SBJ/October 17-23, 2011/Labor and Agents

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  • Agents seek advice on decertifying

    A group of powerful NBA agents has been consulting with antitrust and class-action attorneys, including San Diego-area attorney Len Simon, for legal advice regarding the option of players voting to decertify the National Basketball Players Association, multiple sources said last week.

    Whether the agents decide to pursue decertification as a option, let alone retain Simon or other legal counsel, remained undecided as of last week, sources said. Sources requested anonymity because they were not authorized to speak publicly for the group of agents. No additional attorneys were identified by name as having consulted with the agents.

    Simon
    Simon is of counsel at Robbins Geller Rudman & Dowd. He has represented plaintiffs who received a $240 million settlement in a case involving the failed Lincoln Savings & Loan in the 1990s as well as a settlement of more than $1 billion in the Nasdaq market-makers antitrust litigation, also in the 1990s. Simon did not return repeated phone calls or answer an email seeking comment.

    Simon’s biography on his law firm’s website did not mention ties to the sports industry, but he has been a part-owner of the Lake Elsinore (Calif.) Storm, a San Diego Padres minor league affiliate, and he has taught sports law classes for the University of San Diego, according to publicly available information.

    The NBA agents — a group that includes Mark Bartelstein, Bill Duffy, Dan Fegan, Leon Rose, Jeff Schwartz, Arn Tellem and Henry Thomas — have refused public comment on their plans. Together, the agents represent more than 30 percent of NBA players, an important threshold for the decertification action being considered.

    Meanwhile, NBPA Executive Director Billy Hunter remained opposed last week to decertifying the union by disclaiming interest in representing NBA players for collective bargaining, said Larry Katz, outside attorney to the NBPA. The NBA would have to decertify, either by disclaiming interest or by holding a decertification vote, before players would be able to bring an antitrust suit against the NBA for lockout.

    “Billy Hunter has made it clear in the past, and he feels the same way today, that the NBPA has no intention of disclaiming interest in representing NBA players,” Katz said Tuesday.

    The NBPA has filed an unfair labor practices charge against the NBA alleging that it broke labor laws by engaging in “take-it-or-leave-it” bargaining and is hoping the National Labor Relations Board will seek an injunction to halt the lockout. The NBA has said the NBPA’s charge is without merit and has filed its own charge against the union, alleging the players engaged in unfair labor practices. Katz said the union had “a high level of confidence” that the NLRB would issue a complaint against the NBA.

    If the NBA agents were to pursue decertification, it would be a variety different from what the NFL Players Association executed earlier this year, during the NFL lockout. In that case, the NFLPA disclaimed interest in representing the players for collective bargaining by sending a notice to the NFL. That decertification action was initiated by the leadership of the NFLPA, and there was little to no opposition to it among the ranks of NFL players.

    The NBPA could take the same type of disclaimer action if Hunter and the NBA players chose to do so by sending a notice to the NBA. But what the agents have been said to be considering is what is known as an “involuntary decertification,” a process more complicated than the disclaimer of interest. In an involuntarily decertification, 30 percent of the players would file a decertification petition to the NLRB asking for a vote of all NBA players. The union would then be decertified if 50 percent plus one player voted in favor of it.

    Although the agents have sought legal advice from Simon, it is not clear if they favor that strategy, nor is it clear who would be the leader of that effort if pursued.

    “We do not believe that there will be a decertification petition filed on behalf of the players,” Katz said. Katz has previously said that, if the players did file such a charge, the NBPA may try to block an election depending on a number of factors, including the number of players who signed the petition.

    Bill Gould, a Stanford Law School professor and former chairman of the NLRB, said that if there are no major issues, a decertification could be completed in a couple of months. If there are issues, he said, “All bets are off.”

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  • NFL: Benson’s charge against union won’t stop discipline

    Liz Mullen
    While Cincinnati Bengals running back Cedric Benson’s unfair labor practices charge against the NFL Players Association could take months to resolve, that charge in itself will not prevent the NFL from disciplining him for off-the-field actions this past summer, an NFL spokesman said last week.

    “I am not aware of how it would,” said Greg Aiello, NFL senior vice president, public relations, in an email.

    Benson, who filed the charge against the NFLPA late last month, is one of eight players whom the NFLPA reportedly agreed to allow to be disciplined for being arrested or charged during the NFL lockout. He appeared before the Cincinnati office of the National Labor Relations Board last week regarding the charge, which alleges, among other things, that the union did not adequately investigate whether the NFL could discipline him for conduct that occurred during the lockout.

    GETTY IMAGES
    Benson says the NFLPA didn’t properly
    investigate whether he could be disciplined.
    Benson was not under contract to the Bengals and was an unrestricted free agent when he was arrested on misdemeanor assault charges in July. In addition, the arrest happened at a time when NFL players were unrepresented by a union that had disclaimed interest in representing players.

    Benson also has filed a non-injury grievance against the NFL to prevent him from being suspended for conduct that occurred when he was locked out and not represented by a union.

    The NFL and the NFLPA reportedly entered into an agreement or side letter to the collective-bargaining agreement they reached this summer that stated that players would not be fined or otherwise disciplined for conduct when they were locked out and not members of a union. However, according to sources and published reports, an exception was made for eight players who were not first-time offenders — including Benson, whose individual exception is noted in the NLRB charge.

    “The NFLPA arbitrarily, capriciously, without investigation, and without notice excluded Cedric Benson from the disciplinary agreement,” the charge states.

    George Atallah, NFLPA assistant executive director, external affairs, said in a text message to SportsBusiness Journal, “Despite the claim from Cedric and his attorney, we will do everything we can to defend our rights and his rights.”
     
    Benson’s attorney, David Cornwell, said, “We filed the unfair labor practices charge out of an abundance of caution. The players association has taken the position the [side letter] does not mean what it appears to mean, and frankly we hope they are right.”

    Labor lawyers said it is not unusual for an employee to file an unfair labor practices charge against his union, alleging that the union did not represent him in good faith. What is unusual is for an employee to allege a union reached an agreement with his employer during a period of time in which the union did not represent him.
     
    ROSENHAUS ON ‘60 MINUTES’: Agents across sports were talking last week about the feature on Drew Rosenhaus that aired on “60 Minutes” on Oct. 9 in which he said, among other things, “I really believe that the NFL would fall apart without me.”
     
    Rosenhaus told SportsBusiness Journal last week: “What I meant in the interview was agents as a whole have a very important function. And the NFL would fall apart without agents as a profession. I wasn’t referring to myself specifically, but to the agent profession.”

    The “60 Minutes” feature also stated that Rosenhaus represented 170 players in the NFL. Rosenhaus told SportsBusiness Journal that he represented about 140 NFL players as of last week but that he did represent 170 earlier this year. Rosenhaus said the number of clients fluctuates because of a number of factors, including players retiring.

    As of last week, the NFLPA website listed Rosenhaus as representing 123 players in the NFL. That is the most of any NFL agent.

    ASM SIGNS PLAYERS: ASM Sports founder and NBA agent Andy Miller has signed Washington Wizards forward Andray Blatche and former NBA forward Kenyon Martin, and he negotiated Martin’s one-year deal to play for the Xinjiang Flying Tigers during the NBA lockout. Additionally, Miller has signed guard Roger Mason, who played for the New York Knicks in 2010-11. Blatche previously had been without an agent, Martin had been represented by Brian Dyke, and Mason had been represented by Dan Fegan.

    Liz Mullen can be reached at lmullen@sportsbusinessjournal.com. Follow her on Twitter @SBJLizMullen.

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  • NBA, players stuck on ‘system’ elements

    Nearly four months ago, NBA Commissioner David Stern and his top lieutenant, Adam Silver, sat stoic in front of a press corps as they announced their intent to declare a lockout just a few hours before the league’s collective-bargaining agreement was set to expire.

    “We had two goals in this process,” Silver said on that last day of June. “One was to create an economic system where all 30 teams could compete for a championship and … No. 2, that we would create a system in which every team, if well-managed, had the opportunity to be profitable.”

    Fast forward to last week, when Stern glumly echoed the same message as he announced that the league was canceling the first two weeks of the regular season, the second time the league has lost regular-season games to labor unrest in the past 12 years.

    “The issues on the competition side, in order to have 30 teams be as competitive as they can and … compete for a championship if well-managed, have separated us greatly,” he said.

    Unless there is a breakthrough soon, expect to hear the same drumbeat from the league as the labor battle threatens to cancel even more games on the heels of what was one of the NBA’s most compelling season in years.

    League officials said that the most recent talks focused on “system” elements of a new deal, not on the economics of how to divide $4 billion of basketball-related revenue that dominated the negotiations up to last week. Specifically, negotiators on both sides set aside the revenue split and as they tried to bridge major differences that have the NBA pushing to create a new structure to curb player spending while the union looks to keep the current soft cap system mostly intact.

    “We have discussed the system and the system and the system … but we can’t close the gap,” said Stern said after last week’s labor talks failed to bring the sides closer to a new deal.

    So now that the league has doomed the first fortnight of the NBA regular season, will the structure, rather than the economics, of any new deal remain the focus of further negotiations? Even those with history in such negotiations aren’t so sure.

    “This is not about religion, it is about money, and the structural issues exist only as a way in deciding on expenses,” said Russ Granik, former deputy commissioner of the NBA who was at the bargaining table during the 1998-99 lockout, which caused a truncated 50-game NBA season. “There are dozens of different things you can do about the structure of a deal.”

    It’s a key question that stands to shape the labor battle, marked by months of full-committee bargaining and small group meetings between the owners and the players. So wide is the gulf that both sides now have agreed to bring in a federal mediator to help bridge the differences.

    Mark Bartelstein, a prominent NBA agent and founder of Priority Sports & Entertainment, said the focus on more on a basketball-related income framework during earlier negotiations was a way to create a sense that a deal was near, which he said would have helped the league push through structural CBA changes.

    “The strategy was to get the BRI done and that would be the be-all end-all for a deal,” he said. “But you can’t have [the economic deal without a system deal].”

    According to Stern, the league first proposed a hard cap similar to the NFL’s and the NHL’s salary cap structures. Then the league proposed a salary cap tax system that imposes a harsh financial tax penalty on teams that spend above a salary cap.

    All were dismissed outright by the union as a version of a hard salary cap — the “blood issue” labeled by NBA union leader Billy Hunter.

    “It is the league’s insistence on tax rates and restrictions which have the same adverse effects as a hard salary cap,” said Jeffrey Kessler, lead counsel for the National Basketball Players Association. “Unless and until this system issue is resolved, there cannot be a deal. The parties were much closer on the economic split, although still apart.”

    For now, the economic split of the $4 billion in league revenue has the players proposing they receive 53 percent of basketball-related income, which represents a 4 percent drop for the 57 percent the players got in the expired CBA deal. Owners are proposing to the players a 47 percent share of the basketball-related income. Owners did float the idea of a 50-50 revenue split, but it was never formally proposed.

    Owners also initially proposed that players re-signing with teams at a maximum salary, known as the “Bird exception,” would see big drops in annual increases from the 10.5 percent annual contract increase in the expired CBA while cutting the length of deals.

    Owners have also proposed cutting the length and value of midlevel exception deals, which allow teams to exceed the salary cap to sign free agents based on the average NBA salary, which last season was $5.1 million.

    But owners have backed off other early demands, including the elimination of guaranteed player contracts and the rollback of existing salaries in a new CBA. The owners have also modified their earlier proposal of a 10-year new CBA with the provision that players be allowed to opt out after seven years.

    But as the lockout rolls on, both sides have hardened their stances as players begin to lose paychecks and owners begin to lose millions of dollars as games go unplayed.

    “You have the situation where the lines are drawn publicly on both sides and to now give in will be very difficult,” Granik said.

    Staff writer Liz Mullen contributed to this report.

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