Last week, the NCAA eliminated a controversial provision of the contracts it requires DIvision 1 athletes to sign. That is, the organization removed the provision that allows the NCAA, or an assigned third party, to use the name and likeness of the athlete to promote NCAA events without compensation. 

Currently, the NCAA is awaiting the decision of a Federal Judge in the O'Bannon v. NCAA trial, which is a class action lawsuit brought by former, and current, Division 1 athletes principally challenging the NCAA's use of the athletes' names and likenesses in television broadcasts, rebroadcasts, and video games without compensation. The NCAA's elimination of the name and likeness provision appears to be an effort to distance the organization from the practices which resulted in the O'Bannon lawsuit. 

Name and likeness rights, also known as publicity rights, are the personal rights to control the use of one's name, image, or likeness for commercial use. These rights continue to exist after death and are freely assignable. Publicity rights are State specific. 

Publicity rights are an important issue for collegiate athletes because intercollegiate athletics, particularly Division 1 football and basketball, is a multi-billion dollar industry where the athletes do not get paid to play, nor for the use of their names and likenesses. Meanwhile, some NCAA conferences and schools have been making millions on media deals and broadcast rights for their sporting events which rely on the use of the athletes' names and likenesses. Additionally, the NCAA had been licensing the use of these athletes' likenesses, at a profit, for video games. In some cases, athletes' likenesses were used years after their college career had ended, capitalizing on players' success and popularity as a professional. Not only were the athletes unpaid for their on-field performance, but they were also unpaid for the use of their likeness, seemingly in perpetuity prior to the O'Bannon lawsuit. 

Although there has yet to be a decision by the Federal Judge in the O'Bannon case, it is telling that the NCAA is removing its name and likeness provision from its athlete contracts. However, some individual colleges and conferences still require athletes to sign name and likeness releases. It will be interesting to see how the Court rules on the O'Bannon case, as it has the potential to reshape the business of intercollegiate athletics.

The ongoing saga of Donald Sterling's attempts to regain, or retain, ownership of the Los Angeles Clippers continues. Last night, Donald filed a lawsuit against Shelly Sterling (his estranged wife), the Los Angeles Clippers, the NBA, and NBA Commissioner Adam Silver. This lawsuit alleges 12 causes of action, including:

1. Violation of section 25401 of California's Corporations Code (fraud)
2. Unfair business practices in violation of section 17200 of the California Business and Professions Code (fraud)
3. Breach of contract
4. Breach of fiduciary duty
5. Breach of implied covenant of good faith and fair dealing
6. Fraud
7. Negligent misrepresentation
8. Conversion
9. Intentional infliction of emotional distress
10. Negligent infliction of emotional distress
11. Injunction
12. Declaratory relief

This lawsuit is the third that Donald has filed in his attempt to regain, or retain, ownership of the Clippers. His original two lawsuits focused on the propriety of the NBA's sanctions against him and the propriety of Donald being declared mentally incompetent, resulting in his supposed loss of ownership of the team to Shelly. 

Legal issues in this new case aside, what this does entail is that the ownership of the Clippers will not be a settled matter (according to the courts) for some time. Attorneys for Sterling have stated that this case may take several years to resolve. But what does that mean to the Clippers organization? 

Dick Parsons, the interim CEO of the Clippers, testified in court yesterday that he fears if Donald were to remain owner of the team, it would plunge the organization into a "death spiral." He indicated that in the event Donald remains owner, Doc Rivers would not want to continue as head coach of the team. Further, Parsons testified that he has spoken with many of the team's players and sponsors who do not wish to remain with the Clippers should Donald remain Owner. Specifically, Parsons testified that sponsors who have yet to commit to the team for next year have indicated "We're in so long as Donald Sterling is out."

Sponsors generally have the ability to cancel their sponsorship agreements through the use of morals clauses in their contracts. Players don't have that option, although they can request to be released and/or traded. 

Parsons testimony echoed the scenario that began when the Sterling audio tape was first released in April. In a few short weeks, sponsors canceled or paused their sponsorship agreements with the team. Further, rumors of a team-wide, and league-wide, boycott surfaced prior to Commissioner Silver banning Donald for life. 

Parsons statements should not be taken lightly, as they are illustrative of the reality the Clippers will find itself in should Donald remain Owner. Unfortunately, Donald Sterling's three lawsuits can result substantial harm to the clippers. If the litigation is not voluntarily dismissed before the season commences, or if Donald manages to prevail in his litigation, then Parsons' "death spiral" comment will be realized. That is, unless the NBA takes action. 

The NBA has yet to commence its formal proceeding to remove Donald Sterling as Owner from the Clippers and force the sale of the team. Pursuant to Article 13 of the NBA's Constitution and Bylaws, an Owner can be removed by a vote of three-fourths of the Board of Governors (made up of other team Owners) if an Owner commits any of the following:

1. Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association
   
2. Transfer or attempt to transfer a Membership or an interest in a Member without complying with the provisions of Article 5 of the Constitution and Bylaws
   
3. Fail to pay any dues or other indebtedness owing to the Association within thirty (30) days after Written Notice from the Commissioner of default in such payment
   
4. Fail or refuse to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely
   
5. Wager or countenance wagering by its officers or employees on any game in which a Team operated by a Member of the Association participates
   
6. Willfully permit open betting, pool selling, or any other form of gambling upon any premises owned, leased, or otherwise controlled by the Member or an Owner, except, subject to Article 8(a), for gambling activities that are lawful in the applicable jurisdiction and do not involve in any way, directly or indirectly, gambling with respect to any aspect of the Association's games, events, property, players, or other personnel
   
7. Offer, agree, conspire, or attempt to lose or control the score of any game participated in by a Team operated by a Member of the Association, or fail to suspend immediately any officer or any Player or other employee of the Member who shall be found guilty, in a court of law or in any hearing sanctioned by this Constitution and By-Laws, of offering, agreeing, conspiring, or attempting to lose or control the score of any such game or of being interested in any pool or wager on any game in which a Team operated by a Member of the Association participates
   
8. Disband its Team during the Season, dissolve its business, or cease its operation
9. Willfully fail to present its Team at the time and place it is scheduled to play in an Exhibition, Regular Season, or Playoff Game
10. Willfully misrepresent any material fact contained in its application for Membership in the Association
    

Donald disputes in his first lawsuit against the NBA that he has not violated any of these provisions, although he has likely violated provisions numbered 1, 3 and 4 noted above. In particular, he has at least violated provision 4 by refusing to pay the $2.5 million fine. (Note: For a full analysis of the propriety of Sterling's sanctions, see my upcoming publication Not So Sterling: Assessing Donald Sterling's Breach of Contract Claims Against the NBA [Forthcoming Summer 2015])

The NBA had planned to have the Board of Governors vote to remove Donald's ownership of the Clippers on July 15, 2014. This date was set to be following the conclusion of the trial between Donald and Shelly Sterling about Donald's mental capacity. However, the trial has run long. The NBA intends to have Donald removed as owner prior to the start of next season, and has set a deadline of September 15 for any transfer of ownership through sale. Presumably, the NBA fears the "death spiral" that Parsons testified would occur should Donald remain Owner. However, if September 15, 2014, comes to pass and the team is not sold, the NBA will seek to remove ownership from Sterling and auction the team.

Although Donald Sterling's latest lawsuit delays the court's determination of ownership of the team, the NBA could move forward and remove Donald's ownership interest, even if the lawsuit about Donald's mental capacity is not resolved. Once the team is sold, the NBA could commence an action for interpleader, where Donald and Shelly can sort out who is entitled to the proceeds, or just await the determination of the suit between Donald and Shelly. 

Donald Sterling's litigation tactics may be designed to delay the sale of the Clippers, but the NBA has the ability to initiate a proceeding to remove his ownership. Only time will tell if the NBA is able to accomplish its goal of removing Sterling prior to the start of next season. If the NBA fails to do so, we may see the "death spiral" of the Clippers that Parsons is warning about.

The Uniform Law Commission's Athlete Agent Committee met earlier this week to discuss changes to the Uniform Athlete Agents Act ("UAAA"). This act, having been passed in 43 States, is a series of laws that attempts to regulate sports agents. However, agents are governed by the players' union of each professional league, as they must be certified by the union to act as an agent for a player in that sport. (Note: the one exception being Major League Baseball, which does not certify an agent until they have a client on an MLB team and meet the certification criteria. Therefore, a person can act as an agent, although uncertified, to baseball players if their clients are not in the MLB.)

Despite being governed by the professional sports' unions, the UAAA imposes additional regulations for agents in a supposed effort to protect collegiate athletes and their institutions. Some of the UAAA provisions echo best practices for agents which do protect athletes, like noting on a representation agreement that the athlete will lose any remaining athletic eligibility in college. However, much of what is unique about the UAAA, as opposed to the agent rules of the professional players' unions, burdens agents with no visible benefit.

The UAAA prohibits the following conduct by agents:

• Providing any materially false information, or anything of material value to the athlete or any third party in an attempt to induce a collegiate athlete to sign with the agent
• Initiating contact with a collegiate athlete unless registered with the State
• Refusing to retain records delineated by the UAAA
• Failing to register with a State when attempting to initiate contact with a player in that State or entering into a representation contract with a player in the State
• Providing false information when registering or renewing certification with the State
• Predating or postdating a representation agreement
• Failing to notify the collegiate athlete that entering into the agency agreements voids all remaining collegiate athletic eligibility.

Violating any of the above provisions carries both criminal and civil penalties. The first of the above prohibitions, perhaps the most important, is also generally prohibited by the agent rules of the various professional sports' unions.

So what are the proposed revisions that were discussed this week?

• Expanding the definition of the term agent
• Creating a centralized registration 'clearinghouse' for agents

As far as agents are concerned, there is one primary revision that should be enacted: Abolish the State registration of sports agents.

There are a multitude of problems with the State registration system. Most glaring, the State registration system fails its designed goal to "keep the good guys in business...[and] keep the bad guys out" (Jerry Bassett, Director of the Alabama Legislative Reference Service, which drafts bills for the Alabama legislature.) As previously stated, agents are governed by their sports' players unions. Agents must satisfy a myriad of requirements in order to become certified by a particular sport. During this process, the supposed "bad guys" are weeded out, and not granted certification by the league. Of course, there will be agents that are granted certification and then break rules and laws, but there is no possible way to prevent all wrongdoers from entering the profession.

Interestingly, there is little data on who, or how often, States are disallowing agents from registering. The leagues are already undertaking the exhaustive agent certification process, which requires disclosure of much the same information as States require. Simply put, it is likely rare that any professional Players' Union, whose primary goal is the protection of the players, would certify an agent that a State rejects. 

Further, should any State employ more stringent restrictions on agents than the professional leagues do, the newer agents would likely suffer the most. Currently, a person with a four year undergraduate degree and postgraduate degree could become an NFL agent, provided they meet the additional requirements such as passing the exam. That means a 24 year old with little business experience (and fantastic connections) could hypothetically become an agent. However, a State utilizing more stringent requirements than the leagues creates higher barriers of entry,  disallowing entrants into the market.

Additionally, the UAAA's registration system is extremely short sighted. Generally, sports agents have a multi-state, if not nationwide or regional practice. By requiring an agent to register with each individual State, agents must pay a registration fee with each State that has a collegiate athlete they wish to speak with. Due to the nature of the multi-state practice, these fees quickly add up. And what do agents get from paying the fees? Nothing more than the chance to talk to athletes in the hopes that they sign with the agent. 

As it currently stands, the UAAA's registration system amounts to little more than systematic extortion. Agents who wish to be successful, which is already difficult enough, are going to pay the wildly varying fees to avoid any criminal and/or civil liability. The UAAA gives States an additional, steady, stream of income that they likely will not want to let go.

Aside from repealing the UAAA, there are two viable solutions to removing the State registration of sports agents:

• Remove the State registration provisions and retain the remainder of the UAAA
• Create a nationwide clearinghouse for the registration of sports agents- as proposed for discussion at the committee meeting earlier this week

The removal of all registration provisions will not be favored by the States as they are earning money off of the UAAA. However, the nationwide clearinghouse can be established in such a way that each State which has enacted the UAAA gets a share of the registration fees from across the country. A clearinghouse can also make the registration process more favorable to the agents as well. Certainly all of the registration information will be centralized, decreasing the need for an agent to fill out multiple applications for multiple States. This would allow registration in a new State to be as simple as paying the fee, as all enacting States would  have agreed on a single set of registration criteria. 

The State fees themselves could also be staggered, creating discounted bundles of States or a flat fee for each additional State.  There is a great deal of flexibility that could be used in creating a nationwide clearinghouse for sports agents that could make the UAAA more attractive to agents. However, this still does not ease the burden of having to essentially be certified as an agent twice, once with the professional sports league, and once with the clearinghouse.

As it stands, the UAAA's State registration model is extremely flawed and burdensome to sports agents. The creation of a nationwide clearinghouse for agents, as proposed for discussion this week, with flexible price models would reduce the burdens on agents, but still unfortunately require that agents be certified by the leagues and the States. 

Now that Lebron James has announced his return to the Cleveland Cavaliers, the basketball world is awaiting Carmelo Anthony's decision on what team he will sign with. Phil Jackson, President of the New York Knicks, is optimistic Carmelo will re-sign, as the team is willing to use the Veteran Free Agent Exception to the salary cap in order to retain him.

Ordinarily, the aggregate salaries of an NBA team must remain under the salary cap provided for in the NBA's Collective Bargaining Agreement ("CBA".) However, the CBA provides for several exceptions, which are defined in Article VII, Section 6, where player salaries may total more than the salary cap. 

One of the exceptions to the salary cap are the so-called "Larry Bird rights." In the CBA, this is officially known as the Veteran Free Agent Exception. 

The Veteran Free Agent Exception allows players to re-sign with their team at an amount that cannot exceed a defined percentage of the salary cap or a defined percentage of the player's earnings in their last season, whichever is greater. The particular percentages are determined by the years of service time the player has been in the NBA.  

For purposes of this exception, the CBA groups players by service time of less than seven seasons, between seven and ten seasons, and more than ten seasons. In determining the maximum contract amount under this exception, the percentage of the player's earnings in the last season is constant at 105% regardless of service time. However, the percentage that the contract may be of the salary cap increases with each service group from 25%, to 30%, and 35%.  Carmelo is in the last service group, having played for eleven seasons.

However, the Veteran Free Agent Exception does not apply to all players entering free agency. In order to qualify, a player must have played the last three seasons with one team, have changed teams only by means of trade, or have signed with a prior team during the first of the three preceding seasons. Carmelo has played more than three seasons with the Knicks, and is therefore eligible for this exception. 

Effectively, the Veteran Free Agent Exception operates as an incentive for players to resign with a team by offering them a salary that cannot be matched by other teams due to salary cap constraints. In turn, this allows the fan base to develop a greater bond with the player, which can then be leveraged by the team and player in marketing endeavors. 

By utilizing the Veteran Free Agent Exception, it has been reported that the Knicks offered Carmelo a contract for $129 million for five years, or the maximum contract allowed. In contrast, other teams have only been able to offer him $96 million for four years. The difference between the two contracts is the Knicks are able to offer an additional year and an additional $33 million. 

Hopefully, Carmelo, re-signs with the Knicks. As a result of the Veteran Free Agent Exception, he certainly has an additional thirty three million reasons to do so.

The most important contract to a sports agent is the contract between the player and agent, otherwise known as the Standard Representation Agreement. This contract establishes the terms of the agent's representation, including fees, scope of representation, term of representation, payment scheduling, and how disputes between the agent and player are to be handled. 

Before diving in to the meat of the contract, it is important to establish at the very beginning who the parties to the contract are, namely, the player and the agent. It is also be worthwhile to include that the athlete will lose their "amateur" status and eligibility at the collegiate level by entering into this contract with the agent. This is particularly important to players who still have athletic eligibility in college. 

NCAA Bylaw 12.3.2.1, known as the No-Agent Rule, declares that it is punishable offense for an athlete to allow an agent to conduct or attend the athlete's negotiations with a professional team. Violations of the rule could result in the loss of NCAA eligibility. By informing the player at the beginning of the contract that signing it would threaten his/her eligibility, the player is on notice of the potential penalties should they cancel the contract and attempt to play in college again.

Next, the contract should focus on the scope of the agent's representation, which delineates the services that the agent will provide. This is the most important clause of the agreement, as it not only establishes what the agent will be paid for, but any exclusive rights the agent may have. It is not uncommon for athletes to have multiple representatives in different earning spheres, such as an agent who works on the player-contract and an agent who handles marketing. These exclusivity rights must be established to avoid any confusion as to what responsibilities the agent has, and importantly what they should be paid for. Exclusivity should also be considered with respect to location. For instance, a baseball player from Japan may wish to have three agents: one to handle his player-contracts globally; one to handle his marketing in the US; and one to handle his marketing in Asia. A broad scope of representation clause that tightly defines the agent's exclusive rights is best for the agent. 

Now that the agent's services are delineated, it is important to include how the agent is to be paid. Each of the major US professional sports has an industry standard or agent regulation delineating what the agent's fee can be for successfully negotiating a player-contract. This fee is a percentage of player-contract's value. Agent fees for secured sponsorships and endorsements are much higher, generally between 15% and 25%. In this clause, it is important to include that the agent will be paid on any contract that is substantially negotiated during the term of the agreement. This ensures that an agent is entitled to their fee even if they are fired prior to completion of the deal. Also, it is in the agent's best interest to define what constitutes income from sponsorships and how the agent is to receive a portion of this income as a fee. Athletes are increasingly paid in equity and other non-liquid measures, which creates a difficulty in determining an agent's fee if it is not specifically stated in the representation agreement. 

The last large clause in the agreement relates to expenses. Specifically, whether the player, agent, or a combination of the two, are to pay for expenses such as equipment, service providers, and travel. Certain sports have agent regulations which cap the amount of money the agent is allowed to spend on equipment for a player in a year, such as in baseball, so the relevant agent regulations must be consulted when drafting this clause. The specifics of who is to pay for each expense type can be negotiated individually.

Lastly is a series of smaller, general clauses that apply to the entire representation agreement. Including:

• the duration of the Agreement (the Major League Baseball Players' Association limits the duration of representation agreements to 1 year whereas the National Football League Players' Association has no limit)
• how disputes between the player and agent will be handled
• the rights to use the player's name and likeness for the promotion of the agent/agency
• how conflicts of interest are to be handled
• that the player is aware they have a right to have an attorney review the agreement prior to signing
• that the player fully understands the agreement

Notably, I have not included any clauses that involve financial services such as loans and investments. Financial services is a broad enough topic that it warrants its own contract. Further, not all agents provide financial services as the risks faced by the agent are greater. Some leagues have separate requirements for financial advisors, such as the NFL. Due to the increased risk, special rules, and breadth of services that could comprise financial services, it is in the agent's best interest to draft a separate agreement regarding any financial services offered. 

Many of the clauses I've described contain the ideal situations for agents, but players may wish to renegotiate specific terms. As in all contract negotiations, it is important to know the difference between the terms you need and the terms you would like to have. The relationship between a player and agent is built on trust, and no agent wants to start that relationship off poorly by engaging in a contentious negotiation over the terms of their representation agreement. 

There has been an interesting trend in recent years of technology being developed for athletes. From simple pedometers, shoes that track your speed and distance, to equipment that monitors how you strike a ball, tech for athletes is becoming increasingly popular and mainstream. 

Perhaps you've seen the new Apple commercial below which has been airing frequently during the World Cup: 

What would a tech trend be without Apple's involvement? This video shows off several examples of how tech is integrating with athletes to help them hone their abilities. More importantly, the ad doesn't use any professional athletes, which highlights the wide reach of this tech trend.  

I admit, I love my Nike Fuelband. It loosely keeps track of my movement throughout the day to lets me know if I've been sitting at my desk for too long and need to hit the heavybag. And although I like to box, I'm not training to be heavyweight champion of the world. That's why this story caught my eye. 

A tennis racket has now been developed by Babolat which transfers to an app the strength of the racket's impact on the ball, the spin, and also counts the number of forehands, backhands, serves and overhands. More importantly, this racket was recently used by Julia Gorges during the French Open.

The tennis player, currently ranked 107th in the world, stated in the article that she is using the new racket because "sometimes you are in the emotions...and you sometimes lose the vision [to see] things." She is hopeful that her new tech will allow her to analyze and improve her game, and ultimately, her ranking. 

This kind of tech is exciting, as its entire purpose is to develop its users' abilities. It is easy to see that widespread accessibility to this 'athletic development' tech can potentially increase the level of competition in a sport. Athletes are continuously looking for an edge over their competition, and similar tech can help them achieve that. On the developer side, tech for athletes can be utilized by a large market, and opens up the possibility of high-profile endorsement with multiple methods of activation. Athlete tech is here to stay, and some of the companies involved in its development could find the area particularly lucrative.

Companies developing tech for athletes could engage professional athletes for endorsement opportunities, as Babolat has with Gorges. Such endorsement frequently occurs with products manufactured for athletes' use. For example, Major League Baseball players generally have endorsement agreements with their bat manufacturers. These professional athlete endorsements can have a marketing trickle-down effect to the athletes' fans.

Athlete tech can allow professional athletes to engage with consumers in new ways. For instance, Babolat's app that works in conjunction with the smart-racket could have a leaderboard for hardest swing or most revolutions on a ball. Or, even a way for people to send challenges or encouragement to one another, utilizing the racket's measurables. 

However, the more professional athlete involvement with the tech desired, the tighter the contract must be. Some things to consider include:

• How frequently must the athlete post content about the tech (whether in an app or social media platform)
• How frequently must the athlete interact with other users through the tech
• The duration of the endorsement
• Whether or not the athlete gets paid per content post
• Whether the athlete receives any commission from the purchase of the tech during promotions under their name
• Whether the athlete must utilize the tech in public

Of course, any time a company utilizes athlete endorsements, the contract should also have a broad morals clause for all the reasons outlined here. 

There have been many exciting developments in tech for athletes, and I expect the trend to continue.  Businesses in this niche industry could find professional athlete endorsements lucrative, but they must be specific in drafting such agreements. 

The World Cup is in full swing in Brazil and soccer fans around the world have been glued to their TVs/social media platform of choice to follow the games. So far, Team USA is 1-0 in a tough division, but the country is ever hopeful. 

Major sporting events such as the World Cup always create a global uptick in sports betting. In particular, Asia has seen a large increase in illegal sports betting (See here). 

As you may be aware, sports betting in the United States is extremely limited. Currently, the only state that has legal sports betting is Nevada. However, in 2011, a sports betting referendum was passed by voters in New Jersey. Subsequently, the NCAA, NFL, NBA, MLB and NHL filed suit against New Jersey, attempting to block the state from allowing sports betting.

The District Court for the District of New Jersey held that the State's sports betting initiative was preempted by the Professional and Amateur Sports Protection Act ("PASPA")  and that PASPA was constitutional. This ruling meant that New Jersey's implementation of sports betting was in violation of PASPA, which are a preexisting series of federal laws that were found to be legally created by Congress. Interestingly, New Jersey had the opportunity to become exempt from PASPA after its adoption, but failed to do so. New Jersey appealed the District Court's decision, but it was upheld by the Third Circuit Court. 

New Jersey is now attempting to appeal the Third Circuit's decision to the United States Supreme Court, and is currently awaiting the Supreme Court's response as to whether they will take the case. The State is confident that the case will be accepted and that the Court will find in its favor. 

However, if the case is not accepted by the Court, State Senator Ray Lesniak has claimed that he will introduce an amendment to state law that will allow "legal" sports betting in casinos and racetracks within New Jersey. On June 16, 2014, Lesniak appeared on a radio show and announced that the State will move ahead with its plans to implement sports betting should the Supreme Court decline to accept the case. During his interview, Lesniak went so far as to say that sports betting will be in place by Week 1 of the NFL season in September. 

Lesniak likened New Jersey's challenge of PASPA to Colorado's legalization of marijuana, which is unfair. Marijuana reform had growing support across the country and within the federal government, whereas sports betting has been largely seen as an illegal activity outside of Nevada. In any event, it would not be surprising for the Supreme Court to take this case as a means of clarifying states' rights in the face of federal legislation. 

Lesniak's latest comments have raised the stakes in this already interesting litigation, and it appears as if New Jersey is ready to defy federal law and the collective will of the major sports leagues. This litigation will certainly be interesting to follow, whether or not the Supreme Court decides to take the case.

One thing is for certain, should New Jersey legalize sports betting, its casinos stand to make even larger sums of money. Perhaps more importantly, if New Jersey succeeds in legalizing sports betting, other states may soon follow. 

I will be following this story closely over the next several months.