Category Archives: General
Documents that were recently released in connection with the filing of a motion in the NCAA student-athlete name and likeness litigation (O’Bannon v NCAA) show that one of the defendants, the Collegiate Licensing Company, has contemplated starting a college athlete’s union. The CLC aids many universities, conferences, bowl games, and the NCAA in protecting, managing, and developing their brands. As part of that process, the CLC is the trademark licensing agent for these entities.
Presumably, the idea behind starting a college athlete’s union is the opportunity to provide the same types of services to the union and its individual members: college athletes. But, what many, including the CLC, may not know is that a college athlete’s union already exists: the National Collegiate Players Association (“NCPA”).
The NCPA was founded by Ramogi Huma. Huma is a former UCLA scholarship football player. He started the NCPA after the NCAA suspended one of his teammates for accepting groceries after his scholarship money ran out at the end of the month. The NCPA claims that it has over 14,000 current and former student-athletes as members.
Huma and the NCPA have been behind some of the recent efforts to make NCAA bylaws and state legislation more student-athlete friendly. For example, the NCPA was intimately involved in the White v. NCAA litigation. This case sought to allow Division I institutions to provide athletics-based scholarships to men’s basketball and football players equal to each school’s actual cost of attendance. I was a member of the attorney team that represented the NCAA in this case and it ultimately settled with no change to the NCAA bylaws. Ironically, the NCAA now agrees with the NCPA’s stance on allowing Division I members to award athletics-based scholarships up to a school’s cost of attendance. But, much of the membership is still opposed to the rule change. I previously discussed this topic in this earlier entry.
More recently, the NCPA was successful in lobbying California to pass legislation known as the Student Athlete Bill of Rights. The legislation mandates that certain California universities continue to provide scholarships to student-athletes who suffer career ending injuries, pay health insurance premiums for low-income student-athletes, and pay for injured student-athletes medical bills (even after they are no longer attending the university). Governor Jerry Brown signed the bill into law last week. I previously covered some of the problems with the legislation here.
The NCPA also, among other things, successfully pressured the NCAA into increasing the amount of the NCAA death benefit and removing the cap on the amount of money a student-athlete can earn from a part-time job.
While the NCPA has had success in changing NCAA bylaws and passing state legislation, it appears the CLC envisions taking things a step further: organizing student-athletes for the purpose of licensing the use of their names and likenesses during and after their college careers (the CLC documents refer to the organization as the College Student-Athlete Players Association). For example, if a Manhattan, Kansas car dealer wanted to use Colin Klein in a TV ad, CLC would negotiate the terms of the deal. CLC would do the same for other current and former student-athletes who had offers for advertising, apparel, or other promotional opportunities.
The CLC’s potential plan has one big problem: current student-athletes are deemed ineligible the moment they accept payment from third parties based on their participation in college athletics. Once Colin Klein accepts payment from the car dealer he can no longer play football for Kansas State. And he is no longer on TV, no longer being talked about as a Heisman candidate, and no longer helping the car dealer to sell cars. The same would be true for other current student-athletes who sign on with CLC, and CLC would quickly run out of student-athlete clients.
The only chance of current success for the CLC’s potential plan would be a massive organizing campaign of FBS football and Division I men’s basketball players. These student-athletes are helping to generate nearly all of the revenue for many university athletic departments and the NCAA. If they were to strike, and if the flow of revenue stopped, it would cripple the athletic departments and the NCAA. Perhaps the NCAA would change its bylaws to allow student-athletes to profit from their names and likenesses as a result.
Would current Division I football and men’s basketball student-athletes organize en masse and refuse to play in an effort to gain the ability to license their names and likenesses? Maybe. Putting myself back into my 18-year-old mind, if a CLC representative came into the locker room and told me that my teammates and I would be able to get paid for promotional appearances if we joined the CSAPA it would be appealing. But, if he or she then told us that we would likely not be playing basketball for at least a portion of the season and that we could potentially lose our scholarships, I would have likely rejected the invitation to join. I’m sure many current student-athletes would feel the same way. Putting a free education at risk for non-guaranteed licensing payments is a big risk.
But, if the plaintiffs in the O’Bannon lawsuit are successful that risk could be eliminated. The plaintiffs in the case are currently asking the court to implement a system where money generated from the licensing of the names and likenesses of Division I football and men’s basketball players is held in trust until the student-athletes’ playing careers are over. This would be a lot of money as it includes the money the NCAA, the conferences, and the schools receive from television broadcast rights agreements.
It would be interesting to see how the NCPA and the CLC react to the implementation of this system. Would they join forces to act as student-athletes’ licensing agents or fight for supremacy? We’ll have to wait and see how the litigation progresses, so stay tuned for further developments in the case.
With college football season underway and college basketball season quickly approaching, stories of coaches and athletics departments limiting or banning student-athletes’ social media usage will become more frequent. Schools have taken a variety of approaches to address student-athletes’ improper use of social media websites like Facebook and Twitter. Some limit their usage during the season, arguing that such is necessary to ensure their focus upon the season at hand. Others have implemented various usage rules and have enacted monitoring systems to enforce those rules. Then there are those that have banned the usage of Facebook and Twitter by student-athletes altogether.
While much has been reported upon this subject, the question remains: Do policies that outright ban the use of Twitter and Facebook violate the student-athletes’ First Amendment rights?
The First Amendment to the United States Constitution grants five rights, including the freedom of speech. Freedom of speech is a fundamental personal right that is protected against state action under the Fourteenth Amendment. As such, in order for a First Amendment violation to exist, a government actor must be infringing upon someone’s freedom of speech. Therefore, this means that from a constitutional standpoint, public state universities–and not private universities–could potentially found liable for infringing upon student-athletes’ First Amendment rights.
In the realm of First Amendment law, there are several concerns related to state universities altogether banning the use of social media by student-athletes. Arguably, banning student-athletes from using social media outright amounts to a prior restraint. A prior restraint is government action that prevents speech before it occurs. Preventing student-athletes from communicating on Twitter before they do so arguably amounts to a prior restraint. Courts rarely uphold government action that amounts to a prior restraint. In order for something amounting to a prior restraint to be upheld by a court, the government (here, the public universities banning social media use by student-athletes) must prove that a societal harm will result absent the prior restraint. This would likely be difficult for a university to prove. While a student-athlete’s Twitter usage may likely cause an athletics department many headaches, it is highly unlikely it will cause a societal harm. Additionally, the school would be required to show that their limitation is narrowly drawn with reasonable and definite standards. Cutting the student-athlete off from the two communication methods used the most by his generation arguably is not a narrowly drawn limitation.
The issue, though, is that in order for a government action to be overturned as a prior restraint, is that an injunction to the action must be promptly sought. Thus, student-athletes who have been banned from social media usage would be required to seek an injunction to the restraint promptly. To date, no student-athlete has challenged his school’s banning his social media usage in the courts. Therefore, in order for student-athletes to gain ground against these bans on the First Amendment front, a student-athlete will need to seek an injunction the next time an athletics department bans social media usage. Thereafter, the court would have to give a prompt and final determination on the validity of the restraint. For the reasons set forth above, it is likely that a court would not allow a social media ban.
This analysis should cause some concern for athletics departments in public universities who have instituted outright bans of social media usage by their student-athletes. If the athletics departments have banned social media usage without having in place a contract with the student-athlete waiving their right to use social media, there is a strong likelihood that their social media policy is unconstitutional. As such, public schools seeking to ban social media usage should attempt to enter into contracts with their student-athletes whereby the student-athlete waives their right for the consideration of participating in athletics on the campus. If the school is unable to do this, the school should not institute an outright ban of social media usage. Rather, the school should adopt narrow social media usage policies that allow student-athletes to use the communication medium in a way that does not damage the school’s reputation.
On Tuesday, the NCAA, NBA, NFL, NHL and MLB filed a lawsuit in the United States District Court for the District of New Jersey seeking declaratory and injunctive relief challenging the State of New Jersey’s “plan to sponsor, operate, advertise, promote, license and authorize gambling on amateur and professional sports.” The lawsuit names New Jersey Governor Christopher Christie, the state’s Director of Gaming Endorsement and the Executive Director of the New Jersey Racing Commission as defendants.
On January 17, 2012, Governor Christie signed into law N.J.S.A. 5:12A-1, which according to the lawsuit, “purport[ed] to permit wagering at casinos and racetracks on the results of certain collegiate and professional sports or athletic events.” According to the lawsuit, the act signed into law by Governor Christie violates federal law. In particular, the plaintiffs assert that allowing gambling on amateur and professional sports in New Jersey violates the Professional and Amateur Sports Protection Act, and contravenes the Supremacy Clause of the United States Constitution. The Professional and Amateur Sports Protection Act generally outlaws sports betting, save for certain exceptions, which the plaintiffs argue do not apply to New Jersey’s law. Notably, those exceptions are: that New Jersey conducted sports gambling activity prior to the law’s enaction in 1992, New Jersey authorized sports betting in a one-year period following the law’s 1992 enaction or the gambling relates to pari-mutuel animal racing and jai alai games.
The plaintiffs’ lawsuit comes just three weeks before the public comment period for comments on proposed regulations concerning the licensure and operation of sports gambling in New Jersey expires. The timing is notable, because according to the lawsuit, once the regulations are in place, New Jersey casinos and racetracks will be able to allow their patrons to gamble on sporting events.
Ultimately, the plaintiffs are seeking a declaration that New Jersey’s sports gambling law and its regulations violate Professional and Amateur Sports Protection Act in that the New Jersey law allows sports gambling in contradiction to the federal law. Additionally, the plaintiffs seek an injunction preventing the implementation of New Jersey’s sports gambling law and regulations. The plaintiffs are also seeking costs, attorney’s fees and other relief as the court finds appropriate.
The defendants will now have to file an answer in federal court responding to the allegations in the complaint. Given the nature of this matter, one can expect that it will not be settled out of court. Rather, those planning on placing bets in New Jersey during the football season will more than likely have to hold onto their money, as the legal process will likely drag out to determine whether New Jersey’s sports betting initiative violates federal law.
I’ve got a great guest post for you today on giving college football fans what they want. But first, you want more of me, right? Good, because I’ve got video from my weekly segment I do every Thursday at 10:30am on The Pulse Network. This week we spent the first part of the show discussing the USA Today story on Rutgers I responded to earlier this week. I go on to discuss why Frank McCourt’s days as a MLB owner are numbered because he’s been using the team as his own personal credit card and end with a discussion on what Tiger Woods is doing to his brand power and why the NBA can’t afford its lockout.
If you still want more of me, here’s a podcast from my appearance on the Michigan Insider this morning where I talked about Michigan’s athletic facility expenses, self-sustaining athletic departments and why departments who aren’t self-sufficient are subsidized by their university. My interview starts at the 9-minute mark:
Ok, that’s enough of me for one day. Now I’d like to introduce you to my favorite college sports blog: College Football’s Most Dangerous Blog. It’s called that because the writer happens to be extraordinarily opinionated, and his opinions are rarely popular. The writer also happens to be my boyfriend, Chadd Scott. My admiration of his work, however, came long before I ever met him, so I present the following with no bias.
This is from a post Chadd had on his blog this week as he attempted to give good news to ALL college football fans:
When writing “College Football’s Most Dangerous Blog,” I try to do many things. I try to make you think and feel. I try to say what’s never been said. I try to attract as many readers as possible. Most importantly, I try to be honest. Everything I write, I honestly believe in.
Why am I changing? Because it’s never been more apparent to me that the vast majority of college football fans (you) don’t want honesty or investigation or reality when it comes to your favorite team, you want good news. You want to hear how the next crop of recruits are the best to ever step foot on campus and how the redesigned strength and conditioning program will turn the current roster into a collection of freakish monsters capable of dominating all competition. In the words of my buddy Colin Cowherd, fans want affirmation, not information.
If that’s what you want – and judging by the droves of you plopping down your hard-earned money to get in line behind the rest of the lemmings at your local pay-for-good-news college football website you do – here’s some good news for everybody.
Clemson’s new offensive coordinator Chad Morris will replicate Gus Malzahn’s success in Death Valley and if the CU Tigers aren’t playing for a national title this year, they will next.
Auburn’s Trooper Taylor simply connects with young people better than all the other college football recruiters.
Nick Saban has the long-term health of his players foremost in mind when he encourages certain members of the Tide to take medical hardships.
Butch Davis can’t possibly be expected to know what everybody in his football program is doing at all times and no coach will ever be able to control what his players say on social media.
Bobby Petrino – misunderstood. Arkansas is the job he’s been coaching his whole life to obtain.
Al Golden = Jimmy Johnson.
With the recruits he has verbally committed, James Franklin is on the verge of turning Vandy into a player in the SEC East.
Urban Meyer, Gene Chizik and Jim Tressel all won national championships in their second seasons; see where I’m going with this Tennessee fans!
A JUCO nose tackle and two new linebackers will have Georgia’s defense DOMINATING; add in the best true freshman running back since Herschel (Isiah Crowell) and UGA is Atlanta bound in December.
Virginia fans are as passionate as any in the ACC.
Paul Johnson doesn’t need highly rated recruits, he wins with scheme.
It’s no longer just the Big Three in the SEC East (UF, UT, UGA), it’s the Big Four with South Carolina.
Considering their TV markets, I expect Memphis and UCF to be invited into the Big East any day now. And Houston, you’re next up for the Big 12.
This Florida State team reminds me of the dynasty years.
Having perspective on life beyond football makes Mark Richt a better coach.
Look at the coming facility upgrades and season ticket records, Dan Mullen will be at Mississippi State for years to come.
ACC football, you’re this close to catching the SEC.
You’re all going to the conference title game! You’ve all got the best coach! Your student-athletes are scholars and gentlemen! Other fans who dislike your favorite team are simply jealous. Your stadium is the best, your cheerleaders are the best, your uniforms are the best, your fans are the best, your tailgating is the best, your coeds are the best, your academics are the best, your traditions are the best, your message board is the best, you’re the best!!!!!!!!!!!!!!!!!!!!!!!!!
By far, the number one thing I’m asked by email and on Twitter is how I got to where I am. So, I thought I’d tell my story, and also show you that my career may not be exactly what you think.
I grew up wanting to be the first female GM in Major League Baseball, but my second choice was being a corporate attorney. I learned early on that there were two ways to get into baseball: be a former player or start as an unpaid intern. I applied for an internship with the Braves every summer in college. I was an Atlanta native, a baseball enthusiast and attended a well-respected private liberal arts college. They never even interviewed me.
When I got the chance to work for the WTA Tour in law school, I was ecstatic. Finally, I could get me foot in the door. It wasn’t baseball, but it was sports. Once it was on my resume, I could apply again to baseball teams. And this time I’d apply to more than just the Braves. I’d learned you have to be willing to go anywhere you could get a job.
Then I learned you also had to be willing to start at the bottom – financially, that is. Turns out that when there is an abundance of interest in a position they don’t have to pay you much. I did get an offer from a baseball team other than the Braves. It paid exactly 1/4th of the amount a medium-sized firm in Atlanta had offered me. I had student loans and dreams of owning a home, so I took the law firm job.
Ever heard that things happen for a reason? It was at that law firm that I met someone who set me on a whole new course.
During my last year of law school, I write a paper for my Taxation class on internal taxation in baseball (i.e., revenue sharing and the luxury tax). I could always make any class relate to baseball. I finished law school with baseball-themed papers from Taxation, Sports Law and Historic Preservation. Anyway, my taxation professor was kind enough to help me pursue publication for my paper, and it appeared in the Spring of 2007 in the University of Denver Sports and Entertainment Law Journal.
Flash forward to the fall of 2007 when I was a first-year associate. A chance meeting with a client who was also a baseball fan led to my showing him my article. As it turned out, he knew the editor of a sports publication and forwarded it to him. That editor knew an editor at a publishing company and forwarded it to him. To make a long story short, I signed a contract to write a book based on that article in December 2009 with that same publishing company. That book, BALANCING BASEBALL: HOW COLLECTIVE BARGAINING HAS CHANGED THE MAJOR LEAGUES, is due out next year after the execution of a new collective bargaining agreement in Major League Baseball.
In April of 2010, I was watching a video clip of Forbes’ SportsMoney editor, Michael Ozanian. He was discussing an aspect of Major League Baseball’s collective bargaining agreement and I thought he said something misleading. I decided to email him and express my thoughts on the issue. I added in that I was working on the book and that I’d be happy to collaborate with him if he ever covered MLB’s collective bargaining agreement again. I pointed him to my journal article and other pieces I’d written online.
Much to my surprise, I received an email a few hours later asking if I’d like to write for SportsMoney on Forbes. I tried to wait more than 30 seconds to respond so they wouldn’t know just how excited I really was to write for Forbes. Who turns down Forbes?
By this time, I had moved to another law firm. This law firm hired an outside publicist to handle their work, and a colleague suggested I meet with her to see if she could help market my book when it was published. We had a lovely lunch and talked about my long-term goals. I told her one of my goals was to appear on a show called SportsNite that Comcast Sports Southeast tapes here in Atlanta. I had been a long-time viewer of the show and thought I could appear if they ever needed an expert on collective bargaining.
The publicist suggested I email the show. “Just email the address on their webpage?” I asked, doubting the effectiveness of this approach.
“Yep,” she said. “You’d be surprised where that can get you.
Truth is, I shouldn’t have been surprised. After all, I’d gotten the offer to work for a baseball team after emailing the General Counsel and asking if there were any jobs available. I got my book deal because I emailed a client my journal article, hoping he might be interested. I got my position at Forbes because I emailed the founder and offered my expertise. Why wouldn’t Comcast be the same?
One interview and a bundle of nerves later, I was live on the set of SportsNite. That was almost exactly one year ago. I went on to get a segment named after me (“Miss SportsBiz”), a blog on the CSS website and a weekly appearance.
By the end of the summer, I was being asked to appear on podcasts to talk about baseball. I’m not sure any of them had much of an audience, but I did them for the experience, and because I like to hear myself talk (as I’m sure you’ve figured out from the length of my posts). Comcast had required me to branch out from baseball for my segment, and I soon began writing more and more for Forbes on other sports. By the fall of 2010, I was becoming more fluent on each of the four major professional sports leagues.
My first appearance on a real, live radio show was in October 2010 with the Milwaukee Sports Geeks. I’d met Chris Carter on Twitter through my various blogging efforts and he asked me to be on his show one Sunday morning. I was shaking through the whole thing.
By December of 2010, I was making appearances on The Pulse Network. By the first of the year, they’d created a weekly segment for me (which is live on Thursdays at 10:30 a.m. ET).
The more I wrote about the impending NFL lockout possibility during the 2010 season, the more radio interviews I was asked to do. I used my legal knowledge to bone up on the collective bargaining agreement and the law surrounding these types of negotiations and agreements. Before I knew it, I was on the radio in a dozen different cities.
Around the beginning of this year, I was shocked to find that the topic I wrote about most often wasn’t MLB or the NFL’s collective bargaining agreement – it was college football. I was doing a Conference Finance Series on Forbes and getting tens of thousands of hits. I’d finally found my perfect niche.
I started BusinessofCollegeSports.com on April 18th, 2011. After consulting with the owners of several other amazing sports blogs, I decided to start my own. The decision was primarily based on the ability to post immediately (without oversight) and organize the categories how I pleased. I threw together a WordPress blog with a terrible header and sat back to see what happened.
I’m delighted to say that in two months this site has seen over 100,000 unique hits. It’s been linked to online by ESPN, CBS, NBC, the Seattle Times, the Atlanta Journal and dozens upon dozens of other networks, newspapers and blogs. I’ve done a remote interview for a television station in Tampa. I’m interviewed on the radio on an almost daily basis. I’ve done nationally-syndicated and satellite radio with guys I really admire like Tim Brando. I even picked up my own radio segment on Wednesdays at 5:30pm ET with Shawn and Wally on Arkansas Radio Network/Sports Animal 920.
And now I’m writing another book, this one on the business of college football. The amazing feedback I’ve received from this website has convinced me that there is a demand for analysis and news on the business surrounding college sports, particularly football. I’m passionate about this subject, and I love sharing with you all what I find.
Here’s what will shock you, however. I make virtually no money from any of this. So, when you ask me how I got to where I am, I always tell you this: “There are three keys to success in sports. You have to be willing to start at the bottom. You have to be willing to work harder than everyone else. And you have to be willing to work for free for awhile.”
Last year I made a grand total of $5,000 for all my writing and television appearances. That’s it. I didn’t make a living. I made a little spending money off a hobby.
I always say I’m lucky to be able to make a living as an attorney while I pursue my career as a sports business analyst. Truly, I’m lucky that I’m love my law job as well. My boyfriend always reminds me, however, that it’s not luck. It’s hard work.
I put at least three hours into this website every single day. Some days it’s far more. I’m emailing and calling athletic departments, reading through eighty-page budgets and writing a post for each weekday. I’m using my lunch break or getting up early to go on radio shows to do interviews. Before an appearance on SportsNite or The Pulse Network, I spend hours researching topics. I treat this site like a part-time job. There is no pay and no benefits, but I love it. My real luck is in having found someone who encourages me to continue to pursue this avenue, even if it means I spend less time with him or that our time together is filled with me debating the merits of issues like pay-for-play.
The only advice I can give you if you want to work in sports are the three keys I shared before: You have to be willing to start at the bottom. You have to be willing to work harder than everyone else. And you have to be willing to work for free for awhile. Oh, and it helps if you’re willing to email anyone, anytime and ask for anything!
Last year one of the biggest legal decisions in sports was made in American Needle, Inc. v. National Football League. (You can read about the decision in these two pieces I wrote for Forbes: Why NFL’s Supreme Court Loss Isn’t Much of a Loss(5.24.10) and American Needle vs. NFL: Looking Forward (5.26.10))
Earlier this month, cease and desist letters were sent to Collegiate Licensing Company, the nation’s top collegiate marketing and licensing company, and 27 FBS schools demanding that they stop their so-called collective effort to limit the production of merchandise with collegiate logos.
Quite a few of you have asked me about the situation, so I’ve asked my friend Beth Hutchens (Twitter: @HutchensLaw) of Hutchens Law Offices, who specializes in Intellectual Property law, to help me explain.
The real question here is whether the decision from the American Needle case applies in this situation. So, Ms. Hutchens will start with an explanation of that case and move to the situation at hand. I’ll let her take it away:
About 10 years ago, the National Football League Players’ Association (“NFLPA”) decided that they wanted Reebok (and only Reebok) to make hats with the teams’ logos on them. American Needle, Inc., a competitor of Reebok, had been making these types of hats for the National Football League (“NFL”) for some time and, as a result of the NFLPA’s deal with Reebok, lost its contract to make said hats. American Needle, Inc. did not have much of a sense of humor about this and sued the NFL under antitrust principles. Long story short, American Needle Inc. argued that the NFL violated antitrust law because all 32 NFL teams worked together to freeze it out of the NFL-licensed-brand-hat-making business when they gave that exclusive right to Reebok for ten years. The NFL asked for broad antitrust protection and argued that it was a single entity comprised of 32 different teams united under a common umbrella, hence the license wasn’t anticompetitive. American Needle Inc. disagreed and argued that since each team retained ownership and control of its trademarks they were independent entities acting in concert. Hilarity ensued all the way to the United States Supreme Court.
The Needle Court had to decide if the NFL was a single entity as opposed to a collection of separate entities because §1 of the Sherman Act (the antitrust law at issue here) forbids conspiracies to restrain trade. One cannot conspire with oneself, such as a parent and a subsidiary (the NFL’s argument), but two separate entities can, such as two competitors (American Needle, Inc.’s argument). The relevant question, then, is if the 32 teams agreeing to grant an exclusive license for use of their independently owned marks “join[ed] together independent centers of decision making”. This is why the NFL argued that the teams were under a single umbrella and most definitely were not separate entities. The Supreme Court didn’t buy it and said:
Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned.
Justice Stevens, writing for a unanimous Court, noted that even though there may be some cases where it is necessary for cooperation among (football) teams, in terms of their licensing agreements, they are not a single entity. But the Court didn’t resolve the issue as to whether the agreement among the NFL teams actually did violate competition laws, which is important in our CLC analysis. The Court kicked Needle back to the 7th Circuit to analyze American Needle Inc.’s claims under the “rule of reason” and determine whether the NFL’s licensing practices actually do harm competition. Under this rule, the actions of the NFL teams would be illegal only if they unreasonably restrain trade. The 7th Circuit has not decided the case yet.
Dechert plainly thinks Needle should apply to collegiate athletics. Its letter alleges that CLC is “promoting, organizing, and implementing a concerted effort…to restrict the number of licensees” and accuses CLC licensors of “acting in concert to suppress competition in markets for licensed goods (similar to American Needle, Inc.’s position). CLC disagrees, calling the accusations “outrageous and unfounded” and “absolutely unsustainable”. CLC’s position is that the restriction represents “good, sound business practices”. We have no precedent to tell us which is the better argument, or if we can even analyze college sports licensing under Needle.
A glaring difference between the facts of Needle and the current issue is that, arguably, Needle only addressed a particular licensing scheme to one entity in one type of professional sport. The CLC license merely restricts the number (which is presumably greater than one) and involves all college athletics, not just football. Another important difference is that collegiate sports, by definition, are not professional. Unlike professional athletes, college athletes are not compensated. Yes, they receive scholarships and other sorts of aid that has some monetary value, but, technically, they are not paid to play the game. It stands to reason, then, that even though college athletics is a huge revenue generator, the teams’ existence is incident to, not independent of, the affiliated university, thus any separate entity argument could fail.
Speaking of money issues, and in furtherance of the single-entity argument, at least some of the revenues generated by college sports go toward the academic institution and not a professional payroll. This may have major implications in applying antitrust principles to colleges because, at least in theory, one could argue that collegiate sports teams are in fact, under the umbrella of the university system. So one could say that, at least on some level, competing college teams cannot possibly be viewed as having separate interests where the goal is to improve the academic institution. Will these issues be enough for a court to refuse to apply Needle to Dechert’s claims? They might, but I honestly don’t know. These are important issues that require a very lengthy and drawn out analysis that I can’t expand on today. So, just for the sake of argument, let’s pretend that Needle does apply and Dechert can actually challenge the CLC’s activities under antitrust principles.
So what exactly is Dechert talking about? The letter makes mention of a “Sideline + 1” initiative. This initiative is apparently an endeavor to limit the number of manufacturers allowed to make collegiate branded apparel sold at certain types of retail outlets. Dechert believes this limitation is an “anti-competitive restraint of trade”. Dechert alleges that “[b]y severely reducing the number of licensees and eliminating competition from the excluded suppliers, the restraint will allow CLC and the universities to garner increased royalty revenues…both through higher royalty rates and through higher prices… which will rise as competition will fall”. I remain unconvinced that limiting the number of licensees immediately triggers antitrust concerns, especially where trademarks are involved. As IMG College spokesman Andrew Giangola points out “More sophisticated strategic brand management benefits schools, best-in-class licensees, and consumers. We are confident each school can and should continue to make its own decision about how to best manage its brands.”
Mr. Giangola makes a good point. Each university should be able to “choose best-in-class licensees and to work with experts that can help evaluate the myriad of licensing alternatives that the school may wish to consider.” This necessarily includes deciding who will be permitted to affix a school’s logo on merchandise. Even if that “who” is a very small subset of manufacturers. Further, CLC assists its members in managing, developing, and protecting their brands, and specifically provides that licensing assures only quality products are associated with member institutions. There is a colorable argument that the licensing initiative Dechert is complaining about is actually a way to maintain brand integrity by only giving licenses to companies with a long history of providing top-notch products. Just because that list is limited to only a few companies does not mean the initiative is anticompetitive, especially where trademarks are concerned. Here’s why.
A trademark owner has a vested interest in saying who can and cannot use the brand of their merchandise. This is because one of the first things a responsible trademark owner must do is see to it that their brand maintains its level of quality. A way to accomplish and maintain this quality is to be highly selective about when, how, and if a company will be permitted to use the mark on its products. The idea is that if a licensee puts a known mark on shoddy products, the consuming public will incorrectly attribute the poor quality to the brand, not the licensed product, and the brand’s value will be diminished. CLC members have an interest in making sure that their logos are only affixed to high quality products and choosing to do business with only certain companies is a way to ensure that.
As it appears on their website, CLC’s current licensing information provides that there are more than 2500 companies licensed to produce a variety of assorted sundries, including apparel. I do not have a clue as to what number the alleged “Sideline plus 1” initiative proposes to limit that number to, but reports are that CLC members are being asked to restrict their licensing to either Adidas, Nike or Under Armour. A drastic reduction, to be sure. Is this a way to control the quality of the product bearing the team’s logo thereby maintaining the brand image or a dastardly ploy to squeeze smaller companies who cannot afford royalties out of the marketplace to charge astronomical prices? Or both? Make your own assumptions, but I do have a question mark above my head about the stakeholders’ motives as it appears that the end result of their endeavors would be to, at least in theory, require CLC members to contract with entities they otherwise would not negotiate with.
Here’s the rub. Needle was an argument about all of the NFL teams agreeing to allow one and only one manufacturer make their hats and the USSC wouldn’t decide if even that violated the rule of reason. Even if we can say without a doubt Needle should apply to collegiate sports, the question here is whether granting a fewer number licenses to select manufacturers for a certain subset of merchandise amounts to an unreasonable restraint on trade. I won’t speak for the 7th Circuit or the Supreme Court, but I am uneasy about the marked increase in antitrust allegations and am hesitant to slap an anticompetitive label on an agreement willy-nilly. This one must be decided with caution.
Remember this. At the end of the day, antitrust laws are only meant to punish businesses that intentionally dominate the market through misconduct. Intent is the pivotal question, not success, and intent is really really REALLY hard to prove. Plus, Justice Stevens pointed out that “joint licensing activities…may be necessary to make the product of NFL Football available to the public.” So a decision that is intended to maintain a competitive balance or maintain brand quality among the teams would probably be OK, at least as far as the Needle Court is concerned, and I’d be surprised if college athletics in general, or even CLC’s initiative, would be held to a different or stricter standard. The Supreme Court also noted that NFL teams “share an interest in making the entire league successful and profitable,” and in pursuing that they may need to make “a host of collective decisions” that would be beyond antitrust challenge. Arguably, colleges and universities share that same interest at least on some level, perhaps even more so. So even though a group-granted exclusive license to a single manufacturer may be subject to antitrust scrutiny, such a license is not necessarily a violation of the Sherman Act.
Alas, this rant is pure conjecture and even if Needle does apply to college athletics, it doesn’t mean the initiative is toast. Besides, we actually won’t know for some time if even the NFL licensing agreement violates the rule of reason, so the CLC issue is a looooong way off. I think we can file this one in the “Hmmm, we’ll see” file. For the record, though, my Magic 8 Ball says the NFL licensing scheme will violate antitrust laws “without a doubt.” But then, my Magic 8 Ball is also 0-4 in the prediction department, so there that is for you.
This article offers the personal observations of Beth Hutchens, and does not represent the views of her law firm or its clients. This article does not represent the views of Kristi Dosh, her law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.
I recently attended a conference where I heard a very intelligent attorney contradict himself over the course of an afternoon. His diametrically opposed opinions are ones I think are not uncommon amongst college football fans. Early on in the day, he admonished college athletic departments for relying on direct institutional support and state government subsidies to in order to operate in the black. Later that afternoon, he made the case for why college athletes should be paid.
I’m not sure you can have it both ways.
The first question I ask people when they say college athletes should be paid is: where is the money going to come from? If you’re unaware, the NCAA released data showing that only 14 programs are turning a profit without having to rely on institutional support (like student fees or a check cut directly from the university coffers).
Although the NCAA did not list the 14 schools turning a net profit, Notre Dame is one of them. Athletic Director, Jack Swarbrick, has revealed that Notre Dame actually pours money back into the college’s coffers, to the tune of about $10 million in 2009. LSU tells me they are also one of the 14, having sent about $8 million back to the university last year.
Other schools that have been confirmed to be part of the 14: Alabama, University of Missouri, University of Texas, University of Florida, University of Tennessee and Ohio State University, and Nebraska. BYU’s athletic director also recently confirmed that BYU has operated in the black for the past three years.
So, where is the money supposed to come from to pay these athletes?
Even if we could get past this issue, I see a number of other problems. Here are some of my questions:
How do you decide which athletes are paid? Is it just in revenue-producing sports? Is it every athlete playing in those sports or just the elite?
Here is the second big problem. Actually, it’s probably the first, but I chose to focus on the issue of finances first. You cannot pay players without invoking Title IX. Safely assuming that any pay-for-play plan would pay male football and basketball players, you run into huge issues with federal law. More money will have to be devoted to women’s sports and it’s highly likely it’s men’s sports outside of football and basketball that will suffer. And, again, where is all this money going to come from?
Even if Title IX weren’t an issue (and let me just say, without revision to these federal laws, college athletes will never be paid), there are plenty of other problems standing between college athletes and their big pay day:
How much do you pay players? Is it one set amount for every athlete no matter the sport or the school in order to keep things fair? At least within a sport I think it has to be the same, otherwise schools with more money will have the advantage.
If you let athletes get paid for endorsements (which could avoid the first problem I outlined above), will it give some programs an unfair advantage? Playing for Alabama or Ohio State is bound to give you more endorsement opportunities (and more lucrative ones) than playing for Tulsa.
I see the same problem with allowing athletes to profit off merchandise sold with their name or number, like jerseys. Playing for Florida is going to give you greater opportunity to make money off merchandise than playing for Western Michigan.
Another way to pay player and avoid the first problem I outlined is to allow agents to pay players. Darren Heitner over at the Sports Agent Blog recently wrote a post advocating the lifting of all regulations against agents paying players. Heitner believes there would be no harm to the athletes from this situation and that it would allow the market to dictate what a player is worth.
Aside from the initial concerns I have regarding the influence these agents would have and the types of promises they could elicit from players about being paid back in the future, I have another bigger concern. Could these agents pay a player to choose a specific school? And what’s to stop a big car dealership in Athens from slipping money to an agent so he can encourage a player to attend the University of Georgia? (Thanks to @BrotherhoodSpt for pointing me to his blog on the subject, which included a link to Heitner’s piece.)
Will sports that pay athletes have to break from the NCAA? I think so. Tack on new administrative costs as those sports are forced to form new leagues to manage their sport.
There are far too many serious questions to answer for me to jump on the pay-college-athletes bandwagon. Without even getting into whether college athletes should be paid, I just don’t see a scenario where college athletes can be paid without allowing the gap to grow between the have and have-nots.
You asked for it…and now you’ve got it: a website dedicated to business news and analysis in collegiate athletics!
After the overwhelming response to my series on SportsMoney on Forbes.com on the financial picture of each AQ BCS conference (non-AQs coming soon!), I realized there was a need for a website dedicated to discussing the business of collegiate athletics. I’ve pulled in all the posts I’ve previously written on collegiate athletics and reposted them here where you can easily search and find news and analysis on your favorite schools or conferences.
I’ve backdated the posts to when they originally appeared on SportsMoney. You can find posts by scrolling down, browsing by conference or category on the right-hand sidebar or using the search feature also found on the right-hand sidebar.
New content will begin TODAY and be updated EVERY day! In fact, check back at 12 p.m. ET today for a brand new piece on football finance.
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