SBD/Issue 219/Leagues & Governing Bodies

Judge Throws Out All But One Charge In ATP-Hamburg Trial

Judge Throws Out All But One Charge In ATP Suit
U.S. District Court Judge Gregory Sleet this morning threw out all but one of the charges in the ATP antitrust case, a source said. The core charge of antitrust violations against the ATP corporate entity remains and will likely be given to the jury today on this, the 11th day of the trial. But charges against the ATP for tortious interference and for illicitly converting the value of the Hamburg, Germany, tournament to its own benefit, as well as against the individual board members, have all been thrown out, the source said. The tournament sued the ATP for planning to demote the event as part of the circuit's new format for next year. The tournament charged antitrust violations, that the ATP was taking value from Hamburg without payment, it had interfered with Hamburg's business relationships and that the individual board directors were responsible.

ECONOMIC WITNESSES PAID BIG BUCKS: Underscoring the high stakes involved in the case, the ATP paid economic witness Jonathan Walker and his firm, Economists Inc., $1M for his analysis that the circuit's new calendar format did not violate antitrust laws. The Hamburg organizers also paid economic witness Andrew Zimbalist $850 per hour, according to his expert report that was included as an exhibit in an earlier filing, though his number of hours worked on the case was not given. Walker testified Friday that because the ATP lacks market power among broadcasters, sponsors and the general entertainment universe, it could not possibly be guilty of antitrust violations. And he argued that what it stands accused of are the normal functions of a governing body. “We are talking about rules that are necessary for the ATP Tour to exist,” he told the jury. “So before we even get to the stage of measuring market shares, we know that we are concerned with conduct that's fundamentally necessary for the product to exist.” Later he added, “The end goal of antitrust is what's the impact on consumers, not, say, what is the result on a particular tournament.” Hamburg has taken a noteworthy approach to antitrust; arguing in this case the consumers are the tournaments, not the fans, and the products are the players. So by mandating the top eight events get the top players, the ATP has monopolized the players' services market. Walker responded there are many other outlets for players, like the Grand Slams, exhibitions, Davis Cup and World TeamTennis, though he came back to the point that the ATP is allowed to make rules regarding where players compete.

SCOTT TAKES THE STAND: Also testifying Friday was Larry Scott, Chair & CEO of the Sony Ericsson WTA Tour and the former number two exec at the ATP. He advocated for the ATP’s position. A loss for the ATP could open the door for lawsuits against the WTA, which is implementing a similar plan. While the ATP’s corporate practices have come under scrutiny at the trial, certainly Hamburg did not come off so clean on Friday. The ATP unveiled an internal Hamburg spreadsheet that showed the tournament has been materially overstating its attendance by tens of thousands a year. “To have a positive PR reporting,” said Ulrich Kroeker of the German Tennis Federation, responding in a videotaped testimony played at the trial on why the federation reported false numbers. Applications for the new top tier of ATP events required at least attendance of 100,000. Hamburg reported '06 attendance of 105,300 to the ATP, but its actual attendance was 70,850.

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