David C. Blum, a partner at Levenfield Pearlstein LLC, (LP) and chairman of the firm’s Sports Law Group, has an informed perspective on how the economy is impacting the legal side of the professional sports industry.
Much of that is due to his extensive experience in creating and implementing tax-efficient structures for all types of domestic and cross border transactions, including business start-ups, private equity, venture capital, mergers and acquisitions, joint ventures, dispositions, restructurings, executive compensation and corporate finance matters.
To learn more about his practice and what he sees for the industry, Sports Litigation Alert sought out Blum and conducted the following interview.
Question: HOW DID YOU GET INVOLVED IN SPORTS LAW?
Aanswer: I have always been interested in the business of sports. For years, my partners and I worked on various, almost random, legal matters involving owners, teams, agents, athletes, licensees and other people involved in the sports industry. Over time, I realized that we had a “critical mass” of experience, legal talent and clients, so I formalized this practice by creating a dedicated Sports Law Group.
Q: HOW WOULD YOU DESCRIBE YOUR PARTICULAR PRACTICE AND THE SPORTS LAW GROUP AS A WHOLE?
A: LP’s Sports Law Group is comprised of attorneys who are experienced within particular areas of the law, such as litigation, intellectual property, real estate, labor and employment, finance, estate planning and asset protection. My practice is focused on corporate and tax law. As the Chair of the Group, I am the point person and coordinate the overall effort. When a need arises, clients can call me and I will get the matter into the right hands. Clients do not need to figure out whether something is a corporate matter or commercial litigation. Likewise, they do not have to know which real estate attorney is the right person for a matter or which intellectual property attorney does what. They can call me and I’ll take care of it.
Q: DO YOU HAVE A TYPICAL CLIENT IN THIS AREA?
A: We have clients involved in various aspects of professional sports. Some are well known and others are not. For example, we provide labor and employment advice to a team in the NFL and we do sophisticated estate planning, asset protection and create special purpose trusts for professional athletes. I am currently working on a joint venture agreement between a stadium food service provider and an owner of several minor league teams. The legal issues involved in running the day-to-day business of a professional team differs vastly from the needs of an athlete, which also differs vastly from, say, an agent who needs advice on covenants not to compete and fiduciary duties. We cover all those bases.
Q: WHAT MAKES LEVENFELD PEARLSTEIN’S SPORTS LAW PRACTICE UNIQUE?
A: What makes us unique is our size, service offering and practical approach to business decisions. We are not too big, disjointed or prohibitively expensive, and at the same time, we are not too small that our abilities are limited. Clients come to us because our attorneys are well-versed in the needs of the sports industry and because we have the depth and breadth of a full service law firm. Most importantly, we tailor the appropriate attorneys and paralegals to each situation, whether it is for proactive planning, tough negotiating or aggressively defending a particular situation.
Q: WHAT ROLE HAS THE ECONOMY PLAYED ON YOUR PRACTICE AND WHY?
A: During the past couple of years, everyone’s margins have been squeezed. Our clients are no different. We recognize the difficulties all businesses are facing. Our goal has always been to provide excellent client service in an efficient, cost-effective manner. We value long-term relationships and I think that has helped our practice during this time.
Q: YOU MENTIONED THAT YOU PRACTICE TAX LAW, WHAT SPORTS ENTITIES ARE MOST VULNERABLE TO AN AUDIT AND WHY?
A: States, cities and even the IRS have been more aggressive than ever. They are shooting first and asking questions later. The number of audits has increased and the aggressiveness of the positions taken in some cases is ridiculous. You may recall in 2009 that the City of St. Louis imposed its city tax on each player’s MLB All-Star bonus. This was very controversial. The IRS is looking at taxing foreign sponsorship of foreign athletes playing in the US. The list goes on and on. Owners, teams, agents and athletes are all susceptible to an audit because they are high profile people. No one is safe and participants in the industry should expect more audits. We aggressively defend against federal, state and city tax audits on a nationwide basis to protect our clients against overreaching governments.
Q: IS THERE ONE REPRESENTATION THAT STANDS OUT MORE THAN OTHERS?
A: While I do not think it would be fair to single out any one matter, there was one representation that was particularly satisfying. We helped a long-time client form a team in the WNBA. We did work for the team, work for the principal owner and set up a charitable foundation. It was great to see this come together. I enjoy following the team, meeting with management and seeing all the good that has come from their charitable foundation.
