Archive for the ‘Legal’ Category

This Town Ain’t Big Enough For the Two of Us: Athletics, Giants Battle Over San Jose

The Oakland Athletics and San Francisco Giants have one of the oldest rivalries in Major League Baseball. The series dates back to the 1905 World Series when the A’s, then located in Philadelphia, and the Giants, then located in New York, faced off in the Fall Classic, which the Giants won 4 games to 1. The A’s would get the better of the Giants in the 1911 and 1913 World Series.

Both clubs eventually found their way to California as the Giants moved to San Francisco in 1957 and the A’s to Oakland in 1968 after a 13 years in Kansas City prior. The teams met in the 1989 World Series, a series the A’s won 4 games to 0 but was marred by the Loma Prieta Earthquake which occurred just prior to Game 3 of the series. Every year since 1997, the clubs have met in Interleague play, with Oakland holding a slight 47-45 edge in those matchups.

The Bay Bridge Series should be renamed “The Battle of San Jose”.

But the battle between these teams may soon switch to the courtrooms rather than the baseball diamond. The A’s currently play in O.co Coliseum, a multi-purpose stadium that is also the home to Oakland Raiders of the NFL. Opened in 1966, the “Coliseum” is the only venue to be the full-time host of an MLB and NFL team. The Athletics’ lease at O.co expires after the 2013 season, and with poor sight lines and the fifth-oldest venue in baseball, the A’s are looking for a new home.

Enter San Jose, the third-largest city in California and one of the fastest growing cities (translation: money piling up) in the country over the past two decades. Downtown San Jose is located 40 miles from downtown Oakland, and 35 miles from O.co Coliseum. As the home of the NHL’s San Jose Sharks, the city has proven the ability to host a major sports team and grow the A’s fan base.

And that’s precisely the problem. The Giants claim San Jose and Silicon Valley as part of their MLB territorial rights, which designates what areas of the country belong to which teams (used primarily for determining which teams are shown on local TV in certain areas). According to the Giants, their territorial rights extend from San Francisco as far south as Monterey County. These rights, which were loosely agreed upon by the club’s owners over 20 years ago based upon the Giants possible relocation further south that never occurred, have led to a painful and “excruciating” deliberation process for the A’s.

In 2009, MLB Commissioner Bud Selig appointed a committee to study the implications for both the A’s and Giants if the move to San Jose were completed by the Athletics. Over three years later, the committee has yet to come forward with any resolution.

It is understandable why the Giants would be hesitant to the A’s moving to San Jose. The Giants have undoubtedly built up a fan base in this area, and a new team moving to the area would cause some fans to switch allegiances to the Athletics, and that means fewer ticket sales, merchandise sales and fewer dollars. At the same time, The A’s are struggling in Oakland, with the second-lowest payroll in baseball and a run-down stadium not helping matters. Having a franchise in such poor economic shape is not good for baseball.

The decision for the Athletics to move would have to be approved by Selig, but the real sticking point is the territorial rights. That would have to be determined by a 75 percent vote from MLB owners in order to be overturned. Of course Selig has his hands in this as well, given his close relationship with the league’s 30 ownership groups. ESPN likened the entire situation to a game of chicken, asking who will blink first among Selig, the A’s, Giants and San Jose.

What’s worse is that this seems to be the tip of the iceberg. If the Athletics are eventually given permission to enter San Jose, it would not be a stretch to suggest the Giants would pursue a lawsuit against the A’s, Major League Baseball, San Jose, or any combination. Just what Major League Baseball wants, more days in court.

Baseball’s problem is not a unique one. In the NFL, the Jets and Giants share the New York market. In the NBA, the Knicks and Nets will now share New York, similar to the way the Lakers and Clippers share Los Angeles. The NHL has three teams — the Rangers, Islanders and Devils — within the New York market, while the Ducks and Kings are only 30 miles apart between L.A. and Anaheim. Even within MLB, New York (Yankees and Mets), Chicago (White Sox and Cubs) and Los Angeles (Dodgers and Angels) are shared by two teams. To see a league struggle so mightily over market sharing is incredible.

The Athletics and Giants are sure to battle on the diamond for the next decade. But the real battles appear as though they will happen before a judge.

Photo (cc) by Tim Wilson and republished here under a Creative Commons license. Some rights reserved.

Guilty By Association: Penn State Non-Revenue Sports May Struggle Following NCAA’s Football Punishment

NCAA President Mark Emmert stepped to the podium Monday morning and delivered what many believe to be the strictest punishment in collegiate sports history.

As a result of the Jerry Sandusky scandal cover-up and shocking details of the Freeh Report, the NCAA chose to hand out the following penalties against Penn State and its football program:

  • A $60 million sanction — equivalent to one year’s gross revenue of the football program — with funds going to support victims of child sexual abuse and programs intended to prevent such acts from occurring
  • A four-year ban on bowl games and postseason play
  • A reduction in football scholarships ranging from 25 to 15 for four years
  • The removal of all football wins (111) from 1998 to 2011
  • A five year probation period for the entire athletic department

Reaction to the punishment has been mixed. Some call the NCAA’s decision fair, while others find it over the top. What’s clear is that Penn State’s football team will be in rebuilding mode for quite some time.

And so too might the remainder of Penn State’s athletic programs. In 2011 Penn State’s football team made $53 million in profits, by far the biggest moneymaker program at the school. This money is spread around and used to help support non-revenue sports, such as fencing, gymnastics, and swimming & diving among others.

If Penn State football struggles as it is expected to, these sports may be in trouble financially. Though the program has weathered through unremarkable seasons before, it looks as though it will be entirely dependent on donations, especially without the aid of money sharing from the Big Ten or from bowl games. It is not a stretch to say other programs could be cut as an unintended result of the NCAA’s ruling.

The problems extend outside Penn State’s campus. Local businesses in State College, Pa. could suffer an estimated $50 million in losses per year. Much like the school itself, Central Pennsylvania has thrived off Nittany Lion football. That financial vehicle has suddenly been derailed.

Time will tell how long Penn State football suffers. It may be a shorter time before the remainder of Penn State’s teams learn their connected fate.

Guilty Until Proven Innocent?: Roger Goodell and the Saints’ Bounty Scandal

Monday was expected to be the appeal day for suspended NFL players Jonathan Vilma, Scott Fujita, Anthony Hargrove and Will Smith. The four were in New York to appeal their respective suspensions, handed down in early May for the New Orleans Saints bounty scandal.

Fujita, Hargrove and Smith chose not to attend the appeal session and instead released a joint statement criticizing Goodell for his handling of the situation, and especially his withholding of evidence against the players. Vilma meanwhile showed up to the appeal with is attorney, but left after only an hour at the league offices, telling the media outside that the process was “a sham.”

CBS Sports managed to obtain a copy of the league’s evidence against the players, which includes a $5,000 knockout pool for injuring a quarterback, but nothing else. If there is more evidence against the players, the NFL isn’t releasing it.

The most striking quote from today’s events comes from Vilma, who questioned the players’ ability to get a fair trial through due process.

“I don’t know how you get a fair process when you get [Roger Goodell as] judge, jury and executioner,” Vilma said.

That begs the question: Is Roger Goodell too powerful? Certainly Goodell is not the only commissioner in major professional sports who has the power to suspend players. Bud Selig hands out punishment in Major League Baseball, and David Stern does the same in the NBA. But these sports, by their nature, don’t have the amount of incidents that would warrant suspension.

Hockey and football do, and in the NHL there is a separate executive in charge of suspensions. Brendan Shanahan, who played 21 years in the league and won three Stanley Cups, is the league’s Senior Vice President of Player Safety and hands out suspensions, each with a video explanation  he posts on his Twitter page. Shanahan’s decisions are not without outcry from players and teams, but at least it is handled by a former player who understands the game and not commissioner Gary Bettman.

In just over five years as commissioner, Goodell has already handed out more suspensions than any other boss in NFL history. He isn’t called “the most powerful man in sports” for nothing. But for all his power, it’s clear Goodell has made some enemies during his tenure, and that’s not good for the future of the league.

The players are understandably upset, but they agreed last summer to have Goodell continue overseeing discipline when they signed the new collective bargaining agreement. As CBS Sports’ Clark Judge pointed out, Vilma and others signed off on Goodell’s power, so they should direct their anger elsewhere.

This may be true, but it’s not what’s best for the league going forward.

Garden State Goes All In: New Jersey Gov. Chris Christie Seeks to Add Sports Betting

If you’re anything like the average sports fan you probably filled out a bracket for the NCAA men’s basketball tournament, also known as March Madness. You also probably entered a pool — whether with your friends or your family or your co-workers — and put some money on it. And unless you saw those upsets by Norfolk State and Lehigh — be honest, no one did — then your bracket was busted and you lost.

New Jersey Gov. Chris Christie is challenging the federal government on sports betting.

Losing bets aside, Chris Christie invites you to bet some more on other sports, no matter what the federal government says. Christie, the governor of New Jersey, said his state will allow people to bet on sports despite the ban set by the Professional and Amateur Sports Protection Act of 1992, which outlaws sports betting outside of Nevada, Oregon, Delaware and Montana.

Here are Christie’s thoughts on the ban: “If someone wants to stop us, then let them try to stop us.” Not exactly conservative rhetoric from a Republican during an election year, huh?

There are signs the state was pushing closer to this, most notably the non-binding referendum on betting and a vote that passed 2-to-1 from the public.

Early reaction seems generally positive on the move, pointing to the fact that states should have a choice on the matter and that allowing public betting will take away the dangerous underground nature of the practice that already exists.

If this goes through, this would be huge for the popularity of sports. Think fantasy sports on steroids. It would give casual fans another reason to lock their attention on a Week 6 NFL game or check their smart phones for the score of the late-season NHL contest. Of course regulating the practice would be a hassle, which is why many are skeptical of the proposal passing.

Either way, Christie has gone all-in on sports betting.

Photo (cc) by Bob Jagendorf and republished here under a Creative Commons license. Some rights reserved.

The $3 Billion Question: The Potential Sale of the New York Yankees

For the extremely cheap price of $3 billion you can now own the New York Yankees.

Or maybe not, depending on who you believe. A report from the New York Daily News surfaced Wednesday evening that the Yankees, who have been owned by the late George Steinbrenner and his family since 1973, could be up for sale.

Check between your sofa for loose change because Yankee Stadium and the team that plays in it could be all yours for only $3 billion.

According to the report, the impetus for putting the team on the market stems from the recent sale of the Los Angeles Dodgers. Despite not having won a World Series title in 24 years, an aging stadium and a tumultuous period of ownership from Frank McCourt that led to a bankruptcy filing, the team still sold for more than $2 billion.

Steinbrenner’s two sons, Hank and Hal, don’t seem to be as emotionally invested in the team as their father, who paid $10 million to buy the club four decades ago. The thinking is if the downtrodden Dodgers can fetch more than $2 billion in a sale, the Yanks could easily surpass that and then some.

To quell the commotion, the family immediately denied the rumors from the Daily News story and said there is “absolutely, positively nothing to” the speculation. After all, it has been 932 days since the Bronx Bombers last won the World Series, and in Yankeeland that is unacceptable.

All kidding aside, the prospect of a sale is a tricky one. The late Steinbrenner no doubt always wanted the team to stay in the family, and seeing his children sell the club two years after his passing seems unjust. There’s also the tricky subject of the Empire State’s estate tax. In 2009, the 45 percent tax expired and the new rate of 55 percent did not begin until 2011. Because Mr. Steinbrenner passed in 2010 — between tax years — his family escaped having to pay nearly $500 million in taxes. If the family sells the team now, those taxes would apply. Why would the family surrender to such a hefty price they just evaded?

Others see it differently. Based on numbers from the Dodgers sale, financial experts estimate the Pinstripes could be sold for as much as $3 billion.  If someone asked to buy your business for $3 billion, you’d be selling too. Also consider the team’s aging roster of superstars like Derek Jeter, Mariano Rivera, Andy Pettitte, Alex Rodriguez and others. These players have contributed to the team winning five championships since 1996, and though a new crop of stars could still reap titles, it will be hard to replace these names. Finally the new Yankee Stadium, built in 2009, is the third-youngest in Major League Baseball and should be around for at least 40 years or more. To summarize: The value of the franchise may be at its peak.

So what do you think: Should the Steinbrenners sell the Yankees or not?

Photo (cc) by John Dalton and republished here under a Creative Commons license. Some rights reserved.

A House Divided: NFL, Players Association Feud Could Spell the End for Football’s Fortune

On the outside the NFL is the cash cow of the four major professional sports leagues (NFL, NBA, MLB, NHL). A recent study by Plunkett Research, Ltd. shows the NFL exceeds the other leagues in every monetary category. Football ranks first in overall revenue ($9 billion), operating income ($1,069 million) and average team value ($1 billion). The league has captured the attention of sports nuts as well, accounting for 23 of the 25 most-watched telecasts from Sept. to Dec.

NFL Commissioner Roger Goodell has been criticized heavily by the NFLPA, even in what was billed as a decade of labor peace.

The good times might not last much longer, however, if the league and players association can’t get along. Just like John Lennon and Paul McCartney or Kobe Bryant and Shaquille O’Neal, this power duo is showing signs of a breakup:

First, there was the lockout. For 136 days from March to mid-July, the NFL and NFLPA sat on opposite sides of a debate on league revenue, the longest in league history. After a heated summer of negotiations, the pair finally agreed to a new 10-year collective bargaining agreement.

Next, benefits for retired players. Football is a violent game, and many players have experienced health issues after retiring from the sport. Ex-players say the NFL doesn’t care about the health of retired players and doesn’t do enough for them. The recent suicides of Dave Duerson and Junior Seau show the effects the game can have. As much as this is an issue for the players union to handle, the NFL will continue to look bad if it doesn’t do its part.

This leads to player safety issues. This has actually been a testy topic for the past three years. NFL commissioner Roger Goodell has been committed to making the game safer, as evidenced by his harsh punishment for the Saints bounty scandal. Goodell has already levied more fines against players than any other commissioner in league history, leading to criticism from players such as James Harrison and a defamation lawsuit from Jonathan Vilma.

Finally, two separate issues emerged on Wednesday that further strained the relationship between the NFL and NFLPA. The players union is unhappy about the league’s decision to make thigh and knee pads mandatory for the 2013 season, claiming such a rule should be negotiated. Also on Wednesday, the NFLPA filed a collusion lawsuit against the NFL for allegedly setting a $123 million salary cap in 2010, which was supposed to be an uncapped year. By secretly setting a cap, the NFLPA claims the league and its owners confided to keep player salaries low.

It’s unsettling for football fans to think that all this is happening in the first year of what is supposed to be a 10-year window of labor peace. Matters only seem to be getting worse, arguably more so than during the lockout last year. It’s not a stretch to imagine another lockout occurring in the next three to five years if matters don’t improve.

Through it all the sport remains as popular and successful as ever. Perhaps the two sides should take a lesson from The Beatles and let it be.

Photo (cc) by Staff Sgt. Bradley Lail, USAF and republished here under a Creative Commons license. Some rights reserved.

Tebow Time? Not for Reebok: Licensing and Lawsuits Between Sporting Companies

Tim Tebow has already made it well-known he is “excited” to be a member of the New York Jets after being traded from the Denver Broncos on March 21. The excitement for the quarterback’s arrival in the Big Apple led to a court battle between athletic companies Reebok and Nike.

Tim Tebow's trade to the Jets incited a lawsuit between Nike and Reebok.

Reebok has been the exclusive maker of licensed on-field apparel for the NFL since 2002 after agreeing to a 10-year, $250 million pact. Company rival Nike struck a five-year deal in October 2010 to replace Reebok when the contract expired. Nike was set to take over as the NFL’s exclusive partner on April 1.

Like he has done to opponents on the field, Tebow took the companies by storm when he was shipped to New York with 10 days remaining on Reebok’s apparel contract. In an effort to capitalize quickly on the Tebow trade, Reebok mass-produced Jets Tebow apparel to be sold in stores. In the first weekend after the trade, sporting goods retailer Modell’s reported selling more than 4,000 Tebow items.

The sales bonanza led to a legal battle between the companies. Nike requested and was granted a restraining order against Reebok on March 28 to cease sales of Tebow apparel. In the suit, Nike claimed that Reebok misappropriated publicity rights and interfered with business relationships. Reebok claimed it had an agreement with the NFL to continue selling items of up to five players who changed teams until its contract expired.

On Wednesday, that temporary order morphed into a preliminary injunction against Reebok, ordering that all Tebow-related apparel manufactured after March 1 was to be recalled. From now on, all Tebow products will be made by Nike, which unveiled its new uniforms for all 32 NFL teams on Tuesday.

Legal questions aside, the interesting aspect to the Tebow saga shows how significant an impact a player can have on sales. Nike knew it would eventually be able to start selling Tebow apparel once its new contract with the NFL kicked into gear. However, the instant demand for Tebow items was so high that it feared Reebok would garner all the possible profits from his move to N.Y. This is perhaps another reason why teams are willing to pay big money for a single player.

Photo (cc) by Jeffrey Beall and republished here under a Creative Commons license. Some rights reserved.