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Volume 20 No. 42

Leagues and Governing Bodies

The ATP, nearly four years after scoring a significant antitrust victory in a Delaware federal court, now must go back to that court to defend a key policy designed to make the federations that sued the tour pay the $20 million in legal fees.

The development comes as the ATP this month also sued its insurance carrier for $1.5 million, alleging the company has not made good on reimbursing the tour for some of those fees. While the ATP has waited for the courts to rule on whether the two groups that sued must pay the fees, it has tried to collect from the insurance carrier.

The tour is seeking payment from German and Qatari tennis federations, but the 3rd U.S. Circuit Court of Appeals earlier this month not only did not order those groups to pay the legal fees, but it also called into question the very bylaw the tour contends requires the payment.

“We have doubts that Delaware courts would conclude that (the bylaw) imposes a legally enforceable burden on Deutscher and Qatar,” said the 3rd Circuit opinion. The ATP is incorporated in Delaware.

“Determining whether (the bylaw) provides a basis for fee-shifting might require analysis of the possibility that it was adopted specifically to deter members from suing the organization.”

The bylaw, requiring ATP members to pay legal fees if they lose a lawsuit against the tour, was adopted in 2006 as the circuit implemented a new tour structure that disadvantaged certain tournaments, including the Hamburg, Germany, stop owned by the Qatari and German federations.

The appeals court sent the fee issue back to a lower Delaware federal court to decide whether the bylaw is legal. That lower court had already ruled federal antitrust law prevented the ATP from getting the fees, but the appeals court wants a ruling first on whether the underlying policy should even stand.

An ATP spokeswoman said, “We believe the bylaw is enforceable under applicable law.”

The German and Qatari tennis federations sued the ATP for demoting their event five years ago. A jury ruled against them in August 2008, and the fee dispute has been winding its way through the courts almost ever since.

The ATP in the interim filed with its insurance carrier, National Union Fire Insurance Company of Pittsburgh, a division of AIG, for $9.8 million the tour claimed in court filings it was owed under its policy. The insurer paid $8.3 million but has not paid any more since 2010, according to the claim filed in Florida federal court.

An AIG spokesman did not reply for comment. As of last Thursday, the insurance company had not responded in court papers to the ATP claim, which was filed May 2.

The NBA- and NCAA-owned iHoops has hired Derrick Godfrey as its chief executive officer, effective today.

iHoops CEO Derrick Godfrey
Godfrey, who previously worked as vice president of international development for Major League Baseball Advanced Media, replaces former iHoops CEO Len Elmore, who left the organization in February.

Godfrey will be responsible for growing iHoops, which was created in 2008 as a joint venture between the NBA and the NCAA to develop youth basketball training and educational programs. He signed a three-year contract in becoming the third iHoops CEO since the venture was launched, following Elmore and current Pac-12 Conference Deputy Commissioner Kevin Weiberg, who worked for iHoops from 2008 to 2010.

Godfrey, who captained the basketball team as an undergraduate at Colgate University, is counting on his previous digital media background to grow, which counts 750,000 unique visitors a month.

“We need to figure out how to monetize the site in a better way,” he said. “The way kids digest information is more mobile and we have to do a better job of providing access on the go.”

Since its inception, iHoops has signed Nike and Adidas as founding partners. The iHoops venture also has formed partnerships with USA Basketball, the Amateur Athletic Union and the National Federation of State High School Associations.

Parker Executive Search was retained by iHoops to recruit for the CEO job, with Godfrey chosen among seven finalists.

“Derek stood out with a strong background digitally,” said NBA executive Kathy Behrens, who was involved in the search as a member of the iHoops board of directors. “We want to figure out some new opportunities in the digital space. We are pleased with the traffic in terms of but there is more we can do.”

Godfrey also will be responsible for creating additional iHoops grassroots programs, as Behrens acknowledged, “The grassroots programming side has been a bit of a challenge for us.”

Godfrey will be based in Indianapolis and will lead a staff of nine employees, with more staff expected to be added.

“We are looking to add some resources,” Behrens said. “We feel like we have a terrific CEO in place and the NBA and the NCAA are committed to make this work.”

For years, the May MLB owners meetings have been a center for concern and worry within the league. Attendance problems, poor weather, an uncertain national economy and team insolvency have been regular topics of discussion.

This season, however, owners gathered with some significant and surprising momentum behind them, particularly with regard to attendance.

After three consecutive years of decline and then a slight increase in 2011, MLB attendance this season is up about 6 percent as of press time, even higher than the 3 percent to 5 percent league Commissioner Bud Selig projected before Opening Day.
Nineteen of 30 teams are posting attendance increases thus far, a marked reversal from this time last year, when 20 of 30 were showing declines.

The overall bump owes to several factors, including the new Marlins Park in Miami, a run of good weather after last year’s historically wet spring, sizable upticks in Detroit and Texas after playoff runs in 2011, and continued competitive balance with teams such as Washington seeing attendance benefits from strong on-field starts.

Popular young players like Bryce Harper and strong on-field starts are helping teams like the Nationals see attendance gains.
Also factoring into the mix is the increasing national-level role of the league into what traditionally has been a local piece of the baseball business. Since its formation in late 2010, the Commissioner’s Ticket Review Committee has studied issues such as the secondary market, dynamic pricing and data tracking. The panel this year created the new FanPass brand for the sport’s digital ticketing initiatives.

The group last week presented an update on its work before the owners. As always, attendance remains a major revenue source for clubs and a key indicator on the sport’s health at large. “We’re having an extraordinary year so far,” Selig said.

CAVE EXPLORERS: Tim Brosnan, MLB’s executive vice president of business, held an MLB Enterprises board meeting at the newly redesigned MLB Fan Cave last Wednesday and also hosted several other team owners visiting the interactive, social media-infused facility while in town for the owners meetings.

The idea was for Brosnan and other league executives to show their team-based counterparts what is happening with the much-acclaimed space, which blends youth-oriented marketing, reality TV concepts and baseball’s intersection with pop culture.

But unlike similar owner visits made a year ago, when MLB didn’t even fully know what it had on its hands with the Fan Cave, formal and informal discussions this time focused heavily on the initiative’s power as a content-producing engine. Material created from the Fan Cave is now a regular staple on MLB Network and and throughout social media. The space is also quickly becoming an in-demand concert venue for musical acts in several genres.

“There’s a real proof of concept now,” Brosnan said. “Now we understand this. We’re creating a large amount of content, and we wanted to show the owners the full force of that. It’s kind of hard to understand the full scope of what’s happening there without actually being there.”

Also quickly gaining traction is the idea of creating additional, localized versions of the MLB Fan Cave.

“That’s probably the biggest question in front of us with the Fan Cave,” Brosnan said. “How do we extend out what the Fan Cave does into our markets and create some type of satellite versions of that? And those conversations are definitely happening as we speak.”