SBJ/May 21-27, 2012/Opinion

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  • Cartoon: Team of the future

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  • NFL ruling has changed how sports labor wars are waged

    Editor's note: This story is revised from the print edition.

    Just a year ago, the sports world faced a colossal battle. Three leagues’ labor contracts were expiring and severe disruption was almost certain to occur. Today, all three leagues have long-term labor agreements, but because of one court’s decision, the way sports labor wars have been waged for 40 years has changed.

    The NFL’s collective-bargaining agreement was the first to expire. The impasse resulted in a settlement and a significant decision by the 8th U.S. Circuit Court of Appeals involving antitrust.

    Antitrust has been involved in sports labor negotiations since Mackey v. NFL in 1975, when the players union used antitrust to attack the Rozelle Rule that limited free agent movement. The union succeeded, and antitrust has been part of sports union strategy since.

    The sports industry is unique in that teams cannot individually produce the product that is sold by them collectively. The creation of a game requires a large degree of cooperation among teams perceived as competitors. This cooperation is the basis for antitrust claims by players who use the Sherman Act to attack the teams’ efforts to collaborate as a league. The Sherman Act’s Section 1 prohibits competitors from acting together in restraint of trade. Therefore, if league members act together to restrain player compensation, they violate the act. If found guilty, they pay three times the damages and attorneys’ fees as well.

    If the players are unionized, however, there are two antitrust exemptions that bar such claims. These are the statutory exemption from the Clayton Act and the non-statutory exemption from case law. In essence, these exemptions say that if a matter originates in labor law, no antitrust claim can be filed.

    NFL players and league and union leaders reached an agreement after a 132-day lockout.
    Photo by: GETTY IMAGES
    The prevailing thought has been that if a union decertifies its union status or its leadership disclaims its interest in representing the members, the exemptions cease to apply, and antitrust claims can be filed. This has been the course of action since Mackey and Powell v. NFL in 1989.

    Since then, a series of cases has determined that the antitrust exemptions continue past any impasse in negotiations or until the union ceases to exist. From Powell on, the scenario has been the same: The labor agreement expires, the union decertifies, then, as an association, files or threatens an antitrust claim. The parties then reach a settlement, and the union is on again, re-establishing the antitrust exemptions mentioned before.

    This is what happened in the Brady v. NFL case in 2011. The NFLPA disclaimed four hours before the agreement expired, and the league instituted a lockout — a labor action — just after the agreement expired on March 12. The union then filed an action to enjoin the lockout in federal court in Minnesota.

    As expected, the federal court enjoined the lockout, denied a stay pending appeal, and the game was on. The NFL appealed to the 8th Circuit in St. Louis. A three-member panel of the appeals court stayed the Minnesota court’s injunction until it could rule on the legality of the lockout. Its ruling, issued in early July, changed the playing field as it reversed the Minnesota court and found that the Norris-La Guardia Act barred the injunction. By this time, the NFL and the players union had begun negotiations again and arrived at an agreement in late July.

    Applying the law

    The issue before the two courts was whether the Norris-La Guardia Act applied. This act says that courts cannot enjoin actions that arise from labor matters. The 8th Circuit ruling that ended the district court’s injunction changes the labor/antitrust confrontation that has been present in sports for 40 years. The ruling goes so far in protecting management’s labor law rights that it may have eliminated the antitrust action that has been so typical and destructive of sports labor relations. It does so by applying a more complete analysis of the National Labor Relations Act and, importantly, the Norris-La Guardia Act to protect labor law actions by leagues where these actions “grow out of a labor matter.”

    Section 7 of the National Labor Relations Act gives employees the right to form unions and “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” In other words, the players are covered under the labor acts as long as they are involved in concerted activities, whether they are a union or an association.

    The 8th Circuit never got to the issue of the nonstatutory exemption’s application, but it seems that the same process that applied the Norris-La Guardia Act to injunctions will apply to the nonstatutory exemption, as well.

    The district court in Brady defined a labor dispute as one involving an employer and a union. The 8th Circuit went much further by recognizing that the Norris-La Guardia Act applies to concerted activity and said, “We see no warrant to add a requirement of unionization to the text [of the NLGA].” Concerted activity is what is protected under labor law, not union activity. It is where two or more employees take action affecting working conditions, as shown in Washington Aluminum, a pivotal labor law case cited by the 8th Circuit majority.

    What this means going forward is that sports labor disputes will be decided by traditional labor means, as in MLB. The National Basketball Players Association conducted a pure labor negotiation in 2011 and survived an NBA lockout. The league has completed a shortened, but successful, regular season.

    This summer, the NHL and the NHL Players’ Association will be negotiating a contract along pure labor lines.

    The 8th Circuit in Brady has expanded the coverage of the labor laws, muted the use of antitrust, and created an environment contemplated by the drafters of the Norris-La Guardia Act and NLRA, where both sides are equal and the issue is decided at the bargaining table and not a federal courtroom.n

    Clark C. Griffith (ccgpa@ccgpa.com), an attorney and arbitrator in Minneapolis, is a former owner, treasurer and executive vice president of the Minnesota Twins. He was chairman of Major League Baseball Properties and a member of the MLB labor negotiating committee. Follow him on Twitter @ccgpa.

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  • ‘Humble’ leader Paul Tagliabue to be honored by SBJ/SBD

    SportsBusiness Journal/Daily will present our fifth annual Sports Business Awards on Wednesday evening at the New York Marriott Marquis at Times Square. The event continues to grow, and we’re expecting more than 725 people at what is becoming one of the top industry get-togethers.

    During the evening, we will present our Lifetime Achievement Award to Paul Tagliabue, who will join previous recipients Peter Ueberroth and Billie Jean King. Tagliabue richly deserves this honor as he has spent his adult life dedicated to, and improving, the business of sports. He is best known for his 17 years of strong leadership as commissioner of the NFL, but he also led an advisory group that played a critical role in reshaping the U.S. Olympic Committee.

    After leaving the NFL in 2006, Tagliabue helped reshape the U.S. Olympic Committee.
    Photo by: ICON SMI
    At the NFL, the Tagliabue legacy is overflowing with accomplishments, all of which were well-documented in Ross Nethery’s excellent profile of his tenure in the July 31, 2006, issue of SportsBusiness Journal. Among them: uninterrupted labor peace, significant stadium development, expansion, the introduction of free agency, massive television deals, new media initiatives, a network and leadership of a league that set the tone for U.S. sports.

    We have never announced our Lifetime Achievement Award winners prior to the ceremony, but we had a change of heart this year when it came to Tagliabue, believing that he deserved to be honored in front of the many who admire and respect him. We told NFL team owners and former colleagues of this tribute, and the common refrain was, “It’s about time.”

    Carolina Panthers owner Jerry Richardson, who was brought into the league during Tagliabue’s tenure, plans to be with him Wednesday in New York. He told us the honor and spotlight are long overdue. “Paul did not seek recognition and gladly gave credit to others,” Richardson said.

    Green Bay Packers President and CEO Mark Murphy, whose relationship with Tagliabue goes back more than 30 years, said he was thrilled that Tagliabue was getting this recognition. “He’s very, very humble. It was never about Paul. He never got a lot of publicity. But his impact and what he accomplished is truly remarkable,” Murphy said.

    Recently in New York City, I caught up with the former president and CEO of the San Francisco 49ers and Cleveland Browns, Carmen Policy, who practically jumped out of his chair when reflecting on Tagliabue, praising his “dignity” and “integrity.”

    “I’m not trying to be over-dramatic, but I always saw him as being a bit Lincoln-esque,” he said. “He never looked happy or joyful. He was bright as hell, wickedly smart, dedicated and on a mission.” He cited Tagliabue’s long-standing pursuit for increasing minority representation in the NFL — “You knew that when an issue was important to Paul, he would be relentless” — and his strong relationship with former NFLPA Executive Director Gene Upshaw as two hallmarks of his legacy.

    “I really admired the relationship that he and Gene built,” Policy said. “It was not only based on mutual respect, but on both of them feeling that they had been handed a very sacred responsibility: to maintain the integrity of the game. That caused them to rise above the partisanship that accompanies their role. Their work really created tremendous growth for the NFL. Statesmanship was truly shown by these men.”

    Two instances stand out for me with Tagliabue, and both reflect a quiet, stoic executive showing leadership. One was at his annual State of the NFL address in January 2001, when the league was under intense scrutiny over player image and reckless and violent behavior during a run of incidents. At the end of his press conference, after numerous questions on players behaving badly, Tagliabue was about as firm as I could recall, looking straight at his inquisitors and declaring, “If the rest of society can do as well as we do in the NFL, America’s crime problem will be well-addressed.” He saved his best for last, walked off stage, and the issue was, for all intents and purposes, handled.

    The other instance was in Houston after Super Bowl XXXVIII and the MTV-produced Janet Jackson/Justin Timberlake halftime show. At the Monday morning press conference honoring the champion New England Patriots, a clearly angry Tagliabue called the halftime show “offensive and embarrassing,” and declared, “I just want to say this: We will change our policies, our people and our processes before the next Super Bowl to ensure that this entertainment is far more effectively dealt with and is of far more appropriate quality for a Super Bowl game.” Again, he made his point in a public, forceful way that exuded leadership, and, in fact, many changes were made.

    Tagliabue has his critics, and his exclusion from the Pro Football Hall of Fame is the most striking evidence of that. Through the years, he’s been called stiff and devoid of personality. That’s not the Paul Tagliabue I have come to know. I have found him humble, kind and among the most brilliant and thoughtful people I have come across, with a rare global point of view that I admire. His legion of admirers and the loyalty from past colleagues is nearly unrivaled.

    Policy said that Tagliabue’s manner was direct and matter-of-fact. “He was not very gregarious or friendly in an outgoing way, unless he was around people he knew and liked,” he said. “He was a combination of being preoccupied and obsessed with his responsibilities, and somewhat professorial — and at times amazingly outspoken within the confines of the room. He would get in the faces of some owners that I felt at times was a bit risky, considering his own position. He really saw the commissioner’s position where you weren’t hired, it’s as though you were elected to do a job, and it’s your responsibility to do that job. Yes, they can vote you out, but you had a job.”

    It was a job that Tagliabue handled with dignity, bringing a long-term, strategic view that helped the NFL prosper in ways many felt unthinkable. Next week, we’ll offer highlights from our Lifetime Achievement Award presentation and share more tributes, recollections and memories from others who worked with Tagliabue through the years.

    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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  • How ADA compliance affects a venue’s capital improvement plan

    Stadium operators know a flexible and comprehensive capital improvement plan is critical for ensuring that the facility is providing a safe and enjoyable experience for patrons while at the same time maximizing profits. However, developing and implementing an effective capital improvement plan can be a complicated process. Even though the plans are developed relying on an assumption that economic and legal standards will remain constant during the plan’s term, changes in law, technological innovations, unexpected events and changes in a stadium’s operating needs may force an operator to adapt its plan.

    A revised legal standard that is forcing stadium operators to re-evaluate their capital improvement plans is Title III to the Americans with Disabilities Act and its companion Title III accessible design standards (the “2010 Standards”). While the revised Title III affects many different aspects of a stadium’s operations — from ticket sales to assistive listening device availability policies — it is in the area of construction renovation that Title III and the 2010 Standards pose the greatest logistical and economic challenges for stadium operators.

    Stadium elements: ADA compliance in a stadium is evaluated on an element-by-element basis. An element is a specific building component or attribute. Examples of elements include elevators, parking spaces, swimming pools, doors and doorways, and drinking fountains. A list of elements can be found in the ADA’s 2010 Standards of Accessible Design Manual.

    Alterations: An operator’s need to comply with the 2010 Standards in connection with a renovation is dependent, in part, upon whether the renovation is considered an alteration, and if so, when that alteration begins. An alteration means any change that affects (or could affect) the usability of an element. Examples of alterations include remodeling, rehabilitation, historic renovation and reconstruction. Normal maintenance, reroofing and painting are examples of nonalterations. For the purpose of determining when an alteration began, alterations that require building permits begin on the date the building permit is approved by the applicable authority. Alterations that do not require building permits begin on the date the alteration work begins.

    Compliance date: The date a stadium element must be in compliance with the 2010 Standards depends on a number of factors:

    • Compliance with the 1991 version of Title III standards (the “1991 Standards”). Is the element in compliance with the 1991 Standards currently?

    • Does the element have its own specific guidelines in the 2010 Standards? If so, does the element have a corresponding set of guidelines in the 1991 Standards?

    • Future alterations. Is the element going to be altered in the future?

    With those factors in mind, the rules regarding compliance dates are below.

    • Stadium elements altered at any time prior to March 15 may comply with either the 1991 Standards or the 2010 Standards. If multiple elements are being altered at one time, the stadium operator must choose one set of standards and apply that set of standards to all elements being altered.

    • Stadium elements altered on or after March 15 must comply with the 2010 Standards.

    • Note: If a stadium element is addressed in the 2010 Standards but is not addressed in the 1991 Standards, stadium operators were required to bring that element into compliance with the 2010 Standards by March 15. There are a number of elements that fall into this category, including golf facilities, miniature golf facilities, swimming pools, spas, exercise machines and amusement rides.

    Compliance exemptions: The ADA has certain guidelines under which a stadium operator can reduce or defer the scope of renovations required under the ADA. In general, when considering a stadium renovation, a stadium operator should ask the following questions:

    • Would making the renovation fundamentally alter the services or goods provided by the stadium?

    • Would making the renovation compromise the stadium’s safety?

    • Would making the renovation constitute an undue burden (a significant difficulty or expense) on the stadium operator?

    • Is making the renovation not readily achievable (easily accomplishable and able to be carried out without much difficulty or expense)?

    If the answer to any of those questions is yes, then the stadium operator may have grounds upon which to argue an exemption to compliance requirements. However, stadium operators should remember that exemptions are very subjective. Answering yes to one of the questions above is not a “get out of renovation free” card. Instead, it is more of a defense against a future claim that the stadium is out of ADA compliance.

    An ADA-related lawsuit is pending over alleged improper barriers at Power Balance Pavilion.
    Photo by: NBAE / GETTY IMAGES
    Consequences of noncompliance:
    Failure to comply with the ADA can subject a stadium operator to lawsuits from public and private entities, equitable remedies, monetary damages, and fines.

    The claims and dollar amounts at play are alarmingly high. Consider, as an example, the U.S. Equal Employment Opportunity Commission’s ADA litigation history over the past 10 years. Starting in fiscal year 2001 and ending in fiscal year 2011, the EEOC filed 576 ADA-related claims against third parties. Of those 576 claims, 526 were resolved, with the EEOC securing approximately $74 million in awards for plaintiffs. Of particular note is that 2011 represented both the highest number of ADA claims filed and highest amount of awards secured over this 10-year period. This suggests that the ADA revisions are triggering a new wave of litigation (both warranted and unwarranted). Consider also that these stats likely pale in comparison with the number of private ADA-related suits that have been filed over the same amount of time.

    Stadiums have not been immune from ADA-related claims. In November 2010, plaintiffs brought suit against the city of Sacramento and the Maloofs (owner of the NBA’s Sacramento Kings), alleging civil rights violations as a result of improper barriers in Arco Arena’s (now Power Balance Pavilion) parking lots, ticket stands, main entrance, concession stands and seating. In the lawsuit, the plaintiffs sought money damages and equitable remedies (specifically, renovations to Arco Arena to address the alleged improper barriers). The case is pending in federal court.

    Adjusting or developing a capital improvement to accommodate the revised construction requirements of Title III and the 2010 Standards presents certain challenges that require coordination between operators, architects and attorneys to identify the potential options to minimize implementation costs and negative operational impacts while simultaneously considering what if any revenue-generating opportunities may arise. n

    Irwin Raij (iraij@foley.com) is a partner at Foley & Lardner LLP and co-chair of its sports industry team. Erick Harris (esharris@foley.com) is an associate at Foley & Lardner LLP and a member of the firm’s sports industry team.


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