The vetting and hiring of a new coach is one of the most critical responsibilities athletic directors face. Athletic directors work to identify coaching candidates that will give the university’s teams an opportunity to win games. At the same time, they must also identify coaching candidates that will satisfy concerns of the various university stakeholders. The University of Tennessee’s recent coaching search demonstrates what happens when an athletic director fails to do the latter. The fallout at Tennessee serves as a cautionary tale for all athletic directors, and offers critical lessons that every athletic director must learn before embarking on a new coaching search.

The #SchiaNO Movement and Its Effect on Tennessee’s Coaching Search

In the early morning of November 26, 2017, the University of Tennessee’s then-Athletic Director, John Currie, boarded a plane destined for Columbus, Ohio. At the time, Currie intended for that trip to result in him hiring Ohio State’s Defensive Coordinator, Greg Schiano, as Tennessee’s next head football coach. Currie nearly succeeded in executing that plan, as he successfully procured Schiano’s signature on a memorandum of understanding and had a plane lined up to transport Schiano to Knoxville to be introduced as Tennessee’s coach later that evening. That announcement, however, never happened.

In the few hours it took Currie to travel to Columbus and meet with Schiano, Tennessee football supporters caught wind of Schiano’s imminent hire and united in a public backlash. Government officials, fans, students, alumni, national and local media, and even the White House Press Secretary spoke with a shared voice in opposition to Currie’s decision to hire Schiano, and they banded together around the catchy Twitter hashtag “#SchiaNO.”

In its core, the #SchiaNO movement was a reaction to deposition testimony of a Penn State whistleblower indicating that Schiano knew of Jerry Sandusky’s sexual misconduct but failed to properly report it to authorities while Schiano was employed as an assistant coach at Penn State in the 1990s. As the #SchiaNO movement grew, further reports detailing Schiano’s controversial tenure as head coach of the Tampa Bay Buccaneers added additional fuel to the fire.

With unprecedented speed, the #SchiaNO movement brought an end to Schiano’s candidacy and to Currie’s tenure as Tennessee’s athletic director. Within hours of its creation, the #SchiaNO movement caused Tennessee to back out of its memorandum of understanding with Schiano and transition the search to other candidates. In the following week, Tennessee removed John Currie from his position as Athletic Director and replaced him with former Tennessee head coach Phil Fulmer.

These events should serve as a cautionary tale for athletic directors across the country. Indeed, all athletics directors should be vigilant on the following issues before embarking on a new coaching search because there is a very real possibility their career will hang in the balance.

Vet Coaching Candidates the Way the Public Will Vet Them

In the immediate aftermath of the #SchiaNO movement, John Currie released a statement indicating that he “carefully interviewed and vetted” Schiano before he met with him in Columbus on November 26, 2017. According to his statement, Currie’s vetting process included a review of Louis Freeh’s 2012 investigation report detailing the findings of Freeh’s investigation into the Penn State/Sandusky scandal. Currie’s vetting process also included inquiries to The Ohio State University to confirm that Schiano was never called upon to testify as part of the investigation. Those steps were, of course, necessary for Currie to properly vet Schiano, but they were not sufficient. Absent from Currie’s statement was any indication of detailed investigation and consideration on Schiano’s tenure at Penn State.

Any consideration of Schiano should have included information likely available to Tennessee football supporters who would vet Schiano by searching Google, Twitter, and other online resources to find information published about Schiano’s coaching history. Even a cursory on-line search would have located the July 2016 Washington Post article entitled “Greg Schiano, Tom Bradley knew of Jerry Sandusky abuse at Penn State, documents show” that mobilized supporters behind the #SchiaNO movement. This would be an issue that would alert the need to conduct further investigation and to proactively explain a hiring decision despite such information.

Athletic directors must recognize their fan bases now have immediate access to extensive information regarding coaching candidates. Relatedly, athletic directors must not underestimate fans’ willingness and ability to unearth anything and everything ever published about a new coach. Failure to adequately consider and prepare for the results of public vetting may result in an embarrassing, and potentially damaging, outcome.

Use of a Robust Morals Clause in Coaching MOUs

When fully executed, a MOU between a coaching candidate and a university can serve as legally enforceable document that defines the parties’ rights and obligations before they enter a formal employment agreement. Accordingly, athletic directors must recognize the exposure for themselves and their employers to potential litigation the moment they put pen to paper and sign a MOU. In the Schiano saga, this threat of litigation is somewhat complicated by a partially-executed MOU.

Athletic directors can, however, take steps to mitigate such risks by including a morals clause within legal documents pertaining to athletic employment, including MOUs. Morals clauses have become standard provisions in endorsement contracts for sponsors that engage popular athletes to promote their brand and allow sponsors to terminate the agreement if the athlete engages in conduct that contrasts with community standards of honesty or good morals.

Tennessee’s coaching search is instructive as to the importance of morals clauses in MOUs with coaching candidates. If the Schiano/Tennessee MOU had a robust morals clause that provided Tennessee an exit option upon information implicating Schiano’s morals (particularly with respect to the course of prior athletic employment), the litigation threat from Schiano would be diminished.

Appropriate Standard of Review When Evaluating Coaches with a Tainted Past

A common refrain by those criticizing the #SchiaNO movement is that the deposition testimony connecting Schiano to the Penn State scandal constitutes double-hearsay that would be inadmissible in court. While that might technically be true (one Penn State assistant testified regarding what another assistant had told him about Schiano’s purported statements), that is not the determinative standard of review for athletic directors when evaluating a coaches with a tainted past.

The ultimate arbiters of an athletic director’s coaching decision are the various stakeholders of the university’s athletics programs, such as the board of trustees, administrative leadership, students, parents, boosters, and fans, not to mention the media. None of these stakeholders are constrained by the Rules of Evidence or bound by the standards of proof used by a court of law. For this reason, athletic directors must use a standard of review that accounts for this reality when evaluating coaching candidates with a tainted past. More specifically, athletic directors should adopt a standard of review that measures, at a minimum, the following three factors:

  • Severity of the Coach’s Suspected Bad Conduct: The #SchiaNO movement gained steam in significant part because Schiano’s suspected bad conduct was so severely reprehensible. But not all scandals are created equal. Athletic directors must identify where a coach’s suspected conduct falls on the severity spectrum and exercise increased caution when such conduct lies at a higher level of severity.
  • Reliability of Evidence Connecting the Coach to Suspected Bad Conduct: The evidence connecting Schiano to the Penn State/Sandusky scandal consisted of sworn deposition testimony from a non-party witness that held no direct financial interest in the outcome of the investigation. Though this testimony was based upon double-hearsay, it is still more reliable than the more speculative evidence connecting coaches to other well-known scandals. Athletic directors must gauge the reliability of evidence connecting a coach to suspected bad conduct and factor that reliability with other information into their decisions regarding that coach’s candidacy.
  • Coach’s Appeal in the Absence of Suspected Bad Conduct: Schiano has a career record of 68-67 as a collegiate head coach. His NFL head coaching record was even worse, as the Tampa Bay Buccaneers went 11-21 during his tenure and received criticism on Schiano’s locker room management. Recognizing this, athletic directors must consider a candidate’s appeal to a University’s stakeholders in the absence of any suspected bad conduct. That is certainly a key factor that stakeholders will consider when passing judgment on the athletic director’s hiring decisions.

The Schiano story provides an extreme example of how important these proactive actions are during a coaching search, and how swiftly an athletic director can be terminated for failing to follow them. The consequences may not always be as immediate and severe as they were for John Currie. However, make no mistake: athletic directors run the risk of damaging their careers and reputations every time they ignore these lessons during a coaching search, even if nobody creates a catchy Twitter hashtag to commemorate their mistake.

A celebrity should maximize the value of their brand by strategically monetizing every aspect of it.  For example, one who becomes famous through the recording industry would consider a career in front of and behind a television camera, through endorsement opportunities that are equity-based, along with employment and other business ventures. This is precisely the path taken by recording artists such as Will Smith and Queen Latifah.  Others, such as Michael Strahan, have taken a different path.  Strahan, a former pro football player, intelligently leveraged the NFL’s platform to build a successful on-camera television career, a television production company and numerous endorsement opportunities. This blog covers key considerations for a celebrity that seeks to avail herself or himself of ancillary revenue streams and how to go about protecting and preserving that brand.

BUILDING A BRAND – DNA MATCHING

For any celebrity, monetizing a successful brand requires that you develop, enhance and market your organic DNA and match it with brands with a substantially similar DNA. In many respects, you are who you are. A product is what it is. For the DNAs to work together, they have to match.

If you are uncharacteristically big, strong and powerful like LeBron James, Ezekiel Elliot or Kristaps Porzingis, you should be purposeful in pursuing opportunities that are consistent with those personal characteristics. Examples of those opportunities may be a Porsche, BMW or Dodge’s RAM Truck. Those brands symbolize strength and power and, therefore, share the same DNA as the aforementioned celebrities.

If you are strikingly beautiful and graceful like Beyoncé, Jennifer Lopez or Skylar Diggins, you should pursue opportunities that match that DNA.  Examples of matching DNA may be found in clothing lines, makeup and fragrances.

The first steps for a celebrity that desires to monetize their brand is to assess their organic DNA, be purposeful about enhancing that DNA and marketing it to companies that sell products or services that share the same DNA.

WHAT ARE YOU ENDORSING?

Once the celebrity matches their DNA with that of a company, the objective is to maximize the brand. Because celebrities will be paid more for endorsing multiple products instead of just one, they should consider narrowing the scope of an endorsement obligation. For example, if an athlete intends to endorse only “sneakers,” the endorsement agreement should not say the athlete is endorsing “footwear.” An athlete who has unknowingly signed an endorsement agreement for footwear could find himself or herself obligated to endorse everything one wears on their feet: sneakers, shoes, boots, flip flops, etc. Unintentionally including these additional categories foreclose the athlete’s opportunity to be paid an endorsement fee for endorsing, by way of example, shoes in addition to sneakers.

The same applies to actors and musicians.  An actress that expects to endorse “makeup” should not allow the endorsement agreement to be so broad that it includes all products considered to be in the “glamour category”.  The “glamour category” arguably includes hair products and is beyond what is intended by the term “makeup”.  While this might not be problematic for the athlete, additional compensation is warranted for the additional products. Simply put, there is an opportunity cost associated with every micro-product or service that a celebrity endorses and celebrities should seek to be compensated for each area.

A company may tell a celebrity that although the product category in an endorsement agreement precludes them from endorsing a broad range of products, their practice has been to grant a waiver to allow the celebrity to endorse pretty much whatever they want. In the end however, the agreement says what it means and means what it says. Don’t expect the endorsement agreement to be enforced any differently than what is written.

REVERSE MORALS CLAUSES

Companies that ask celebrities to serve as pitchperson typically require morals clauses in contracts, which give them the right to terminate an agreement in the event an athlete engages in conduct that contrasts with community standards of honesty or good morals (for example, convictions for DUI or use of banned substances).  It is understandable that a company would not want to continue its affiliation with a celebrity whose poor conduct has diminished the value of their brand. Similarly, celebrities must protect their brands against wrongdoing on the part of the companies (or their executives) they have agreed to endorse. For instance, if a celebrity is endorsing a product that has unintended health consequences, the celebrity may want to cease supporting the company. Including reverse morals clauses in an endorsement contract empowers a celebrity to terminate his or her agreement with a company in the same manner in which a company may disengage.

PROTECTING THE BRAND FROM ATTACK

Very often, unscrupulous individuals seek to attack celebrity brands. This may include everything from late night telephone calls threatening prosecution for a false sexual assault allegation to a claim that the celebrity figure allegedly offered to pay the claimant to abort an unborn child. There is simply no limit to the way in which individuals may seek to attack and, in some circumstances, extort the brand. An assessment has to be made on the validity of the claim.  At the same time, there is a critical step that must be taken as soon as the brand comes under attack.  Every reasonable step must be taken to make the brand unassailable.  The best way to achieve that is to quickly determine instances in which the claimant has been dishonest or misleading in matters relating to the celebrity. Armed with that information, the celebrity must swiftly utilize that information in court, in the media or such other strategically determined intended audience.

 

With the start of college football season around the corner, attention turns to off-season shake ups in coaching staffs.  One controversial change involved defensive coordinator Robert H. Shoop.  Shoop traded in his blue and white at Penn State for orange at the University of Tennessee in January 2016, although his employment contract with Penn State did not expire until February 15, 2018.  This led to a dispute over Coach Shoop’s post-employment contractual obligations.

As a result of Shoop’s departure, Penn State filed a breach of contract suit against Shoop in April 2017, which subsequently was removed to federal court in the Middle District of Pennsylvania.  Penn State alleged that Shoop is “obligated to pay liquidated damages in the event of his resignation prior to the end of the stated term of the Contract.”  Section Six of the underlying employment contract provided that if Shoop resigned before the end of his contract term, he would be obligated to pay fifty percent of his base salary for the remaining term. Shoop’s annual base salary was $850,000. The only exception was if Shoop became the head coach at another university within one year of the date of resignation, and he did not. Based on these terms, Penn State is seeking $891,856.00.

Shoop has responded to the Penn State’s complaint, denying the allegations and setting forth sixteen affirmative defenses. The majority of the affirmative defenses focus on the enforceability of the contract, which raises the legal question: Is such a contract void because it is overly restrictive on Shoop’s employment opportunities?

In California, where the authors of this writing practice, non-compete contracts or restrictive covenants are generally unenforceable.  Restricting the movement of a coach to a different football team would be like restricting the movement of an engineer from Google to Amazon.  Such a restriction would be unlawful.  But, notably, Shoop’s contract with Penn State did not impose such a restriction after the termination of his employment.

Rather, the contract obligated Shoop to pay liquidated damages if he left prior to the end of his contract. California law permits non-compete clauses during the term of employment.  See Angelica Textile Servs. Inc. v. Park, 220 Cal. App. 4th 495, 509 (2013) (recognizing that section 16600 of the California Bus. & Prof. Code “does not affect limitations on an employee’s conduct or duties while employed”).  From a policy perspective, this makes sense— non-compete agreements that prevent future gainful employment are void, but a company, or in this case, a University, has an interest in prohibiting its employees from moonlighting during their employment.

Even under the stricter parameters of California and other states that have severely limited restrictive covenants, a court would likely find that contracts such as the one entered into by Shoop and Penn State are not unlawful non-solicitation contracts.  In Pennsylvania, restrictive covenants are generally disfavored, but may be enforceable if they are accompanied by new and valuable consideration.  See Socko v. Mid-Atlantic Systems of CPA, Inc., 633 Pa. 555, 560-61 (2015).  It does not appear that consideration is at issue in this contract, although Shoop formulaically asserts “lack of consideration” as an affirmative defense. It is therefore fairly likely that a court, applying Pennsylvania law, will find that the contract at issue does not contain an unlawful non-compete clause.

Shoop’s counterclaim sheds light on the primary defense theory he will assert at trial — constructive termination.  Shoop alleges in his Counterclaim that his “working conditions became intolerable” and he “experienced a hostile negative work environment.”  Shoop is seeking $75,000 based on Section 5 of the contract, which provided that if Shoop was terminated without cause, Shoop would be entitled to an amount equal to the lesser of (1) his annual base salary or (2) the prorated amount of the annual salary.  Shoop’s allegations do not explain how and when Shoop’s working conditions became “intolerable” or who, specifically, created a “hostile negative work environment.”

Looking at the drop in Penn State defensive team statistics over the two years Shoop was the coordinator, one could question if a hostile environment existed: in 2014, 2d in total defense and 4th in scoring defense; in 2015, 37th in total defense and 47th in scoring defense. Given the barebones nature of Shoop’s allegations, it is somewhat surprising that Penn State did not file a 12(b)(6) motion for failure to state a claim.  Instead, on July 21, 2017, Penn State answered Shoop’s counterclaim and denied the allegations.

Going forward, this dispute raises more questions about contracts in the collegiate athletic sphere. For example, if Shoop employs a novel defensive scheme at Tennessee that was developed at Penn State, there may be a trade secret issue.  Coaching staffs often move to new teams together; if other assistant coaches follow Shoop to Tennessee in the near future, will Shoop be liable for raiding Penn State’s coaching staff?  And, will colleges in states where non-compete agreements are enforceable impose such clauses to restrict intra-division or intra-conference movement?  How will cases like this impact student-athletes who transfer during their collegiate career?

Regardless of how these scenarios play out, this case will likely result in colleges and athletic personnel scrutinizing their contracts in greater detail before signing and increase the need for counsel specializing in these issues to raise the likelihood of enforcement.

 

 

Notwithstanding the glitz and glamour of multi-millionaire race drivers and champagne, Formula One is all about data. Analytics are fundamental to understanding Formula One races. Teams are fueled by data, and around every corner you’ll find a car fitted with over 150 sensors monitoring car and driver behavior. These sensors track vital stats such as brake wear, tire life and driver biometrics. In one lap, they can transmit 2GB of data; over the course of a full race, 3TB of data.

NBA teams too are now using a form of technology, called “Player Tracking,” that evaluates the efficiency of a team by an analysis of player movement. According to the SportVu software website, teams in the NBA are now using six cameras installed in the catwalks of arenas to track the movements of every player on the court and the basketball 25 times per second. The data collected provides a plethora of innovative statistics based on speed, distance, player separation and ball possession. Examples include stats on how fast a player moves, how far he travels during a game, how many times he touches the ball, how many passes he makes, how many rebounding opportunities he has, and much more. The information is available to fans on NBA.com and NBA TV. Data analytics are also common in the MLB, NFL, MLS and other professional and collegiate sports, where statistics have become vital in analyzing games and players.

But gathering data in the volume and depth that is necessary to make accurate predictions comes with risks. What if the data falls into the wrong hands? How valuable would detailed statistics be? Of course, teams have traditionally monitored their opponents by sending scouts to games, or watching hours of video re-runs, while meticulously making notes on individuals’ performances; but access to the “fire hose” of data collected during training would provide a huge shortcut.

For example, in Formula One, a data or system loss, or even a malware infection, and the race is lost.  Formula One teams have data centers on the side of the track, processing every nanosecond of the race.  If any of that data fell into the wrong hands it could be disastrous, which is why Formula One teams take data security extremely seriously.

Interestingly, tools needed to make sure data can be collected safely and kept only in the hands of those who it’s intended for are already available. The problem is that outside of a few highly data-driven sports, such as Formula One, most clubs and teams just aren’t aware enough of the dangers to have implemented them. Like businesses gathering data, sports teams too should have a full understanding of any and all obligations and requirements under relevant data protection legislation.

Communication is also critically important, i.e., appropriate disclosure of what data is being collected and how it is stored. It’s also important to learn about and put in place the appropriate security measures to guard data, and to implement the necessary policies on deleting data a sports team no longer needs. The digital revolution engulfing sports has many challenges to overcome, but the point is that whether in sports or business, when data becomes an important asset that drives important decisions and competitiveness, it needs to be protected like any other important asset.

Public financing, including tax-exempt bond financing, of facilities used by professional sport teams has long been a controversial topic, with advocates and opponents disagreeing over whether the benefits sufficiently to justify public subsidies.  Since 2000, over $3.2 billion of tax exempt bonds have been issued to finance the construction and renovation of 36 sports stadiums.

A bill has been introduced that would eliminate the availability of federal tax-exempt bonds for stadium financing.  Under existing tax law, use of a stadium by the applicable professional sports team constitutes “private use,” but taxable “private activity bond” status, which is triggered by “private use” of the financed facility combined with the presence of “private security or payment” for the applicable bonds, can be avoided by structuring the bonds to be payable from tax or other revenues unrelated to the financed stadium.

The bill would amend the Internal Revenue Code to treat bonds used to finance a “professional sports stadium” as automatically meeting the “private security or payment” test,  thus rendering any such bonds taxable irrespective of the source of payment.

This bill is identical to a version introduced in the House of Representatives in February and a slight departure from prior versions in the House that extended the exclusion from tax-exempt financing to a broader category of “entertainment” facilities.

What’s new this time? There are versions of legislation intended to terminate tax-exempt financing of professional sports stadiums in both the House and Senate, arguably evidencing an increased likelihood of advancement.

Although the Federal Trade Commission currently is short-handed with one Democrat and one Republican serving on the Commission (out of a normal lineup of five), today they showed that bi-partisan consensus still can exist in Washington.  The FTC, along with California and DC, have sued to block the proposed merger of DraftKings and FanDuel, the two largest daily fantasy sports sites.

The federal court complaint alleges that paid daily fantasy sports contests in the United States represent a distinct antitrust product market.  According to the complaint, consumers of paid fantasy sports are unlikely to view season-long fantasy sports contests as a meaningful substitute due to the length of season-long contests, the limitations on number of entrants and other issues.  The FTC claims that entry or expansion by other providers is not likely to provide timely or effective new competition.

DraftKings and FanDuel are the two largest daily fantasy sports sites, controlling together more than 90 percent of the United States market.  The complaint alleges they are each other’s closest and most significant competitor and they have battled head-to-head to offer best prices, product quality, largest prize pool and greatest variety of contests.

A federal judge will decide whether to enjoin the merger pending an administrative trial at the FTC.  That hearing will turn on whether the FTC can factually demonstrate its view that daily fantasy sports is its own market.  DraftKings and FanDuel issued a statement that they are “considering all their options.”

An ongoing controversy regarding fraud and academic dishonesty among student-athletes at the University of North Carolina at Chapel Hill (“UNC”) has brought to the forefront an important question:  Who is responsible for ensuring student-athletes are receiving an academically appropriate education?

The UNC scandal involves the revelation that a “shadow curriculum” was developed in the early 1990s during a period of complaints that student-athletes’ workloads were too strenuous given the heavy demands of competing in Division I athletics.  The shadow curriculum allegedly involved classes that never met, had little to no faculty oversight, and in certain instances required only a single paper to be submitted in order to complete the class.  Investigation findings suggest that for well over a decade, these classes were taken by a significant number of students – many of which competed on UNC’s football and men’s and women’s basketball teams.

The National Collegiate Athletic Association (“NCAA”) which regulates college-level athletics, has charged UNC with improper and unethical conduct as a result of the revelation of UNC’s implicit sponsorship of this shadow curriculum.  Although the NCAA has yet to levy its final punishment against UNC (the University has instituted several self-imposed sanctions), potential penalties could include a reduction in the number of scholarships available to UNC athletes in the future, a postseason ban on competition, and – in a worst case scenario – the “death penalty,” which would eliminate UNC’s eligibility for college-level athletics competition for an entire year or longer.

In response to the threat of these potential penalties, UNC has asserted that the NCAA is overstepping its role by threatening UNC’s athletic programs based on concerns over academic integrity.  The NCAA’s principal function is to regulate athletics compliance, not to determine whether student-athletes are being held to sufficiently rigorous academic criteria.  That should be reserved for the purview of the University.

And UNC has a point.  Charged with the regulation of athletics, the NCAA does not specialize in assessment of how difficult a college student’s coursework should be.  If the NCAA punishes UNC for its academic failings, it could open the floodgates for the NCAA’s role in oversight over the curriculum for student-athletes and begs the question, “What next?”  Will the NCAA demand that it be given an opportunity to audit and approve of university classes in order to ensure that student-athletes are being held to sufficiently rigorous standards?  And if so, on what basis?

On the other hand, the UNC scandal raises the debate of whether universities can be trusted alone with ensuring the academic preparedness of their student-athletes.  Perhaps an institution’s judgment could be clouded by conflicting incentives that potentially motivate them to place the success of their athletic programs over other principles.  After all, college sports – and particularly Division I teams in football and men’s basketball – generate mass amounts of revenue for their institutions.  For many universities then, it may be extremely difficult for them to decide to, for example, sideline their star player because he is struggling in calculus, when they are armed with foreknowledge that such a decision would have competitive and financial consequences.

Of course, universities cannot place their bottom line over the education of their students. If schools cannot be trusted to prioritize their students’ success over financial gain, then we are left with one very important question about the regulation of student-athletes’ education:  If not the NCAA, then who?

The present end result is universities must continuously assess both internally and with appropriate external counsel, the separation in oversight of academics and athletics.  Failure to do otherwise may force the NCAA to assert a more prominent role and increase risk to potential infractions.

 

We are in March.  The minds of many turn to March Madness as the NCAA hosts its annual tournament to crown college basketball’s national champion.  Of these, many want to take advantage of the tournament to promote their products or services.  However, this phrase is trademarked, and the owners are active in policing and protecting their mark, as sponsors pay large amounts for association with the championship.  It is important therefore to be careful of using “March Madness” in promotions and advertisements, as these uses could bring trouble.

“March Madness” – a Trademarked Term?

Yes, it is.  This, however, does not mean that newscasters, sports reporters or morning DJs can’t talk about the tournament using the name of the event. Instead, what it means is that commercial uses of the term that could imply some association with the event for which sponsors pay money, can be problematic – and could cost you or your sponsor money or time defending the use. So the safest way to avoid issues is to avoid the trademarked phrase in promotions and advertisements.

The NCAA was not the first to employ the March Madness theme for a basketball championship.  That honor goes to the Illinois High School Association. But those rights have been acquired, and are now protected vigorously by the NCAA (including associated marks such as “Final Four” and “Elite Eight”).  Marks objected to in the past by the NCAA include “April Madness” (for entertainment service), “Markdown Madness” (for auto sales services), “Skate Madness” (for skateboarding competitions) and “Freestyle Madness” (for various entertainment services).

Safe use.

In considering how best to use “March Madness” in a commercial setting, it is important to note that using the term in a manner where it is simply describing the event rather than for an attention-getting headline is more likely to be perceived as fair.  For example, in noting a list of events and other features, an ad may say, “During the March Madness tournament, we will be serving flights and celebrating the individual athletes from our home team.”  Using the term close to the event date rather than well in advance is also more likely to be perceived as fair, and not trading on the excitement that surrounds the games outside the context of the tournament itself.  The same considerations apply to sales of merchandise.

So be careful out there, and enjoy the games.

As of this writing, it has been over 850 days since UConn women’s basketball team has lost a game.  When the Huskies last tasted defeat (in an overtime thriller to Stanford on November 17, 2014), football players at Northwestern University were pursuing their rights to collectively bargain after a ruling by the NLRB regional director in Chicago held they were statutory employees.  While the undefeated nature of women’s basketball in Storrs, CT has been a constant, the NLRB changed the game for Northwestern football players by declining to assert jurisdiction.  However, there remains a feeling in certain quarters of college sports that some form of pay to student-athletes is inevitable.

The order declining to assert jurisdiction over Northwestern’s football players was not the last word by the NLRB with respect to the University’s athletics.  Last fall, an advisory memorandum by the NLRB’s Associate General Counsel found certain rules in the University’s Football Handbook were unlawful.  The offending rules, which the University subsequently modified for purposes of compliance, related to restrictions on social media and health communications by players.  The fact that the Office of the General Counsel opined on this issue has raised concern whether the NLRB will reconsider its prior position if another college team petitions to assert collective bargaining rights.

Payments to college players would offer support to their argument for standing as statutory employees.  Similar to those of Northwestern, policies and rules that affect players would have to be evaluated for compliance with the National Labor Relations Act.  Considering the volatile impact of social media on college sports and the desire of many athletic departments to manage this area, the limitations and guidance to employers on social media policies would require rule changes in the athletic handbooks of many universities.

In addition to the right to organize, many individual employment rights would also flow from the new standing.  For instance, it has been long understood that coverage under workers’ compensation statutes is not available to college athletes, largely because any injuries would not be derived from job-related activity.  However, creating a compensatory arrangement for college players would bring back the logic used by the Colorado Supreme Court in 1954 when it ruled in favor of Ernest Nemeth, an injured football player from the University of Denver on a claim for workers’ compensation.  Key to Mr. Nemeth’s claim was that his football activity was part of his total “job” with the University.  Under this rationale wage compliance would also become a concern, especially given the non-exempt status that could be designated to college athletes.

The Pandora’s Box of legal compliance for student-athlete pay will also involve the IRS.  Under Revenue Ruling 77-263, the value of an athletic scholarship is excluded from the recipient’s gross income.  However, this ruling is grounded in the understanding that the value of the scholarship will not exceed the expenses incurred to attend the institution. The excess value paid to college players would raise question as to whether some portion or all of the athletic grant-in-aid would become taxable income.

While the idea of providing payments to student-athletes may appear a simple solution to some, there would be a host of devils in the details.  Any prospective framework would need limitations that not only address financial considerations (such as how this would impact availability of Olympic sports that are often the focus of Title IX compliance), but a cross-section of legal concerns.  This would be a task only slightly less daunting than beating a team coached by Geno Auriemma.

Follow Tyrone on Twitter at https://twitter.com/tyronepthomas

 

The NFL has agreed not to require its teams to set minimum prices in ticket resale marketplaces as part of a settlement with several state attorneys general.  The settlement caps an investigation that was initially launched by New York Attorney General Eric Schneiderman into possible antitrust violations involving the NFL’s implementation of resale price floors, the practice of putting a lower limit on ticket prices to ensure they are not sold for less than a set value.

 

The NFL encouraged individuals interested in selling tickets to do so on the NFL Ticket Exchange, a marketplace operated by Ticketmaster. The NFL Ticket Exchange thereby could prevent sales below the face value of the ticket, as a means of generating additional revenue.  Because some teams require ticket holders to use the league-promoted platform, even sellers who would be willing to sell for less could not do so.  Instead, fans were forced to pay a minimum price for all NFL games.

 

The resolution with Florida, Massachusetts, New York, Ohio, Pennsylvania, and the District of Columbia is designed to make it easier for fans to find tickets at lower costs on the re-sale market.  It also includes an agreement that the NFL will pay approximately $100,000 to cover the cost of the multistate investigation. The NFL admitted to no wrongdoing and paid no other financial penalties.   But whether that means cheaper seats for NFL fans is uncertain, since teams will still be allowed to individually set minimum re-sale prices if they desire (although they must inform ticket sellers when a price floor is set).

 

It remains to be seen whether state attorneys generals take issue with other existing price floors.  Just this past summer, the New York Yankees settled a longstanding disagreement with StubHub over the use of price floors. StubHub, who initially was adverse to any price floor, has agreed to set floors at 50% of a ticket’s price at the season ticket rate.  StubHub will reportedly now be the primary fan-to-fan ticket resale site for the Yankees.