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- The NHL’s COVID-19 Situation, and its Effect on the Olympics
The National Hockey League announced on Monday the league would pause on December 21st, after games were completed. They began the holiday break earlier, the original starting date was Friday, December 24th. This league-wide shutdown is due to the COVID cases surging at an alarming rate. The NHL shutdown includes international games being postponed, and the only games that were allowed to be played Monday and Tuesday were games between United States teams and games between Canadian teams. No U.S.-Canadian games were allowed due to the border crossing, and the strict travel restrictions imposed on entering and leaving each country. The Associated Press reported 15% of the 700+ players were in the virus protocol. Once a player enters the virus protocol, they are required to miss team activities for at least 10 days. However, the treat that has been exciting to see is the American Hockey League players playing in the NHL, and making an impression on the NHL clubs’ general managers. Teams had juggled lineups, such as an 11 forward and 7 defensemen lineup rather than the traditional 12 forward and 6 defensemen lineup. The Blues had to play a week’s worth of games shorthanded. They played with 17 players rather than the typical 18 players. In order to get that “emergency call-up,” the NHL requires the team play a game shorthanded. The NHL took the right step, though, by postponing this week’s slate of games after tonight, and the teams that were scheduled to play the games across the borders are supposed to be made up during the weeks that were included for the Olympic break, as reported by Andy Strickland of Bally Sports Midwest. Strickland’s report includes that the Blues will make up games against Ottawa and Toronto at Canadian Tire Centre and the Scotiabank Centre respectively, during the weeks that make up the Olympic break. All other teams will make up their respective games during those weeks. Will the players be allowed to participate in the Olympics? The Olympics are an honor to participate in; however, the players that participate in the Olympics are not compensated, and reported by various sources, should any player or employee catch Covid in China, they will quarantine in China, fly back to the U.S., and quarantine in the U.S. too. Since the NHL plan to play makeup games during that stretch, it may be impossible for the players and executives to fly over to China for the Olympics. According to Yahoo Sports and other outlets, there is only one player in the NHL that is unvaccinated, it is the Red Wings’ Tyler Bertuzzi. The NHL has made the right call to begin the holiday break early, but this means the season’s end will have teams playing games with very little rest in between games. The NHL may need to force the players from participating in the Olympics to fit all eighty-two regular season games for each club. Alex Patterson is a 3L at Thomas M. Cooley Law School in Lansing, Michigan. He played football for seventeen years as an offensive and defensive lineman. He graduated from Lindenwood University-Belleville in 2018 with a Bachelor's in Sports Management. He can be followed on Twitter @alpatt71.
- The Delicate Legal Art of Financing, Building, and Naming a Stadium in America: Part 3 - Naming
As noted in Part I, naming rights can be a crucial piece of securing funding for a stadium to be built - providing for tens of millions of dollars. To recap - naming rights deals are financial agreements under which a corporation or an individual purchases the right to name a stadium or arena, potentially along with other benefits, for a set period of time in exchange for a financial payment. The parties involved generally include the stadium owner, the professional team, and the potential purchaser. Naming rights are sometimes negotiated years after funding and construction is completed. One of the first stadium naming rights deals was agreed upon in 1987, when the “Los Angeles Forum” was renamed the “Great Western Forum”. Since then, naming rights have become one of the most lucrative revenue generating aspects of developed stadiums. In fact, mere months ago, the sports world saw what is believed to be the most lucrative naming rights deal in history completed. The Staples Center - home to the NBA’s Los Angeles Lakers, the NHL’s Los Angeles Kings, and the WNBA’s Los Angeles Sparks - was renamed to the Crypto.com Arena in November of 2021. The deal was worth an estimated $700 million. Today, only a handful of stadiums and arenas in the nation’s top professional sports leagues are without a naming deal - some by choice (e.g. Madison Square Garden or Lambeau Field), while some may have had a deal that just recently wasn’t renewed and are shopping for suitors (a recent example being when the Miami Heat’s naming rights sponsor, American Airlines, refused to renew their deal in 2019). At times, corporation and team are a natural fit; such as Coors Brewing (a Colorado corporation) owning the naming rights to the Colorado Rockies’ stadium, or Heinz owning the naming rights to the Pittsburgh Steelers’ stadium. Other times, mega-corporations rule the day, with large banks, airlines, and insurance companies often making the deals. Briefly mentioned in Part I, these naming rights and sponsorship agreements can contain any number of provisions, restrictions, and licenses. As noted in Part I of this series, this includes things such as exclusivity provisions, explicit licensing terms that dictate the extent of the relationship, publicity arrangements, intellectual property considerations, and more. To that end, today, many naming right agreements often go beyond the name of the stadium itself. Certain packages may include the naming rights to the entryways, the field itself, or a concourse. As an example, the Conduct Detrimental Stadium may have the Cheez-It Concourse, or the CitiBank West Gate, or any number of pieces of the stadium sold off to be named by a corporate sponsor. Other types of packages may include partial team ownership, or as a part of a larger sponsorship agreement. The owner of the professional sports venue, naturally, receives substantial revenues to pay for construction costs or high player salaries by selling a package deal. The benefits for the corporate sponsor generally include the amenity clause. This contractual clause sets forth the sponsor's amenities such as principal identification of the building; advertising signs on the building, at the entrances, and even on the playing surfaces; it may include advertising in the official program; merchandising in the luxury suites; promotional ticket discounts tied to the corporation; media-based benefits such as radio and television spots; and even logos on everything from trash cans to tickets to uniforms. Further, These may include clauses of an aesthetic nature (stadium designs, colours and logos), relating to the use of the parties’ trademarks in advertising, tax issues, the jurisdictions involved, the players’ image rights (each managed on a personal basis), practices such as ambush marketing and the use of the facility name upon termination of the naming rights agreement.. The variance in amenities included in a contract are one of the reasons that naming rights deals can vary so wildly in price. Finally, of course, before signing, both parties naturally must take into account the local legislation that may affect, or restrict, the deal in any way - such as permits, advertising laws, economic regulations, and more. The cost of these naming rights deals naturally depends on a number of factors. One such factor is the presence of an established and successful sports franchise with a loyal fanbase, without which most investors would lose interest in the stadium. Corporate sponsors also generally consider the total number of major events the stadium will host in a given year, including sporting events, concerts, expos, and any other special events that the stadium may attract. Another factor that contributes to the price of a naming deal involves Ultimately, individual naming rights deals are largely a product of the economic situation of the time the agreement was negotiated in, the amenities included, and the solvency of an individual business to pay. Crypto.com may have paid $700 million for the naming rights to the Staples Center, but it is just as important to remember that Tropicana pays about only $1.6 million per year on average for the naming rights for the Tampa Bay Rays’ stadium. Given the recent and ongoing COVID-19 pandemic, and how it notably emptied stadiums for months, one potential progression that naming rights law and contractual negotiation will likely see is a more prominent usage, and thoroughly fleshed out drafting of, a force majeure clause. Such a clause allocates the risk of loss if performance is hindered, delayed, or prevented because of an event that the parties could not have anticipated or controlled - and if recent times have showed us anything, it is that you never know what is coming, so it’s best to plan for unforeseen events as best as possible with such a clause. A clause in this context may, for example, allow a corporation that is paying $10 million dollars per year for naming rights of a stadium to, for example, repudiate if a qualifying intervening event occurs. Another potential area for progression is in the virtual space through video games or virtual reality - offering an entire new frontier of potentially endless possibilities for naming rights. Imagine - a company looking to boost their sales could reach an agreement with EA Sports to have a virtual stadium named after them to use in the video game itself; or on a grander scale, the naming rights opportunities for battle-royale style video games such as Call of Duty Warzone are unlimited. The intersection between sports, video games, and technology is an ever-growing area of convergence, and opportunities will surely become more and more prevalent in the coming years. Ultimately, whether in the real world or virtual, naming rights deals are a complex, but extremely beneficial and synergistic tool for all parties involved, in a variety of contexts, and tailored to fit all parties specific needs. When negotiating and drafting such a deal, it is important to remember that it is not a zero sum game and both parties will benefit: by entering into a naming rights deal with a famous sport team, a company will be increasing their brand awareness, reputation and, accordingly, its sales, by associating their name and brand with such a famous institution. On the other hand, the famous club will be able to obtain funds from a non-traditional revenue stream, increasing its investment capacity for other areas of interest (i.e. transfer of new players, advertising investment, among others), and more. Jason Re, George Washington University Law School 3L Twitter: https://twitter.com/JasonReLaw Email: jre22@law.gwu.edu LinkedIn: https://www.linkedin.com/in/jason-re/
- How will the NHL Pause Impact the Rest of the Season?
When the NHL announced an regular 82 game season, spectators in the stands and no conference bubble fans and players were overjoyed. The 2020 – 2021 season experienced a game cut, no fans in the arenas and teams only playing other tri-state teams. While it was great that hockey was back, it was not the same. The 2021 – 2022 season meant that hockey was now back in full force and fans cold once again experience the sport they love. During the beginning of the season games were played and few players were placed in Covid protocol. It seemed that the season would be able to continue, and players would be able to participate in the 2022 Olympics. However, in November player Covid cases began to increase in the league and teams like the New York Islanders had to reschedule games due to outbreaks. The Montreal Canadians did not let fans into the arena in their game against the Philadelphia Flyers over the spike in cases. This week, the NHL became the first league to press pause on the 2021 - 2022 season due to concerns of rising Covid case. The NBA and NFL have also seen a surge in Covid cases but neither have placed a pause on their seasons. Historically the NHL schedules a three-day Christmas break when no regular season games are played on either Christmas Eve and Christmas Day. However, the league has stopped all operations on Wednesday December 22nd. This week alone, 11 teams suspended operations and the league postponed all games through Christmas that involved travel between Canada and the U.S. Over 15% of the league's players were in virus protocols as of Monday December 20th.[1] The pause will be from Wednesday through Saturday to control the Covid outbreaks that are happening around the league.[2] Players, coaches and other team staff cannot report to facilities during the pause. Players are set to report back to team facilities on Sunday and resume daily testing. The NHL schedule is set to resume on Dec. 27.[3] As a result of the pause, 50 games had to be postponed which is a material damage to the schedule which triggers an opt-out clause for player participation in the Beijing Olympics.[4] The NHL announced that players will not be allowed to participate in the Olympics due to Covid concerns. The biggest question now: what will happen to the remainder of the NHL season? Will it be like 2020 when the season was suspended then reinstated in July? Or will the NHL come up with a solution to keep the season going? As of right now there is no answer to either of those questions. The NHL did put into place new Covid protocols. Players and staff are now subject to daily Covid testing, instead of once every three days. Social distancing measures have also been reinstated as well as restrictions on where players can go when they are not at home.[5] Every player in the league is currently vaccinated against Covid except for Detroit Red Wings forward Tyler Bertuzzi. As of right now the NHL and NHLPA have recommended the vaccine booster to players but do not have plans to mandate it.[6] Like other hockey fans, my hope is that players and staff stay safe, and the NHL will be able to finish the season. Jessica Shaw is the Secretary of the New York Law School Sports Law Society. She can be reached on Twitter @JessicaShaw22. [1] Kaplan, E. (December 21. 2021). NHL to pause season Wednesday, resume as scheduled after Christmas break, amid covid-19 cases. ESPN. https://www.espn.com/nhl/story/_/id/32913690/nhl-pause-season-wednesday-resume-scheduled-christmas-break-amid-covid-19-outbreaks-sources-say [2] Id. [3] Id. [4] Id. [5] Id. [6] Id.
- Turning Back the Clock on Forfeit Policies in College Basketball
Coming into the college basketball season, things were a lot different than they are at this moment in time. Fall sports were going as smoothly as possible with little to no cancellations due to COVID-19. As a result, the optimism was there to think that Winter sports including basketball would not be tremendously affected by contact tracing, pauses, and cancellations. Thus, conferences across the nation established that if a team cannot play due to COVID issues, they would suffer a loss in the conference standings. However, as we sit today, the optimism many held has obviously been thrown for a loop. Dozens of games have been canceled over the course of the young season, with many coming in the last week or so. In Men’s Basketball alone, 40 programs have had to go on COVID pause this season. With the forfeit policies in place, some teams are already taking losses and falling behind in their respective conferences. At the time of all these conferences coming out and announcing their policies, the consensus was in favor of the decisions. Encouraging humans, but in this case student athletes, to get the vaccine seemed like a smart idea. In many cases, if teams met a certain threshold in terms of vaccinated players, they weren’t required to be tested without showing symptoms. But with Omicron spreading at a rapid rate, these forfeit policies may be a little out of date and could throw a wrench in the integrity of the college basketball season. Last week, the NCAA’s Executive Vice President Dan Gavitt said that rules regarding the minimum number of games a team must play to be eligible for the NCAA Tournament could be altered.. Current rules stipulate that a team must play 25 games to be eligible for the postseason. That, however, could change. "It’s not something we need to do right now but if we get into mid to late January and it’s an ongoing problem, it’s something we might have to look into," said Gavitt. While the NCAA doesn’t have the same control over regular season contests like they have over the Tournament, conferences might want to look at their forfeit policies to adjust to the current times. The Omicron variant has changed the game, and as a result, the game's policies need to change as well. Last season, conference games were considered “no contests” even if only one team contributed to the cancellation due to COVID-19. That policy might need to return as soon as possible in college athletics this season. Ohio State is a team who is reported to be fully vaccinated, yet they’ve had breakthrough cases disrupt their season. Should they be taking conference losses which could affect their postseason chances just for a case of bad luck? DePaul is already 0-2 in the Big East without playing a conference game. On the other side, St. John’s is already 1-0 without having scored a point in league play. This list will only grow longer if conferences don’t adjust their policies to reflect 2020-2021’s quickly. It’s not ideal, but it’s the world we’re living in right now. Hopefully, the Omicron variant doesn’t cause as much havoc on the season as previous strands did in the past, but conferences need to take proactive steps to ensure the best teams are eligible for the Tournament. You’d hate to see a team capable of cutting down the nets in March be saddled with losses they didn’t deserve. It’s time to turn back the clock on forfeit policies in college sports. Brendan can be followed on Twitter @_bbell5.
- Lamar Jackson: Biggest NFL Payday in History Incoming?
Lamar Jackson may be in for the next big contract in the NFL. Patrick Mahomes got $450 million over 10 years, [1] and I am not saying that Lamar Jackson’s new contract will be anything close to that, but he deserves a payday. I should preface this with the fact that I am a massive Lamar Jackson fan, which led me to write this article. It is the perfect opportunity to explain why he is so good despite the criticism he gets. If you are reading this and you do not see Lamar’s talent, go watch some highlights and you will see how exciting he makes the game. He impacts the game the way Stephen Curry has modernized the three-point shot in basketball or the way Lionel Messi revolutionized the modern game of football. But I digress, and now on to why he may get a massive contract in the near future. So now, onto the numbers. Lamar can negotiate a new contract any time between now and 2023, however, if the Ravens wait until 2023 to sign him, that requires putting him under a franchise tag, which eats a ton of salary cap space. That is not in their best interest, which is why this contract must be coming soon. If the Ravens can agree to a new contract before they are forced to franchise tag him, then they are able to more evenly distribute how much cap space his contract accounts for per year. It is easy to see why Lamar is deserving of a huge contract, but it can be broken down most clearly using some statistics. Michael Vick is, by some, regarded as the best rushing quarterback of all time. Yet he has never had multiple seasons with 1,000 rushing yards over his 13-year career. [2] Lamar Jackson had two in his first three seasons. He’s also the record holder for the most rushing yards and rushing attempts for a quarterback in history. [3] He set that record in 2019, when he ranked sixth in rushing yards in the NFL. Not to mention he did that as a quarterback. To recognize the scope of this, he finished above Dalvin Cook and Joe Mixon, two of the premier running backs in the league. [4] Yet, people still made the argument that he didn’t deserve the MVP award he won in 2019 because he didn’t fit the model of the “traditional” quarterback. To that, you can cite his record for most games with a perfect passer rating in a season, in which he has the joint record with Ben Roethlisberger, one of the premier pocket passers in NFL history. So now that it’s been established that he is one of the best, if not the best, rushing quarterback in NFL history, I hope that it can clearly be seen why he deserves somewhere in the region of that Patrick Mahomes contract I cited earlier. So, if all those statistics and comparisons couldn’t convince you why he deserves a massive contract, watch him play and you’ll understand the impact he has on the game. I’ve never seen another quarterback handle 20+ carries a game, and still play at full speed in the fourth quarter. I have never seen, and I don’t think I ever will see, a more true dual-threat quarterback in the NFL. To cap this off, let me drop this quote that Lamar’s coach, John Harbaugh, said to him during his 2019 MVP season. He simply asked, “Do you know how many little kids in this country are gonna be wearing the number 8 playing quarterback for the next 20 years?” [5] This just speaks to the way Lamar Jackson has revolutionized the position like no one in NFL history, paving the way for rushing quarterbacks to thrive, and making an impact that goes beyond even football itself. It’s clear and obvious that Lamar’s contribution to the game extends into the hearts of young football fans around the world, and even though no dollar amount can be placed on that impact, Lamar deserves as much money as the Ravens can give him. Jon Trusz is a Junior at the University of Connecticut studying Political Science and Communications, and can be reached on LinkedIn under his name, or by email at jonathan.trusz@uconn.edu.
- The Legal Framework to Create a New Sport
THIS IS NOT A SPONSORED POST When looking at sport leagues such as the NFL, NBA, NHL, or even the PLL, it’s hard to imagine a day when it was not a (more or less) well-known entity. However, like all things, before it sees the fruits of massive success, there is a period of grinding and growth. So hypothetically speaking, what if someone wanted to start a new sport? Take the case of Canadian based growing sport, PurInstinct. PurInstinct is a sport that combines principles of football, rugby, soccer, and volleyball. It has spread throughout Canada, drawing fans and players running the gambit from elementary school aged children to CFL (Canadian Football League) players. More recently, there have been pop-up events also throughout the United States. I was fortunate to attend the “launch” in Miami on December 18-19th 2021. My first impression after having played the game is 1) wow this is a lot of running, but seriously fun 2) what’s next for the game? Truthfully, I can see how it’s made a run through Canada and am beyond interested to see it take hold in the States as well. However, this raises a question, if it does gain popularity, what exactly can/will this look like? There are a handful of considerations. 1) if adopted by other schools or even on a pro-level, will there be some sort of league? If so, who or what will oversee it? Additionally, what exactly would this association of sorts look like? 2) What else is necessary in order to help the game become more established. Talking to PurInstinct creator, Dominique Soucey, one big consideration and step that he is eyeing is setting up a US corporate entity. While this entity form has not yet been determined, there are a couple of routes it could go. Fans generally see the league format, but very rarely see what goes on in the front office and in corporate offices throughout. Entity formation is crucial for any business in the United States, and there are different options of corporate structure that can impact corporate functions. A cursory overview of six of the most popular are below: Sole proprietorship Regarded as the simplest business entity, a sole proprietor is owned by one person (or a married couple) that acts as the sole owner and operator of the “company.” When a business launched and there is only one owner, under the law, it is presumed to be a sole proprietorship, and accordingly, there is no need to register with a state. That being said, the owner may still need to file for local business licenses and permits, and the proper research should be done regardless to ensure that no snares arise while launching the business. General Partnership A general partnership is much like a sole proprietorship in that there is an automatic presumption associated with it meaning there is no need to file with a state. When a business is started with two or more owners, it is presumed to be a general partnership, and under this formation, all partners are to actively manage the business and accordingly share in its profits and losses. Limited Partnership The other type of partnership is a Limited Partnership (LP), which is different for a General Partnership in that it is a registered entity. In forming a LP, you have to file the proper paperwork with the state. Also under this entity format, there are “classes” of partners. The first is the General Partner, who owns, operates, and assumes liability and responsibility for the business (including debts), and Limited Partners, who are merely investors. A sidetone, Limited Partners are sometimes referred to as “silent partners”. Also under this entity format, Silent Partners don’t have any control over business operations, pay fewer taxes, and have fewer liabilities associated with their partnership. “C” Corporation A “C” Corporation is an independent entity that exists separately from the company’s owners. A C Corporation has shareholders, who are considered the owners, a board of directors, and officers. Worth noting though albeit unconventional, one person can perform all these functions. With a C Corporation, there are more regulations and laws that the company must adhere to, and these regulations, fees, and filing documents both for tax and formation purposes vary on a state-by-state basis. “S” Corporation “S” Corporations are known for “pass-through taxation,” which allows the corporation’s profits and losses to pass through to the owners’ personal tax returns. Essentially, it allows the business to reap the benefits afforded to a partnership (being tax exempt) while still maintaining the traditional corporate structure. Otherwise, it is incredibly similar to a “C” Corporation. Limited Liability Company (LLC) The last most noteworthy corporate entity format is the Limited Liability Company (LLC). Much like the standard corporation, the LLC offers limited liability protection to the owners, but the LLC also have less ongoing requirements and are similar to sole proprietorships and partnerships in that regard. Another noteworthy benefit to this format is the ability to decide how the IRS will tax the company; it can either be treated and accordingly taxed as a “C” Corporation or can be subject to pass-through taxation, making it more like an “S” Corporation. If someone were looking to start a sport, in addition to deciding what sort of league format it would use, it also needs to think about the business structure, as it will be subject to tax, and the owners will have to decide how to handle liabilities that that company could incur. While this list is not exhaustive, if one were to also consider starting a new sport, these are considerations that must be made if it would like to see long term success. As it relates to PurInstinct, at least getting started, perhaps it should take the form of a single-entity league. Under a single-entity league, each team would be a registered trademark owned and operated by the league, and accordingly, each team is not its own independent collective, but instead under the governance of the league. Said differently, every facet of every team is owned and operated by the league, ranging from sponsorships to contracts with the players and everything in between. A prime example of a single-entity league in the United States is Major League Soccer. The MLS is a not a collection of franchises, but instead each team does have an owner-operator, but they are shareholders within the league. In the MLS, the league, not individual teams, contract with the players. Under this form, one organization, in this case PurInstinct, would in theory own all the teams, and accordingly be responsible for paying all athletes and handling all other matters including but not limited to sponsorships, media agreements, marketing, and merchandising. This is different than a multiple-entity league, an alternative to the single-entity league format. In a multiple-entity league, teams opt into the league and in participating, will be subject to the league’s rules and regulations. In theory, under the multi-entity league form, should a team no longer wish to participate, it has the ability to leave the league. As previously mentioned, each team individually is responsible for media agreements, sponsorships, and contracting with players. An example of a multiple-entity league is the NBA. The NBA is a limited corporation in which each team is a franchise and its own corporation. As each team is its own corporation, each team is subject to different ownership. For example, the Washington Wizards is owned and operated by Monumental Sports & Entertainment, which is owned Ted Leonsis, whereas the Lakers team is technically owned and operated by the Buss Family Trust, in which Jeanie Buss is the controlling owner. Under this form, each team individually, not the league itself, contracts with the players. As previously mentioned, under this form, should Leonsis not like the direction the NBA is going in, in theory, he could leave the league. Additionally, each league reserves the right to revoke a franchise/club. While I will not comment on what corporate structure it should take, these are the possibilities, and it would be a good move to weigh the pros and cons and also consult with an attorney to make the best decision. As for the part that the fans see, I do firmly believe that at least starting out, a single-entity league is the way to go. I’m excited to see what’s next for the game and highly recommend anyone looking for something new to check out how to get involved or even how to play the game and try it out in their own respective communities. More information on the game can be found here. Stephon Burton is a 3L at Duquesne University School of Law in Pittsburgh, PA. He obtained his undergraduate degree from Washington & Jefferson College in 2019. He can be contacted via email at burtons2@duq.edu, on twitter @stephonburton3.
- Is the New York Yankees' Facial and Grooming Policy in Violation of Title VII?
On opening day, April 11, 1973 former New York Yankee team owner George Steinbrenner was present to watch his recently acquired Major League Baseball franchise. As players warmed up pre-game, Steinbrenner immediately noticed some players had hair that was long enough to be visible below their collar. As a result, garnishing inspiration from his veteran status with the U.S. Air Force, as well as having a successful tenure in corporate America, Steinbrenner adopted the still standing New York Yankees Facial and Grooming Policy. The official employment policy establishes that, "All players, coaches and male executives are forbidden to display any facial hair other than mustaches (except for religious reasons), and scalp hair may not be grown below the collar. Long sideburns and 'mutton chops' are not specifically banned.”[1] For the last 47 years, Yankee players have had little to no input as it pertains to their bodily autonomy in regard to facial hair and hairstyle. It begs the question, is any of this legal? In 2019, Sheryl Ring established how the policy is likely in violation of New York state law. Last year, Dylan Harriger, approached the issue from a first amendment standpoint. Here, I seek to assess the legality of the policy as it may hypothetically pertain to facial hair, Pseudofolliculitis Barbae (PFB), and Title VII of the Civil Rights Act, 42 U.S.C. s 2000e et seq. (Title VII). Title VII prohibits discrimination in virtually every employment circumstance on the basis of race, color, religion, gender, pregnancy, or national origin. It applies to all employers with 15 or more employees. The purpose of Title VII's protections is to require employers to consider only objective, job-related criteria in making employment decisions. An employment practice may be in violation of Title VII as a result of the employment actions discriminatory “disparate impact” or “disparate treatment”. A claim arguing that an employment grooming and facial hair policy is discriminatory, such as the Yankees, would likely have a discriminatory disparate impact as an employer’s facially neutral policy has a disproportionate and unintended effect on a protected race. In a disparate impact claim under Title VII the plaintiff is required to prove their prima facie case by identifying a specific employer policy or practice that applies to all employees equally. The Plaintiff must prove: (a) The Policy, procedure, or practice is a barrier to employment opportunities; (b) for members of a protected class; (c) has an adverse impact on that protected class; and (d) the adverse impact is caused by the specific employment practice. Subsequently, the defendant can prevail by showing that the requirement is job related and consistent with a business necessity. An employer can sustain this defense by demonstrating that the challenged practice has a manifested relationship to the relevant job. Even if the defendant satisfies their aforementioned burden, the plaintiff can still prevail by establishing that there is an alternative employment practice available with less discriminatory impact that still satisfies the employer’s business need. As the federal case law on the matter suggests, the New York Yankees unique facial hair and grooming policy is likely in violation of Title VII. It is true that federal courts routinely dismiss race discrimination claims challenging grooming codes in the work place. However, the specific requirements of the Yankees current standing policy likely render it federally illegal, specifically due to its restrictions on facial hair as the policy pertains to a hypothetical, Black employee, diagnosed with PFB. One of the leading cases on employment facial hair policy is, University of Maryland at Baltimore v. Boyd, 612 A.2d 305 (Md. 1992). In Boyd, an employee succeeded on a claim that the University of Maryland at Baltimore’s facial hair policy was discriminatory as it related to African Americans. This specific policy was found to be discriminatory due to the fact that African American men are more likely to be affected by a skin disease known as PFB.[2] PFB can render the practice of shaving and facial grooming incredibly painful. Since this disease is specific to African American men, and is unquestionably immutable, the court found the policy to be in violation of federal law, as the policy had a disparate impact on a protected class of employees. In defense of its policy, the University argued that grooming standards of their employees are important to reflect in their view the correct public image. However, the court held that, “[t]his business necessity, however, is outweighed by the discriminatory impact of the policy. Other evidence introduced at the hearing showed that similar organizations with similar grooming policies allowed officers, diagnosed as suffering from PFB, to grow neatly trimmed beards in order to alleviate the condition.” Similarly, the plaintiff in, Richardson v. Quick Trip, 591 F.Supp.1151 (S.D. Iowa 1984), challenged an almost identical employment policy that restricted the growth of facial hair. The court in Richardson found, “[s]cientific studies indicate that between forty-five to eighty-three percent of all Black males who shave may be excluded from employment with the defendant because their PFB condition makes compliance with the no-beard policy insufferable. Less than one percent of white males are so hindered in obtaining employment with the defendant.” The defendant-employer argued that this policy was a business necessity, as any other facial hair policy would lead to an increase in customer dissatisfaction, however, the court held in favor of Richardson. Specifically, its holding established that the employer “can limit the perceived threat of customer dissatisfaction previously discussed by enforcing the no-beard policy against all employees except those who provide a medical certificate showing that they are afflicted by PFB.” As a result, the court held that the plaintiff’s discharge for violation of defendants "no-beard policy" constituted racial discrimination, as the policy had an unquestionably had a discriminatory disparate impact on African-American men, diagnosed with PFB. The employment policy in Boyd and Richardson would both likely be found to be analogous to the one in question. The Yankees have signed numerous African American males, with facial hair other than mustaches throughout the last nearly five decades, such as, former National League Most Valuable Player, Andrew McCutchen. All of those who ended up playing for the organization have had to shave their facial hair. McCutchen was outspoken against the policy. Years after he had to shave his trademark dreadlocks and facial hair, McCutchen stated, “I definitely do think it takes away from our individualism as players and as people. We express ourselves in different ways.”[3] Other MLB stars have even refused to sign with the Yankees due to this policy. In 2013, Pitching-Ace David Price stated he would never sign with the Yankees due to their facial hair and grooming standards.[4] Consequently, the Yankees facial hair and grooming policy resulted in the organization potentially missing out on signing the previous season’s American League Cy Young Award winner. Recently, in Bey v. City of New York, 999 F.3d 157 (2d Cir. 2021), New York City based African American male firefighters, who had been diagnosed with PFB, brought a discrimination claim against city and the Fire Department of New York (FDNY). They alleged that the department's rescission of an accommodation exempting plaintiffs from the department's “clean-shave standard” for personal grooming was in violation of Title VII. This employment standard was put in place to comply with Federal Occupational Health and Safety (OSHA) regulations and New York State laws ensuring that facial hair does not inhibit a fireman’s respirator from fitting properly when worn. The Second Circuit affirmed the grant of summary judgment in favor of the City of New York the FDNY on the Plaintiffs’ Title VII claim. This is due to the fact that the City raised the defense that they could not comply with the accommodation asked of by the plaintiffs due to the fact that the respiratory-protection standard is a business necessity. The court made clear however, when there are no federal safety regulations that require an employer to follow a specific employment practice, discriminatory disparate impact will be found. As the City did in Bey, if a similar case was brought against the Yankees, they would likely argue that facial hair policy was a business necessity. However, unlike firemen, there exists no OSHA standard or state law requiring baseball players to shave for their safety. As such the defense would likely be found as pretextual, and the Plaintiff-employee would prevail. Political and legal scholars have disagreed about the neutrality of dress and grooming policies. Many contend that they implicitly enforce culturally “white norms”. See Devon W. Carbado and Mitu Gulati, Acting White?: Rethinking Race in Post-Racial America (2013); Angela Onwauchi-Willig, Another Hair Piece Exploring New Strands of Analysis Under Title VII, 98 Geo. L.J. 1079 (2010). Currently, professional baseball players, such as Fernando Tatís Jr., are demonstrating employment autonomy and choice when dealing with their respective organizations. Major League Baseball is currently seeing an influx of new stars who are able to bring a new energy to the league through their expressionism and individualism. Despite this however, Steinbrenner’s policy has remained unchanged, and is continuously proving to be more antiquated with each passing season. Even the U.S. Air Force policy, which was Steinbrenner’s influence, has subsequently made several changes in the interim, allowing for men’s facial hair medical exemptions.[5] Is such a potentially legally discriminatory employment practice morally, ethically and or politically responsible for the second most valuable professional sports franchise in the world to continue?[6] [1] https://www.mlb.com/news/no-beard-in-the-bronx-brian-wilson-wont-shave-for-new-york-yankees/c-63902080 [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6585396/ [3] https://www.youtube.com/watch?v=LN4V4eqYOZA&t=224s [4] https://www.wsj.com/articles/SB10001424127887324048904578320741510151474 [5] https://www.operationmilitarykids.org/air-force-grooming-standards/#men-regs [6] https://www.espn.com/soccer/barcelona-espbarcelona/story/4382031/barcelona-ranked-worlds-fourth-most-valuable-sports-team-forbes
- Swimmer Lia Thomas has Sparked National Discussion on Transgender Sports Rules
The passionately debated topic of transgender athletes and their rights to participate in athletics has intensified across media sites considering the recent success experienced by Lia Thomas, a University of Pennsylvania transgender female student-athlete swimmer. Her notoriety has brought to the forefront the balancing of the rights of transgender athletes and the idea of keeping an equal playing field. Policymakers are struggling to find a middle ground that mutually benefits both sides without compromising the protections afforded by the laws of the United States. Significant Legal Decisions Several significant legal decisions on transgender students and their rights to equal participation have been handed down. On June 15th, 2020, the U.S. Supreme Court (“SCOTUS”) held in a 6-3 decision in Bostock v. Clayton County that an employer who discriminates against an individual for being gay or transgender violates Title VII of the Civil Rights Act of 1964. The most important takeaway from this case is the Supreme Court’s conclusion that a person’s “sex” is defined by gender identity and not by their biological gender. This conclusion has led to much speculation and insight into how SCOTUS could rule in future cases involving Title IX discrimination and the right of transgender athletes to compete in sports and utilize facilities such as restrooms and locker rooms. In August of 2020, the Office for Civil Rights (“OCR”) issued a response to a complaint filed by three cisgender females alleging that the Connecticut Interscholastic Athletic Conference (“CIAC”) violated Title IX with their policy allowing transgender athletes to compete based on their gender identity. The three females, who competitively competed in the 55-meter dash, asserted that it was almost impossible for them to prevail against transgender girls, thus denying them the equal opportunity to win events, championships, and to possibly attract the attention of college recruiters to obtain a collegiate athletic scholarship which are all violations of Title IX. The OCR concluded that for purposes of Title IX enforcement, the term “sex” as used in the Title IX statute refers to one’s biological gender and not their gender identity, therefore finding the transgender participation policy of the CIAC to be in direct violation of Title IX. Although the cisgender females claim they have zero chance of prevailing against a transgender female in the 55-meter dash, Chelsea Mitchell, a cisgender female who was an original claimant, won the Connecticut 55-meter Dash state championship beating out one of the transgender girls. Unfortunately, SCOTUS has yet to definitively answer the question of whether the term “sex” is defined as one’s gender identity or biological gender regarding Title IX. The issue of transgender athletes and their right to participate became a very politicized topic with the Trump administration striking out the Title IX guidance provided by the Obama administration, which defines gender identity as the controlling factor and inserting the policy of the OCR that defines biological gender as the controlling factor. President Joe Biden has pledged to reinstate the Obama-era Title IX guidance. Recent Trends in Judicial Decisions In August of 2020, the U.S. Fourth Circuit Court of Appeals ruled in favor of Gavin Grimm, a sophomore at a Virginia High School, who in 2014 was barred from using the boys’ restroom. The court held that “sex” in the Title IX statute refers to gender identity. This 2020 Fourth Circuit decision upheld a 2019 ruling that even in the absence of the guidelines provided by the Obama administration, gender identity is still the controlling factor governing the rights of transgender students in education and sports participation. In August of 2020, a U.S. District Court in Idaho issued a preliminary injunction blocking the implementation of a state statute that limited the participation of transgender women in sporting events concluding that the Plaintiffs were likely to establish that the statute is unconstitutional. Since the District Court concluded that the Plaintiffs are likely to establish that the statute is unconstitutional. The recent trends in judicial decisions favoring the transgender athlete coupled with Biden administration’s pledge to reinstate the Obama-era Title IX Guidance, may indicate an environment that is more conducive for SCOTUS to define “sex” on the basis of gender identity regarding the participation of transgender athletes in sports. Lia Thomas: Penn Swimmer Recently, University of Pennsylvania student-athlete Lia Thomas has been the subject of severe backlash due to the swimmer’s recent success in the pool. Although Thomas has diligently followed the strict guidelines for transgender student-athletes provided by the NCAA, many debates the fairness and equity of having a former man compete against women in sport. Thomas is a transgender woman who was a former member of the UPenn men’s swimming program, where Thomas competed for three years. After receiving hormone suppressant therapy, which the NCAA requires, Thomas began competing as a member of Penn’s women’s program. Thomas has posted impressive times throughout the swimming season that suggests the swimmer could challenge American records of Missy Franklin and Katie Ledecky at the NCAA Championships. John Lohn, the editor-in-chief of Swimming World, has argued that even though Thomas has endured the required testosterone suppression therapy, the advantage possessed by Thomas has not been mitigated, thus resulting in an unfair advantage to biological females. Lohn compares Thomas’ presence in the water as relatable to racing against the doping athletes of East Germany and China. Lohn claims that the NCAA’s protocol requiring a full year of hormone suppressant therapy is not enough to mitigate the advantages of years of testosterone production fully. Lohn states that it is critical to find a welcoming environment for transgender athletes but not without guaranteeing a level playing field for biological women. On the other hand, ACLU Philadelphia Trans Justice Coordinator Naiymah Sanchez thinks Thomas’ participation as a transgender woman is “amazing.” Sanchez went on to explain that “Trans rights are human rights and that trans athletes should be allowed to compete in the gender with which they identify. Dr. Raymond Cattaneo, a lead pediatric faculty member of the Pride Program stated that “Thomas is absolutely following the rules set forth by the NCAA.” Many argue that the playing field is unfair for cisgender athletes because they do not possess the physical attributes that a transgender woman has even after hormone suppression therapy. Sanchez rebuts this claim with evidence of her own experiences that even cisgender women athletes can have physical advantages over cisgender women or even transgender women. Regardless of one’s thoughts about the rights and protections of transgender athletes participating in sporting events, we must caution ourselves on being overly critical of student-athlete Lia Thomas. Thomas has willfully participated in hormone suppression and followed all the guidelines provided by the NCAA to participate in women’s swimming. Barring a sudden change in legislation or if SCOTUS grants certiorari on a case involving transgender athletes and their right to compete, Thomas should and will be allowed the opportunity to compete and possibly win an NCAA National Championship. Adrian Hannah is a 3L at the University of Arkansas School of Law. He obtained his undergraduate degree in Finance from the Walton School of Business at the University of Arkansas in 2021. He can be contacted via email at aph004@uark.edu or on Twitter @AdrianHannah3. Video and picture of NCAA guidelines via the NCAA website.
- Could The Brian Kelly Coaching Change Lead To A Rule Change?
The NCAA football coaching carousel has begun and has already shown to shake things up a bit. News broke on Sunday that Lincoln Riley was departing Oklahoma and heading to USC.[1] Also notably, Brian Kelly left Notre Dame and is on the move to Baton Rouge to become the next head coach for LSU.[2] In addition, a variety of other programs have made announcements of new hires. However, there is one major issue looming. The 2020-2021 season is not entirely over yet. While the college football playoff hope is all but decimated for Oklahoma after losing to Oklahoma State and not qualifying for the Big 12 title game, Notre Dame is not entirely out of the playoff picture. They are currently ranked 6th with all five teams ahead of them playing this upcoming weekend in their conference championship games.[3] While only four teams will make the college football playoff, it is not outlandish to consider Notre Dame may potentially be amongst the top four teams remaining, contingent on some outcomes this coming weekend. In short, this is where the issue comes into play. Notre Dame has a chance to be a college football playoff team, yet their head coach just left the program. But this should not matter, right? Wrong. This does in fact matter. And the worst part about it for Notre Dame players is this fact clearly matters to the college football playoff selection committee. Committee Chair Gary Barta stated, that "once the championship games wrap up .... our protocol does include the ability for the committee to consider a player or coach not being available."[4] Pause right there. Do you understand the implication this statement has? To put it plain and simple, whether it ultimately impacts this decision, and whether Notre Dame even qualifies as a potential top-four team is irrelevant. The fact alone that a coach, here Brian Kelly, departing a program can impact a team’s final ranking is incredibly significant. So significant, that Athletic Directors everywhere will likely need to reconsider this implication in future coaching contract negotiations. It is simply not good for NCAA Football, programs, or its players that a coach departing can have this strong of an impact on a team’s ranking after a full regular season of play. Whether or not it is fair for the committee to consider this, is beside the point. The point is that Athletic Directors everywhere will now likely need to amply protect their programs by reconsidering this point of leverage in their coaching contracts liquidated damages provisions. If a coach harms a team like this, the coach should have to pay. Alternatively, there is another solution. A rule change. While the NCAA may not have the direct authority to limit coaches to a window of when they are permitted to seek other employment, institutions have the discretion to make hiring decisions when they are inclined. Whether a formal agreement is reached at the conference level, or this elevates to the NCAA, an initiative driven by Athletic Directions and institutions seems reasonable to restrict coaches’ mobility during the final weeks of the season. This may even be construed as a reasonable, short-term non-compete. It is undoubtedly not in the best interest of NCAA Football to have a team play an entire regular season of games just to have their coach leave, and then the team ultimately be the party punished out of the chance to compete in the postseason. If schools, conferences, or even the entire NCAA can agree to withhold from hiring new head coaches until after the National Championship, this issue would become moot. However, this is easier said than done. The reason that schools want a leg up and rush to hire a new coach as soon as possible is that coaches have an obvious impact on recruiting. This was further evidenced this week when Five-star QB Malachi Nelson flipped his commitment from Oklahoma to USC to follow Lincoln Riley.[5] The sooner (no pun intended) a coach is announced somewhere, the sooner their impact can be felt on the program’s recruitment. Realistically, what is the solution then? A solution may be to extend the recruitment dead period through November and December and perhaps even the beginning of January. The NCAA can implement such a rule change, which may serve as a partial deterrent from coaches changing schools so quickly. However, for such a rule change to be effective the NCAA may need to reevaluate the current dead period contact rules and give them more teeth. The current dead period rules permit athletes and coaches to communicate via phone, email, and other forms of digital communication during this period. The dead period limitation is mainly targeted at limiting in-person recruiting.[6] For such a rule change to be effective, the dead period restriction may need to deter all levels of communication. Surely, this change may prove difficult to enforce. Further, a counterargument may even reasonably be made asserting that this limitation may ultimately hinder student-athletes ability to be recruited. This concern may be even more detrimental than the issues caused from coaching changes. Ultimately, it seems clear that the proposed solutions may not be the perfect answer or the final recommendations to combat the coaching carousel issue. However, the fact remains that Athletic Directors, schools, conferences, and potentially the NCAA need to act. It is unjust for NCAA Football that a (likely financially motivated) coaching change can impact a postseason berth. For a sport that strives on competitive equity, this does not drive competition, and it is surely not equal. Perhaps, it is time for a change. This article is also available on LongRunSports at https://www.longrunsports.com/post/could-the-brian-kelly-coaching-change-lead-to-a-rule-change. Anthony Studnicka is a licensed attorney who also holds a Masters in Sports Law and Business from Arizona State University. He is the founder of www.LongRunSports.com and can be found on twitter at @Anthony_Stud. [1] Mark Schlabach, Lincoln Riley Leaving Oklahoma To Be USC Head Football Coach, ESPN (Nov. 28, 2021), https://www.espn.com/college-football/story/_/id/32737893/lincoln-riley-leaving-oklahoma-become-usc-head-football-coach-sources-say. [2] Michael Shapiro, LSU Officially Names Brian Kelly Next Head Coach, Sports Illustrated (Nov. 30, 2021), https://www.si.com/college/2021/11/30/lsu-officially-names-brian-kelly-next-head-coach. [3] College Football Playoff, College Football Playoff Rankings, (last visited: Dec. 1, 2021) https://collegefootballplayoff.com/rankings.aspx. [4] Bryan Driskell, Brian Kelly’s Departure Didn’t Impact Notre Dame’s Playoff Ranking …. Yet, Sports Illustrated (Dec. 1, 2021), https://www.si.com/college/notredame/football/notre-dame-football-playoff-ranking-impacted-by-brian-kelly-leaving. [5] Tom VanHaaren, Five-Star QB Malachi Nelson First Former Oklahoma Sooners Commit To Follow Lincoln Riley To USC Trojans, ESPN (Nov. 30, 2021), https://www.espn.com/college-football/story/_/id/32756531/five-star-qb-malachi-nelson-first-former-oklahoma-sooners-commit-follow-lincoln-riley-usc-trojans. [6] Next College Student Athlete, What Is The NCAA Dead Period?, NCSA (last visited: Dec. 1, 2021) https://www.ncsasports.org/ncaa-eligibility-center/recruiting-rules/dead-period.
- Mike Leach’s Legal Battle with Texas Tech
On November 1st, 2008, Texas Tech fans, administrators, and student athletes probably felt like Mike Leach was the perfect coach to lead their football program for the foreseeable future. That night, his Red Raiders upset the top-ranked Texas Longhorns on a heroic last second play by Graham Harrell and Michael Crabtree. As a result, Texas Tech climbed to number 2 in the following week’s AP Poll, the highest ranking in school history. No one in Lubbock would have even considered the possibility that Leach would be let go just a season later. However, in December of 2009 allegations emerged over Leach’s mistreatment of a player suffering a concussion. There seemed to be no concrete investigation into the allegations and Mike Leach refused to apologize for his actions and claimed university officials illegally hid documents. This led the President of Texas Tech to suspend Leach, which prompted the coach to file a temporary restraining order against the school hoping to still coach the upcoming bowl game. Instead, the President and Athletic Director decided “the relationship was probably broken,” and fired Leach with cause. As we just saw in the Urban Meyer downfall in Jacksonville, the for cause element in a coach’s contract can be a tricky element to figure out. There is a fine line between upholding morality and violating a rule or breaking a law. Texas Tech obviously believed that Leach crossed the line. However, Leach has strongly maintained over the years that he was cheated out of money promised in his contract. He has insisted that he won’t go away until he gets a check for the roughly $2.5 million he feels he’s owed. Ever since, Leach has been in a legal battle with the university for nearly 12 years now. His temporary restraining order fell short when he was fired and when he sued the school for wrongful termination, the Texas Supreme Court rejected his appeal in 2012 without an opinion. More recently, Wayne Dolcefino, who runs an investigative media consulting firm, has battled Texas Tech over public information record requests. While it’s said that time heals all wounds and many in college athletics have forgotten about this case, it was brought back to the limelight in this year’s bowl season. After elevating the Washington State football program from 2013 to 2019 following his dismissal from Tech, Leach took a job in the SEC at Mississippi State. In his second season at the helm in Starkville, his Bulldogs accepted a bid to the AutoZone Liberty Bowl to play… the Texas Tech Red Raiders. In his initial press conference following the news of the bowl matchup, Mike Leach addressed that he is still not happy with the officials at Texas Tech who made the decision to fire him with cause over a decade ago. “In Lubbock, there were four bad apples that were determined to cheat me out of my salary,” Leach said. “We know about that. And the other four years on my contract. And then continued to hide the documents illegally.” “I’ve been willing to settle this thing for a long time, but they don’t seem to be willing to,” Leach added. “I think that’s unfortunate. I think all the people there are great. Some of the leadership, at least when I was there, was very sleazy and slimy and dirty. I enjoy naming names on it too, which I might as well. They all know who they are. We should get this thing settled. They should pay me. And we should all celebrate achievements together. But that doesn’t seem to be what they have in mind.” Going into Tuesday night’s Liberty Bowl, many thought that Leach would be extremely motivated to get some revenge on his former school. The Bulldogs were nearly double-digit favorites to beat the Red Raiders, but things didn't go as anticipated. Despite having an interim coaching staff, Texas Tech bludgeoned Leach’s squad to the tune of a 34-7 blowout. While Mississippi State had a few of their prominent players opt-out to prepare for the NFL Draft, it was still an embarrassing result for them as they finished the season at 7-6. Now that the opportunity to beat Texas Tech on field is now off the table, Mike Leach will continue to try to get a more favorable outcome off of it. While he receives a healthy salary from Mississippi State, anyone who has any familiarity with Leach knows it’s well within his personality to focus on things many coaches don’t have the time of day for. The Jacksonville/Urban Meyer for cause/not for cause dilemma isn’t the only one ongoing in football currently. We’ll see if Leach can finally get what he believes he deserves.
- Show Me The Crypto: Risks and Rewards of Contracting Athlete Salaries in Cryptocurrency
Over the past several years, cryptocurrency has taken the world by storm - from bitcoin, to dogecoin, and everything in between, cryptocurrency is becoming a part of personal finance and business transaction for millions around the world. To that end, cryptocurrency has become an intriguing element - or perhaps a complication - in the the sports business, finance, and law realms. Notably, many professional athletes across the major American sports leagues have requested, and some have successfully contracted, that their salary be paid in a particular cryptocurrency. For example, NFL tackle Russel Okung famously tweeted, “Pay me in Bitcoin” in 2019. It appears his wish has been granted by the Carolina Panthers recently. Well… Technically, Okung was not paid directly in bitcoin. Instead, he personally converted half of his salary (around $13 million) to the cryptocurrency through an outside company that owned an exchange system allowing conversion. The company announced a paycheck conversion program for athletes, allowing many to do the same. Interestingly, when Okung converted about half of his salary to bitcoin, the cryptocurrency was worth about $27,318. Bitcoin’s price has nearly doubled at times since then, and if you are to include these crypto gains in his salary, it would make him one of the highest paid offensive linemen in the sport. In November of 2021, NFL wide receiver Odell Beckham Jr. announced that he would be receiving the entirety of his contract with the Los Angeles Rams in Bitcoin. Beckham teamed up with Square Inc.’s CashApp to make the arrangement happen, . He also announced at the same time that he was giving away $1 million in the cryptocurrency to his followers on Twitter. Polarizing NFL star Aaron Rodgers also partnered with Cash App in October of 2021, taking just a portion of his salary in Bitcoin. Rodgers also gave away $1 million in Bitcoin to his Twitter followers upon the announcement, a clear effort by Cash App and crypto companies to increase the access to crypto for sports fans and athletes alike. Even rookie quarterback Trevor Lawrence joined the crypto-craze. When Lawrence was drafted first overall in the NFL draft, the young talent joined forces with investment app Blockfolio, placing his signing bonus into a cryptocurrency investment account - reportedly ending up with a mixture of Bitcoin, Ethereum, and Solana. Meanwhile, NBA guard Spencer Dinwiddie is the first basketball star to “tokenize” his contract through extensive planning by his legal team. In essence, Dinwiddie will tokenize his three-year, $34.36 million contract, theoretically collecting its value up front. To do this, Dinwiddie would sell 90 of these tokens for $150,000 each to investors, which will then become tradeable, as a digital security. This security would pay out interest on a monthly basis, and fully pay out in 2023 when it matures. Put another way, Dinwiddie is essentially claiming half of his three-year contract salary up front as a sort of loan, paid back to investors in the following years. This process of issuing blockchain-based tokenized security backed by his contract was a point of contention with the league, but after months of negotiations - including discussions over what the opt-out clause in his contract for a third year meant for the plan - it appears the league relented. It’s possible that Dinwiddie has opened the door for other athletes to structure and issue their own debt instruments in digital token form, the size of their contracts making it simpler to bootstrap liquidity and interest using these processes. Further, some professional teams have explicitly adopted cryptocurrency with open arms, such as the NBA’s Sacramento Kings. The team has accepted Bitcoin for merchandise and ticket purchases from fans since 2014, but in April of 2021, the Kings Chairman, CEO, and Governor - Vivek Ranadive - announced that all Kings players (in addition to coaches, stadium staff, and more) would have the option to be paid their salary, in part or in full, in Bitcoin. Seemingly, the Sacramento Kings have entered the crypto-investing sphere, holding their own shares of the cryptocurrency in their own portfolio - coming in and going out, tracking the market’s rise and fall. Similarly, in early 2018, Harunustaspor, a Turkish football club, became the world’s first football team to purchase a player using Bitcoin. The player involved in the transaction, 22-year-old Omar Faruk Kiroglu, also received 0.0524 Bitcoin (£385) as part of the deal with Harunustaspor. Some football clubs around the world are even using crypto-tokens to let fans influence their favorite club. Chiliz, a cryptocurrency and social platform, offers fan engagement tokens focused on sports. Ownership in the crypto-token gives fans the ability to vote on decisions such as whom the football club plays during “friendlies”. The voting power on the platform does not extend to institutional or corporate governance decisions which could have third-party-ownership implications that may be against international or domestic regulations, but the crypto-token nonetheless has inherent value to be bought and sold, drives fan engagement, and increases the relationship between sports club and cryptocurrency worldwide. Ultimately, it appears that there are three key avenues that a team and player may take when contracting that part (or the whole) of a player’s salary will be paid in bitcoin: a) a professional sports team owns their own shares of a cryptocurrency in reserve, paying out to players as the contractual obligations come (putting the risk, but also potential benefit on the team); b) a team purchases a particular cryptocurrency at the time a payment to a player is due and immediately transfers it to them; or c) a player is paid in normal currency, and their currency is then independently transferred and converted into a cryptocurrency of their choice. Each of these arrangements comes with their own set of risks, benefits, and complications. Naturally, there are some benefits and advantages to a professional athlete receiving part, or the entirety, of their contractual salary in cryptocurrency such as efficiency, financial liberation, flexible salary options, potential for growth, and more. First, on a very basic level, a salary paid in bitcoin may theoretically rise in the time after payment, allowing for incredible profits beyond what was promised in the contract with the team, with no loss to them. This rise also applies to a team if they were to have their own wallet of cryptocurrency in reserve - it is about allocation of risk. Take Bitcoin as an example: The value of a Bitcoin was about $900 by the end of 2016, but the value today is around $46,700. Bitcoin may be an outlier, but several different cryptocurrencies have seen substantial growth over the past few years. Next, cryptocurrency transactions are immediate. This leads to more efficient and cost-effective transfers, cutting out the bank and the administrative delays that may come with bank involvement. This is particularly helpful in international payments, as cryptocurrencies are borderless. Cutting out the bank, and an athlete being paid in cryptocurrency essentially being their own bank, allows the player to manage their own assets to their heart’s content - no restrictions, no entity waiting to freeze your account, and no waiting on checks to clear. Further, payment in cryptocurrency increases transparency and identity protection. For example, blockchain transfer generally creates an immutable, transparent record of the salary payments that have taken place - protecting both parties in the event of a dispute as long as these records are properly maintained and stored. While you may not be 100% anonymous or untraceable, worries typically associated with credit card use and identity theft are lessened dramatically. You can even go so far as to send payments while keeping your identity hidden, as long as you follow responsible security practices. Finally, as noted, if a player uses a contractual system of debt instruments in token forms like Dinwiddie, this may allow a player to collect a larger portion of their multi-year salary up front, with almost a sort of quasi-annuity for the length of the player’s contract being sold in crypto form. All that being said, there are significant negatives, and potential risks, associated with contracting a player’s salary to be paid in cryptocurrency. For starters, it is important to remember that cryptocurrencies can be incredibly volatile, and their value may rise and fall sharply from day to day. If a player, or team, has a significant holding of a cryptocurrency that depreciates, a significant portion of their net worth may be affected. Cryptocurrencies like bitcoin are known to have drastic swings in price making them much more risky than regular transactional currency. So it may be a good idea to make sure you're only receiving a part of your salary in crypto or to consider selling some part of it immediately upon receiving it. On the other hand, you might choose to hold onto the currency if you know about crypto trading and are expecting your crypto assets to appreciate. Further, unfortunately, cryptocurrency crime is a danger. Things like hacking and scams aren’t uncommon, and if your account gets hacked or you fall victim to a scam or some other crypto-based crime, your money is gone for good — there is no FDIC insurance, nor is there a fraud protection number you can call, nor a bank or credit card company that can cancel a transaction. Finally, there certainly is a learning curve in the crypto-sphere when it comes to the market, the technology involved, and even the simple capability of owning crypto. Cryptocurrency isn’t regulated by the Securities and Exchange Commission, it isn’t traded on the stock market, it can’t be bought or sold directly in ETFs, and isn’t traded on standard currency exchanges. In order to receive payment in cryptocurrency, you’ll have to open an account and a digital wallet on a special exchange. All of this may require special advising and legal help. Additionally, there are tax considerations that must be taken into account when advising a professional athlete client on contracting their salary in cryptocurrency.When it comes to taxation on crypto salary, the IRS states that you will need to determine the difference between the value of the crypto at time of receipt, and how much you sell it for; you should then report this number on your taxes when you sell the currency. Many people are unclear on how crypto taxes work and end up not declaring crypto income. However, the IRS is calling for stricter compliance with crypto reporting requirements. One of the challenges with filing these returns is that you may not always remember the fair market value of the crypto you received, so keeping diligent data tracking the market, and recording your gains and losses as they happen, is crucial. However, you’re not done there! If you think your tax returns are sorted once you declare the cryptocurrency income you received, think again. As far as the IRS is concerned, bitcoin and other cryptocurrencies fall into the category of “property.” This essentially means that when you sell cryptocurrencies, you have to pay capital gains on any profit that you make. If you have held the crypto for less than a year, you’ll have to pay short-term capital gains tax on the profits. This profit gets added to your total taxable income, and the amount you have to pay in taxes will depend on the tax bracket you belong to. If you hold crypto for more than a year, you’ll end up paying long-term capital gains tax, which can amount to as much as 20% of the profit. On the other hand, don’t forget that if you sell crypto at a loss, you can write off your losses to reduce your taxable income and therefore your tax burden. So don’t forget to keep an account of your losses and include them when you file your returns. Receiving a part of your income in cryptocurrency can feel extremely liberating, as well as efficient and cost-effective. However, there also comes with it a significant risk, and various tax considerations to take into account. Advising a professional athlete on whether they should request some (or the entirety) of their salary from their professional team to be paid in cryptocurrency is certainly a case-by-case question, considering the various factors as outlined above, and should not be taken lightly as crypto seems here to stay. Jason Re, The George Washington University Law School 3L Twitter: https://twitter.com/JasonReLaw Email: jre22@law.gwu.edu LinkedIn: https://www.linkedin.com/in/jason-re/
- Win-Win-Win(?) if Goodell Were to Incentivize 'Out of the Hunt' Week 18 Players
I am diehard Washington Football team fan (who as of last week are eliminated from playoff contention).I’ll move most anything around on my schedule to watch them play. Not this Sunday. I couldn’t care less about their upcoming game Sunday. Who can wrap their head around many (if any) of their starters feeling a sincere desire to win. I can’t be the only fan with this mentality and this must have an effect on a number the NFL cares deeply about: ratings. While some players on playoff ineligible teams may be willing to put their bodies on the line to achieve individual season long contract incentives (i.e. total catches, yards, tds etc.), they are few and far between. Obviously each player is a professional and compensated handsomely per their respective contracts but there’s a human element here the NFL seems to be glossing over. It is clearly, for the majority of players, in their financial best interest to prolong their careers by avoiding injury. No Kirk Herbstreit-esque blame games here: the juice is not worth the squeeze for the majority of players to jeopardize their career length and risk injury by giving it their all in week 18. Their bank account will presumably read the same regardless if the box score shows W or L. Their cost benefit analysis definitively points to erring on the side of caution and more conservative play on their part. But what if they did have a financial incentive to play to the best of their abilities in these, once thought of as meaningless, games? There’s a possibility for a win-win-win scenario for the NFL, it’s players and the fans if the league offered a bonus to players who win games in these scenarios. What?! I know it sounds crazy to reward losers but humor me for a second. For example, who wouldn’t want to watch Taylor Heinecke strap it on one last week for a chance at $20K (or 0.289 bitcoin in Trevor Lawrence’s case). As I don’t have a finance degree, I’ll let the Joe Pompliano’s of twitter hash out the appropriate compensation numbers but that’s beside the point. Motivating these players to elevate (or at least maintain) their standard of play would assuredly boost ratings.In this scenario fans are happier, the players are presumably happier (if they win) and the NFL pads their regular season ratings. Your move, Goodell. By: Rob Williams Twitter: @The_RobWilliams Instagram: @The_RobWilliams Linkedin: www.linkedin.com/in/robertlouiswilliams/




