1. The Business of Sports –What the Future Holds
Prof. Mark Conrad
Gabelli School of Business,
Fordham University
New York, NY
SABEW Teletraining Session June 26, 2017

2. Who am I? 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 (full- time)
Adjunct, Columbia University, Graduate Program in Sport Management
Frequently quoted in the media
Started my career as a legal journalist

3. The Main Topics Sports Gambling/DFS Concussion litigation
Sports Governance/Arbitration Issues
Professionalization of College Sports
Stadium/Facilities
International
Tax

4. Gambling and Sports

5. Federal Powers – Limitation of Sports Gambling
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.

6. PASPA Created Exceptions
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

7. New Jersey’s Attempt to Legalize Sports Gambling
In 2012, New Jersey legislature enacted the Sports Wagering Law permitting state- regulated 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

8. Appeal to Supreme Court
Today, court may make determination

9. Other States Since January, these states introduced similar bills:
West Virginia
New York (2 bills) – S and A. 5438
Michigan – H. 4060
Maryland – H. 989
Pennsylvania – H. 519
South Carolina – HJR and SJR 309 (amending State Constitution)

10. Legislative Options
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

11. Daily Fantasy Sports

12. Daily Fantasy Sports
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

13. Is DFS ‘Illegal Gambling’?
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 )
NY legalized DFS in August 2016

14. Is DFS ‘Illegal Gambling’?
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

15. 2017 Legislative Map Nine states formally legalized DFS
12 states failed to pass legislation in 2016
14 states gave introduced legislation as of January 2017

16. FanDuel/DraftKings Merger
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

17. The Professionalism of College Sports

18. College Sports Focus: Efforts to Unionize College Players
The O’Bannon case

19. Unionization
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?

20. O’Bannon and Progeny
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.

21. O’Bannon 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.

22. Alston v. NCAA 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

23. Jenkins v. NCAA
In Jenkins v. NCAA, Case No. 3:14-cv (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

24. Dispute resolution – Professional Sports

25. Powers of Private Dispute Resolution Methods Upheld
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 pounds per square inch

26. Brady
NFL Commissioner can arbitrate disputes under Art. 46 of the Collective Bargaining Agreement

27. Concussion Litigation

28. NFL Players 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

29. NHL Players
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.

30. NCAA
In re Nat'l Collegiate Athletic Ass'n Student- Athlete 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 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

31. Conferences
January 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 

32. Stadium Economics and Team Relocation

33. Other Issues to Watch Team Relocation Stadium issues and financing
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

34. Olympic and International Sports

35. New Patterns of Bidding
Are the costs worth it?
Rise of Cities with Leverage
Questions: Look at the bidding contracts
What rights does the IOC have?

36. Ethics and Transparency
Issue of making international sports federations more transparent
FIFA?
Others?

37. PEDs Issues of positive drug tests will continue Future:
Gene alteration?
Technology
Rich v. poor nations

38. Taxation

39. Players 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

40. Team Owners Generous depreciation rules Costs of minor leagues
Lack of requirement to report

41. For More Information or Media Inquiries. . .
@Sportslaw1 (Twitter)