SBJ/April 11-17, 2011/Labor and Agents

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  • MLB agent Close joins with Schwartz's NBA firm

    MLB agent Casey Close, best known as agent to New York Yankees shortstop Derek Jeter, has joined the practice of NBA agent Jeff Schwartz as a partner in a deal that will make the firm Schwartz founded, Excel Sports Management, a player across two major sports.

    Casey Close
    In addition to Jeter, Close, who recently left CAA Sports, is expected to bring with him clients Ryan Howard and Derrek Lee, among others. Under an agreement with Close and CAA, Close will continue to serve as Jeter’s and Howard’s baseball contract player agent, but Close and CAA share the marketing responsibilities of Jeter and Howard.

    Schwartz and his New York-based firm Excel represent a number of NBA stars, including Paul Pierce, Blake Griffin, Kevin Love, Jason Kidd and Lamar Odom. Financial terms of the deal were not disclosed, but Close and Schwartz confirmed that Close is joining the agency as a partner.

    “What I think about this partnership that is particularly exciting is that we are combining our industry experience, knowledge and relationships typically associated with a big agency with the hands-on, personal approach of a boutique agency,” Close said, in a phone interview last week. “Our plan is to make sure we are industry leaders in both baseball and basketball as well as client marketing. We want to be known for that, while looking for strategic opportunities in other representation and marketing businesses.”

    Schwartz said Excel is not planning to acquire any new companies or businesses right away. “Right now, we’re going to focus on building baseball and basketball for the short term,” he said. Both Schwartz and Close will work out of New York.

    Close and Schwartz have a friendship spanning 19 years, going back to when they were first hired as young agents working in the Cleveland office of IMG in the summer of 1992. Schwartz said that the two worked “30 feet away from each other” in those offices. “I was there in 1993 when Casey signed Derek and have watched him strategically build Derek’s off-court brand over the last 18 years,” Schwartz said. “Casey has done a fantastic job navigating the corporate world and determining the right deals to do for him but also the ones to pass on.”

    Jeff Schwartz
    Both agents said last week they have similar personalities and philosophies. “With Casey’s talented roster of athletes, combined with his established relationships, I am confident that he will be a great addition to the Excel team as we continue to grow both the basketball and baseball businesses, as well as explore additional strategic opportunities,” Schwartz said. 

    Schwartz was originally a tennis agent but later became a basketball player agent and formed Excel in 2002.

    Close left IMG and joined CAA in 2006, along with then-IMG NFL player agent Tom Condon, which marked the beginning of CAA Sports.

    Schwartz said that at the time Close left IMG, they had discussed him joining Excel, but the timing wasn’t right.

    “Once I decided to leave CAA,” Close said, “Jeff and I re-engaged in a serious conversation about teaming up and we decided we were ready to make it happen.”

    There have been plenty of big agencies acquiring the businesses of sports agents over the years, but this merger of two very prominent agents in different sports is a bit unusual. Prominent sports agents tend to specialize in one sport and generally do not have close relationship with agents specializing in other sports that lead to such business combinations, industry sources said.

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  • NFL memo lays out punishments for unauthorized contact

    Liz Mullen
    NFL clubs and their top executives who violate the NFL’s lockout rules by talking to NFL players or their agents can be subject to discipline, including the executives getting fired or the club losing a draft pick, according to a league memo obtained by SportsBusiness Journal.

    “Please be advised that violations of these rules will subject you and your Club to discipline, including, but not limited to, fines, suspensions, loss of draft picks and/or termination for cause,” states the memo, penned by Dennis Curran, the NFL’s senior vice president of labor litigation and policy. The memo was sent to all NFL club head coaches, general managers, presidents and CEOs on March 14, the Monday after the Saturday that the NFL locked out the players.

    The rules prohibit speaking to any agents or players about football or business-related issues, including contact by telephone, email, text message, Facebook, Twitter or instant messaging, according to the memo.

    NFL club executives have, however, been talking to agents who represent NFL draft-eligible players since the lockout began March 12. Asked about that, Greg Aiello, NFL senior vice president of communications, responded in an email, “The draft is part of the 2006 CBA,” referring to the fact that although the collective-bargaining agreement expired in March, before this month’s draft, it provides that a draft can be held. Aiello declined to respond to further questions about Curran’s memo.

    Since the lockout began, NFL general managers are required to keep a “call log” of any contact with agents. Curran, in his memo, wrote, “You must maintain a call log of any calls from Players or agents and whether the call was answered. The call log must be made available to NFL Security upon request.”

    Curran suggested, in the memo, that NFL club executives have an assistant answer or screen their calls.
    The memo also prohibits NFL club staff from making any public comments about either the CBA negotiations or the rules in place during the lockout.

    “You can expect that other Clubs and the media, as well as NFL Security, will be vigilant in monitoring your communications and activities to ensure compliance with these rules,” Curran wrote.

    In addition, Curran noted in the memo that a number of prominent NFL player agents have made declarations in support of the players’ motion in the Brady v. NFL case for a judge to issue an injunction ending the lockout. The memo states that agents “may attempt to bolster their position through conversations with you.”

    NFL player agents Joby Branion, Tom Condon, Neil Cornrich, Vann McElroy, Neil Schwartz and Don Yee all submitted declarations in support of the players’ motion for a preliminary injunction to end the lockout — which is the motion that was heard in a St. Paul courtroom last week.

    CAA SIGNS TOM WATSON: CAA Sports has signed legendary golfer Tom Watson for representation and to develop opportunities for him across a variety of platforms, including licensing, endorsements, speaking appearances, television and business development. Watson has won eight major championships, including five British Opens, and holds 39 PGA Tour victories. Watson will be represented by a team of agents led by Andy Pierce and Mike Rielly.

    OCTAGON BASEBALL SIGNS PLAYERS: Octagon’s baseball practice has signed a number of players, including Detroit Tigers second baseman Carlos Guillen. Octagon also signed Los Angeles Dodgers pitcher Travis Schlichting, Oakland A’s infielder Adam Rosales and Seattle Mariners pitcher David Pauley.

    Octagon agent Wil Polidor will represent Guillen, agent Lou Nero will represent Schlichting, agent Steve Hilliard will represent Rosales, and agent Fred Wray will represent Pauley.
     
    Liz Mullen can be reached at lmullen@sportsbusinessjournal.com. Follow her on Twitter @SBJLizMullen.

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  • MLBPA builds asset base as labor talks continue

    The Major League Baseball Players Association in 2010 built its asset base to its second-largest level in the past decade, continuing a common union practice of accumulating funds in the latter stages of a collective-bargaining agreement.

    According to the organization’s LM-2 filing with the U.S. Department of Labor for calendar year 2010, required by law, the MLBPA ended last year with total assets of $167.5 million, up nearly 13 percent from $148.7 million at the end of 2009. The only MLBPA asset total to surpass 2010 in the last decade was $171.2 million in 2006, achieved shortly before the enactment of the sport’s current five-year labor deal.

    Sports unions, including the MLBPA, typically in advance of a CBA negotiation, withhold money that normally would be distributed to players. Those funds can be used for litigation and other costs arising from a work stoppage, with the money then returned if a stoppage is avoided.

    On a player-by-player basis, distributions from licensing royalties also fell sharply last year, with maximum payouts decreasing from $18,103 in 2009 to $14,080. The 2010 sum is barely half the $28,041 player maximum distributed in 2008.

    MLB and the union are just beginning formal negotiations toward a new agreement to replace the current accord, which expires in December. Three bargaining sessions have been held, with many more to come during the spring and summer.

    While the mood surrounding the developing baseball talks has nowhere near the hostility or broad conceptual disagreements of the NFL and NBA labor situations, many owners think correction is still needed on areas including revenue sharing, debt rules, postseason format and draft rules. But MLB is not expected to ask for major concessions from players as the NFL or NBA have done, so it is not anticipated that players will strike or owners will impose a lockout.

    MLBPA Executive Director Michael Weiner, serving in his first full year in that role in 2010, earned $1 million during the year, continuing a salary level held for years by his predecessor, Donald Fehr. Now the head of the NHL Players Association, Fehr is listed in the MLBPA LM-2 as having earned $750,000 in 2010. Gene Orza, the now-retired union chief operating officer, earned $1.325 million. Judy Heeter, the union’s former head of licensing, earned $772,500. It is believed the money paid to Fehr, Orza and Heeter was related to their retirements from the union.

    The union’s revenue from “other receipts,” where licensing income is listed and itemized, was reported at $46.45 million, down nearly 12 percent from $52.66 million in 2009. The MLBPA credits payments in the years they are received and not earned. It is thought the drop in the year-to-year comparison is a result of payments that were earned but not received until 2011 and that those payments will be reflected in next year’s LM-2.

    Take-Two Interactive, parent of 2K Sports and baseball’s exclusive third-party console video game producer, was again the union’s largest licensee in terms of royalties, with payments of $14.5 million. Sony Interactive Entertainment, maker of “MLB: The Show,” paid $3.56 million. Trading card partners Topps and Upper Deck paid $5.77 million, and $6.57 million, respectively, each down by double-digit percentages from 2009.

    Union officials declined to comment.

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  • Judge’s questions, parting words give some hope to players’ side

    U.S. District Judge Susan Richard Nelson looked tired.

    Her NFL lockout hearing was nearing the end of four hours and 17 minutes of grueling, complex legal arguments, with more than half of that in robust give-and-take with owners’ lawyer David Boies. Nelson allowed the attorneys for the current NFL players and retirees their full say, too.

    With the clock in her St. Paul courtroom ticking toward 3:15 p.m., the judge informed both sides that she would need “a couple of weeks” to come to a fair ruling on whether to issue a preliminary injunction, sought by the players in this Tom Brady v. NFL case. The players want her to lift the lockout imposed by the owners last month.

    Then, Nelson moved up in her chair. The U.S. flag stood behind her. She looked down from the elevated judge’s bench to the score of lawyers, the dozens of journalists, and a handful of current and former players before her. Nelson pointedly urged both sides to “come back to the table. Not to the union table, not to the players’ table, but to the federal court table. … This is really a matter that should be resolved.”

    Known for her mediation and settlement skills
    JAY WEINER (2)
    David Boies (top) argued for the owners, Jim Quinn (with Jeffrey Kessler) for the players.
    as a trial lawyer in Minneapolis and then as a federal magistrate for 10 years before being elevated to the district court four months ago, Nelson offered to aid and “facilitate suggestions” for resolution, a message to get it done before she weighed in with her injunction decision.

    Her suggestion to use the auspices of her court seemed to be a mini-victory for the players. Theirs is a litigation strategy to be played out in court. Having “disclaimed” their affiliation with a union, they believe the dispute with the owners is an antitrust case for the courts. Having a federal judge oversee the outcome of this current struggle with the owners would begin to look a lot like how the league’s labor life was resolved by Judge David Doty in 1993, with a court-supervised settlement.

    For the players, returning to St. Paul soon to use Nelson’s chambers as a venue for resolving the matter seemed, on the face of it, like a good idea.

    “It’s something we’ll consider,” players’ lawyer Jim Quinn told reporters outside the courthouse afterward. “We heard what the judge said, and she said it forcefully.”

    For the owners, putting their future in Nelson’s hands wasn’t as appealing. “We believe these kind of matters ought to be settled at the collective-bargaining table, not in federal court,” said Boies, who gently sparred with Nelson through three separate sessions in which she allowed him great latitude to attempt to convince her that the league’s lockout was legal.

    Notes from the lockout
    hearing in St. Paul


    • Walking into the courtroom 40 minutes before the gavel sounded, NFLPA Executive Director DeMaurice Smith saw the pew-like benches in the gallery and told the U.S. marshal, “I want to be on the groom’s side.”

    Nelson
    • You know the attorneys are high-powered when this happens: Judge Susan Richard Nelson’s clerk and courtroom deputy, Joan Flood, informed those in the courtroom to turn off their cell phones; that if they left during the hearing, they wouldn’t be allowed back until there was a break; and, “Those seeking autographs from either the lawyers or the players … you need to do that outside the courthouse.”

    • One of the first labor cases in the NFL dates to 1975, when former players of the World Football League claimed NFL owners colluded to boycott the hiring of players from the defunct league. The judge in that case was Edward J. Devitt. He issued an injunction prohibiting NFL owners from barring WFL players from signing with NFL teams. Historic irony: Wednesday’s hearing was in the Devitt Courtroom, named for him after his death in 1992. At one point during the day, Nelson, who gave the lawyers lots of time to make their points, said: “You know, we’re in Judge Devitt’s courtroom. Judge Devitt would always say, ‘Have I heard you out?’”
    On Wednesday, Nelson heard all the lawyers out.
    — Jay Weiner
    In the owners’ view, Boies said, bargaining should be overseen by the Federal Mediation and Conciliation Service, adding to the reporters afterward: “We don’t need a settlement of this [antitrust] lawsuit. We need a collective-bargaining agreement.”

    Earlier in the day, Nelson, fully engaged and asking incisive questions to all the lawyers, repeatedly hinted that she was buying the players’ arguments and not the owners’. The players’ basic point: She has the jurisdiction to lift the lockout and, under some undefined system, put the players back to work. The lockout, the players argue, trips the 32 owners into an antitrust violation because the players are no longer in a union. It also inflicts “irreparable harm” on the players, and Nelson acknowledged the players had a “strong” case on that score.

    Boies disagreed and repeatedly argued that the lockout is a matter for the National Labor Relations Board, not Nelson. He also argued that a 1932 federal law known as the Norris-LaGuardia Act bars her from issuing an injunction against the lockout. But Nelson, examining the act in detail, expressed “having trouble” with that Boies assertion; Norris-LaGuardia was enacted to protect unions against overzealous federal judges.

    “Isn’t there some bit of irony,” she stated, that the Norris-LaGuardia Act “intended to halt strike-breaking judges should now be used by a wealthy multiemployer unit seeking to break a players union?”

    Retired NFL players, led by former Minnesota Vikings’ great Carl Eller, also sought to lift the injunction and begin an antirust case against the owners, claiming their pensions and health benefits were at stake. Without objection from the current or former players or the league, Nelson consolidated the Brady and Eller cases.

    As for any Nelson decision, it’s sure to be appealed by the losing side. Using a football analogy, Boies said: “I think this is the first quarter. Hopefully, we can divert the game back to the playing field.”

    But, not, it seems, any time soon.

    Jay Weiner is a writer in Minnesota.

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  • Players' lawsuit prompts talk of 'free-market' NFL

    Early into the four-hour NFL lockout hearing in federal court last Wednesday, U.S. District Judge Susan Richard Nelson’s first query to the lawyer representing the players suing the league for antitrust violations was not to ask why she should order the league to open for business, but instead to question what that business would look like.

    Lost in the understandable media focus of whether Nelson lifts the now month-old lockout is the tectonic change the players’ antitrust lawsuit seeks. For the first time in pro sports, the lawsuit wants a sports league to organize under truly free market principles. If the lawsuit succeeds, most if not all free agency restrictions, almost certainly the draft, and not to mention the salary cap, would reside in the dustbin of NFL history.

    These restraints on player movement, agreed to through collective bargaining, have fueled professional sports for the last three decades and certainly are widely perceived as major contributors to the NFL’s success.

    “I am a big believer in capitalism and the free market and I have no doubt that can produce a pro-competitive, efficient outcome,” said Jeffrey Kessler, the class counsel for the players in Brady v. NFL, during a panel discussion at the IMG World Congress of Sports last month.

    Kessler envisions a league in which every player is an unrestricted free agent, including all incoming collegians, and teams are free to spend whatever they wish on payroll.

    What would that look like? To Kessler, because of the NFL’s healthy revenue sharing, unfettered free agency wouldn’t affect competitive balance while players benefit. To others, beyond high-revenue teams spending wildly and shaking the foundation of the NFL’s “Any Given Sunday” ethos, most players would suffer.
    “One has to be really careful what you wish for,” argued Phil de Picciotto, president of Octagon, which represents players, coaches and sponsors, speaking on the same panel and directly responding to Kessler. “If I were an owner, I would seriously consider advocating every player being a free agent every year. You will oversupply the market and lower player compensation by a song.

    “Most of the players in aggregate would be losers,” de Picciotto contended.
    Michael Weiner, executive director of the MLB Players Association and also a panelist, disagreed.

    “I find it fascinating … to suggest it wouldn’t be good for players to be in a world where owners could pay them whatever they wanted.”

    It’s unclear who’d win Brady v. NFL if it reaches trial, and advancing to that stage is by no means assured. The sides could settle, or a court could dismiss the case. Many of the past judicial decisions related to whether player restraints like drafts can pass antitrust muster are dated or focus on specific elements of narrow issues.

    “All the antitrust cases that actually judged the legality or illegality of player restraints in a player market are all very old cases and they are all from a different time,” said Bill Daly, deputy commissioner of the NHL, speaking on the same World Congress panel. “A lot of those cases were decided during a time when antitrust precedent wasn’t where it is today.”

    Even the U.S. Supreme Court’s decision last year in cap maker American Needle’s victory over the NFL ruled only that the league could not claim wide antitrust immunity. In fact, the justices wrote there were pro-competitive reasons for teams to work together. “We have recognized, for example, ‘that the interest in maintaining a competitive balance’ among ‘athletic teams is legitimate and important,’” they wrote unanimously. “While that same interest applies to the teams in the NFL, it does not justify treating them as a single entity for purposes when it comes to the marketing of the teams’ individually owned intellectual property.”

    In other words, the Supreme Court’s rejection of the NFL’s arguments that its decision to pool commercial resources should be excused from antitrust scrutiny does not necessarily carry over to other areas like player restraints.

    That may be why Kessler’s main argument about the draft, for example, is not that it’s an antitrust violation on its face, but that it does not actually enhance competitive balance. “Have all the top quarterbacks drafted in the first round worked out?” he asked. “Is there really a connection between your draft position and your competitiveness on the field?”

    De Picciotto retorted, “The draft is not designed to guarantee competitive balance, just like capitalism in America is not designed to make everyone immediately successful. It is designed for the opportunity to be competitively balanced.”

    To that thought, Kessler replied that what guarantees opportunity is untrammeled free agency.

    More immediately, the issue for the NFL is what to do if the lockout is lifted by Nelson, who should rule by the middle of next week, or on appeal by the 8th U.S. Circuit Court of Appeals. The league’s lawyer, David Boies, calls this the catch-22 problem: The players are suing to force the NFL to impose a system that is allegedly illegal.

    When Nelson asked players’ counsel Jim Quinn if there were any player services systems that satisfied him, he replied, “I believe there are systems that can pass [antitrust] muster,” without being specific.
    “It’s possible you could sit down and work out a plan?” Nelson asked.

    “Maybe not to the NFL’s liking,” Quinn replied, “but yes.”

    Correspondent Jay Weiner contributed to this report.

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  • Wasserman stakes claim in golf representation with deal

    Wasserman Media Group is expected to announce today that it has acquired SFX Golf, giving the global sports and entertainment company a major presence in the representation of golf stars, including Zach Johnson, Rickie Fowler and Scott Verplank.

    In addition to the nearly 50 golf clients that SFX Golf brings to the deal, the acquisition is expected to bolster WMG’s corporate consulting business. WMG counts American Express, Northern Trust and Nationwide Insurance as clients, and each has a notable golf presence as part of its overall marketing platform.

    “They have built a powerful golf representation firm over the past two decades, and clients will collectively benefit from the Wasserman platform by now also having access to our pre-eminent management, consulting and sales disciplines,” said Arn Tellem, WMG prinicipal, management.

    John Mascatello, CEO of SFX Golf, will lead the new WMG golf division, and SFX golf agents Bud Martin, Terry Reilly, Brad Buffoni and Sam MacNaughton will also join the company as part of the acquisition.

    Neither WMG nor SFX Golf officials would discuss the financial details of the deal, but Mascatello said all the SFX Golf agents had committed to stay at the combined operation in the long term.

    Meanwhile, golf agent Jay Danzi, who joined WMG in 2007 — his hiring essentially launched the golf division — recently left the company, Tellem confirmed.

    “I don’t want to get into the details of why Jay left except to say we wish him the very best and we are appreciative of what he did when he was here,” Tellem said.

    Said Danzi, “It was a difficult decision to leave Wasserman, as I really enjoyed my time there and am proud of the golf division which we created. That said, after reviewing the direction of the company, I decided to leave and I am excited about pursuing new opportunities in the golf business.” He declined to comment further.

    Neither Tellem nor Danzi identified clients who left with Danzi, but Tellem said “many of his clients have stayed.” Among those clients are PGA Tour star Hunter Mahan and Nick Taylor, winner of the 2010 Ben Hogan Award, which recognizes the outstanding male amateur and collegiate golfer of the year.

    Additionally, WMG recently signed LPGA Tour star Morgan Pressel.

    WMG, which was built through a combination of acquisitions of agencies and hiring agents who focus on global sports, is expected to be a big player in golf. The company already has large soccer, basketball and action sports athlete representation practices, and with this move, it becomes a larger player competing against bigger golf agencies, including Gaylord Sports Management, International Sports Management and IMG.

    Other golfers that SFX is bringing to WMG include PGA Tour players D.J. Trahan, Rory Sabbatini, Mark Wilson and John Daly, and LPGA Tour Rookie of the Year Azahara Munoz.

    Tellem and Mascatello have known each other for years and worked together at the former SFX Sports Group, which Tellem ran, before it broke up in 2006. They said they started discussing the acquisition last fall.

    Mascatello said that joining WMG was attractive for a number of reasons, including that the company has offices all over the world and golf is becoming a much more global business. Additionally, WMG’s corporate consulting operation was
    attractive to SFX Golf’s clients.

    “With the consulting division, we see a lot of synergies there, both opportunities for the future growth of the consulting business of Wasserman as a whole, and, obviously, with the quality of our client list, there should be more and more corporate opportunities for our players,” Mascatello said.

    Said Tellem, “It was a huge part of it. We knew they would work well with our consulting group and hopefully work together to grow not only our golf practice, but also our consulting business.”

    Mascatello described his client list of golf talent as “a vertically integrated group” that appeals to a wide audience. “We have the veterans, the all-stars; we’ve got the young guns and the role players as well,” he said.

    But Mascatello added that both Tellem and WMG Chairman Casey Wasserman impressed on him early in the talks that they were not buying SFX Golf’s client list. What’s particularly notable, Tellem said, is that Mascatello and the other SFX Golf agents who are part of the deal have been
    together for many years.

    “The core of their practice, their clients and their executive team has been together a long time,” Tellem said. “It is unusual [in the sports business], but to stay together is a great challenge; not many people can do that. I think that says more about them than anything. These guys are great partners, they are great guys, and it is all about what is best for the client. And that is what we are trying to build here.”

    ON THE TEE
    Partial list of clients who will be represented
    by the combined WMG/SFX Golf entity.

    Stephen Ames*
    Jason Day
    John Daly
    Rickie Fowler
    Charley Hoffman
    J.B. Holmes
    Zach Johnson
    Marc Leishman
    Hunter Mahan*
    Azahara Munoz
    D.A. Points
    Morgan Pressel*
    Rory Sabbatini
    Nick Taylor*
    D.J. Trahan
    Scott Verplank
    Mark Wilson
    * WMG client
    Sources: Agencies, published reports


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