By James Wold
A final, wide-ranging discussion on current business and legal issues in sports was the culmination of the National Sport Law Institute’s Current Legal and Business Issues Affecting International and Professional Sports conference at Marquette University on October 15.
The event, held at Eckstein Hall on the campus of Marquette University, was organized by NSLI Director Matthew Mitten and Associate Director Paul Anderson.
Perhaps the most important idea that carried the day was seeing that each sport organization has its own regulations and methods of enforcement.
The day’s program began with “Olympic and International Dispute Resolution.” Ilhyung Lee, the Edward W. Hinton Professor of Law at the University of Missouri, opened the proceedings by discussing the resolution of tiebreakers in Olympic sports and used the 100-meter dash tie between Jeneba Tarmoh and Allyson Felix at the United States track and field Olympic trials as a case study. Dr. Dirk-Reiner Martens, legal advisor to the International Basketball Federation (FIBA) discussed disputes in sport and how arbitration is key in resolving them.
The final panelist was Maidie Oliveau, a member of the Court of Arbitration in Sport (CAS), who discussed its beginnings and how CAS can work within the Olympic Games. Specifically interesting was CAS’s ad hoc division which was first used in the 1996 Atlanta Games. By using the ad hoc division, it allowed CAS to act with speed, minimal cost and independence in adjudicating cases in a timely fashion.
Corruption Issues in Sports
Panel two featured “Corruption Issues in Sports” and was headlined by World Anti-Doping Agency director general David Howman. He spoke of how all forms of cheating have a criminal underworld and are starting to infiltrate even amateur athletics.
Howman stated that WADA is the only international body that has one set of rules for every sport and every country while accumulating a 98% allocation rate from worldwide governments. This was done in order to maintain the integrity of sport and is protecting the clean athlete as much as it is finding the cheating athlete.
At the luncheon following the panel, Howman was honored with the Master of the Game Award.
Perspectives on Sports Facility Development
After the break, Mary K. Braza led a panel on “Perspectives on Sports Facility Development” that featured three main areas of emphasis.
Braza talked about the trend of stadiums going away from fully public financing to more partnerships with the private sector. In that line of thinking, prospective facilities should also think about developing the neighborhood surrounding the stadium in order to drive revenue. Braza pointed to examples of the L.A. Live experience in downtown Los Angeles as well as AT&T Park in San Francisco and Petco Park in San Diego as to how facilities can used ancillary development in order to provide economic impact.
Mike Duckett, executive director of the Southeast Wisconsin Professional Baseball Park District, discussed the numerous lessons learned from planning and building Miller Park. Duckett’s biggest takeaway was that if taxpayers are involved, transparency is a must.
Martin J. Greenberg, managing member of the Law Office of Martin J. Greenberg, LLC, then added to Duckett’s discussion by stating that sports stadiums should be the anchor in the investment of a community. Greenberg looked at three different areas where growth was seen with a correlation to the building of Miller Park.
Current Issues in Sport and Business
The last panel was a question and answer session on current issues in sport and business that helped summarize the three previous panels.
The hottest topic and one that affected the most on the panel was the issue of day-to-day operations within a sports league or franchise during labor turmoil.
Arena Football League Commissioner Jerry Kurz has just emerged from a lengthy collective bargaining agreement that saw the league take a full season off. It recently agreed with the players on a five-year deal lasting through 2017.
“Last year, we went through a challenging CBA,” Kurz said. “Getting there is always a challenge.”
In terms of how much the CBA governs operations of his sport, it affects almost all day-to-day operations. “Player contracts, tryouts, player’s rights — everything has to be governed by the CBA.”
For the National Football League, an organization that until recently had experienced a lengthy labor peace, the 2011 lockout of its players provided its own challenges, starting with the simple question of when it was starting.
“It was clear in 2010 there wasn’t going to be an extension of the CBA,” said Cliff Stein, Vice President of Football Administration and General Counsel of the Chicago Bears. “We had to have a model for a (potential) uncapped and a capped year.”
When the lockout began in the spring of 2011, it was as though everything regarding player movement and contracts froze. But that wasn’t the case for sponsors and fans, who were banking on a full season taking place.
“We had to keep our season-ticket holders, fans and sponsors on board,” Stein said.
Panelists Michael Sneathern, associate counsel of the Milwaukee Bucks and Nyea Sturman, director of legal services with the Orlando Magic, dealt with similar issues with the National Basketball Association’s lockout that ultimately emerged with a 66-game regular season after its agreement.
Attempting to keep sponsorships was as much about timing as it was about money.
“We didn’t have many sponsorships up for renewal (at the time),” Sneathern said. “That was key for us.”
One final voice to the discussion was Ricky Olczyk, assistant general manager and director of hockey operations and legal affairs for the Edmonton Oilers. Currently, the Oilers are caught in the middle of the National Hockey League’s labor negotiations which have locked out the players for the second time in seven years and third since 1995.
With three straight No. 1 overall draft picks on its roster, the Oilers decided the best way to cultivate its youth was to send those players to its minor league affiliate, the Oklahoma City Barons of the American Hockey League.
“We’re conducting our business in a unique way,” Olczyk said. “We were able to send our young guys to the minors as a way to develop them. The AHL benefits us.”
Economic Challenges
While a majority of the panelists had issues with labor relations, all of them have felt some impact of the global economic slowdown. With fans unlikely to have as much disposable income as in the past, maximizing the “bang for the buck” has become the mantra for several organizations.
“Disposable income doesn’t exist anymore,” Kurz said. “We have to provide value to the fans. We have to have value added. Something has to be going on all the time. Premiums — fans want to take something home. We give away 100-200 shirts/game. We had to convince owners to not cut costs but find ways to drive revenue.”
In baseball and football, there’s another factor that is cutting into the game-day profit potential of organizations — television. With the continuing rise of high definition television as well as sports tier packages (NBA League Pass, MLB.TV) where people can pay to sit at home and watch every game in the convenience of their own home, competing for that dollar has never been tougher.
“Everybody in the office is a salesperson,” Chicago Cubs executive vice president, community affairs and general counsel Michael Lufrano said. “We’re not only competing against events downtown but also against HD TV.”
Milwaukee Brewers vice president and general counsel Marti Wronski echoed a similar sentiment but added that her staff took advantage of a unique opportunity to capitalize on success on the field.
“We had the good fortune to be performing well in the playoffs (reaching the National League Championship Series),” Wronski said. “We were enjoying it but also trying to leverage it toward getting tickets sold for 2012.”
Brand Identity
Wronski’s comments served well to lead into a discussion on generating brand identity with organizations. Each team tackles the question differently and those choices also come with some risks.
“It’s a tricky balance,” said Atlanta Braves legal counsel Greg Heller. “You have to tap into the marketability of the player. But sports are also unpredictable. Promoting the team and its brand is key. We have a seven-state territory that we call Braves Country.”
The Braves had the benefit of a beloved player in Chipper Jones — a life-long Braves player — announcing that 2012 would be his final season.
“With Chipper Jones retiring at the end of the year, we had an opportunity to market him through the end of the year,” Heller added.
Some teams have chosen to go on the other end of the age spectrum.
“We consider branding the most important thing we do,” said Olczyk. “We’re going with a youth movement. We had a unique opportunity with three No. 1 picks on our team at one time.”
While players come and go — even players who spend their entire career with one organization — getting fans to identify the team brand is vital to maintain consistency.
“We’re looking toward our mascots (Bernie Brewer and the Sausages),” Wronski said. “History and tradition are always important and it’s something the Cubs do very well with.”
Social Media
Reaching out toward fans through advertising and branding is one skill. With the rapid rise of social media (Twitter, Facebook, Tumblr, etc.), it allows for more fan-to-player interaction but also creates numerous legal and administrative issues to deal with.
“It’s a real fear for us,” Wronski said. “As a lawyer, you live in fear of it. Sometimes, it’s not just about the players you have but its tweets from family members against other players on the team.”
Kurz echoed a similar sentiment and added that seeing something on a screen is much different than hearing it in context.
“The first time some bad language comes out, I live in fear of it,” Kurz said.
Rather than looking at social media in an adversarial fashion, organizations are starting to use its near instantaneous access on multiple fronts. From analyzing trends in what fans are looking for to simply screening potential new hires, it allows companies to access a greater wealth of knowledge.
“We certainly use social media as an information gatherer,” Lufrano said.
Sneatheran added that social media has created rules in the game. He recalled when former Bucks player Charlie Villanueva was tweeting during game action. Since then, the NBA has stepped in with rules that require players not to use social media immediately before or after the game.
Commissioners and Their Power
While labor negotiations are between ownership and players, ultimately it’s the league commissioner who has the final say. Acting as the owner’s representative in negotiations as well as disciplinary issues, they must stay above the fray as much as possible.
“It was a contentious subject to be negotiated (in the AFL),” Kurz said. “If the commissioner was going to be judge, jury and executioner, it’s a tough position to be in. If you adjudicate the case and then hear the appeal, it looks bad.”
One of the more thoughtful answers on the issue came from Foley and Lardner LLP partner and member Mary K. Braza. Rather than focus on the more routine operations, Braza believes that the most important role of a commissioner is when major issues arise.
“The real test for a commissioner is when there’s a crisis,” Braza said. “The natural reaction is to close down the hatches. But to look after the sport as a whole and stepping out, even while being criticized, takes leadership.”
Other Issues Discussed
Three other questions were discussed during the panel interview — concussions, personal conduct and discipline as well as market globalization.
Regarding concussions, Stein addressed the issue by saying the NFL is trying to get ahead of the curve through education as well as through rules changes.
“Any football player who plays in the NFL, you see a player who’s played between 10-14 years of football,” Stein said. “The first thing is education — learning how to tackle properly, making sure coaches know how to spot symptoms. It’s also getting them to understand that this is something that can also be cumulative over time.
“We’ve also started hiring neutral trainers to diagnose head injuries and pulling (players) them out of the game. We’ve also moved the yard-line on kickoffs to the 35, which has led to fewer returns. We’ve eliminated the 3-man wedge and the rules on contact on a defenseless player.”
Stein also addressed the NFL’s personal conduct policy, adding that it includes all league employees and not just players and coaches.
“The commissioner talks about protecting the shield or the brand of the league,” Stein said. “There is a proactive approach to a player’s character. You have a whole separate criterion when evaluating players.”
Finally on marketing globally, leagues are taking a proactive approach to try and obtain sponsorships and brand recognition. With 75 international players in the NBA, a global perspective is needed but it also comes with some logistical challenges. Sturman said having translators are key when dealing with marketing and sponsorships in order to make sure that a team’s message is understood.
Despite these challenges, it’s an opportunity that leagues and teams seek to take advantage of.
“Everybody believes there’s gold in them [sic] hills,” Kurz said. “But it takes a lot of work.”
