Top Ten Sports Law Controversies of 2020 Set to Shape Industry’s Future
The past year has been one of the most trying in the country’s 244-year history. The sports world, and the many industries that serve it, won’t forget 2020 anytime soon—especially since it saw the advent of 10 major legal controversies that will reshape sports long after the pandemic ends.
1. The Coronavirus Pandemic Abruptly Transformed Sports as We Knew It
For many Americans, the disruptive power of coronavirus first became evident on March 11. Within hours of Utah Jazz center Rudy Gobert testing positive for the virus, NBA commissioner Adam Silver dramatically suspended the 2019-20 season. Two days later, President Donald Trump proclaimed a national emergency. Businesses would soon shut down. Schools steeped in in-person traditions would quickly become dependent on teleconference software.
Much of the world as we knew it was no more.
The legal aftermath would prove just as jarring. Leagues and their respective players’ associations—and their respective attorneys—had to swiftly negotiate new economic terms and workplace rules to account for lost games and forfeited revenue. They also had to forecast when it would become both sensible and lawful under stay-at-home orders, gathering restrictions, travel prohibitions and other public measures to resume. Force majeure clauses, which had previously been obscure provisions, became paramount.
The NBA and NHL completed their 2019-20 seasons in “bubbles,” while MLB and the MLBPA eventually reached an agreement on a 60-game season. The NFL is nearing the end of a complete season despite more than 300 players being placed on the league’s Reserve/Covid-19 injury list.
Meanwhile, pro teams brought business interruption lawsuits against their insurance companies, college football players sued to play and demanded a collective entity, and the U.S. Department of Homeland Security denied entry to foreign college athletes.
The legal fallout of the pandemic could last well into the 2020s.
2. Black Lives Matter Reshapes Athlete Speech
The killing of George Floyd and the shooting of Jacob Blake sparked outrage across the country, and the sports industry was no exception. Players in the major leagues walked out and refused to play. They weren’t protesting their commissioners, team owners or workplace conditions. They were protesting racism.
Commentators struggled to define what was happening. Some preferred the label “wildcat strike,” which refers to a strike without union authorization. That moniker may have been correct under the letter of the law, though perhaps not the spirit of it; the players’ unions were hardly in opposition. A “walkout” to demand justice for African Americans might have been more apt.
The leagues listened to this new era of athlete activism. Owners accepted brief work stoppages and endorsed social justice messaging. In the NBA, for example, players exhibited slogans, like “Power to the People” and “Say Their Names”, on the back of jerseys. Meanwhile, in baseball, “BLM” was placed on the pitcher’s mound.
These developments also entered the political arena. Most notably, many WNBA players wore “Vote Warnock” T-shirts in reference to Rev. Raphael Warnock, a Democratic candidate for U.S. Senate in Georgia. The explicit support for Warnock followed controversial statements by U.S. Senator Kelly Loeffler, a Republican from Georgia and co-owner of the WNBA franchise Atlanta Dream. Loeffler dismissed Black Lives Matter as a “very divisive organization” that promotes “violence and destruction across the country.”
In August, NFL commissioner Roger Goodell apologized to Colin Kaepernick, whose kneeling during the playing of the national anthem sparked a two-year social controversy and collusion grievance. “I wish,” the commissioner lamented, “we had listened earlier, Kaep, to what you were kneeling about and what you were trying to bring attention to.” Yet Kaepernick, now 33, remains out of the NFL.
3. The United States Supreme Court Grants Cert in the Alston Case
It’s been decades since the NCAA’s controversial concept of “amateurism” played a central role in a case examined by the U.S. Supreme Court.
That will soon change.
Earlier this month the Court granted cert in two companion cases, NCAA v. Shawne Alston et al. and AAC v. Shawne Alston et al. The cases center on whether it is illegal under antitrust law for the NCAA and its member schools to join hands to limit the value of grants-in-aid to tuition, fees, room, board, books and other expenses up to the value of the full cost of attendance.
The U.S. Court of Appeals for the Ninth Circuit held that such a practice is illegal, though the Ninth Circuit’s remedy—schools can still agree to limit athlete compensation tied to sports—preserves the basics of amateurism. Whether the U.S. Supreme Court will agree is the pivotal question.
4. The NCAA Accepts the Concept of NIL, but Details Remain Unsettled
In April, the NCAA’s Board of Governors announced it supported changing eligibility rules to allow college athletes to hire agents, sign endorsement deals and negotiate contracts with third parties for the commercial use of their name, image and likeness. The rule changes—details for which are still in flux—will go into effect in the 2021-22 academic year.
This shift reflects a profound change in American sports history.
Until recently, the NCAA had expressed worry that college players profiting from their NIL would destroy the separation between pro and amateur sports and diminish interest in their on-court and on-field product. This philosophical objection increasingly attracted accusations of hypocrisy. The public watched college coaches sign multimillion-dollar contracts and conferences negotiate massive broadcasting deals. The objection also conflicted with several states’ newly ratified NIL statutes.
The NCAA, which intends to provide clarity on NIL rules next month, hopes that Congress will pass a federal law to preempt state NIL statutes. Many questions remain, including whether Congress will take action, what role would be played by the Federal Trade Commission and how NCAA compliance would change. It could all wind up in court.
5. Minor League Baseball Faces Pressure to Contract
Earlier this month, Major League Baseball and its 30 clubs executed a much-derided plan to restructure, and shrink, affiliated Minor League Baseball.
More than 40 teams at the short-season and rookie league levels lost their big-league affiliations. The remaining MiLB clubs “invited” to continue must contractually relinquish potential legal rights.
MLB’s moves defy the wishes of the bipartisan Save Minor League Baseball Task Force in Congress, which could demand hearings and propose legislation to limit or eliminate MLB’s antitrust exemption. Meanwhile, minor league clubs that have lost their MLB affiliations could sue—the Staten Island Yankees have already done so—as could cities and counties that funded ballparks and team sponsors.
Not to be forgotten in the restructuring: minor league players themselves and their continuing class action against MLB over minimum wage and overtime pay.
6. Kobe Bryant’s Death Spawns Myriad Forms of Fallout
2020 featured tragedy long before “coronavirus” and “COVID-19” became household names.
In January, a Sikorsky S-76 helicopter transporting NBA legend Kobe Bryant, his 13-year-old daughter Gianna Bryant and seven others crashed in Calabasas, Calif. Everyone on board died on impact.
The National Transportation Safety Board continues to investigate the crash, which occurred during heavy fog. The crash scene led to unauthorized photos. That, in turn, prompted California lawmakers and Gov. Gavin Newsom to sign a law making it a crime for first responders to take unsanctioned photos of deceased persons at crash scenes.
Bryant’s widow, Vanessa Bryant, filed a wrongful death lawsuit against the company that operated the helicopter and the estate of the pilot. More recently, Vanessa Bryant’s mother, Sofia Urbieta Laine, 68, sued her daughter—whose estate is reportedly worth in excess of $600 million. Laine contends that Bryant hasn’t honored her late husband’s alleged wishes to financially support Laine for the remainder of her life. Vanessa Bryant insists the lawsuit is tantamount to a macabre form of extortion.
7. U. S. Women Soccer Players Lose Summary Judgment but Legal Fight Continues
The lawsuit brought by USWNT players against U.S. Soccer for what they maintain is inequality in compensation hit a formidable roadblock in May, when U.S. District Judge Gary Klausner granted summary judgment for U.S. Soccer. The core reason: USWNT’s union negotiated the pay system that USWNT players claim is illegal.
But the lawsuit is hardly over. The two sides reached a settlement in December regarding non-pay aspects of the case (travel and hotel accommodations, venue selection and staff sizes), which paves the way for the players to appeal to the Ninth Circuit. While the appeal provides the players with another opportunity in court, a ruling is unlikely before 2023.
8. The Astros Face the Consequences of Their Cheating
Sign stealing has long been a dubious art in baseball. Aided by the unlikely combination of illicit cameras and trash cans, the Houston Astros took sign stealing to another level—and paid the price.
In January, MLB commissioner Rob Manfred found the Astros had orchestrated an electronic sign stealing plot during their championship season in 2017. The basic schematics: A centerfield camera in Minute Maid Park secretly recorded opposing teams’ catchers signaling signs. Imagery was then reviewed in the clubhouse and, through coded bangs on a trash can near the dugout, information about forthcoming pitches was relayed to Astros batters.
The fallout was massive. General manager Jeff Luhnow, manager A.J. Hinch and former bench coach Alex Cora received season-long suspensions. Players avoided suspensions by cooperating with MLB, but former outfielder Carlos Beltran lost his new job as New York Mets manager due to the scandal.
Lawsuits were brought. Luhnow sued the team for wrongful termination, former Toronto Blue Jays pitcher Mike Bolsinger sued the Astros for ruining his career and aggrieved DFS contestants argued in court that their rights had been violated.
9. Washington’s NFL Franchise Changes Its Name as Ownership Legal Battles Play on
2020 was a year of change in Washington, D.C., and not only for political reasons.
In July, the NFL team formerly known as the Redskins announced it was dropping its controversial name after major brands, including Pepsi and FedEx, made clear they could no longer sponsor the team if it held onto a name long protested by some as racist to Native Americans. The pressure from the corporate sponsors came as a result of the changing climate spawned by the summer’s BLM and racial justice protests.
This was no minor development. Only a few years earlier, the franchise had prevailed in a longstanding legal fight over whether the U.S. Patent and Trademark Office could cancel a business’s marks for being disparaging.
But the move away from “Redskins” raised other complications, including that other parties—derisively called “trolls”—had filed trademark applications for possible replacement names and logos. The franchise picked Washington Football Team for 2020 and might keep it for a while. The Cleveland Indians, which pledged earlier this month to change their controversial name, appear to have taken a page from the Washington playbook.
As Washington’s NFL franchise works to land on a new name, its majority owner, Daniel Snyder, is embroiled in multiple legal controversies. The team’s three limited partners (Robert Rothman, Dwight Schar and Frederick Smith) sued Snyder in Maryland over his ability to block their sale of equity, and Snyder has intervened in a separate lawsuit brought by his team’s former counsel. Meanwhile, the NFL, which is investigating the franchise (and perhaps Snyder) for workplace misconduct, isn’t standing by idly. The league has intervened in the lawsuit involving the four owners and insists the NFL dispute resolution system should resolve the matter internally and away from media access.
10. The XFL Goes to Bankruptcy Court but Is Saved by Gerry Cardinale and the Rock
The XFL was one of the pandemic’s many business casualties: The league’s inaugural comeback season was cut short in March. Then Vince McMahon’s Alpha Entertainment declared Chapter 11 bankruptcy, effectively ending the XFL as we knew it (19 years after the first version of the XFL folded).
As often happens when businesses fail, litigation would follow the XFL’s demise. Commissioner Oliver Luck brought a breach of contract lawsuit against McMahon. Later, a committee representing unsecured creditors filed an objection to a pending sale.
But in August, the XFL would live another day. U.S. Bankruptcy Judge Laurie Selber Silverstein approved the sale of the team—as first reported by Sportico’s Scott Soshnick—to a group headlined by former WWE star Dwayne “The Rock’’ Johnson, businessperson Dany Garcia and RedBird Capital CEO Gerry Cardinale for $15 million, plus assumption of liabilities. The XFL hopes to resume play in 2022, long after the pandemic hopefully and mercifully ends.
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