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Sports and All Kinds of Courts

By Rick Horrow and Karla Swatek

May 20, 2013

These days, it is seemingly impossible to open the sports page and NOT see a story about somebody suing someone. From retired NFL players suing the league over health benefits and head trauma to golfer V.J. Singh suing the PGA Tour over deer antler spray, and most recently, former NBPA head Billy Hunter suing the union and President Derek Fisher for defamation and breach of contract, the list of legal tangles in sports never seems to get any shorter.

And as the 39th annual Sports Lawyers Association Conference is underway in Atlanta, it’s clear that the week’s biggest sports business headline—the NBA Board of Governors voting to keep the Kings in Sacramento, and the Maloof family agreeing to sell the franchise to an investor group led by Vivek Ranadive for an NBA record $535 million—will likely be fraught with legal battles of its own.

The Sports Lawyers Association Conference gathers leading practicing and academic law experts together to discuss today’s top sports law topics. Chaired by David Cornwell, who is also Executive Director of the NFL Coaches Association, the conference is open to attorneys, agents, representatives of professional athletes, professional sports teams and leagues, players associations, stadium and arena authorities, and companies tangentially involved with amateur sports; students and professors of sports law; educators; and all others generally interested in the field of sports law.

Cornwell, who is moderating a panel on defending athletes in criminal and administrative disciplinary matters, has also been an outspoken critic of the leadership of Players Association head DeMaurice Smith; while he’s sure to remain cordially neutral in Atlanta this weekend, Cornwell has been known to detail his differences with Smith and speak frankly about problems on the NFL labor front that affect both coaches and players.

While head trauma is a current lighting rod topic, Chris Boies, a partner at Manhattan-based litigation powerhouse Boies, Schiller & Flexner LLP, thinks most of the serious sports law issues over the next decade will be found at the intersection of the impact of law and the threat of litigation.

“Take the idea of liability—you’re seeing that in the NFL players’ lawsuit, you’re seeing that in V.J.’s suit, you’re seeing some of it in connection with Lance Armstrong and doping,” Boies noted during an interview on Yahoo! Sports Radio’s “Beyond the Scoreboard” earlier this week. “What you’re going to see in the next ten years is how creative lawyers can be in helping teams and leagues drive profitability in a marketplace that’s getting crowded and seeing some teams and leagues struggling to find revenues.

“The business of sports has become corporatized over the last decade,” Boies continues. “”Professional investors have become more active in sports teams and media rights have become even more dominant in driving revenues. These are very large corporations with very large financial interests. They have the same kinds of complex legal problems that have to be addressed as any other large business. The real issue with sports entities, and it’s going to be broad, is liability management—figuring out ways to limit your liability whether that’s to lawsuits or contract disputes. As you have multiple players driving revenue, the biggest challenge teams will face is, how do you minimize your exposure?”

Boies also acknowledged the attractiveness—and challenges—of international cross-ownership and expanding into global markets, which is a key component of Ranadive’s winning bid for the Kings. As we noted last month, Ranadive is eager to carry the NBA banner back to his India, his homeland, and turn the Kings into the de facto NBA team of India, much as the Houston Rockets’ ownership is attempting to use star Jeremy Lin (and retired Hall of Famer Yao Ming) to make the Rockets China’s team.

But closer to home, while the BOG vote was a huge victory for Ranadive, his investors, and Sacramento Mayor (and former NBAer) Kevin Johnson, the Kings’ promised new downtown arena, a key component of NBA owners voting to keep the franchise in Sacramento rather than move it to Seattle, are already under the threat of litigation.

On Tuesday, according to the Sacramento Bee, three Sacramento residents filed a lawsuit in Sacramento Superior Court “alleging the city has broken the law on several fronts” in its $448 million downtown arena deal. The lawsuit “contends the city fraudulently under-valued the size of the subsidy it is providing developers as part of a tentative deal to build a sports and entertainment arena in Downtown Plaza,” alleges that the city "concealed or suppressed material facts," and that Johnson and City Manager John Shirey "failed to disclose in the Term Sheet ... that they had privately agreed with [Ranadive’s] Sacramento Investor Group to subsidize its purchase of the Kings franchise."

The months-long skirmish between Seattle and Sacramento for the franchise, capped by the BOG vote, was not without a fair amount of controversy itself. Just like most courtroom cases—and virtually all sports sales and relocations, for that matter—the contest for the Kings was really about leverage, with Sacramento clearly using Seattle’s higher bid to help secure taxpayer funds, all under the watchful eye of NBA Commissioner David Stern.

Former Seattle Super Sonics star Shawn Kemp summed it up well. “It seems like we were used a little bit as leverage here in Seattle,” Kemp vented to the Seattle Times. “…I felt like David kind of stuck it to us today.”

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Beyond the Scoreboard
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard eBook
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
Beyond the Scoreboard: Chapter 1. The Mega-Master Super Series XLXL eBook chapter

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