SBJ Unpacks: Coronavirus -- MiLB Lost Momentum To Fight Contraction

The attorneys have been busy. Two major lawsuits came to light today, including Oliver Luck suing Vince McMahon for breach of contract after he was fired from the now-defunct XFL. A class-action lawsuit has also been filed against MLB and its ticket partners, Ticketmaster and StubHub, for not issuing refunds.

Sports leagues are going under and seasons are being shuttered amid the COVID-19 pandemic. That makes for fertile litigious ground.

Luck, the former West Virginia AD and NCAA senior exec, was hired to be the XFL’s commissioner for top dollar, signing a multiyear deal worth $20 million and potentially $30 million based on the league’s performance, SBJ reported in 2018. Now, he’s suing McMahon to recoup the guaranteed portion.

The action against MLB was initiated by two fans in New York seeking a refund for their Mets and Yankees ticket purchases. Whether the suit grows to include other ticket buyers remains to be seen.

We’ve all become well-acquainted with the legal term “Force Majeure,” a clause in contracts that protects a party if an unforeseen event makes it impossible to do business. It’s basically an out clause for M&A or commercial contracts. But before thinking Force Majeure is the answer to all business woes during the pandemic, understand “it can be difficult to justify invoking the provision to cancel a transaction,” Benjamin Horney writes for Law360.

On to today’s stories. Stay safe, everyone.

 -- Michael Smith

MiLB HOPED TO EXTEND PROFESSIONAL BASEBALL AGREEMENT

• MiLB is expected to agree to move forward with 120 affiliated teams (down from 160) tomorrow, as first reported by Baseball America. The two sides had engaged in contentious negotiations for months, and the pandemic added a complex layer to those talks. Multiple MiLB sources told SBJ’s Eric Prisbell that they were hoping both sides would agree to extend the Professional Baseball Agreement another year amid the potential that already financially-strapped MiLB teams could lose the entire 2020 season. But whatever small amount of leverage MiLB appeared to have had -- relying largely on a public campaign that focused on saving baseball in small-town America -- all but disintegrated amid the pandemic.

• A MLB source said the league office was as surprised as anyone with the Baseball America report, adding that they have received no formal indications -- acknowledging some backchannel discussions about the issue -- that MiLB was agreeing to 120 affiliated teams. The source said that it remains to be seen if MiLB holds true on that position in tomorrow's conference call. In any event, MLB says it is committed to trying to maintain baseball in the markets that may lose affiliated teams. 
  
  
• One minor league baseball team owner took SBJ through the uncertainty of the contraction situation amid the pandemic. "If you believe you're on the (contraction) list, now what do you do? If you believe you're going to be contracted anyway, do you keep your employees and continue to pay them, which the government is urging? The truth is … if you then continue to pay people rather than furloughing and then find yourself contracted out, the economic harm that you've suffered amid the uncertainty over this is absolutely catastrophic."

• MiLB has also said that each of its 160 teams likely will apply for assistance through the federal government’s Paycheck Protection Program. SBJ’s David Broughton notes nearly $5 billion has already been issued to companies in the “Arts, Entertainment, and Recreation” sector, which includes sports. According to Small Business Administration data through April 16, companies in the sector had received 1.44% of the $342 billion spent on the program, accounting for 39,670 loans. 

Download the PPP Sector Loans

WOULD MLB PLAYERS GO ALONG WITH BUBBLE CITIES PLAN?

• A variety of plans for how MLB can start an abbreviated 2020 season remain in motion, but one of the potential deal-breakers for players may be whether their families could be quarantined with them wherever they are designated to play. Cardinals veteran Adam Wainwright told MLB Network Radio, "You're going to have a lot of uninterested players when they hear that their families are not to be involved." If families are included in the plan to create so-called bubble cities where games are played, that inevitably means even more COVID-19 tests for family members (as well as players, coaches, staff, etc.).

• ESPN's Tim Kurkjian told SBJ this week that the bubble cities concept is “just the best of the bad ideas." He added that what Wainwright expressed is "the way almost every player feels.” More Kurkjian: “That will be the real tricky part. How do we keep the union happy here, because they have every right to say we want to play -- but we need to play in better conditions than quarantined for four months, no family with us, hotel and ballpark only. That just doesn't sound like a good situation."

YOUTH SPORTS LOOK TO CONGRESS FOR $8.5 BILLION IN AID

• A coalition of more than 400 youth and community sports organizations -- including Little League, Pop Warner, USA Volleyball and most leading travel sports operators -- will lobby Congress for $8.5 billion in federal aid to keep both non-profit and paid programs afloat during a shutdown that has canceled leagues, tournaments, camps and clinics across the country, SBJ’s Bill King reports. In a letter delivered yesterday to leaders in both the Senate and House, the coalition -- led by the National Council of Youth Sports -- pointed to a shutdown of youth and travel sports that is expected to linger well into the summer, the peak activity season for both recreational programs and a regional and national travel sports circuit that has emerged as a driver for tourism.
  
  
• Funds would be used to offset cancellation of tournaments, clinics and other programs, many of which were not covered by insurance and do not qualify for other emergency relief sources. It also would offer funding to pay workers at organizations that don’t qualify for existing or extended federal relief. The group pledged to prioritize underserved youth. “As this crisis persists, the infrastructure of youth sports, from running programs, providing coaching and hosting events and competitions is eroding,” the group said in the letter. “We must provide critical support now to the youth sports community so these programs can remain intact for our youth as the crisis wanes.”

• The N.Y. Times’ Joe Drape also took a look at the impact of the shutdown on youth sports.

SURVEY: SPORTS BUSINESS EXECS EXPECT LENGTHY RECOVERY PERIOD

• Around 31% of sports business execs believe it will take at least 18 months for their business to recover from the havoc caused by the coronavirus-related restrictions, according to a recent survey conducted by SBJ and YouGov. For organizers of single events, 78% said it would take more than a year to recover, compared to 57% of the rest of the respondents.

• The survey was made available April 10-15 to all SBJ and Sports Business Daily subscribers with the goal of gauging some of the ways the global pandemic has affected the sports industry. More than half of the 952 readers who completed the survey identified themselves as senior management. For more results of the study, see the April 20 edition of SBJ and continue to check out this week’s issues of the SBJ Unpacks newsletter, as well as issues of SBD.

Download the SBJ Survey On Coronavirus Business Recovery Time

DE SMITH URGES CAUTION ON NFL START TIME DECISION

• NFLPA Exec Dir DeMaurice Smith said league and union officials "have to ask tough questions" about how sporting events "fit into the safe practices of our country during a pandemic" when considering whether the NFL season should start on time. Smith, speaking yesterday on the "Debriefing the Briefing" podcast, "There's hundreds of police officers, firefighters, first responders at these games. Are we comfortable with those first responders being at a football game in order to keep us safe, or are we more comfortable with them being where they need to be in order to keep our families safe?"
  
  
• CBS' Major Garrett asked if NFL players should have access to coronavirus tests before the general public. Smith: "I don't think that anyone in our larger community should suffer simply because we want football to proceed on time." See more from Smith in today's issue of SBD.

WORKING FROM HOME WITH BARSTOOL SPORTS CEO ERIKA NARDINI

• Erika Nardini believes she may be working longer hours now than she was before being quarantined at her home in N.Y., with the Barstool Sports CEO plenty motivated to make sure her company comes out of the pandemic stronger than before. “We feel a really big commitment to keeping Barstool going and keeping it healthy and keeping it thriving,” Nardini said. She hasn’t set up a formal home office, though, choosing to instead piece together what she has in her basement, turning an old farm table into a desk. “It's a little bit of a gong show. ... I’m refusing to do it because I don't want to be working from home,” she said.
  
  
• On a daily basis, Nardini is texting Barstool President Dave Portnoy frequently and talking to CRO Deirdre Lester and CFO Wajeeha Ahmed 3-4 times each, while also speaking with Head of Programming Jen Simons 6-plus times. This week, the focus has been on sorting out Barstool’s streaming coverage around Thursday’s NFL Draft, making sure talent can coordinate their efforts together. Overall, Nardini is confident in Barstool’s strategy. “We're pivoting really aggressively right now to make the most of this quarantine time and to make sure that we're preserving as much revenue as possible and attacking,” she said.
  
  
• Being at home has given Nardini more time than she had before to watch Barstool content on social media, and she has even started a daily 10-minute show, the “Token CEO” podcast. “I’m really, honestly doing it so I don’t go crazy,” she said. It also has provided her with a better understanding of Barstool’s content creators. “It actually has given me a first-hand look at how we do some things that I think we need to evolve,” she said.

• Tune in to Part 3 of the CAA World Congress Comes To You virtual conference tomorrow to hear Nardini shed more light on Barstool’s operations during the pandemic and plans for the future. Want to share what your work-from-home setup is like? Reach out to SBJ's David Rumsey. 

Nardini has opted not to set up a formal home office while quarantined in N.Y.

VIRTUAL WNBA DRAFT PROVES TO BE INTERESTING EXPERIMENT 

• SBJ’s Austin Karp reports the WNBA Draft on Friday night averaged 387,000 viewers on ESPN, marking the league's most-watched draft in 16 years. It was ESPN’s second-best figure on record for the event. The draft’s audience was up 123% from 2019, when it aired on ESPN2. The draft also was up 33% from 2011, which was the last time it aired on ESPN.

• Former Oregon star Ruthy Hebard took The Ringer through her experience of the Draft, where she ended up getting picked No. 8 overall by the Chicago Sky. On Friday night, she “set up the camera ESPN had sent her in the corner of her family’s living room in Fairbanks, Alaska, laid out the 12 hats and the interactive welcome package the league had mailed her, and waited.” Hours later due to tech issues, she was the “only one of the top picks who didn’t get to have her in-draft interview with ESPN reporter Holly Rowe.” Hebard was grateful for the effort on all sides though, saying ESPN and the WNBA “did it really well.” Hebard: “Doing my makeup, just sitting there and watching my teammates and other girls get jobs. It was really fun.”

SPEED READS

• Esports Observer’s Tobias Seck writes under the header: “Financial Bottlenecks -- How the COVID-19 Recession Will Impact Esports Startups.” The esports ecosystem is a “rather young industry; consequently, it is host to a large percentage of startups.” A number of those startups “will benefit from boosted revenues from their products and services due to the increased demand for esports, gaming, and game live-streaming.” Moreover, the pandemic may be a way for these young companies to “prove the sustainability of their business models as history has shown that crisis begets opportunities for select startups.”

• Temporary pay cuts for athletic directors and the highest-paid coaches have become common at most universities, but Boise State took cost-savings to another level by putting most of its coaches on a furlough for up to 10 days. The Broncos are facing $10 million in lost revenue this spring. All school employees who make $40,000 or more are required to take the furlough.

• Justin Rose and Graeme McDowell are competing in a virtual 9-hole competition tonight via YouTube, reports SBJ's John Ourand. The two will play Pebble Beach using the online game WGT Golf. Mastercard is the presenting sponsor in partnership with Octagon and the World Golf Tour. Matt Ginella will host the live stream.

• The “Golf Digest Podcast” debated whether the PGA Tour made the right move in announcing a fan-less return in Ft. Worth on June 11. Daniel Rapaport said it’s important to note that this is “still very much the best case scenario.” Rapaport: “Give the PGA Tour some level of credit for sticking their neck out and doing this because they knew they were the first sport that’s released anything. … . They’re not going to do this if they think there’s no chance it happens. They believe they can really get their access and their hands on a bunch of tests and that’s the only reason why they would put this out.” Co-host Sam Weinman: “So much of it hinges on testing. … Right now, given all the problems we’re having with testing around the country, that seemed very ambitious.”

NEWS YOU NEED FROM SPORTS BUSINESS DAILY

• During this crisis impacting the sports business, we want everyone to be up-to-date on the latest news and information. SBD's "Coronavirus & Sports" section is free, outside the paywall, for the foreseeable future. Below are today's headlines:

• Fauci: Could See Some Form Of Spectators At MLB Games This Year
• Sources: MLB Now Discussing Potential Three-State Plan For '20
• MLBPA's Clark Has Issue With Prospect Of Renegotiating Salaries
• Louisville Slugger Maker Losing Revenue With Baseball On Pause
• Texas Gov. Greg Abbott Expects NASCAR Race At TMS "Very Soon"
• Louisville Plans Potential Furloughs, 15% Budget Cuts In All Sports
• FC Barcelona To Sell Camp Nou Naming Rights For Virus Funding
• Jeff Volk, Sports Execs Launch Sport Hiatus To Inform Amid Unique Time
• MLS Sponsor's Effort Supports First Responders, Healthcare Workers
• NFL Makes $3M Donation To Significantly Impacted Markets

SBJ UNPACKS -- WEATHERING COVID-19

• Check out the most recent editions of our "SBJ Unpacks" podcasts around COVID-19:
  
  
  • SBJ's Bill King is joined by former American Gaming Association exec Sara Slane to discuss the downturn in sports betting during the pandemic.
  • SBJ's Bill King, Eric Prisbell & John Lombardo discuss the Paycheck Protection Program and how it can have an impact on the sports industry.
  • SBJ's John Ourand is joined by ESPN VP/Production Seth Markman to discuss the network’s NFL draft plans.
  • Mark Ein, who owns an ATP/WTA event and Overwatch League team based in D.C., discusses the tennis event and the sport at large, as well as esports' growth during the shutdown.

VIRTUAL WORLD CONGRESS PART 3: JOIN US TOMORROW

• Hear interviews with Sarah Hirshland, CEO, USOPC; Chris Curtin, Chief Brand & Innovation Marketing Officer, Visa; Micky Lawler, President, WTA; Allen Greene, AD, Auburn; Dr. Brian Hainline, Chief Medical Officer, NCAA; Erika Nardini, CEO, Barstool Sports, and more. More than 800 execs have attended the previous episodes, so take advantage of this opportunity to network with people from across the industry.
  
  
• To register, go to www.WorldCongressOfSports.com.

Something related to coronavirus and sports business catch your eye? Tell us about it. Reach out to Austin Karp (akarp@sportsbusinessjournal.com) and we'll share the best of it.