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Volume 21 No. 2

Labor and Agents

National Basketball Players Association Executive Director Billy Hunter has agreed to meet with Federal Mediation and Conciliation Service Director George Cohen, who tried to mediate the NFL labor dispute in the weeks leading up to the NFL lockout.

The NBPA’s Billy Hunter will meet with George Cohen, who tried to mediate the NFL labor dispute.
“I have agreed to meet with George Cohen, to kind of brief him on our situation,” said Hunter in an interview with SportsBusiness Journal at the Sports Lawyers Association annual meeting in Washington, D.C., earlier this month. Hunter said he had not made any decision on whether NBA players as a group would agree to enter mediation but said he had agreed to meet Cohen after Cohen reached out to him.

“He contacted [NBA Commissioner] David Stern and he contacted me,” Hunter said, adding that Cohen contacted him about three weeks ago and that it was his understanding that Cohen contacted Stern before contacting him.
NBA officials declined to comment.

The Federal Mediation and Conciliation Service was created to promote labor-management peace in the private and public sectors. It routinely contacts employers and unions a month or so before collective-bargaining agreements expire. The decision of employers and unions to participate in federal mediation is voluntary.

The NBA collective-bargaining agreement expires June 30.

Cohen has a long history in sports labor, going back decades before he was appointed to his current position by President Obama in 2009. In fact, while working as a lawyer at private law firm Bredhoff & Kaiser, Cohen worked for the NBPA and Hunter’s predecessor, Simon Gourdine.

Hunter sat down with SportsBusiness Journal on May 20, four days before the NBPA filed an unfair labor practices charge with the National Labor Relations Board against the NBA. The union, in that charge, alleges among other things that the league was dealing directly with players and bypassing the union, as well as failing and refusing to provide relevant financial information requested by the union to understand its financial demands.

Hunter, at the time of the interview, said there was no movement in the talks toward a new CBA.

NBA owners recently issued a new proposal to the players in which they proposed that the hard salary cap they are seeking would be phased in. Under the proposal, player compensation would be rolled back 8 percent in the first year of the deal and 5 percent the second year. Then, according to union officials, the originally proposed rollback of 30 percent to 40 percent would be put in place.

An NBPA memo dated April 26 noted that the league has proposed a $45 million hard cap, which cuts the current $58 million soft cap by nearly 25 percent (SportsBusiness Journal, May 16-22 issue).

The owners also have asked to increase the length of the CBA term.

“They added two years onto their counter,” Hunter said, referencing the league’s latest offer. “It’s a phase-in. What they did, instead of asking for eight years as they did in their original, they are asking for 10. They perceive it as a major concession on their part. I perceive it as the same old, same old.”

Hunter said the NBPA will continue to meet with the NBA and that the union was discussing “concepts” with league negotiators in small-group meetings. He would not elaborate on what those concepts are, but Hunter did say he had not lost hope about reaching a settlement.

“It’s my nature,” Hunter said. “I’m not going to write it off — the possibility of reaching an agreement.”

Liz Mullen
As the rhetoric surrounding the NFL and NBA labor situations continues to ratchet up, negotiators for MLB and the MLB Players Association have been quietly working to get a new collective-bargaining agreement of their own completed by the end of the year.

MLBPA Executive Director Michael Weiner, in a speech before the Sports Lawyers Association in Washington, D.C., said people in sports have been asking him the same question these days.  

“I get asked a lot, ‘Why is it going more smoothly in baseball than the other sports?’” Weiner said.

The NFL locked out players March 12 after the expiration of that league’s CBA. The NBA is negotiating with the National Basketball Players Association, but with the two sides far apart, the league may lock out players when its CBA expires June 30.

While the NFL and NBA labor disputes have attracted media scrutiny, the fact that Major League Baseball, a sport with a history of lockouts and strikes, is negotiating a new deal has drawn little press attention. So little, in fact, that Weiner began his speech before the annual sports attorneys conference with a joke.

“I understand there are some members of the press here, so I thought I should try to say something newsworthy,” Weiner said. “Our collective-bargaining agreement actually expires this year.”

The MLBPA’s Weiner says NFL, NBA owners believe they have power to get concessions.
The MLB CBA expires Dec. 11. The reason the negotiations have not been front-page news is the widespread expectation that MLB and the players will reach a settlement without a strike or lockout. Unlike the owners in the NBA and NFL, MLB owners are not seeking significant concessions.

In his speech, Weiner said that the NFL, which acknowledges it is profitable, was asking for about $1 billion back from the players while the NBA, which says it is losing money, was asking for close to that same amount.
“Why is it that these two leagues, one of them making money, one of them claiming to lose money, are essentially asking for the same thing?” Weiner said. “It’s not because of economic imperatives. It’s because they think they can get it.”

The NFL declined to comment on Weiner’s remarks. The NBA did not respond to an email seeking comment.
Weiner said collective bargaining is not about intelligence or creativity or the personalities involved in the negotiations. Instead, he said, collective bargaining is about one thing: power. He said he thinks that is what is driving NBA and NFL owners.

“It’s because their assessment — wrong, I believe — their assessment is that they think they have the power,” Weiner said. “They are asking for huge, huge concessions from those players.”

“Why aren’t the baseball owners seeking those kinds of concessions?” Weiner said. “I don’t think it’s because the baseball owners like money less than football and basketball owners.”

Weiner said the reason MLB owners are not seeking the same level of concessions from baseball players is the history of the MLBPA and the unity of baseball players.

MLB owners would love to have the kind of shift in revenue from players to owners that NFL and NBA owners are seeking, Weiner said, “[but] they don’t think they can get there without a fight that would so damage the industry and so damage the game. That is not worth it.”

Weiner noted that MLB players’ gains did not magically appear or drop from the sky. “[Baseball players] fought the very kind of battles that football players and basketball players are fighting,” he said, “and they have to fight this year.”

NHL CBA TALKS TARGET 2012: While MLB, the NFL and the NBA all face expiring, or expired, CBAs this year, the NHL’s CBA does not expire until September 2012. NHL Deputy Commissioner Bill Daly, speaking before the Sports Lawyers Association said, “I don’t expect we will be in substantive discussions for a new collective-bargaining agreement at least until the new calendar year.”

The NHL’s Daly doesn’t expect hockey talks to begin in earnest until next year.
Daly noted that the NHL Players’ Association, which has fired three executive directors since the yearlong NHL lockout that ended in 2005, last year elected longtime MLBPA Executive Director Don Fehr as head of the hockey players union.

“Obviously we have been working for several months with Don and his staff to establish a good working relationship,” Daly said. “As we go forward, I think he is in a process of evaluating and building his organization, understanding the relationships in hockey, understanding the wants and the needs of the players, [and] understanding a little better how our system works since it’s not a system he has had much familiarity with.”

Fehr, who has spoken many times at SLA, did not do so this year because he was attending the funeral of New York Rangers left winger Derek Boogaard, who died May 13.

A union source, in response to Daly’s comments, said, “The NHLPA has not yet discussed with the players the specific timing of beginning CBA talks with the league.” This source said the players will discuss it during player meetings this summer, as well as during Fehr’s annual fall tour.

It is not known whether the negotiations for a new NHL CBA will be contentious, but it’s no secret that NHL players were not happy with the escrow system that is part of the current CBA. As part of that system, the NHL withholds a percentage of players’ paychecks and then returns a certain amount depending on revenue. The system is meant to guarantee that players receive exactly 57 percent of hockey-related revenue.

Players are expected to get some money back this year, as NHL revenue is expected to increase by more than $200 million from last year, to nearly $3 billion for the 2010-11 season. Daly said the escrow was about 17 percent for the first two quarters of the season, 10.5 percent in the third quarter and 9 percent in the last quarter. “Now we are looking at an effective withhold rate of under 5 percent this year,” Daly said.

EYES ON THE NFL: Many of the speakers at the SLA conference talked about — and sometimes argued about — the NFL lockout, the antitrust cases brought against the league by players and what might happen in court-ordered mediation.

The NFLPA’s Smith gave a speech about lawyers’ obligations to clients and also addressed questions on the lockout.
Everyone wanted to chime in — except, it seemed, representatives of the NFL and NFL Players Association.
An NFL labor lawyer usually speaks at the SLA’s general counsel forum, but this year, Gary Gertzog, NFL senior vice president and senior business counsel, spoke about non-labor-related business litigation in which the league is engaged. NFLPA Executive Director DeMaurice Smith gave a speech about lawyers’ obligations to protect their clients’ interests.

Asked directly during a question-and-answer period about the state of the dispute, Smith said, “Everybody socially and culturally likes to look at everything as ‘the game.’ What quarter are we in? What signal does this send?”
Smith said that since he was elected to lead the NFLPA in March 2009, he and the players had been focused on the lockout that they knew was coming.

“The reality of it is, we prepared for a lockout, and the litigation that goes along with it is litigation that is always initiated as counter to what the National Football League does,” he said. “The strength of players, their willingness to either accept what has been proposed or fight what has been proposed is ultimately going to be what is dispositive. The collective will between labor and management to resolve their differences is going to be important to resolving or preserving what we have.”

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

Editor’s note:
    Friday’s legal showdown in St. Louis at the 8th U.S. Circuit Court of Appeals between the NFL and 10 players suing the league for antitrust violation pits two former George W. Bush solicitors general who are on opposite sides of the gay-marriage debate.
    The fate of the lockout hinges on whether the 8th Circuit will overturn a lower court’s decision enjoining the lockout. The court, in staying the previous decision, strongly suggested it would do so. But there are other dramas at foot, as well.
    The players are represented by Ted Olson, a well-known conservative lawyer who was solicitor general under President Bush from 2001-04. He recently argued against California’s ban on gay marriage and now finds himself opposed to management (the NFL) in this case. Additionally, Olson was joined in the California cause by David Boies, who argued the NFL’s case at the lower court.
    Representing the owners will be Paul Clement, who succeeded Olson as solicitor general. While he publicly has no position on gay marriage, Clement resigned from his firm in protest in April when it backed out of representing the U.S. House of Representatives in its Defense of Marriage Act case.
    SportsBusiness Journal takes a look at each lawyer below.

Clement: Quiet but vital for NFL

Among the coterie of high-profile, conservative lawyers, Paul Clement is one of the least well-known.

While his counterpart later this week, Ted Olson, has been a regular on the TV circuit and is open to talking about the NFL owners/players case, Clement is far more reserved.

Through the NFL, Clement declined to speak for this story.

“He is fairly soft spoken,” said Eugene Meyer, president of the Federalist Society, a conservative judicial think tank.
In mid-March, at the NFL’s annual owners meeting, the league’s four outside counsels briefed the news media. The session was dominated by perhaps the two most public names: David Boies, who argued for the NFL at the lower court that ruled to enjoin the lockout, and Bob Batterman, the lawyer who has advised the league since 2007. Clement said very little during that session.

Clement, however, may be the most important attorney in the group, which also includes Gregg Levy. His legal brief to the 8th Circuit arguing that the lower court’s ruling enjoining the lockout should be stayed won the day. Had the league lost that decision, the players would have held most of the leverage in the court and labor battle. Instead, the ruling in the league’s favor gave NFL owners a key victory.

The former U.S. solicitor general, who succeeded Olson in 2005, is known for his upstanding legal ethics. Earlier this year, when his law firm backed out of representing the U.S. House of Representatives in defending the Defense of Marriage Act, Clement quit his firm in protest.

“The court knows he is not pulling the wool over their eyes,” Meyer said of Clement’s sterling reputation.
Lanny Davis, a liberal political adviser, wrote after Clement was criticized in some circles for his decision to resign from his firm, “Paul Clement’s decision to resign from King & Spalding after the firm yielded to pressures from some in the gay community was a courageous decision.”

— Daniel Kaplan

Olson: No stranger to huge cases

Ted Olson, the attorney the NFL players hired to argue for them before the 8th U.S. Circuit Court of Appeals, is the same attorney who represented George W. Bush in Bush v. Gore, the landmark Supreme Court case that confirmed Bush as the 43rd president of the United States.

In 2010, Time magazine selected Olson as one of the most influential people in the world. Olson served as private counsel not only to President George W. Bush, but also to President Ronald Reagan, as well as serving those two presidents in high-level positions in the Department of Justice.

While much has been written about the players having an uphill battle in trying to convince two out of three judges in what is known as one of the most conservative appellate courts in the country to rule against the NFL, observers say Olson has the conservative credentials to do it.

“This is the best selection the players could possibly make,” said Bill Gould, former chairman of the National Labor Relations Board and a Stanford Law School professor. “It was a brilliant move by the players because it sort of checkmates the NFL’s move, which was to get [Paul] Clement.”

Clement and Olson are well-acquainted.

“He was my principal deputy when I was solicitor general and he was my successor as solicitor general,” Olson said. “He is an enormously good lawyer, a very talented individual and a wonderful human being.”

Legal scholars say Olson has a difficult task ahead in convincing the court to uphold a federal judge’s order to lift the NFL lockout because, in a decision granting the NFL a stay, two of the judges wrote that the NFL has shown it is likely to win on the merits. Olson said he has faced that situation before.

“I have had other cases where the court has rendered a decision that some have perceived as inconsistent or different than the earlier decision,” Olson said. “But that is our job as lawyers, not to accept something that has gone before if you don’t think it’s a correct interpretation of the law.”

In addition to arguing the Bush v. Gore case in 2000, Olson made national news in 2009, when he, along with prominent attorney David Boies, represented gay couples challenging California’s Proposition 8, which outlawed same-sex marriage in the state.

Boies, who represented Al Gore in Bush v. Gore, represented the NFL in arguing the case before U.S. District Judge Susan Richard Nelson, who granted the injunction.

Paul Cappuccio, executive vice president and general counsel of Time Warner Inc., has known Olson for decades and has hired him for legal work for Time Warner.

“Ted Olson is a uniquely talented person who is able to combine a legal argument with a moral passion argument and a political argument with a public relations presentation,” Cappuccio said. “So one of the reasons we hire Ted is precisely his skill in putting it all together. He is not the pinheaded appellate lawyer. He is an incredibly persuasive, incredibly articulate lawyer who can combine all the dimensions of an issue into a presentation.”

Olson represented gay couples in the case challenging Proposition 8 because he believed in their case. He said he believes in the NFL players’ case in this instance.

“I was very grateful for the opportunity to participate in this,” Olson said. “I think they are individuals who are dealing with an entity which has frequently been held to be a monopoly.”

— Liz Mullen

Mark Steinberg’s departure is not the beginning of the end for IMG’s golf division, but it does highlight the company’s shrinkage from the sport it helped build the last 50 years.

Mark Steinberg (right) is leaving IMG and Tiger Woods is expected to follow. The agency will shift management of its golf division to Guy Kinnings and Robbie Henchman.
With Steinberg and IMG parting ways, and Tiger Woods expected to follow Steinberg out the door, IMG’s golf division will take on a drastically different look with an even greater focus on driving international revenue.

Profits from IMG Golf, which have traditionally relied heavily on Woods, have steadily declined since the revelation of Woods’ extramarital affairs and ensuing scandal in 2009. That led to the end of endorsement deals with big-spending clients such as Accenture, AT&T and Gatorade.

It was the decline in Woods’ endorsement income and a general decline in golf profits that made Steinberg too expensive to keep, said sources with knowledge of the split.

Before the scandals, in 2007 at the height of Woods’ success on the course, the golf division was clearing $28 million and Woods was bringing in $7.8 million of that, the sources said. After the sex scandal, profits from the golf division dropped to $15 million in 2010, a year in which Woods brought in $1.1 million.

Fees are typically based on a 15 percent to 20 percent cut from endorsement contracts and percentages from other income, such as appearance fees, pro-ams and speaking engagements. Woods, because of his stature, could have been paying less.

Steinberg, the chief of IMG Golf and Woods’ agent for the last 12 years, would have made about $3 million this year in salary and bonuses, significantly more than the fees Woods would have generated, according to industry sources.

During the decline in profits from the golf division, IMG’s overall profits have been growing. IMG made $85 million in 2009, $110 million in 2010 and the company projects $140 million this year. With each passing year, golf’s contribution to the bottom line has decreased. Golf accounted for nearly a quarter of the company’s profits in 2009, but that figure has slipped to about 10 percent this year.

The growing college division accounts for nearly half of the profits and remains the company’s clear focus.

As one source within IMG said, “Golf will continue to be an extremely important part of our business. It’s just smaller.”

Steinberg said through text messages that it would be inappropriate to comment on his departure and that he never talks about details of his deal.

Two of the golf division’s rising stars overseas, Guy Kinnings, 47, and Robbie Henchman, 38, have been installed as the co-chiefs of the golf division, replacing Steinberg and moving the leadership out of IMG’s Cleveland office for the first time.

It also reflects IMG’s focus on increasing profits globally as it moves into the post-Tiger phase. IMG runs more than 50 tournaments around the world including the WGC event in China, it represents properties such as the Asian Tour on media deals, and its consulting clients include General Electric and RBC.

While IMG always has had a strong international component to its golf division, the business still was Woods-centric. When you thought IMG Golf, you thought Tiger Woods.

The new faces of IMG golf from an athlete representation angle will be the world’s No. 2-ranked golfer Luke Donald, a native of England, Irishman Padraig Harrington, Colombian Camilo Villegas, 18-year-old Italian sensation Matteo Manassero and 19-year-old Japanese star Ryo Ishikawa, all of whom position IMG to take advantage of the game’s global growth.

Henchman, a Hong Kong native who leads IMG’s golf business in the Asia/Pacific region, has been in charge of one of the few areas within IMG Golf that has increased profits, sources say. A self-described “IMG lifer” who has been with the company since 1995, Henchman has been integral in expanding IMG’s event business and media partnerships.

Kinnings, who represents Donald and Harrington, is based in London and oversees the company’s work in Europe, Africa and the Middle East. He recently led the efforts to sign the highly coveted Manassero, who already has won twice on the European Tour.