Just over four months ago, I published an article on Conduct Detrimental about the pending cases against popular sports trading card companies Panini and Topps. Since then, many people wrote to me asking for an update and whether there has been any conclusion. I plan to provide that update here. For a summary of the initial filings made in early 2022; see my previous article here. In March of 2022, Panini and Topps faced legal complaints relating to consumer fraud. The allegations were similar in that Plaintiff accused both companies of deceiving consumers by using false, unlawful, and deceptive representations to affect the consumer’s purchasing decisions. One clarification I would like to add is that these cases are not surrounding the frustrations consumers face when it comes to redeeming their Redemption Cards. That is a separate (and albeit important) issue altogether. These cases center around the companies' choice of how they avoid running afoul of state lottery laws. States define lotteries as paying money for the chance to win a certain item. Trading card packs fit into this category as consumers pay the price of the trading card pack to win one of the rare cards that could potentially be inside. To avoid violating lottery laws, the companies include No Purchase Necessary (NPN) instructions on the trading card packs. For example, on a pack of Panini Flux 2020-2021 Inaugural Edition, it reads: NO PURCHASE NECESSARY: Open only to U.S./Canadian (except Quebec) residents. For chance to obtain any of the cards listed above, at the same odds, hand print your name and complete address on a 3 x 5 card and mail in a #10 envelope to: Panini America Inc., NPN, 2020-21 Panini Flux Basketball, 5325 FAA Blvd., Suite 100, Irving, TX 75061-3601. While companies provide NPN instructions, the Plaintiff side argues that the way in which the company displays them forces consumers to purchase the product before they can enter the contest. Many of those who collect cards have realized the main problem. Usually, the packs are in a sealed box which would have to be purchased before the consumer can view them. So what has happened since the Plaintiff filed these cases in March of 2022? In the Panini case filed in the United States District Court for the District of Columbia, the case was dismissed due to the court’s lack of subject matter jurisdiction. Subject matter jurisdiction is spelled out in Article III of the Constitution and is a bar used to determine whether or not a certain court should rule on a case. A court that lacks subject matter jurisdiction will dismiss the case immediately. It is on the burden of the Plaintiff to establish that they have the standing necessary to establish subject matter jurisdiction. In this case, the court set the standard for establishing standing as “plaintiff must allege sufficient facts to show the following: (1) an injury in fact that is concrete and particularized, (2) an injury that is actual or imminent, not conjectural or hypothetical, (3) a causal connection between the injury and the conduct complained of and a likelihood that a court ruling in plaintiffs' favor would remedy their injury" In the end, the court found that there was no injury in fact. While the Plaintiffs alleged injury through overpayment or a procedural violation, the court found those injuries unpersuasive. They noted that she continually bought boxes over a long period of time and should have been aware of the NPN instructions. The court also stated that she purchased the box for the value of the cards, not the chance to enter the NPN contest. Therefore the case has been dismissed with prejudice as the court found that any amendment to the complaint would be futile. The court dismissing the claim with prejudice means that they will be unable to refile the case in D.C. district court. In the Topps case filed in the United States District Court for the Southern District of New York, This case dove into the merits of the arguments focusing on violations of New York's General Business Law (GBL), breach of express and implied warranties under the Magnuson Moss Warranty Act (MMWA), negligent misrepresentation, fraud, and unjust enrichment. The Defendant, in this case, filed an answer which argued that, “the GBL claims lack a New York nexus, that the breach of warranty claims were not preceded by pre-suit notice, that the MMWA claim falls with the state law breach of warranty claims, that the fraud claim fails to plead the requisite intent, and that the unjust enrichment claim is duplicative.” The court found the Defendant’s arguments persuasive and dismissed the case. Just as the D.C. case against Panini, this case was also dismissed with prejudice. It seems that, for the moment at least, both Panini and Topps escaped these lawsuits prior to trial based on different arguments. Both of these cases were dismissed based on the position of the plaintiff and not based on the merits of the actual claims. It will be interesting to see if another Plaintiff files a lawsuit against the card manufacturers for this issue or others surrounding the trading card space. Justin Mader is a recent graduate of the University of New Hampshire Franklin Pierce School of Law where he earned a J.D. and a Sports and Entertainment Law Certificate. He can be reached via Twitter: @maderlaw and LinkedIn at https://www.linkedin.com/in/justin-mader-15a602119/.

In the summer of 2019, Kyrie Irving opted out of the final year of his deal with the Boston Celtics to join the Brooklyn Nets. Irving left behind a $21.3 million extension in exchange for a fully guaranteed 4-year, $136.5 million deal to play alongside Kevin Durant. With an average annual base salary just north of $34 million, it appeared to be a lucrative deal for the eight-time all-star. In the three and a half years spent with the Brooklyn Nets, Irving earned $29 million more than he did in his eight full seasons with the Cleveland Cavaliers and Boston Celtics. However, because of the COVID-19 Pandemic and a few minor injuries, Irving was only able to suit up in 143 games for the Nets. To put this in perspective, Irving played 381 games for the Cavaliers and 127 for the Celtics. Irving’s decision to forgo the vaccine came at a pretty hefty cost - $15,356,296 to be exact (the total amount of fines given by the Brooklyn Nets and NBA front office for violations of the NBA’s COVID safety and guidelines protocols). Even after the COVID-19 restrictions were lifted and fans were free to attend games, Irving was restricted from playing in home games because the city of New York had imposed a vaccine mandate for all indoor activities. Irving could conceivably play basketball at Rucker Park but not the Barclays Center. And unfortunately for Irving, it would not be until the 2022-2023 season before he began seeing a steady pattern of playing games. All-in-all a $136,490,600 contract with $15,356,296 in fines must mean that Irving brought home an estimated total of $121,134,304 and a per-game average of $761,500 during his time in Brooklyn, right? Wrong. Once Uncle Sam and the state of New York were paid their fair share, Irving brought home closer to $500,000 per game. Considering that the average NBA player makes about $91,500 per game, Irving still made 446% more than his peers. However, Irving’s talent for the game of basketball is far from average. On February 4, 2023, Irving and his camp requested a trade from the Brooklyn Nets. This came after a tumultuous off-season in which Irving reaffirmed his commitment to the organization by signing a 1-year extension to his existing deal. Throughout the season, Irving’s camp was unable to reach a long-term extension with the Nets. And while there is speculation as to why the two parties were unable to amicably reach a deal, the key takeaway is that the two were never going to reach a long-term deal. The Phoenix Suns, Los Angeles Clippers, and Los Angeles Lakers all seemed like potential landing spots for the multi-talented point guard. Most media personalities and sports talk shows became enamored with the idea that Irving would team up with his former teammate LeBron James. The idea that Irving and James could reunite on the day James was projected to become the league’s number-one all-time leading scorer would have made for a good story. While most sports talk shows and NBA insiders speculated about the pair reuniting, Mark Cuban had other plans. The shark investor, billionaire, and outspoken owner of the Dallas Mavericks did what he does best – took a risk. Since Cuban’s time with the Dallas Mavericks, he has been unorthodox and willing to take risks. Cuban went after stars like LeBron James, Kevin Durant, Dwyane Wade, Carmelo Anthony, Dwight Howard, and Deron Williams over the past decade, but unfortunately, players would rather opt for places like Los Angeles, Miami, and New York/Brooklyn. This time, Cuban was going to take matters into his own hands. One day later, on February 5, 2023, Dallas sent Spencer Dinwiddie, Dorian Finney-Smith, a 2027 second-round pick, 2029 first-round unprotected pick, and a 2029 second-round pick for Markieff Morris and Kyrie Irving. This was not a sign-trade deal. Cuban sent Brooklyn two of his best five players, who were still under contract for at least two more years for essentially the remainder of the 2022-2023 season. If the Dallas Mavericks are unable to reach the Championship and raise the Larry O’Brien Trophy, people will likely ridicule the trade. Regardless, the trade with the Nets gave the Mavericks Irving’s Bird Rights. Bird Rights – famously named after Larry Bird and the “early bird gets the worm” analogy – gives an organization the financial advantage to one of its players over other potential suitors. In layman’s terms, Dallas can offer considerably more money to Irving than any other team this offseason as he approaches free agency. By owning the contract and playing rights to Irving, they can either: let Irving walk; offer him a 2-year, $86.24 million extension; or sign him to a 5-year, $272.92 million max contract. The best any other team can offer Irving is a 4-year, $210.11 million contract. And with states like California (Lakers and Clippers) and Arizona (Suns) listed as potential suitors, it could be in Irving’s financial interest to stay put in Texas. As a tax income free-state, Texas gives Irving an additional break he did not have in New York. In Texas, Irving will still owe federal income taxes, but he will not owe additional taxes to the state of Texas or the city of Dallas. When it is all said and done, Irving could very well earn more in five seasons with the Mavericks than his total career earnings. It is yet to be determined whether or not Cuban’s gamble will pay off. Irving is still set to receive the remainder of his $136.5 million deal from the Mavericks' front office. With $13 million still to be paid out, and in a tax income free-state like Texas, 4-5 months spent in Dallas, Texas might be enough to convince the superstar to stay put. Caleb Ortega is a 1L at South Texas College of Law. He served in the United States Marine Corps and is an active member of his school’s Sports & Entertainment Law Society. He can be reached on Twitter and LinkedIn.

Bally Sports is about to be part of a rather significant bankruptcy proceeding. Rather significant because (1) Bally Sports is the largest owner of local sports channels,[1] (2) approximately $8.6 billion in debt will be restructured by Ball Sports,[2] known also by its legal name, Diamond Sports Group which is owned by Sinclair Broadcast Group Inc., and (3) the Braves, in addition to other professional sports organizations, might not get paid for their television contract with Bally Sports as a result of the bankruptcy. To further drive home the significance, David Hebert, a senior telecom analyst at CreditSights, an award-winning global credit market research firm, called Bally Sports’ restructuring through bankruptcy a “potential rewrite of the entire regional sports business.”[3] For those familiar with Bally Sports’ current financial woes, the question of bankruptcy is not if Bally Sports will declare bankruptcy but rather when Bally Sports declare bankruptcy. What exactly is the benefit of bankruptcy for Bally Sports? While bankruptcy is often a dirty word to laymen, for businesses, bankruptcy can be a useful tool. With cable television subscribers declining as more and more people cut the cord, Bally Sports has taken a financial hit over the last few years, including a reported $1.2 billion quarterly loss in November 2022,[4] that was only exacerbated by the COVID-19 pandemic disrupting or outright canceling sports seasons. Going the route of bankruptcy would allow Bally Sports to have certain of its outstanding debts forgiven and allow it to re-emerge (hopefully) as a more financially solvent business. Per Investopedia, a Chapter 11 Bankruptcy is common for businesses for a few basic reasons: Businesses often file for Chapter 11 bankruptcy, the goal of which is to reorganize, remain in business, and once again become profitable. Filing Chapter 11 bankruptcy allows a company to create plans for profitability, cut costs, and find new ways to increase revenue. Their preferred stockholders, if any, may still receive payments, though common stockholders will not. Put in a much too simple way, bankruptcy gives a business a second chance. Bally Sports is hoping that bankruptcy will allow it to shed debts and liabilities that would otherwise kill its business because of defaults in payments to its creditors. One of those debts could be its payments to the Atlanta Braves as part of their television contract. To add another wrinkle to the situation, Major League Baseball’s Chief Revenue Officer, Noah Garden, told Front Office Sports that, although the league’s “strong preference would be for the [regional sports networks] to be able to fulfill the agreements they signed with the clubs[,]” Major League Baseball has been planning for a scenario where Bally Sports halts payments or cancels contracts altogether.[5] But an end to its television contract with Bally Sports before its natural expiration in 2027 would not necessarily be a bad thing for the Braves (unless, of course, Bally Sports does not terminate the contract but stops paying under it). By reclaiming their media rights, the organization could seek to find a more favorable media deal since, perhaps more so than any other sport, money makes a big difference in baseball. (It isn’t the end all be all, or the Yankees would win every year, but it definitely helps to be able to pay to retain top talent). The Braves had previously restructured their contract with Bally Sports to increase their payment in 2023 from $80 million to $100 million, but the deal was always one that was widely considered unfavorable for the Braves and that had other issues outside of dollars and cents.[6] With a World Series win in 2021, a passionate, regional fanbase in the southeast, and exciting young players like Ronald Acuña Jr., Spencer Strider, Ozzie Albies, Austin Riley, and Michael Harris II, the Braves would likely be able to go out on the open market and find an even more financially beneficial television contract. Will Bally Sports give the Braves that opportunity? Probably not. But the bankruptcy gives the organization even more bargaining power with Bally Sports going forward. Grant Williamson is a graduate of the University of Tennessee College of Law - J.D., Class of 2019. He can be found on Twitter @GrantWilli33 Sources: [1] Bally Sports Network Owner Headed Toward Bankruptcy as Cable Declines - Bloomberg [2] Id. [3] Id. [4] What could a Bally Sports bankruptcy mean for RSNs’ team deals? - The Athletic [5] MLB Could Take Back Bally Sports’ Local TV Rights (frontofficesports.com) [6] Braves’ local TV revenue will rise sharply in 2023 and beyond (ajc.com)

After a tumultuous stint in Brooklyn, Kyrie Irving was traded to the Dallas Mavericks. The trade occurred after the controversial superstar guard, Irving requested a trade from the Brooklyn Nets. The news is nothing surprising to the Nets. After a failed attempt at assembling a "Big 3" involving stars Kevin Durant, James Harden, and Irving, Irving was the last member of the trio to request a trade from the Nets. Out of a possible 113 games, Durant, Harden, and Irving only played 16 games together, before Harden requested to be traded to the Philadelphia 76ers. A few months later, Durant stated that he wanted to be traded as well, although he ended up staying with Brooklyn. Neither Durant nor Harden were fined by the NBA for their trade requests, but the NBA has not been so consistent in these situations. The question is if the NBA will penalize Irving for his request per the NBA's Collective Bargaining Agreement ("CBA") or do nothing as was the case with his former teammates. The NBA's CBA, as is the case with the other professional sports league CBAs, sets out the governing principles of the league which are not in its constitutions or by-laws. Article XXX, Section 4 of the NBA’s CBA, discusses the "Best Efforts of Players Association." It states in part, "The Players Association will use its best efforts: (e) to prevent each player from making any demand upon the NBA or any of its Teams…" If a player violates this clause, the league may take action against the player. Though throughout the many times that players have requested trades since the current CBA went into effect in 2017, there has not been a steadfast rule that the NBA has enforced. Two of the biggest names of those who have requested trades include Harden and Durant. First, in 2020, reports were out that Harden wanted to be traded from the Rockets. He was only fined $50,000 at the time for violating Covid-19 protocols, but not concerning his trade request. A couple of years later, in February 2022, Harden made headlines again when he requested a trade from the Nets to the Philadelphia 76ers. A few months later, in June 2022, Durant also requested a trade from the Nets. Once more, there was no fine. Furthermore, in 2018, former Cavaliers guard JR Smith was asked by a reporter if he wanted to be traded and he answered in the affirmative. After an NBA review, Smith was not fined. However, the NBA has taken action against some other players. In 2017, while Eric Bledsoe was playing for the Phoenix Suns, he tweeted "I don't want to be here." He was fined $10,000. Most notably, all-star power forward, Anthony Davis was fined $50,000 after his agent told the media that Davis requested a trade from the New Orleans Pelicans and would not sign a contract extension. The following year, Dwayne Dedmon, after signing a three-year contract with Sacramento Kings requested a trade after being demoted from the starting rotation. The NBA also fined the Kings’ center $50,000, calling the comments "detrimental to the NBA and its teams." Although not explicitly set out in the CBA, the difference between the players who have been fined and those who have not seems to be based on the public nature of the requests. However, it appears that players who want out of their current situations have found a loophole to avoid being fined. All they need to do is, tell an inside source to leak the requests. For example, when Harden requested a trade from the Nets to the 76ers, he resisted making a public comment to avoid public backlash, but since someone else leaked the news, the liability was removed from him. For the most protection, the source of the trade request has to be somewhat attenuated. In Anthony Davis’ case, his agent Rich Paul made public comments, not him. Even though the applicable section of the CBA is titled “Best Efforts of the Players Association”, which would make it seems that only if Davis had made the comments would there have been repercussions. However, as NBA agents are certified by the unions only after an agent passes the union's exam, they are considered an extension of the Players Association. It does not appear that Irving will be fined for his trade request unless he personally, or his agent had publicly stated that he wanted to be traded. However, even if one of them did, it is possible the NBA still would not do anything, as was the case when Durant's agent, Rich Kleiman was the one to tell ESPN about his trade request and there were no consequences. Elliot Schwartz is a 3L at Benjamin N. Cardozo School of Law. While at Yeshiva University, he was a player and manager of the nationally-ranked Roller Hockey team. He can be reached on Twitter and LinkedIn.

Today Elon Musk CEO and majority owner of Twitter announced that his website would begin sharing revenue with content creators on ads placed in their tweet’s reply threads. Twitter’s policy change is one of many shifts in the industry including Alphabet Inc’s Youtube announcement that advertising on Youtube shorts would also generate royalties for influencers. As content creators are increasingly able to monetize their creations, the impact on college athletics could become profound. After NIL was formally approved in 2021 the majority sentiment was that while a few extremely popular athletes might be seen in nationwide advertising campaigns, the largest effect would be seen from local car dealership partnerships or enthusiastic alumni meet and greets. To an extent, this has been true as Bryce Young, Hanna Cavinder, and Bo Nix have featured in major national advertising campaigns while local advertisers have supported schools both through NIL collectives and small-scale advertising. However, the most potent tool that college athletes have capitalized upon has occurred by leveraging their social media influence. Olivia Dunne (3.2 Million Instagram followers), Travis Hunter (135 thousand Youtube subscribers), and Paige Bueckers (1 million Instagram followers) are just a few of the many college athletes turned content creators who have, to this point, have largely profited from advertising in their content itself. While college recruiting has quickly been muddied with accusations that athletes now select their school by following the highest bidding NIL collective, athletes may quickly realize that they may be better off going where they can best develop their personal brand. The motivation for building a personal brand rather than partnering with an NIL collective might become more pressing as NIL collectives quickly realize that they don’t have the financial firepower necessary to secure the greatest players. The best example of this came from Gainesville when news of Jaden Rashada’s alleged $13 million NIL collective deal shook the college recruiting world when the quarterback recruit originally committed to the University of Florida. TV talking heads quickly began debating if $13 million would become the new floor for securing top-tier talent at priority positions. The problem, however, was that the NIL collective was unable to come up with the money promised, and once Rashada was made aware, he requested a release from his letter of intent and selected Arizona State. Meanwhile, coaches like Colorado’s Deion Sanders have downplayed NIL potential while encouraging athletes to create Youtube channels and build their personal brands. With athletes unable to rely on school-centric NIL deals, and new revenue-earning opportunities quickly becoming available on social media, top college athletes should instead consider what University will be able to best promote their personal brand on a national stage. Unlike NIL funding which can be quickly pulled and disappears as soon as an athlete leaves campus, social media influence can allow athletes to generate revenue consistently. Moving forward, expect Universities to place an emphasis on how they can generate attention and spotlight for their athletes. Facilities and NIL deals are now the status quo. The future recruiting edge in college recruiting will belong to the schools that have the best graphic designers, social media managers, and content creators that athletes can benefit from. Chase Youngman is a third-year law student at Penn State Law where he was the president of the Penn State Law Sports Entertainment Law Society. You can also find him on Twitter as @c3youngman

First reported by Jonathan Jones of CBS Sports, former Carolina Panthers Head Coach Matt Rhule has filed for arbitration against the Carolina Panthers, alleging that the Carolina Panthers have refused to pay the amount owed to the coach after offsetting his salary as head coach of the University of Nebraska football team. Based on rough estimates, the amount in dispute is between $5-7 million, depending on the remaining amount the Panthers owe Rhule. In 2020, the Carolina Panthers signed Matt Rhule to a seven-year, $62 million contract after Rhule’s successful stints as head coach at Baylor University and Temple University. After less than three years and starting the 2022 season with one win in five games, the Carolina Panthers decided to make a change and fired Rhule, finishing his stint with the Panthers with an 11-27 overall record. At the time of Rhule’s firing, the Carolina Panthers still owed around $34 million through 2027. Rhule’s contract included a clause that the remaining amount the Panthers owe Rhule would be offset if Rhule signed a contract with another team. In November 2022, Rhule signed an eight-year, $74 million contract with the University of Nebraska, which began at $5.5 million and gradually increases each year. Through 2027, Nebraska owes Rhule roughly $28 million. Since the Panthers included an offset clause in their contract with Rhule, the $28 million Nebraska owes to Rhule through 2027 offsets the $34 million the Panthers owe Rhule. Thus, Rhule’s arbitration suit is likely claiming that the Carolina Panthers are refusing to pay somewhere between $5-7 million. Importantly, it is unclear when the Panthers are required to pay out the amount they owe to Rhule. Typically, contracts between coaches and the National Football League (NFL) have a strict mandatory arbitration clause. Thus, the NFL has the option to appoint an arbitrator to hear Rhule’s dispute with the Panthers. Since arbitration is private compared to public litigation, any settlement will likely be confidential. The Carolina Panthers thought they moved on from the Rhule era, hiring Frank Reich last week. However, it will not officially be over until Rhule’s dispute is resolved. Landis Barber is an attorney at Safran Law Offices in Raleigh, North Carolina. You can connect with him via LinkedIn or via his blog offthecourtdocket.com. He can be reached on Twitter @Landisbarber.

Today, February 3, 2023, the Commonwealth Court of Pennsylvania affirmed a Workers’ Compensation Judge’s September, 2021 order awarding Emmanuel Acho disability benefits. The Philadelphia Eagles had petitioned for review of the award on September 29, 2021. The benefits stemmed from an August 11, 2015 thumb injury Acho suffered in practice while employed by the Eagles as a linebacker. Acho continued playing football and ended up fracturing the same thumb less than a month later – again in practice. He had an operation on the thumb a couple days later in August of 2015. Acho was unable to participate in physical activities for a few weeks after the surgery, and, at that point, the Eagles suddenly released him from their roster. Pursuant to an injury settlement agreement, Acho received three weeks of pay upon his release. After physical rehabilitation, Acho was finally cleared to play but continued to have pain in his thumb. Nevertheless, he re-signed with the Eagles in November of 2015. He was there for a cup of coffee. Acho was released, once again, just 16 days after re-signing. After that second release, Acho never played professional football again. That didn’t limit his success, though, as Acho has become a highly-popular sports commentator and obtained a master’s degree at the University of Texas in 2017. Still, according to the court order, Acho argued that this thumb injury left him physically unable to play football at a high level, leading to a lack of employment in the NFL. He suffered from post-traumatic arthritis, among other complications, after the surgery. With that, on August 20, 2018, Acho filed a Claim petition relating to the 2015 thumb injury. The Workers’ Comp. Judge granted Acho partial disability benefits until September 12, 2019, and granted the Eagles a three-week credit for the injury settlement they had reached back in 2015. The Eagles petitioned for review of Acho’s multiple disability awards on September 29, 2021. The team raised 3 issues: “The evidence relied upon by the WCJ to award total disability benefits from August 23, 2015, to November 10, 2015, was insufficient because it did not establish that Claimant's release from Employer's roster was due to his injury.” "The evidence relied upon by the WCJ to award partial disability benefits from November 10, 2015, through September 12, 2019, was insufficient to establish that Claimant suffered a compensable injury during this period; the WCJ's finding in this regard was arbitrary and capricious;" and "The medical testimony of Claimant's expert, Dr. Vagner, was not competent, credible, or unequivocal in establishing a compensable injury after August 23, 2015." The Commonwealth Court’s standard of reviewing the WCJ’s decision was to determine whether constitutional rights were violated, whether an error of law was committed, and whether necessary findings of fact are supported by substantial evidence. The Court was not convinced that Acho’s second release from the team wasn’t related to injury: “Claimant [Acho] was released immediately after the surgery on his thumb and was paid a three-week injury settlement.” “The 2015 release thus clearly was not routine or based on any past practice, but rather was due to Claimant's injury and perceived inability to play.” Thus, the court concluded that an award of total disability benefits for the period in 2015, as well as the subsequent award of partial benefits, were not made in error. Finally, the Court held that the WCJ did not err in considering Acho’s expert Dr.’s testimony. Specifically, the Court pointed to Dr. Vagner's experience: "he is an orthopedic surgeon with added credentials as a hand specialist and the hand surgeon for the University of Texas and Baylor University athletic departments." Jason Morrin is a law clerk (pending admission to the NY Bar) at Zumpano, Patricios & Popok LLP in New York, a firm dedicated to litigation and business counseling including in the areas of sports, gaming and entertainment. He graduated cum laude from Hofstra Law School where he was president of the Sports and Entertainment Law Society. His reporting for Conduct Detrimental has been cited by ESPN, The New York Post, USA Today, Bleacher Report and more.

Star Georgia quarterback Stetson Bennett was arrested on a public intoxication charge in Dallas on Sunday, January 29th. [1] The police report shows that officers were responding to reports of banging on doors, eventually taking Bennett into custody. [2] Bennett recently chiseled his name as a Georgia football legend a couple of weeks ago after leading the Georgia Bulldogs to their second consecutive College Football Playoff National Championship. His arrest poses interesting legal questions regarding the structure of NIL contracts and brings forward issues other student-athletes should know about. What Makes a Morals Clause So Important? Typical NIL agreements include a morals clause that student-athletes may or may not be aware of. A morals clause allows a party who is paying a student-athlete to terminate that agreement because the student-athlete has placed the party into disrepute or public embarrassment. Common actions that trigger a morals clause are arrest, conviction of a crime, or being charged with a felony. These clauses are important for student-athletes to understand because the impact they have on the NIL agreement depends on the language in the contract. Some morals clauses include language that will retake payments already issued to a student-athlete in addition to canceling future payments or termination of the agreement as a whole. The actions that trigger a morals clause can also vary. Even if being arrested does not trigger the clause, an arrest may violate a team or school policy, which could cause termination from the team. Such termination may then trigger the morals clause. What are the Ramifications for Stetson Bennett? Stetson Bennett has exhausted all his years of NCAA eligibility and is preparing for the NFL draft, so his arrest may not his future income. However, Bennett will see consequences if his NIL agreements had morals clauses that included language permitting a company to repossess payments. Another factor to think about, which Bennett and his management team are certainly aware of, is how this arrest affects Bennett’s draft stock. At five feet eleven inches, NFL scouts have already raised doubts and predicted he would be a sixth or seventh-round draft pick.[3] With this arrest, some teams may be even more reluctant to pick him up, so Bennett may need to be worried about losing NIL deals because of behavior that some companies may consider to have brought them into disrepute and public embarrassment. Stetson Bennett’s arrest highlights a significant aspect of all NIL agreements that some student-athletes may overlook or forget about. Now that student-athletes are getting paid through these deals, they have to keep in mind they are representing professional organizations beyond their team and school, and a lack of reciprocal professionalism brings unwanted consequences to NIL deals they have secured. Jared Yaggie is a 2L at the University of Cincinnati College of Law. You can connect with him via LinkedIn or on Twitter @JaredYaggie. Sources: [1] Mark Schlabach, Georgia QB Stetson Bennett Arrested On Public Intoxication Charge, ESPN (Jan. 29, 2023, https://www.espn.com/college-football/story/_/id/35551758/georgia-qb-stetson-bennett-arrested-public-intoxication. [2] Id. [3] Calvin Watkins, How Will Georgia QB Stetson Bennett’s NFL Draft Stock Be Affected By Dallas Arrest?, THE DALLAS MORNING STAR (Jan. 29, 2023), https://www.msn.com/en-us/sports/ncaafb/how-will-georgia-qb-stetson-bennett-s-nfl-draft-stock-be-affected-by-dallas-arrest/ar-AA16So6J.

In January, 2023, Kelly Oubre, Jr.’s fashion brand “Dope Soul” filed a lawsuit against former NBA player Patrick Christopher and his fashion brand Sloan and Bennett (collectively, “Defendants”) for breach of contract and fraud, among other claims. Christopher was a two-time first-team all-Pac-10 selection who played 4 total games in the NBA. After Christopher’s playing career ended in 2016, he started the apparel company Sloan and Bennett. The company describes itself as a “luxury brand of outerwear garments.” Per the complaint, Sloan and Bennett has collaborated with prominent NBA players and agents. One such player is Charlotte Hornets’ swingman Kelly Oubre, Jr. Oubre is a celebrated fashion mogul in the association, consistently drawing the cameras as he walks through stadium tunnels (which now largely serve as runways). Oubre met Patrick Christopher through Oubre’s friend and videographer, who also worked with Christopher’s brother, Houston Rockets 2021 first-round pick Josh Christopher. Oubre approached Defendant Christopher, inquiring about his ability to manufacture garments for Dope Soul. Christopher assured Oubre and Dope Soul that he had the capability. Per the complaint, the two parties began to work together and Christopher provided Oubre samples of how certain items would look starting in February, 2021. Dope Soul approved of the samples and by March of that year, Christopher began sending invoices for the work. However, Plaintiff claims that Christopher did not tell Oubre that Sloan and Bennett had been suspended by the California Franchise Tax Board in 2020 and that Sloan and Bennett did not have the capabilities, despite promises to the contrary, to manufacture Oubre’s requested garments. In 2021, Defendants issued six invoices to Plaintiff, totaling $257,506.81. Plaintiff paid them all in full. Plaintiff’s complaint is summed up as follows, as Christopher never produced the garments after accepting payment: Defendants did not perform: For months, Defendants dodged Plaintiff and strung Plaintiff along, including by ignoring Plaintiff’s attempts to schedule delivery or pickup of the Dope Soul Inventory, making excuses for why the Dope Soul Inventory could not be delivered or picked up, refusing to provide information necessary to arrange pickup of the Dope Soul Inventory (such as the quantity and weight of the boxes), and demanding that Plaintiff pay a ransom to have the Dope Soul Inventory made available for pick up despite previously claiming that they were in storage. Between February and July 2002, it became apparent the jig was up. With that, Oubre filed this 7-count complaint against Christopher and Sloan and Bennett in Los Angeles County Court. Oubre is currently represented by Billy Duffy of BDA sports for his professional career and is on the second year of a 2-year, $24,600,000 contract. He is represented by LA law firm King, Holmes, Paterno & Soriano, LLP in this legal proceeding. Jason Morrin is a law clerk (pending admission to the NY Bar) at Zumpano, Patricios & Popok LLP in New York, a firm dedicated to litigation and business counseling including in the areas of sports, gaming and entertainment. He graduated cum laude from Hofstra Law School where he was president of the Sports and Entertainment Law Society. His reporting for Conduct Detrimental has been cited by ESPN, The New York Post, USA Today, Bleacher Report and more.

As of right now, student-athletes in the NCAA are not considered employees. Many argue that should change. This is a hunch, but there is a chance student-athletes will make the jump to employees in a manner very similar to the one where they became allowed to be compensated for their name, image, and likeness. How We Got to NIL Rights: On September 30, 2019, California passed Senate Bill 206 which allowed NCAA athletes to be compensated for their NIL. The bill was to take effect on January 1, 2023. Then numerous other states passed very similar legislation that would allow athletes compensation for their NIL. This put some pressure on the NCAA, which at the time was the only reason athletes were not allowed to make money on their NIL. When these bills would take effect, the NCAA would then violate state law. However, at the time none of them were in effect. Then on June 21, 2021, the Alston decision by the Supreme Court came out. The case consisted of athletes alleging that the NCAA had violated antitrust laws by restricting non-cash education-related benefits. Judge Wilken of the Ninth Circuit ruled against the NCAA and found that athletes could receive benefits beyond the previously-established full scholarships rule. The NCAA could not prevent athletes from receiving post-eligibility scholarships to complete undergraduate or graduate degrees. Wilken also established that the conferences within the NCAA could set other allowances. However, the NCAA could still limit cash or cash-equivalent awards for academic purposes, so there is no pay-for-play. The Supreme Court affirmed Wilkens decision and found against the NCAA. The Supreme Court however, did not attempt to make any judgment on whether student-athletes should receive further pay. [1] The Supreme Court did not make the NCAA take away their restriction of NIL rights for college athletes, but they showed that the NCAA was restricting the athletes too much by only allowing a full scholarship. This gave further momentum, along with those states passing NIL laws to student-athletes getting the right to their NIL. Then on June 30, 2021, just 9 days after the Supreme Court’s ruling, the NCAA approved the new interim NIL policy allowing student-athletes to be compensated for their name, image, and likeness. Now Further Compensation for Athletes? If history were to repeat itself, we might see a very similar situation that results in student-athletes being paid part of the revenue generated by their team. On January 19th, 2023 California lawmaker Chris Holden proposed a bill labeled the College Athlete Protection Act that would require schools with major revenue-generating sports to create a fund that would pay the players a share of their teams’ annual revenue. The formula designed to create fair market value compensation for the athletes would be giving them half of the team's revenue either through grant-in-aid scholarship dollars or in revenue-sharing payments, after deducting what the team spent on scholarships. For example, if the San Diego State basketball team generates roughly $6 million in revenue and spends roughly $500,000 on scholarships for its players, the school would have to set aside $2.5 million at the end of the year for the players. Players could receive up to $25,000 in annual payments at the end of their season and any additional money would be held in a trust until they graduate. The bill also creates regulation about a 21-member state-run panel that regulates how schools give resources to protecting and educating their activities. Other areas of emphasis in the bill include: return to play, guaranteed scholarships, and restricting schools from cutting varsity programs if the athletic director makes more than $500,000 a year. [2] The proposed bill does make it clear that athletes would not be considered employees. [3] Employment Status: On February 8, 2022, the National College Players Association (NCPA) filed a charge with the National Labor Relations Board (NLRB) claiming that the NCAA, Pac 12, and USC unlawfully violated the employee rights of college football and basketball players under the National Labor Relations Act. The NCPA complained that for the past 6 months, the employers have interfered with, restrained, and coerced its employees… by repeatedly misclassifying employees as “student-athlete’ non-employees.” The NLRB has agreed to bring the charge against the NCAA, Pac-12, and USC. If a settlement is not reached the case will be heard by an administrative law judge. That decision would then likely be appealed to a five-person National Labor Relations Board in DC (which currently has a 3-2 Democratic majority), and then that decision could be appealed to a US District Court or even the US Supreme Court. If the NCPA were to win the case, student-athletes would be classified as employees and would be given all the rights of employees and must be paid to play. [4] Getting to the Deja Vu: It takes a stretch, but if you look at these scenarios from a broad perspective we see that NIL rights came about because California passed a law, other states passed similar laws, the US judicial system heard a case that somewhat had to do with what the laws revolved around, and it leads to the NCAA giving the states what they wanted. Now, we have California’s proposed law and a potential case that could be heard by the US judicial system. I do not mean to say that athletes are going to be classified as employees, I just intend to show the similar characteristics that lead to the NCAA’s hand being forced. Multiple factors will come into play when determining if student-athletes will be paid for their play; whether the California bill passed, other state legislation, any federal legislation, the result of the NCPA lawsuit, and the mindset of the new NCAA President Charlie Baker. The moral of the story is we are getting closer and closer to athletes being paid for the services they are providing for the schools. A big question might be, will the NCAA create its regulation concerning it, or are they once again going to wait for their hand to be forced? Written by Logan Hughes, a second-year law student at Ohio Northern University. Twitter: @loganchughes23 Linkedin: Logan Hughes. Sources: [1] 135 Harv. L. Rev. 471 (2021) [2] Dan Murphy, “New California bill pushes for college sports revenue sharing”, espn.com, Jan 19, 2023, https://www.espn.com/college- sports/story/_/id/35483573/new-california-bill-pushes-college-sports-revenu e-sharing. [3] Id. [4] Michael McCann, “NCAA, PAC-12 Accused of Athlete Labor Violations in New Filing”, sportico.com, Feb 8, 2022, https://www.sportico.com/leagues/college-sports/2022/ncaa-pac-12-ucla-and-usc-1234660311/.

The NCAA has circulated a memorandum to its Division I member schools that includes a standard of review for violations related to NIL activities (H/T to @WinterSportLaw who tweeted the memo). The memorandum also lists several factors for determining whether an NIL violation has occurred and provides additional information on the related infractions process. Standard of Review The memorandum states that when available information supports that the behaviors leading up to, surrounding, and/or related to an NIL agreement or activity were contrary to NCAA Division I legislation and/or the interim NIL policy, the NCAA’s enforcement staff and Division I Committee on Infractions shall presume a violation occurred. Once it is presumed an NIL violation has occurred, the burden then shifts to the institution to “clearly demonstrate” that all behaviors complied with NCAA legislation and the interim policy. The standard of review and burden-shifting analysis included in the memorandum is essentially a reiteration of statements in the NCAA’s press release announcing updated NIL guidance for institutions in October 2022: Factors for Determining NIL Violations The memorandum also outlined several factors for determining whether an NIL violation has occurred, including, but not limited to, impermissible contacts, offers, and benefits. Impermissible Contacts. An impermissible contact is deemed to occur when an institutional staff member directly or indirectly contacts a prospect who is not in the NCAA Transfer Portal to discuss NIL opportunities. An impermissible contact is also deemed to occur when a representative of the institution’s athletic interests (e.g., booster, collective) contacts a prospect or their family about potential NIL opportunities before the prospect signs with an institution. Impermissible Offers. The memorandum provides several examples of impermissible offers: An institutional staff member in any way offers, communicates, and/or guarantees an NIL opportunity to a prospect, their family or representatives during their recruitment. A representative of the institution’s athletics interests announces and/or enters (whether verbally or in writing) into an NIL agreement with a prospect prior to their enrollment at the institution. An NIL agreement requires a prospect to be in the locale (i.e., city, ZIP code) of the institution prior to enrollment in order to fulfill the terms of the agreement (e.g., local appearances). A collective and/or its representatives engage in recruiting activities and/or the promotion of specific prospects prior to their commitment to the institution. Impermissible Benefits. An impermissible benefit is deemed to occur when an institutional staff member, booster or other institutional representative solicits, facilitates and/or provides additional NIL opportunities in order to secure a student-athlete’s continued enrollment at the institution. Infractions Process The memorandum concludes by discussing the infractions process for a potential NIL violation. The memorandum discusses how the NCAA’s enforcement staff has the authority to conduct either a (1) limited/expedited investigation or (2) issue a Letter of Inquiry (“LOI”) to an institution. After reviewing the information obtained through the investigation and/or the institution’s responses to an LOI, the enforcement staff will allege an NIL violation unless it concludes that the institution rebuts the presumption that a violation has occurred. If the institution agrees a violation has occurred, the institution and enforcement staff may submit a summary disposition or negotiated resolution for approval by the Committee on Infractions. If the institution and enforcement do not agree as to whether a violation has occurred, the case will proceed to a contested hearing Key Takeaway The NCAA’s memorandum is intended to crack down on the use of NIL payments as recruiting inducements or disguised “pay-for-play” deals. However, the NCAA has yet to actually enforce its NIL rules. Coaches and administrators have been calling for the NCAA to enforce its rules for months as boosters and collectives continue to commit recruiting violations and use the guise of NIL to lure top high-school recruits and target players in the Transfer Portal through “pay-for-play” deals. But, this new memorandum may be a warning sign for institutions and collectives to get their act together as the standard of review places a heavy burden on institutions to clearly demonstrate that all behaviors with respect to an NIL agreement or activity complied with NCAA rules. Ryan Whelpley is an Associate at Morse in Waltham, Massachusetts, where he is a member of the firm’s Corporate Practice Group. He is a graduate of Albany Law School and Union College. At Union, Ryan was a member and three-year captain of the Men’s Basketball Team. You can connect with him via Twitter and LinkedIn.

The effect a “contract year” has on an athlete is undoubtedly an interesting phenomenon to observe. Whether it’s an MLB, NFL, NBA, or NHL player, the stakes involved for a player’s performance entering free agency are through the roof. Even as smart as today’s front offices are in their holistic evaluations, the recency bias of seeing an athlete succeed or fail could mean the difference of tens of millions. A prime example on the positive side is Aaron Judge. In 2022, Judge was in his last year of club control with the Yankees. He proceeded to break the AL single-season homerun record and inked a $360 Million deal as a result. For a player who’d battled injuries over the course of his career before 2022, if Judge failed to stay healthy and perform in his contract year, he would’ve settled for far less than that this winter. On the flip side, Joey Gallo was also in a contract year in 2022. In the summer of 2021, Gallo was rumored to be negotiating with the Texas Rangers on a potential nine-figure contract to stay in Texas. The talks fell through, and Gallo was eventually traded to the Yankees (later to the Dodgers), where he struggled mightily over the next year and a half. Once positioned to a lucrative $100 Million deal, Gallo was forced to take a 1-year/$11 million deal with the Minnesota Twins. So that’s professional sports. But what about college football? Obviously, college athletes (for the time being) don’t have contracts with their schools, so our attention will be on the coaches. In evaluating the landscape of college football coaching contracts, something really stood out: today’s coaches rarely even get to the point where their deal expires. Why is this the case? While acknowledging that every situation is unique, the contract status for a coach can often be described in one of two ways. The first is if the coach is succeeding and the second is if the coach isn’t. Hitting on the positive side first, if a coach has a successful season or collection of seasons, athletic directors, university presidents, and boosters are immediately pressured to do whatever it takes to keep that coach at their school. Whether it be another school or the NFL, the fear of losing a successful coach often leads to schools shelling out lucrative extensions. Even if a coach isn’t a real candidate for another job, the magnificent work of agents to push rumors into the public sphere can give coaches tremendous leverage at the negotiating table. Whether or not these long-term extensions are wise investments is certainly unknown. In looking at Nick Saban’s pay over the years, there’s no question the seven-time national championship coach has been worth every penny to the University of Alabama. But for Jimbo Fisher and Mel Tucker, there’s certainly some early trepidation on whether their schools acted too soon. However, it’s worth mentioning that hindsight is always 20/20, and the 10-year/$100 million deal is the market for the perceived elite coaches today. Without the extension at Michigan State, would Mel Tucker have taken the LSU job? Who knows? But Michigan State, like many other schools today, wasn’t willing to take that chance. The other reason why coaches rarely get too close to a contract year is quite simple: They get fired well before their contract expires. I’ve written extensively for the site about how coaches are getting fired sooner and sooner into their tenures over the past few years, and I really don’t expect that trend to cease. If a coach doesn’t have success on the field or on the recruiting trail within two years, the pressure to get a new coach in that will is through the roof, especially at big programs. Paying a buyout is undoubtedly a tough pill to swallow for a school’s power brokers. But when pressed to make that decision, they aren’t asking whether or not they can afford to pay their fired coach, they’re asking if they can afford not to. In total, of the 69 power conference schools (including Notre Dame), 65 have either fired or extended a coach over the past two calendar years. Some, including Washington and Texas Tech have done both. Simply put, when it comes to coaches’ contracts in today’s college football, a coach either gets fired or gets extended within months on the job. There’s no in-between. Below is a conference-by-conference look at the contract status of each coach. *Denotes private institutions. Private institutions are not required to release contract terms, but in many cases, they do Although not included in the charts, the Group of 5 data is similar. Whether or not we see this trend reverse or scale back is yet to be determined. But as conferences continue to sign lucrative media rights deals, it’s clear that big-time programs aren’t pressing for money. Sure, in a day where the players start getting paid directly by the schools like employees, this may change. But for now, the money must go somewhere. A significant portion of it is going to extensions or buyouts for coaches. Brendan can be found on Twitter @_bbell5