Prof. Mark Conrad
Gabelli School of Business,
Fordham University
New York, NY
SABEW Teletraining Session June 26, 2017

Teach and write about Sports Law and
Business
◦ Author: “The Business of Sports – Off the Field, In
the Office, On the News” (Routledge, 2017)
◦ Teaching: Fordham’s Gabelli School of Business
where I direct its sports business program (fulltime)
◦ Adjunct, Columbia University, Graduate Program in
Sport Management


Frequently quoted in the media
Started my career as a legal journalist







Sports Gambling/DFS
Concussion litigation
Sports Governance/Arbitration Issues
Professionalization of College Sports
Stadium/Facilities
International
Tax
• Professional and Amateur Sports
Protection Act (PASPA)
• Bans persons or government entities from
operating or authorizing any betting or
wagering “schemes” based on competitive
games in which amateur or professional
athletes participate “pursuant to law or
compact.” 28 U.S.C. § 3702.

 PASPA
permits states that have
legalized gambling schemes
predating the statute to retain
their gambling schemes
◦ 28 U.S.C. § 3704(a)
◦ Nevada, Oregon, Montana, Delaware


In 2012, New Jersey legislature enacted the
Sports Wagering Law permitting stateregulated sports gambling in casinos and
racetracks
Struck down by federal courts
◦ New Jersey’s law was pre-empted by PASPA

2014- Another attempt by NJ was passed
◦ Negated the power of the state to “regulate” such
activity in casinos and race tracks
◦ Also struck down

Today, court may make determination

Since January, these states introduced similar
bills:
◦
◦
◦
◦
◦
◦
West Virginia
New York (2 bills) – S. 1282 and A. 5438
Michigan – H. 4060
Maryland – H. 989
Pennsylvania – H. 519
South Carolina – HJR. 3102 and SJR 309 (amending
State Constitution)

Possibility that legislation amending or
voiding PASPA may be introduced in Congress
◦ May get the federal government out of sports
gambling and leave it to individual states to
regulate/legalize

DFS evolved from traditional fantasy sports
(season-long competition)
◦ Users select a lineup of players and receive points
based on how well the lineup performs
◦ How a lineup gets constructed depends on how a
user manages his in-game budget
◦ The key to success is finding players who are
undervalued by the service


Matter of debate
Depends on the state’s definition
◦ NYS Attorney General -- “a person engages in
gambling when he stakes or risks something of
value upon the outcome of a contest of chance or a
future contingent event not under his control or
influence.”
◦ Represents a wager on a “contest of chance” where
winning or losing depends on numerous elements
of chance to a “material degree.” (NY Penal Law
225.00)
 NY legalized DFS in August 2016


MA Attorney General – DFS is legal and no
plans to shut down
Nevada – DFS is illegal as it is: (1) a wager;
and (2) it is not settled whether skill is
predominant factor



Nine states formally legalized DFS
12 states failed to pass legislation in 2016
14 states gave introduced legislation as of
January 2017




Top two DFS providers announced merger
plans in November 2016
Could create 90% share of the DFS market
FTC blocked the merger
Arguments for:
◦ Stabilizing the marketplace that has many DFS
providers
◦ Start-up type business with opportunities for many
to enter markets or disrupt markets



Focus:
Efforts to Unionize College Players
The O’Bannon case

Are college athletes receiving grant-in-aid
“employees” under sec. 2 of the NRLA?
◦ Definition: “an employee is a person who performs
services for another under a contract of hire,
subject to the other's control or right of control,
and in return for payment. . . .”

If so, are student-athletes subject to
unionization?


Antitrust litigation based on forced contract
that restricts student-athletes’ right to
compensation
Courts divided
◦ District court concluded that the NCAA’s
compensation rules were an unlawful restraint of
trade. It then enjoined the NCAA from prohibiting
member schools from giving student-athletes
scholarships up to the full cost of attendance at
their respective schools and up to $5,000 per year
in deferred compensation, to be held in trust for
student-athletes until after they leave college.

9th Circuit – limited the lower court’s remedy
◦ O’Bannon v. NCAA, 802 F.3d 1049 (9th Cir.2015)
◦ Reversed determination that allowed students to be paid
cash compensation of up to $5,000 per year, was
erroneous.

NCAA changed its rules to allow schools to offer
student-athletes the full-cost of attendance.
◦ Amount in addition to that received by student-athletes
through grant-in-aid (financial aid). Per NCAA rules,
grant-in-aid is capped at tuition and fees, room and
board, and required course-related books.



Similar challenge to grant-in-aid formula
Top five conferences also sued
Difference – remedies
◦ Alston sought money damages, not just injunction




January 2017 – settlement; not approved yet
Class members should generally expect to
receive between $5,000 and $7,500
Cost to NCAA to pay $208.7 million
No admission of wrongdoing



In Jenkins v. NCAA, Case No. 3:14-cv-01678
(D. N.J., filed March 17, 2014),
Current and former Division I basketball and
FBS football players allege the NCAA, and
major conferences “earn billions of dollars in
revenues” but place limits on athletes’
compensation is inherently anti-competitive
Case still pending


In the last year, the courts have upheld the
power of league-mandated arbitration.
National Football League Management
Council v. National Football League Players
Assn.,820 F.3d 527 (2016).
◦ NFL Commissioner Goodell punished Tom Brady
and the Patriots, for using underinflated footballs
during that season’s AFC Championship Game
◦ Patriots employees were alleged to have reduced
the pressure in footballs the Patriots would use on
offense to below the league-mandated minimum of
12.5 pounds per square inch

NFL Commissioner can arbitrate disputes
under Art. 46 of the Collective Bargaining
Agreement


Retired players filed suit in 2011
Modified settlement in 2014
◦ Up to $1billion for claims for players showing
neurological symptoms,
◦ $75 million for baseline testing
◦ $10 million for medical education and research
◦ NFL admits causation
◦ Most players accepted


Over 200 former NHL players have sued the
NHL alleging that the league “concealed what
it knew about the long-term effects of
repeated head trauma.”
◦ District court denied the NHL’s motion to dismiss
◦ Depositions have begun and are continuing
Seeking medical monitoring for players, covering
the costs of medication and regular medical
attention and brain scans. The league would also
face having to pay potential damages to players
who say they are now permanently disabled.




In re Nat'l Collegiate Athletic Ass'n StudentAthlete Concussion Injury Litig.
Similar to NFL and NHL actions
Much like the complaints against the NFL and
NHL, plaintiffs allege that the NCAA was
negligent in safeguarding student-athletes from
the risks of concussions.
July 2016 -- settlement approved
◦ NCAA will pay $50 million to set up a 50-year medical
monitoring program for college athletes and another $5
million to start a program to research the prevention and
treatment of concussions.
◦ Medical screenings and evaluations for all current and
former NCAA student-athletes

January 2017 - a group of former Big 12 football players
sued the NCAA and the Big 12 conference in the District
Court for the Southern District of Indiana for an alleged
breach of contract regarding inadequate concussion
protocol
◦ Alleging that the institutions breached their respective contracts
with the players by failing to protect and warn student-athletes of
the consequences of head injuries



By allegedly breaching their contracts with the players, the
NCAA has violated its own constitution, rules, and bylaws
according the NCAA manual
Claims breach of express and implied contract, fraudulent
concealment, negligence and unjust enrichment
The plaintiffs are seeking damages for brain injuries
incurred on the field as well as class certification

Team Relocation
◦ Raiders’ move to Las Vegas approved
◦ Chargers move to Los Angeles

Stadium issues and financing
◦ Eminent domain
◦ Tax deductibility of bonds
◦ Types of financing




Questions to ask:
Who controls the stadium lease?
Who is responsible for expenses?
“State of the Art” clauses and other grounds to
terminate



Are the costs worth it?
Rise of Cities with Leverage
Questions: Look at the bidding contracts
◦ What rights does the IOC have?



Issue of making international sports
federations more transparent
FIFA?
Others?


Issues of positive drug tests will continue
Future:
◦ Gene alteration?
◦ Technology
◦ Rich v. poor nations





Huge differences among states
High-tax states: CA, NY, MA
Low-tax states; FL, TX
Player that signs with a FL team, in effect gets
about 12% more net income than one who
signs in NY (specifically NYC) for the same
salary
Jock Taxes
◦ Out of state players playing road games in a given
state are taxes on portion of income earned in that
state



Generous depreciation rules
Costs of minor leagues
Lack of requirement to report



[email protected]
@Sportslaw1 (Twitter)
212-636-7975