SBJ/April 25 - May 1, 2011/In Depth

Sports specialty requires walking a fine line between league and team relationships

Working on behalf of client Kia Motors on a portfolio of league and team sponsorship deals, attorney Richard Grant quickly realized a key distinction from projects he handled outside of sports.

“There is a tension between the leagues and the teams, particularly on a sponsorship deal,” said Grant, managing partner of McGuireWoods’ Los Angeles office, who represents Kia in its sponsorships. “We’re doing some [mergers and acquisitions] and finance work on a team acquisition … and you have this same tension.

WAYNE EBINGER
When it comes to signing new local sponsorships, lawyers help teams avoid running afoul of league partnerships.
“You need to square those interests, and not just from a document standpoint. You have to make sure you’re not doing something to tick off the league, because leagues have a lot of power. Even if you’ve got the best contract in the world with them, they have to be comfortable with your activation.”

It is one of the distinguishing factors of sports as an industry specialty. Teams and leagues collaborate in some areas of the business and compete in others. In many cases, the league’s role is as a regulator.

“You have to look at them as a friendlier face than the SEC or the Department of Justice, but also in that same sort of context,” said Mary K. Braza, chair of the sports industry team at Foley & Lardner, who serves as outside counsel to Major League Baseball. “It’s a body with a set of rules that you have to understand and work within; a group of people who you have to get to approve your transaction. You deal within the context of those rules.”

Though teams are members of leagues, the two at times will collide in disputes, which may end up in court. Those frequently have antitrust implications. As a result, many of the leading lawyers around sports — including three who became commissioners: David Stern, Paul Tagliabue and Gary Bettman — have come from antitrust backgrounds. Even those who don’t specialize in antitrust say they pay careful attention to potential claims.

Regardless of their legal specialty before they began practicing in sports, attorneys find themselves counseling clients on a range of matters.

Bruce Wilson of Covington & Burling remembers looking up from coffee one morning a decade ago to see footage of Buffalo Sabres owner John Rigas being taken away in handcuffs. Wilson knew he’d soon get a call from NHL Commissioner Gary Bettman.

“I’m no bankruptcy lawyer, but I found myself at the very center of that,” said Wilson, who sold trustees on the idea that the NHL should play an active role in administering the disposition of the team, since it was also in the league’s best interest for the asset to hold its value. “It’s understanding the flows of the business and understanding the importance of the assets and how the business works that gives you a perspective on a whole host of legal issues that, as legal specialties, you may not understand. But because you understand the business, you have something to say.”

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