Teams find safety in numbers when it comes to their legal staff
On a recent spring afternoon, Danna Haydar, who handles legal work for the Tampa Bay Lightning and its arena, found herself on a hot streak. For several months she noticed her to-do lists never dipped below 77 items. On this day, Haydar had trimmed her tasks down to a mere 64 items.
Will you still need me is not a question she needs to ask. Haydar is associate general counsel for the Lightning, a sister Arena Football League franchise and Amalie Arena. The local government owns the arena, but the team runs the building. As for the name, that, too, is part of Haydar’s orbit, since she drafted the naming-rights contract that put the Florida oil company’s name on the downtown Tampa arena.
|Concerts, sponsor contracts, arena renovations, you name it, there’s no shortage of legal work that comes across the desk of Danna Haydar (below), the Lightning’s associate general counsel.
“As a girl who grew up in Toronto, I’m a huge hockey fan,” Haydar said. “And I always wanted to be in law. The icing on the cake is living in a place with palm trees.”
Haydar’s lengthy and diverse to-do list shows why the demand for lawyers among sports teams has accelerated during the past 20 years.
Like many pro sports franchises, the Lightning has two in-house lawyers (Jim Shimberg is the executive vice president and general counsel, concentrating on Lightning owner Jeff Vinik’s billion-dollar downtown redevelopment project on 40 acres surrounding the arena). And then, too, there are outside firms hired to help with discovery and depositions in court cases, including liability issues with customers and employees.
Several factors have created the need and demand for more in-house and outside counsel among teams.
Start with the money. Sports business deals keep growing in size and scope, especially media rights deals. More teams now own, or have invested in, regional sports networks. Then, too, technology has become a larger issue, from streaming rights of broadcasts to other matters involving how teams are promoted across digital platforms.
The legal expertise necessary to keep a franchise running becomes obvious when you add in managing venues, from arenas and stadiums to practice facilities, paying for some or all of those buildings, negotiating with corporate sponsors, drawing up contracts for luxury suite leases, and seat-license sales.
“The business is just growing in scale,” said Glenn Wong, professor in the Isenberg School of Management at the University of Massachusetts and president of the Sports Lawyers Association, which is holding its annual conference this week in Baltimore. “When there’s more at stake, there are more legal issues. People take it more seriously.”
The NFL is a $12 billion league. Major League Soccer teams fetch as much as $100 million. And much of this has trickled down to college sports, mostly in football and men’s basketball.
Wong, who has worked on business negotiations for several college athletic conferences, noted the days of the verbal or handshake deal have long since passed.
Fifty-three colleges generated $50 million or more in athletic-related revenue, according to the annual rankings by USA Today. Texas topped the list at $165 million.
Trend driven by complexity of deals
In-house lawyers became more common in sports the same way they sprouted in other industries and businesses: Over time, the companies realized they were spending heavily on outside advice and decided to reduce expenses by hiring their own experts.
Lawyers Irwin Kishner and Daniel Etna, who have handled team sales, media rights and other sports negotiations at New York firm Herrick, Feinstein, point to the increasing complexity of sports teams and businesses for fueling the jump in legal hires. Legal staffs in some cases have grown to three, four and five people. Many sports franchises have at least two full-time lawyers, supplemented with interns and outside counsel.
“You’re always going to have the need for outside expertise,” Kishner said. “For issues that are not run of the mill, you can’t have that level of expertise in-house.”
Examples include financing a stadium or arena and, often, media-rights agreements.
For the more day-to-day items, in-house lawyers bear most, or all, of the burden. Sweepstakes rules, sponsorship
|Yankees COO and general counsel Lonn Trost said the team has eight in-house lawyers.
Lonn Trost, chief operating officer and general counsel with the New York Yankees, offers a one-man illustration of how sports law has changed during the last 40 years.
Trost was still in private practice in the mid-1970s when he began representing New York teams. Over the years, clients included baseball’s Mets and Yankees, the NHL Devils and the NBA Nets. He remembers ’70s-era Yankees general managers Gabe Paul and Al Rosen handling not only manager and coaches’ hiring, player contracts and roster moves, but also local TV agreements and other business matters. Pause and consider the likelihood of a 21st century general manager in the major leagues interrupting his scouting and roster oversight to interview concessionaires and book a Jimmy Buffett concert to maximize stadium revenue.
Today, the Yankees have eight attorneys in-house, including Trost. “And we still can’t keep up,” he said, mentioning the flood of contracts and details inherent in hosting college football games, outdoor hockey, soccer and the occasional papal visit at Yankee Stadium.
“It’s 48 hours a day and eight days a week,” he said. “It’s a life, not a lifestyle.”
Trost was hired full time by the Yankees in 1997. Since then, he has helped the team start the YES Network; steer through building a stadium; complete negotiations that made Fox the owner of 80 percent of YES; sell team interests in the Nets and Devils; and, with the Dallas Cowboys and other partners, launch the Legends hospitality and sports marketing firm.
Juggling everything from employment law and building leases to risk management and sponsorships emerged as blessing and curse in SportsBusiness Journal interviews with team lawyers.
“The diversity of issues is tremendous,” said Nona Lee, Arizona Diamondbacks general counsel. “That’s one of the things I love about it.”
Jeff Gewirtz, chief legal counsel for the Brooklyn Nets and Barclays Center, agrees. “We’re confronted with dozens of legal issues in a week,” he said, mentioning issues tied to the NBA team, the arena and the relocation of the NHL Islanders to Barclays Center in the fall. “Any issue that has a legal angle or aspect to it falls in our lap. The obvious ones are revenue-generating” such as sponsorships, media deals, licensing, suites and booking outside events.
Gewirtz said everybody needs outside help at least some of the time, citing the dramatic shifts in technology and media as one of the biggest factors.
Kishner, the Herrick partner, said in-house sports jobs have become much more coveted and higher paying in the last 10 to 15 years. In more cases than before, stock options and higher salaries have made team lawyers as well paid as they would be in private practice, a significant change.
Like most things, incrementalism keeps creating more work. Teams cost more, they spend more and, in turn, they both want and need to generate more revenue.
Irwin Raij, co-chair of the sports practice at Foley & Lardner, described the relationship between outside counsel and teams’ in-house lawyers as a way of lending perspective and support staff to the team lawyers. Teams are searching for help and insight because most aspects of running a team keep sending tentacles in new directions.
Raij fell into sports by happenstance. Earlier in his career, he served as White House counsel to Vice President Al Gore and represented the campaign as part of an army of attorneys during the 2000 election recount. (His recollection of the recount: “Six weeks of hell.”) In private practice, he was assigned to help with stadium negotiations when the Washington Nationals moved from Montreal a decade ago.
In 2012, Raij worked for Guggenheim Partners on the marathon sessions that led to the group buying the Los Angeles Dodgers for $2.15 billion.
“Look at facility development — now it’s not just about building the building,” he said, referring to arena and stadium projects, where teams seek outside counsel. “You have a mixture of public and private partnerships, you’re looking for additional revenue and you’ve got ancillary development, surrounding development. It’s not just the bricks and mortar [of where the team plays].”
Erik Spanberg writes for the Charlotte Business Journal, an affiliated publication.