SBD/May 9, 2011/Leagues and Governing Bodies

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  • NFL Lockout Watch, Day 59: NFL Rules Could Differ From Last Year If Forced To Open

    If the NFL is forced by a federal appeals court this week, or sometime later, to fully open the ‘11 offseason, it is not a foregone conclusion as widely expected, and reported, the league will simply impose ‘10 free agency rules. A small NFL working group, in existence for about a month, is currently drafting plans for a ‘11 season without ‘10 rules, though the league has not made a decision whether to use last year’s set or the product of this working group, a source said. The working group’s plans ramped up after league committee meetings in Indianapolis late last week, this source said. The ‘10 free agency rules were the last under the CBA renewal struck with the NFLPA in ‘06 and which expired March 11. The NFLPA earlier that day decertified and 10 players concurrently sued the league for antitrust violations, claiming not only the lockout imposed March 12, but the league’s free agency restrictions were illegal. In seeking a stay of a ruling lifting the lockout, first from the lower court that made the decision, and now the 8th Circuit Court of Appeals, the league has consistently argued that if forced to start the offseason, it is in an untenable situation of being forced to expose the sport to antitrust claims. U.S. District Judge Susan Nelson, who ruled against the league, and the players have each said that the NFL’s response is simply that it should not impose rules that run afoul of antitrust violations. It is unclear if the league’s free agency rules, or the Draft, would survive a drawn out antitrust lawsuit. Because those rules would no longer have been collectively bargained, they would not enjoy immunity from antitrust law.

    GROUP’S GOAL UNKNOWN: What the NFL’s working group’s plan is driving at is unclear, whether lifting restrictions or imposing more. It would seem unlikely, however, given the worry over antitrust liability, the league might respond with more onerous restrictions. The source declined to describe the possible rules, but did note, “2011 rules would be very different than 2010. Might not alter the product on the field but very different for players and clubs. Decision likely to be made after 8th Circuit ruling.” The 8th Circuit was expected to rule on the stay last week, but did not. It could rule this week, or simply keep a temporary stay in place. The court has scheduled June 3 oral arguments, and a decision could come in the weeks following that day. The NFL’s opening brief in the appeal is due today. This source did say reports yesterday that the NFL would consider shutting down its entire business in response to an adverse appeals ruling was not something this person had heard before (Daniel Kaplan, SportsBusiness Journal).

    LATEST ON TV INCOME ISSUE: ESPN.com's Lester Munson reported U.S. District Judge David Doty in a hearing that begins Thursday will "decide whether the players are entitled to as much as $600 million in television income from the 2009 and 2010 seasons and whether to issue an injunction that would prevent the owners from enjoying payments from the networks during the lockout." Doty "will consider 12,000 pages of testimony and more than 400 exhibits," and at the request of the owners, "almost all of the material has been impounded." However, the players "now want it made public," and if Doty agrees with the players, it "would provide a rare look into the profits of the teams and the networks." Munson wrote if Doty rules for the players in the case, it "may be remembered as the biggest occurrence of sports team owner chicanery since the collusion conspiracy in Major League Baseball in which owners were caught trying to manipulate the market for free agents" (ESPN.com, 5/6). SPORTSBUSINESS JOURNAL's Daniel Kaplan reports the NFLPA is urging Doty to "expand the scope of his ruling to include all league commercial contracts." Sources said that "almost all NFL contracts with sponsors have clauses that guarantee payments even in the event of a lockout." The request "could trigger a new, potential financial liability for the NFL and become another point of leverage in the labor battle" (SPORTSBUSINESS JOURNAL, 5/9 issue).

    THE WAIT GOES ON: In Nashville, John Glennon writes with the "possibility that the lockout may drag into June or later, the odds that it will disrupt offseason practices ... are becoming greater by the day." Titans DE Dave Ball said if the 8th U.S. Circuit Court of Appeals grants a stay of the lockout, "Then you go to a June 3 hearing, but you never know if the ruling will be right after that or if it will take a couple of weeks." Ball: "That could possibly take us to mid-June or late June, and then even if the lockout is eventually lifted, we're going to have to cram about 14 weeks of stuff into a month or a month-and-a-half of preparation time." Ball added if the lockout continues, the "quality of the game is going to suffer" and there are going to be "even [greater] differences between the usual 'haves' and 'have-nots.'" Ball: "It's going to be the teams that are good every year and that have consistent coaching staffs every year (that will be in better shape). It's the teams like the Titans, with new coaching staffs, (personnel changes), new schemes and all that. ... We're going to end up suffering" (Nashville TENNESSEAN, 5/9). Lions DT Ndamukong Suh said, "I think it's going to go down to the wire, maybe sometime around late July, first of August, then we'll head right to camp" (FREEP.com, 5/8).

    GOODELL SHOULD SHOW GOODWILL: In N.Y., Gary Myers wrote, "When there is finally a new collective bargaining agreement -- and it will eventually happen -- Roger Goodell should go on a goodwill tour around the league to soothe all the hard feelings the players have developed toward him." Goodell "prides himself on being the commissioner of every sector of the league and having a good relationship with the players." But in "any sports labor dispute, there is no question the commissioner is the owners' guy," even as Goodell takes a cut in pay during the lockout. Goodell's "reaction to the players criticism is that the players are frustrated, just like the owners and the fans, emotions are high and that he doesn't take it personally." Myers noted Goodell on conference calls with teams' season-ticket holders also has emphasized that the "litigation brought by the NFLPA is delaying the process" (N.Y. DAILY NEWS, 5/8).

    UNIONS INEFFECTIVE: In a special to the N.Y. TIMES, WMG Management Principal Arn Tellem wondered if unions in "professional sports other than baseball have outlived their purpose." The "noble idea of solidarity has played itself out" in both the NFL and the NBA. Tellem: "Collective bargaining has proved ineffectual in protecting the rights of football and basketball players. The most that their union leaders can hope for is to minimize concessions. ... The NFL and NBA players consistently allow the owners to define the issue. More often than not, management gets the concessions it seeks." Owners also have "exploited the weakness of unions to inhibit competition," and "more often than not, the result has been union retreat -- on salary caps, salary scales and taxes." Tellem: "Something is fundamentally wrong when the only effective weapon in a union's arsenal is dissolution" (N.Y. TIMES, 5/8).

    GETTING LAWYERED UP: Latham & Watkins is representing the NFLPA in the lawsuit brought against the group by retired players alleging they should have been in the settlement between the union and another group of retired players over licensing fees. NFLPA Exec Dir DeMaurice Smith worked for Latham & Watkins before joining Patton Boggs. He left Patton in ‘09 to join the NFLPA. Three Latham lawyers Friday filed a notice in a California district court they would be representing the NFLPA. The NFLPA also received permission to delay filing its response, originally due today, until June 8. The NFLPA under Smith agreed to pay a class of retired players $26.25M after a district court found the union had not properly marketed them. The latest suit comes from players who had not signed group licensing agreements with the union, and so were excluded from the settlement. This is not the first time Latham has worked for the NFLPA. It worked on the NFL lockout insurance case that is currently before Doty later this week (Kaplan).

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  • NFL Lockout Watch, Day 59: WADA Could Oversee Drug Testing Without New CBA

    The NFL has talked to WADA "about overseeing testing of players for performance-enhancing drugs if a federal appeals court forces the league to stop the lockout and put in place rules for operating the league this season," according to an NFL official cited by Judy Battista of the N.Y. TIMES. The NFL and NFLPA "have resisted third-party administration of drug testing," but without a CBA, the league "would be able to unilaterally impose a drug-testing program and penalties -- much as it could impose rules related to the salary cap and free agency -- although it could be subject to challenge by players in court." WADA's oversight "could even eventually include blood tests" for HGH. Battista notes among the "other options is using the National Center for Drug Free Sport to conduct the drug testing." That organization "already collects urine samples for NFL tests." The league "would probably leave testing for drugs like marijuana and cocaine to the teams." The NFL exec said that the league is "ready to resume drug testing immediately" if the 8th Circuit Court of Appeals "orders it to resume operations, which could happen as soon as this week" (N.Y. TIMES, 5/9).

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  • NFL Lockout Watch, Day 59: Agents Claim Teams Tampering With Undrafted Players

    Brinkley forced to wait after not being picked during NFL Draft

    Six NFL player agents have said that teams "were contacting them in regard to their undrafted free-agent clients after the draft, a violation of NFL lockout rules," according to Eric Edholm of PRO FOOTBALL WEEKLY. NFL teams are "not allowed to have any contact with any undrafted players," and NFL Senior VP/PR Greg Aiello confirmed that "any contact between teams and agents or players currently would constitute tampering." Three of the six agents said that "representatives of NFL clubs even used personal cell phones to contact the agents following the conclusion" of the draft, as opposed to calling from "team-issued lines where evidence of tampering might be easier to trace via phone records in any official NFL audit." Two more agents said that teams "called players directly in a few cases." Undrafted C Tim Barnes last week said that "three teams contacted him after the draft: the Ravens, Bengals and Dolphins." Bengals PR Dir Jack Brennan said the team is "puzzled by the report" and is unaware of any coach or scout calling Barnes; Dolphins Senior VP/Media Relations Harvey Greene said he was unaware of the report. The Ravens did not respond for comment (PROFOOTBALLWEEKLY.com, 5/6).

    WAITING FOR THEIR WORLD TO CHANGE: In St. Louis, Bill Coats notes "uncertainty rules the day" for undrafted free agents. Agent Harold Lewis said he advises his clients to "just keep yourself in shape, keep working out hard." Lewis: "You know that there's interest." Undrafted CB Niles Brinkley said, "We've got to wait, be patient and be ready for the call. You get frustrated a little bit, but you know that it eventually will be over and you'll be with a team." Undrafted WR Jamorris Warren: "You've just got to prepare yourself and get ready for when the time comes, whenever the lockout's over" (ST. LOUIS POST-DISPATCH, 5/9). Undrafted RB John Clay: "We're all in a tough boat right now. ... You've got to just play it by ear, and whenever they figure what they want to do with the lockout, then teams will be making moves. All you can do until then is take care of your side of the business by keeping in shape, and being ready to go when the time comes" (SI.com, 5/6).

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  • CVC Has First Refusal To F1's Minority Shares, Likely Blocking News Corp. Bid

    Ecclestone says he is 100% certain CVC does not want to sell F1 to News Corp.

    News Corp. “cannot make a move to take over Formula One by buying out the sport's minority shareholders because private equity group CVC has first refusal on any stakes offered for sale,” according to Sylt & Reid of the GUARDIAN. News Corp. has "teamed up with Exor, an investment firm controlled by the Agnelli family, for a possible bid for F1.” CVC, which owns 63.4% of F1’s parent company Delta Topco, has confirmed it received a "friendly" approach from News Corp. Deputy COO and Int'l Chair & CEO James Murdoch. But Delta Topco shareholders are “all bound by an agreement that was signed in November 2006 when CVC refinanced” the $2.9B debt that it used to buy F1. That agreement “gives CVC a veto over the sale of any of the other shareholders' stakes in Delta Topco and it states that CVC has first refusal if they decide to sell” (GUARDIAN, 5/9). F1 Management Chair Bernie Ecclestone yesterday said he is "100 percent" certain that CVC does not want to sell F1 to News Corp. Ecclestone: "They are the major shareholders and they do not want to sell. That is 100 percent for sure" (AP, 5/8). Ecclestone noted that “other groups have made approaches about buying the series." Still, he insisted that CVC “doesn’t want to sell unless there is a ‘bloody enormous’ offer.” He also confirmed that the FIA "has the right to veto a buyout" (BLOOMBERG NEWS, 5/6).

    LOOKING FOR SUPPORT: The FINANCIAL TIMES’ Blitz, Edgecliffe-Johnson & Allen reported News Corp. is “appealing to a broad church of F1 parties to get behind its approach” to buy the series. News Corp.’s partner in the bid, Exor, also “controls the Ferrari F1 team.” But there is “no shortage of other teams who feel hard done by in negotiations with CVC and Mr Ecclestone over the share-out of F1 profits, and want a say in F1’s future.” Some F1 teams believe that the likelihood of them getting a larger share of profits “may tempt CVC to strike a deal sooner than expected.” But “to get inside the News Corp tent, they must get to grips with the reasoning behind the media group’s interest” (FINANCIAL TIMES, 5/7).

    Print | Tags: Leagues and Governing Bodies, Formula One, News Corp, Motorsports
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