Supreme Court Finds For NCAA Student-Athletes on Antitrust Issues

NCAA student athletes are entitled to education-related benefits, such as paid post-graduate internships, scholarships for graduate school, tutors, laptops, science equipment, musical instruments, and annual awards for academic achievement up to $5,980. Justice Neil Gorsuch wrote the opinion for the unanimous Supreme Court ruling, holding that the now-former NCAA prohibition for such things violated antitrust laws.

NCAA v. Alston began seven years ago as a class action against the NCAA brought by Shawn Alston and Justine Hartman as representatives for a class of former men’s and women’s college football and basketball players. They alleged that the NCAA’s limitation on the types and amounts of compensation student-athletes can receive violates Section 1 of the Sherman Antitrust Act which prohibits the unreasonable restriction on competition among the states. The District Court and Ninth Circuit both resolved that there was an antitrust violation when applying the applicable “rule of reason” test and the Supreme Court did not depart from those decisions.

Included with the June 21 Alston ruling was Justice Brett Kavanaugh’s concurring opinion, which could be indicative of how SCOTUS might interpret any future challenges to the NCAA’s rules. For example, the Alston case did not pose the question as to whether athletes can receive cash payments for the use of their names, images, or likenesses.  However, Justice Kavanaugh identifies what he believes might be antitrust issues with other NCAA rules that “generally restrict student athletes from receiving compensation or benefits from their colleges for playing sports…and receiving money from endorsement deals and the like.” Some State lawmakers agree. Over the next few weeks state laws will take effect in Alabama, Florida, Georgia, Mississippi, New Mexico, and Texas that will allow athletes to make endorsements and monetize their social media presence.

The full impact of the Alston case remains to be seen, but it seems apparent from statements immediately cast by various college coaches and program directors that there are likely to be substantive changes in how student athletes are recruited and how program budgets are managed. For example, to be competitive, athlete recruitment packages will need to include education-related benefits, grant-in-aid packages, and awards for academic achievement up to the $5,980 annual cap.

Further, and immediately following the Alston ruling, as a show of cooperation NCAA President Mark Emmert announced his commitment to working with Congress to implement a new framework. The NCAA Division I Council has now, on June 28th, voted to support an interim policy that would permit college athletes to profit from the use of their names, images, and likenesses pending the adoption of a federal law or a new NCAA rule being enacted.   The Division I Board of Directors are now due to meet to review and vote on the recommendation.

Controversy in Horse Racing: A Race to Lift a Suspension

The crown jewels of American thoroughbred horseracing are the Kentucky Derby, Preakness Stakes, and the Belmont Stakes.  Together, they are known as the “Triple Crown,” and winning all three in a single year—an immensely difficult feat—is the pinnacle of horseracing in the United States.

Robert Baffert, a seven-time Kentucky Derby winner, is one of only a few racehorse trainers who have won the Triple Crown, and one of only two trainers to have two horses win the Triple Crown.  Recently, however, Mr. Baffert has made headlines not for the success of his thoroughbreds, but for controversy surrounding them.

On May 1, 2021, Medina Spirit, a horse trained by Mr. Baffert, won the Kentucky Derby.  Following the Kentucky Derby, Medina Spirit tested positive for an elevated level of the steroid betamethasone, an anti-inflammatory drug.  As a result of the investigation in Kentucky, on May 17, 2021, the New York Racing Association (“NYRA”), which controls thoroughbred racing at state-owned racetracks in New York, announced that Mr. Baffert was “immediately” and “temporarily suspended from entering horses” or using stall space at any NYRA racetrack.  In reaching its decision, the NYRA determined it necessary to “protect the integrity of the sport” and took into account that other horses trained by Mr. Baffert had failed drug tests in the past.

Mr. Baffert’s suspension is currently indefinite, and the final length and terms will be determined by the results of the ongoing investigation in Kentucky.  Because the Belmont Stakes are held in New York, Mr. Baffert was disqualified from entering a horse into the third leg of the coveted Triple Crown.

Mr. Baffert has elected to fight the suspension, and on May 14, 2021, he filed a lawsuit in federal court challenging the suspension, captioned Bob Baffert v. The New York Racing Association, Inc., Case No. 1:21-cv-03329, United States District Court of the Eastern District of New York.

The gravamen of the lawsuit is that the NYRA lacked authority to suspend Mr. Baffert.  Specifically, Mr. Baffert argues that the NYRA’s suspension is tantamount to a formal suspension or revocation of the occupational license granted to him by the New York State Gaming Commission.  By indefinitely suspending Mr. Baffert from all NYRA racetracks, the NYRA has “essentially barred Baffert from exercising his professional and State-issued trainer’s license anywhere in the State of New York.” Mr. Baffert claims that the power to suspend or revoke a license rests solely with the Gaming Commission, not the NYRA, pursuant to New York statutory law.  Moreover, Mr. Baffert alleges that the suspension was issued without any notice or hearing, violating due process under both New York State law and the Fourteenth Amendment of the Constitution.

Concurrent with the lawsuit, Mr. Baffert also filed a Motion for Preliminary Injunction, seeking an Order from the Court that would, in effect, lift the NYRA’s suspension and allow Mr. Baffert to participate and enter horses at NYRA racetracks during the pendency of the lawsuit.  To obtain the injunction, Mr. Baffert must show that he will suffer irreparable harm, that he has a likelihood of success on the merits of his legal claims (or, if it is uncertain as to whether he is likely to prevail, that the costs outweigh the benefits of not granting the injunction), and that an injunction is in the public interest.

A hearing on the Motion for Preliminary Injunction is scheduled for July 12, 2021.

European Parliament proposes new regime to combat piracy of live sports content

Pirate Key on a Keyboard

 

 

 

 

 

 

Scale of the piracy problem

The threats posed to the funding of sport by media rights piracy is nothing new.  However, as recognised by the European Parliament in its resolution published 19 May 2021, developments in digital technology and the proliferation of access to digital content (in particular through IPTV) have, in turn, increased the potential exposure of sports fans to pirated content.

In its report[1] prepared in December 2020, the European Parliamentary Research Service found that in 2019:

  • 6 million subscriptions were made to illegal broadcasting platforms in the EU;
  • these subscriptions generated illicit subscription revenues of an estimated 522 million EUR; and
  • if the same number of subscriptions were made legally, authorised broadcasters’ revenues could increase by 3.4 billion EUR each year.

Furthermore, a report published this year by Synamedia and Ampere Analysis has found that sports rights holders and streaming services lost $28.3 billion globally as a result of piracy in 2020.

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Given Out on Appeal – An Occupier’s Duty

Cricket bat and ball

As recreational sport returns to local parks and commons, a recent High Court ruling has served as a useful reminder to occupiers of their duty of care owed to visitors. The case considers, amongst other things, the requirement of reasonableness under the Occupiers Liability Act 1957 (the “OLA 1957”) as well as the concept of remoteness.  It is also notable for revisiting points to be distilled from the seminal House of Lords decision in Bolton v Stone.[1]

Facts of the Case

In August 2014, the claimant in Lewis v Wandsworth London Borough Council[2] was walking through Battersea Park, along a path that bounded a small cricket pitch. Upon hearing a shout, she turned her head and was immediately struck on the eye by a falling cricket ball, causing her serious injury.

The claimant brought a case against the local authority. She claimed that they should have put up signage that warned that a cricket match was being played with hard balls and/or prohibited the path from being used during matches. Had there been such signs, she claimed that she would have paid greater attention to the match and would have been able to dodge any stray cricket balls.

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Does the buyout market reflect a competitive imbalance in the NBA?

Last Thursday marked the NBA trade deadline, meaning teams can no longer trade players on their rosters. However, after the deadline, there remain no restrictions on teams signing free agents. Coincidentally, after the trade deadline, some players and teams enter into buyouts whereby that player is bought out of his current contract and becomes a free agent. This happens where a team is usually unsuccessful in trading a player on a high salary or a player refuses to play for the team for the rest of the season.

The buyout market can make or break a team’s season. This year, the Brooklyn Nets fortified an already stacked roster by signing two all-star free agents whilst the reigning champions, the LA Lakers, signed the league’s leading rebounder. These signings come somewhat at the expense of small market franchises who lose a star player and get nothing in return. One general manager reportedly described the buyout market as “helping the rich get richer.”Basketball Money and Finance Concept

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Another COVID-19 By-Product: A Reduction in the NFL Salary Cap

Owing to a 92% drop in attendance during the COVID-19 pandemic, the National Football League (NFL) salary cap will be 8% lower this season, going from $198.2 million in 2020 to $182.5 million in 2021. The NFL has had a salary cap since 1994.  The cap regulates the amount that teams can spend on players in a given year.  This amount typically changes every year, and, in fact, cap limits had been going up every year since 2011 when the cap was at $120 million. The final number for 2021 was the result of negotiations between owners and the players union based on projected revenues and other factors. Continue Reading

The Future of Sports – Cryptocurrencies and Blockchain Technology

Sports as an industry has realised the potential that cryptocurrencies and blockchain technologies can bring to further monetise fan engagement, attract sponsors and engage a global market in ways that were unimaginable decades ago. Passionate fans, each a citizen of digital technology, consume sports and related content beyond the actual duration of a match. Teams, clubs and sporting bodies are innovating to survive in the new digital age and meet fan expectations.

With the limitations brought upon the industry due to the COVID-19 pandemic, the sports industry has responded and devised new strategies to ensure clubs and fans remain connected in a socially distanced world. The industry has recognised that blockchain is capable of revolutionising revenue streams and the fan experience through increased crypto-sponsorships, fan tokens, non-fungible tokens (“NFTs”) or even by entrance of blockchain providers into the market.

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Private Equity Investment in Sport

Private equity firm CVC Capital Partners has purchased a 14.3% stake in the Six Nations rugby tournament, putting pen to paper on a deal, which will see CVC pay approximately £365 million over five-years.

The deal, subject to regulatory approval, sees CVC target the tournament’s commercial rights. In return, the governing bodies of England, Scotland, Wales, Ireland, France and Italy are set to receive an important financial boost, which is hoped will ensure growth to the game for years to come. Rugby country flags

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HANDBALL!!! I think… (Part 2)

Football’s handball law has been under scrutiny from pundits, players and fans alike for some years now. Last year, Sports Shorts assessed the controversy of the new handball law, which has continued to depend on interpretation with little uniformity in its application across world football.

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A new post-Brexit system for the transfer of EU players

In a joint statement released last week, the Football Association (“FA”), the Premier League and the Football League (together, the “Stakeholders”) confirmed the Home Office approved points-based system that will apply to all overseas players, including EU nationals, hoping to join an English club from January 2021 onwards.

Following the end of the Brexit transition period, players from the EU will be subject to the requirement to earn Governing Body Endorsement (“GBE”) for the first time.  The FA has published updated GBE criteria for men’s players for the 2020/21 season (“New Criteria”) in time for the January transfer window.

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