SBJ/January 12 - 18, 2004/SBJ In Depth
Leagues establish their legislative agendas for ’04
Published January 12, 2004
Front and center in the sports industry's legislative spotlight in 2004 will be congressional efforts to restrict Internet gambling. Lobbyists also will work on Capitol Hill to help shape efforts to regulate dietary supplements and so-called "designer steroids." The industry will seek legislation for aircraft flying over stadiums, work to improve the way taxes are levied, seek to protect data collected during events, and challenge the way cable systems treat sports networks.
The NFL and NCAA have been at the forefront of an expansive coalition that is pushing for legislation that would significantly restrict Internet gambling by U.S. residents.
Congress has been working on the issue since 1999, when Sen. Jon Kyl, R-Ariz., introduced sweeping legislation that made headlines but stalled as soon as lawmakers, lobbyists and the Justice Department began sorting out the specifics.
In June the House passed the Unlawful Internet Gambling Funding Prohibition Act, introduced by Alabama Republican Spencer Bachus. The bill prohibits U.S. banking institutions from processing payments to Internet gambling sites based outside the country. It does not include criminal penalties, a strategic choice that kept it out of the House Judiciary Committee, where it bogged down in the past.
The current version of Kyl's bill, which does include criminal penalties, cleared the Senate banking committee in July and could come to a full vote this year. If it does clear the Senate, a joint committee will try to resolve the differences between the two versions.
The American Gaming Association and Native American casino operators oppose both bills, saying they would give unfair advantages to owners of pari-mutuel facilities. The NFL Players Association has lobbied to make sure fantasy-league Web sites aren't covered by the bill.
At the end of 2003, both the Senate and House were working on bills that would ban steroid precursors — legal drugs that metabolize into illegal anabolic steroids once in the body — from the over-the-counter market.
Rep. Diana DeGette, D-Colo., questions a witness during a House hearing on ephedra.
Former Nebraska football coach Tom Osborne, R-Neb., and Rep. John Sweeney, R-N.Y., reintroduced the legislation in the House last January and Sens. Joseph Biden, D-Del., and Orrin Hatch, R-Utah, introduced it in the Senate in October. The Senate bill includes funding for research on the drugs and their effects.
All the leagues, along with the NCAA and the U.S. Olympic Committee, will be watching the issue, but none will be more active than MLB and its players association, both of which have endured widespread criticism for going soft on performance-enhancing drugs.
A discussion about the use of supplements containing ephedra will continue in both the House and Senate. The Food and Drug Administration notified manufacturers in December that it intends to ban ephedra early this year. Biden said the MLBPA has notified him that it will agree to test for androstenedione, the steroid precursor used by slugger Mark McGwire, if his bill passes.
In the wake of Sept. 11, the Federal Aviation Administration imposed directives governing stadium flyovers that were meant to clear the skies of low-flying aircraft during sporting events. But soon after the ban was imposed, the FAA began granting waivers that allowed banner-towing planes to continue their flights.
Efforts by the sports industry to restrict aircraft flyovers met opposition from plane owners who tow banners.
That led the leagues and schools to lobby hard for the enforcement of the original bans. When they ran into opposition from powerful small-plane lobbies that hold sway in the transportation committees, they got the flyovers banned through the House and Senate appropriations committees, which oversee funding of the Department of Transportation.
That ban, written by Louisiana Democratic Sen. John Breaux and passed in February 2003, was scheduled to sunset next month but likely will be extended indefinitely in another omnibus appropriations package that already has cleared the House and likely will clear the Senate when it convenes later this month.
The NBA and NHL also lobby on security matters, but because they play indoors they have put their resources behind matters of venue security. The NBA, NHL and colleges also have lobbied to make sure that players can travel on charters without clearing main terminal security.
MLB and the NFL are pushing for legislation that would change the schedule at which player salaries are amortized for tax and franchise valuation purposes, asking that sports franchises be treated similarly to other businesses.
Sports franchises long have amortized salaries across five years. Other businesses stretch them across 15 years. Both leagues determined in recent years that it would be beneficial, on a marginal basis, to amortize across a longer schedule. The proposed change made it out of committee last year but didn't get any further. The leagues believe it will surface again this year.
The MLBPA also has lobbied on tax issues, paying particularly close attention to a bill that would have taxed player salaries to help finance a ballpark in Washington, D.C., a stadium-financing strategy that has been suggested in several municipalities but never tried.
Copyright protection/database collection
To sports properties — and particularly stats-driven MLB — database collection, when turned around and delivered to consumers in near real-time, amounts to a rebroadcast of an event. That troubles the leagues, which want to control their webcasts, license them and profit from them.
So far, one key test case has gone against the sports properties. In 1997, a federal appeals court ruled against the NBA in its claim that Motorola and Stats Inc. violated copyright law by delivering play-by-play of its games via its handheld pagers. Since then, the assumption has been that anything short of full-scale animation would fall outside of copyright protection.
Finding no relief from the courts, the leagues have supported legislation that protects Internet databases from piracy. The latest such bill, the Database and Collections of Information Misappropriation Act, made it out of a House Judiciary subcommittee late last year, but observers say it is unlikely to survive the consumer-minded Energy and Commerce Committee.
Among those who have joined a vast and diverse coalition to oppose the controversial bill: the U.S. Chamber of Commerce, the American Civil Liberties Union and the nation's librarians.
Broadcasting and communications
All the leagues are monitoring Congress' stance on the rate dispute between ESPN and cable carrier Cox Communications Inc.
Sports-minded Sen. John McCain, chairman of the Committee on Commerce, Science and Transportation, made the dispute a legislative issue last year when he urged cable operators to offer more a la carte programming, then followed that up by ordering research into whether the cost of sports programming was behind rapidly increasing cable rates.
That study concluded that the cable industry would do fine without further government regulation. But it also found that sports channel fees had increased 60 percent in the last three years while the cost for other channels rose by only 26 percent. The sports networks say they are merely passing along the exorbitant cost of the rights fees that they pay to leagues.
The leagues — and particularly the NBA and NFL — also are monitoring the renewal of the Satellite Home Viewer Improvement Act, which is scheduled to expire at the end of 2004. The reauthorization addresses a range of issues regarding satellite programming, including the carriage of local digital broadcast offerings and the fees satellite services pay to carry superstations. Carriage of local network affiliates is a key issue for the NFL, which airs most of its games via CBS, Fox and ABC and offers its "Season Ticket" pay package only on DirecTV.
The NFL and NBA already have launched their own satellite channels, and MLB and the NHL are considering doing the same, as the NHL Network airs only in Canada.