold the team, the parking lots and 250 acres of land surrounding the stadium (and 3 miles from downtown LA).

The previous record sale was the Miami Dolphins, which Stephen Ross bought for $1.1 billion in 2011.

McCourt bought the team in 2004 for $430 million. In 2010, the team was valued at about $720 million. Many believe that the Guggenheim group overpaid for the Dodgers. This is despite the estimated $3 to $4 billion media deal the team expects to sign with Time Warner or Fox - or perhaps someone else. The deal hits the open market in 2014. By then, Matt Kemp should have 50 million home runs.

According to Eric Fisher of the SportsBusiness Journal, the Dodgers generated about $240 million in revenue last year, down from $265 million in 2010 and $286 million in 2009.

First order of business for the new ownership group is seeking to maximize revenue and making sure the team is working at top productivity levels.


MLB complained that McCourt used the team to subsidize his personal and lavish lifestyle to the tune of $187 million. In order to fend of MLB's attempts to seize his team, he took the team into the protective shell that is bankruptcy. Once inside the shell, MLB had little power to wrest the team from McCourt - despite its constitution providing that it could (judges in bankruptcy court just want to see creditors get paid - they don't care too much about a league's constitution).

What did the Dodgers buy for McCourt? According to various reports, here’s where some of the Dodger green went:

1) As Dodger CEO, wife Jamie McCourt was paid $2 million a year, while Frank was paid $5 million annually. Here’s where it gets a bit odd. Their 2 kids were each paid $600,000.00 a year. The thing, though, is that one child was attending Stanford, while the other worked full time at Goldman Sachs.

2) After the purchase of the Dodgers, the McCourts bought 4 homes in Los Angeles at cost of around $89 million.

3) They also bought vacation properties and a private jet, had private drivers, a hairdresser who worked exclusively for the McCourts five days a week and a makeup artist.

4) Jamie paid over $100,000.00 to florists.

5) Frank fired his wife as Dodgers’ CEO, claiming that she was having an affair with her driver. However, that didn’t put a damper on spending. Frank spent $30,000.00 a month on a suite at the Beverly Hills hotel.

6) Jamie used one of the homes “exclusively for swimming” and the second to store furniture.

7) Jamie went on a lavish trip to France with her driver.

All this was paid for by the Dodgers.

Dodgers fans are undoubtedly relieved that McCourt is out of the picture and that their iconic franchise can  return to respectability. As for McCourt he will go down as an owner that put himself ahead of the team - then forgot he owned a team.