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Lewis & Clark Law Review

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Volume 18 / Number 2 / 2014

BUSINESS LAW FORUM: SUCCESS AND FAILURE IN PROFESSIONAL SPORTS

VALUATION OF THE PROFESSIONAL SPORTS FRANCHISE IN BANKRUPTCY: IT’S A WHOLE DIFFERENT BALLGAME

Paul M. Lopez, K.M. Lewis & D.M. Lynn

18 Lewis & Clark L. Rev. 299 (2014)

An increasing number of professional sports teams have declared bankruptcy in recent years. Although no bankruptcy court has yet been required to value a bankrupt sports team as an enterprise, it is only a matter of time before such a judicial valuation will be necessary. In this Article, Paul M. Lopez, K.M. Lewis, and Judge D.M. Lynn explain the challenges of valuing a professional sports franchise in bankruptcy, and offer judges and practicioners guidance in undertaking this difficult task.

INSOLVENT PROFESSIONAL SPORTS TEAMS: A HISTORICAL CASE STUDY

Nathaniel Grow

18 Lewis & Clark L. Rev. 345 (2014)

The U.S. professional sports industry has recently witnessed a series of high-profile bankruptcy proceedings involving teams from both Major League Baseball (“MLB”) and the National Hockey League (“NHL”). In some cases—most notably those involving MLB’s Los Angeles Dodgers and the NHL’s Phoenix Coyotes—those proceedings raised difficult issues regarding the proper balance for bankruptcy courts to strike between the authority of a professional sports league to control the disposition of its financially struggling franchise’s assets and the rights of the debtor team to maximize the value of its property. However, these cases did not mark the first time that a court was called upon to balance the interests of a professional sports league and one of its insolvent teams.

Drawing upon original court records and contemporaneous newspaper accounts, this Article documents the history of two long-forgotten disputes in 1915 for the control of a pair of insolvent franchises in the Federal League of Professional Base Ball Clubs (specifically, the Kansas City Packers and the Indianapolis Hoosiers). In the process, the Article contends that despite the passage of time—and the different factual and procedural postures of the respective cases—courts both then and now have adopted similar approaches to managing litigation between professional sports leagues and their insolvent franchises. Moreover, the Article discusses how the history of these 1915 disputes helps explain why the U.S. professional sports leagues have traditionally disfavored public franchise ownership.

THE NCAA’S “DEATH PENALTY” SANCTION—REASONABLE SELF-GOVERNANCE OR AN ILLEGAL GROUP BOYCOTT IN DISGUISE?

Marc Edelman

18 Lewis & Clark L. Rev. 385 (2014)

On June 22, 1985, members of the National Collegiate Athletic Association (“NCAA”) voted to empower the NCAA Committee on Infractions to suspend any member’s athletic program for up to two years for the engagement in repeat, major violations of the NCAA bylaws. This newfound power to suspend athletic programs—albeit limited in duration to two years—has become colloquially known as the “death penalty” because “everyone, including [NCAA member] presidents, believes it could effectively kill a program for decades.”

This Article examines why the NCAA “death penalty,” although arguably benevolent in its intent, undermines the core principles of federal antitrust law. Part I of this Article discusses the history of college athletics, the NCAA, and the “death penalty” sanction. Part II provides an introduction to section 1 of the Sherman Act and its application to the conduct of both private trade associations and the NCAA. Part III explains why a future challenge to the NCAA “death penalty” could logically lead to a court’s conclusion that the “death penalty” violates section 1 of the Sherman Act. Finally, Part IV explains why Congress should not legislate a special antitrust exemption to insulate the NCAA “death penalty” from antitrust law’s jurisdiction.

THE DEMISE OF THE AFRICAN AMERICAN BASEBALL PLAYER

Jeffrey Standen

18 Lewis & Clark L. Rev. 421 (2014)

Recently alarms were raised in the sports world over the revelation that baseball player agent Scott Boras and other American investors were providing large loans to young baseball players in the Dominican Republic. Although this practice does not violate any restrictions imposed by Major League Baseball or the MLB Players Association, many commentators have termed this funding practice of dubious ethical merit and at bottom exploitative. Yet it is difficult to distinguish exploitation from empowerment. Refusing to lend money to young Dominican players reduces the money invested in athletes. The rules of baseball and the requirements of amateurism preclude similar loans to American-born baseball players. Young ballplayers unlucky enough to be born in the United States cannot borrow their training expenses against their future earning potential. The same limitations apply in similar forms to athletes in other sports, yet baseball presents some unique problems. Success at the professional level in baseball involves a great deal of skill, attention to detail, and supervised training over a long period of time. Players from impoverished financial backgrounds, including predominately the African American baseball player, have been priced out of the game.

American athletes in sports that, like baseball, require a significant commitment of money over time have not been able to fund their apprenticeships through self-generated lending markets. One notable example of self-generated funding is in the sport of golf. To fund their career goals, American golfers raise money through a combination of debt and equity financing. They sell “shares” of their future earnings in exchange for or as collateral for investments and loans. Unlike young golfers, U.S.-born baseball players cannot avail themselves of risk-capital to fund their increasingly expensive developtment. If U.S.-born baseball players could borrow against their “sports capital” as do players from outside the country, then baseball’s increasing dearth of African American players would likely be ameliorated.

The restrictions that Major League Baseball and the NCAA impose on U.S.-born players effectively diminish the supply of minority players. For those baseball players who would turn professional, Major League Baseball precludes American players from becoming professionals until they are age-eligible and are drafted or signed after the draft. As a result, American-born ballplayers must delay their professional careers, and may only negotiate with one team when they begin it. These rules lower the compensation for novice professionals. An American-born baseball player will typically earn a very small fraction of the milliondollar signing bonus frequently paid to Dominican players, and will have to wait two to five additional years for that bonus. Thus the rules of baseball combine to raise the cost of entering the occupation. The result is that U.S.-born minorities are disappearing from the major leagues. The fact that Dominican players are receiving direct funding from American interests will only further promote the Dominican player and further disadvantage the American one.

2013 James L. Huffman Lecture in Honor of the Western Resources Legal Center

GLOBAL WARMING AND THE LIMITS OF FEDERAL JUDICIAL POWER

Kenneth W. Starr

18 Lewis & Clark L. Rev. 453 (2014)

In a speech delivered at Lewis & Clark Law School, Judge Starr explores our judiciary’s history of federal common law through the lens of global warming and environmental regulation. The speech discusses various eras in Supreme Court jurisprudence, ranging from Chief Justice Jay’s denial of an advisory opinion in 1793 to the recent case AEP v. Connecticut, which found the Supreme Court unanimous on the application of federal common law.

NOTES & COMMENTS

THE FAILED PURPOSE PRONG: WOMEN’S RIGHT TO CHOOSE IN THEORY, NOT IN FACT, UNDER THE UNDUE BURDEN STANDARD

Jenny K. Jarrard

18 Lewis & Clark L. Rev. 469 (2014)

In 1973, the Supreme Court legalized abortion with its controversial landmark decision in Roe v. Wade. The right to choose whether or not to “bear or beget a child” was declared fundamental. While the government interests in potential fetal life and maternal health were recognized, the interests were limited by the infamous trimester framework and subjection of state regulation to strict scrutiny review. In 1992, the Supreme Court retreated from its decision in Roe when it decided Planned Parenthood of Southeastern Pennsylvania v. Casey. The right to choose was no longer fundamental, the trimester framework abandoned, and the interests of the state were held to apply to some extent throughout the pregnancy. Although no one opinion from Casey commanded a majority of the justices, it has been the law for the past 20 years.

THE GRAPHIC WARNING REQUIREMENT ON TOBACCO PACKAGES AND ADVERTISEMENTS: A CONSTITUTIONAL RESPONSE TO DECADES OF DECEPTION

Emily Matasar

18 Lewis & Clark L. Rev. 517 (2014)

When the FDA issued a graphic warning requirement for cigarette packages and advertisements, tobacco companies challenged the rule on First Amendment grounds, and the Sixth and District of Columbia Circuits came to conflicting decisions on the merits of the challenge. The Sixth Circuit, considering a facial challenge prior to promulgation of the final rule, found that the graphic warning directive required the tobacco companies to disclose factual, if graphic, information in order to counter deceptive claims about the health risks of tobacco use. The District of Columbia Circuit, on the other hand, concluded that the graphic warnings neither correct a deception nor convey factual, uncontroversial information, and ultimately affirmed the United States District Court for the District of Columbia’s grant of the tobacco companies’ motion for summary judgment.

This Comment argues that because the tobacco industry deceived the American public about the health risks of smoking for the last half century, [and that this overarching deception is a valid reason to apply] applying a looser First Amendment standard to the graphic warning requirement is constitutionally appropriate. Furthermore, the Comment posits that the images convey factual information, which are reasonably related to the tobacco companies’ deceptive claims, and may indeed be essential for the average consumer to learn and understand the health risks of tobacco use. Finally, although the rule was withdrawn, the Comment warns against diluting the government’s ability to compel factual information from commercial speakers because of its minimal intrusion on the First Amendment rights of the compelled speakers and its vital role in protecting consumers.

CHANGING THE CULTURE OF UNCONSTITUTIONAL INTERFERENCE: A PROPOSAL FOR NATIONWIDE IMPLEMENTATION OF A MODEL POLICY AND TRAINING PROCEDURES PROTECTING THE RIGHT TO PHOTOGRAPH AND RECORD ON-DUTY POLICE

Kimberly McCullough

18 Lewis & Clark L. Rev. 543 (2014)

In a world filled with cell phones and digital recording devices, documenting the activities of on-duty police has become increasingly common. Videos and photographs of police interactions have great value. They increase officer and public safety, provide evidence in judicial proceedings, expose police misconduct, and often provide a solid and effective foundation for demands for change. Although courts overwhelmingly agree that recording on-duty police is protected by the First Amendment, and despite the fact that police themselves increasingly record their interactions with the public, there exists a deep resistance in police culture to photography and recording by the public and press. Law enforcement officers across the nation use a variety of tactics—from intimidation and physical injury to criminal prosecution—to prevent the public from documenting them.

Changing the culture of unconstitutional interference with the right to photograph and record the police will be a difficult task. Litigation alone is not enough. This Comment calls for nationwide implementation of model police department training procedures and policies protecting the right of the public and press to document on-duty police. After providing a general overview of the relevant issues and explaining why policies and training are needed, the author sets out the necessary components of a model policy and training procedures and suggests tactics for promoting and requiring their implementation nationwide.

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