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LONGTIME LICENSING AGENT SUES MLBPA OVER CONTRACT DISPUTE
Published May 10, 1996
The MLBPA has been sued by Tampa-based Mike Schechter Associates, Inc., its non-exclusive group licensing agent since '77. The lawsuit, filed in NY Supreme Court in February, alleges that the MLBPA -- through the actions of MLBPA Exec Dir Donald Fehr and Dir of Licensing Judy Heeter -- "breached its agency agreement with MSA, tortiously interfered with MSA's business and business relationships, and engaged in various schemes to intimidate MSA, deprive MSA of rightfully-earned commissions and exert undue control over licensees." MSA, which earns a 25% commission from MLBPA for all gross income from licensing deals entered into by the company, claims to have generated over $100M in revenues -- securing contracts with such companies as Burger King, Coca-Cola, Kraft, McDonald's, Pizza Hut, Pinnacle Brands, Sony and Sega (MSA). A CLOSER LOOK: According to the complaint, much of the dispute stems from a paragraph in the original agency agreement signed by MSA Founder/President Mike Schechter and then-MLBPA Exec Dir Marvin Miller in June '77. The so- called "evergreen provision" establishes MSA's 25% cut and contains language which could be interpreted to allow a continuing commission -- even on license "extensions, renewals, replacements and substitutions" entered into after the termination of the agency agreement. In May '89, this provision was allegedly modified, reducing MSA's commission to 10% for certain post-January '89 licensing deals. The complaint asserts that MLBPA has breached the agreement by unlawfully attempting to circumvent or eliminate the "evergreen provision," impede MSA's normal business routine and dilute its general powers. MSA is seeking compensatory and punitive damages in excess of $1M (THE DAILY). THE CHARGE: Schechter told THE DAILY his main concern is that MLBPA desired to cut back or eliminate MSA's commission while still keeping its other regular business arrangements. He said he was "saddened" to file the lawsuit after a "very successful" 20-year relationship with MLBPA. He also made an analogy to "intimidation tactics" used by the union against MLB owners during the strike (THE DAILY). THE RESPONSE: Heeter told THE DAILY that she, too, was "saddened" by the collapse of such a "long and cordial" affiliation. She said the union was "stunned" by the filing of the suit, and "even more stunned by its viciousness." Heeter, who revealed that the MLBPA had officially terminated its agency association with MSA effective May 3 (following the required 60- days written notice), stated that the organizations had been trying to "transition" in preparation for the day when Schechter "would not be able or willing" to serve as an agent for MLBPA. Heeter: "We did not want to terminate our relationship. We wanted to change by mutual agreement." Heeter added that the MLBPA was not planning to hire a new licensing agent, but rather was working towards a "fully integrated marketing program in- house." She said the MSA lawsuit will "precipitate much sooner what we were trying to do for a while" (THE DAILY).