ContractsProf Blog

Bobby Bonilla's Contract

Fascinating!  As reported here in the Wall Street Journal blog, the Mets are about to start paying Bobby Bonilla for doing nothing!  They are obligated to do so under the terms of their agreement with Bonilla from 2000 when they bought out the final year of his contract.  Beginning July 1st and continuing for another 25 years, the Mets will pay Mr. Bonilla $1.2 million/year.  

Although Bonilla had been a highly productive player for much of his career, he never lived up to the tough New York standards, and neither party seemed happy with the relationship.  In his last season with the Mets, Bonilla hit .160 in 60 games.  He then notoriously showed his disdain for the team and its prospects by playing cards with Rickey Henderson during the National League championship series.  The Mets thus agreed to defer his $5.9 million salary for the last season just in order to be rid of him.  

The deal was not unprecedented and seemed to be in the best interest of both parties at the time.  The Mets freed up enough room under the salary cap to lure some good players and become contenders in 2000.  However, long-term the deferred salary is a drain on the Mets' resources.  Because of the agreed-upon 8% interest, Bonilla will eventually collect $30 million from the Mets. Still, Adam Meshell of NJ.com provides an intelligent defense of the agreement here.  

All hail the power of contracts!

[JT]

Fan Sues NFL and Cleveland Browns

Cleveland Browns fan Ken Lanci has brought suit against the Cleveland Browns for allegedly violating his contractual right to buy tickets under his personal seat license due to the current NFL lockout, about which we have previously posted.  You can find a copy of Mr. Lanci's complaint here.  According to Wikipedia, a personal seat license:

gives the holder the right to buy season tickets for a certain seat in a stadium. This holder can sell the seat license to someone else if they no longer wish to purchase season tickets. However, if the seat license holder chooses not to sell the seat licenses and does not renew the season tickets, the holder forfeits the license back to the team. Most seat licenses are valid for as long as the team plays in the current venue.

According to this story in the Miami Herald the suit is seeking $25,000 in damages from the Browns on theories of breach of contract and bad faith.  Lanci has named the NFL and its other teams in the suit as well, alleging tortious nterference with his personal seat license. He is seeking over $25,000 in damages plus additional unspecified damages.  Lanci claims that the violation stemmed from the conspiracy of the NFL to lock out the players which violated his personal seat license. In response to this claim, NFL spokesman Greg Aiello told the Herald that he understands that the fans are frustrated and that the league has refund policies in place for fans in the event that games are lost.  

Mr Lanci characterizes the lockout as a product of a dispute between millionaires and billionaires and notes that people have no sympathy for multi-millionaires.  Given that Mr. Lanci is himself a multi-millionaire, this would seem to be a case that only a lawyer could love.  The website, Cleveland Frowns, provides a critical commentary on the suit here, noting among other things, that Mr. Lanci's personal suit license agreement specifically contemplates the possibility of a lockout.  Here's the relevant language:

STRIKES, DAMAGES, DESTRUCTION, ETC.  In the event of: (a) any strike or other labor disturbance which results in the cancellation of any Browns Games at the Stadium, … the License/Ticket Fee payable under the Agreement shall … be abated during the period of time that the Club Seats are unusable. Any such abatement of the License/Ticket Fee shall be computed for each NFL Season by dividing the number of Browns Games for which the Club Seats were unusable by the total number of Browns Games that would have been played in the Stadium during the applicable NFL Season were it not for such strike, labor disturbance, damage or destruction.”

If games are lost it is possible that the NFL could find itself in breach of their other contractual obligations with entities such as sponsors, and television stations that broadcast league games. Stay tuned.

[Jared Vasiliauskas & JT]

Blockbuster Trade Makes Cubs a Lock in 2011

As those driving around Chicago have probably already noticed, there are new billboards advertising some of the team's latest acquisitions, including Derek Jeter and Albert Pujols.  The New York Times calls the billboards a stumble, but they misunderestimate the savvy of the Cubs' leadership.  Fans looking for those lovable losers this season will be disappointed by the new starting line-up.  

Here it is:

1. Ichiro Suzuki, RF
2. Derek Jeter, SS
3. Marlon Byrd, CF
4. Albert Pujols, IB
5. Aramis Ramirez, 3B
6. Joe Mauer, C
7. Chase Utley, 2B
8. Alfonso Soriano, LF 
9. Cliff Lee 

Barry Bonds has announced that he will come out of retirement to pinch hit on occasion, in keeping with his down-to-earth low-key style.

[JT]

The NFL Lock-Out, Part I

The NFL’s owners entered into a collective bargaining agreement with the players after the 2008 season.  The agreement expired on March 4^th of this year.  As ESPN.com reports, after several delays and a 16-day federal mediation, the owners locked the players out.  A lock-out means that the players can have no contact with teams or their personnel, do not get paid, and also cannot negotiate new contracts with their respective teams or any other teams. This is the NFL's first work stoppage since 1987.  

The players union has now dissolved itself, enabling individual players to bring a class-action antitrust suit in federal court.  The matter is scheduled to be heard by a federal judge on April 6.  The Washington Post reports that the owners have asked the judge to allow the lockout to continue until the National Labor Relations Board has ruled on its claim that the union's decertification was an unfair labor practice.  

As the New York Times reports, the main issue dividing the parties is revenue sharing.  Under the old deal, the players received nearly 60% of the league revenue from 2006 to 2009 after the owners took $1 billion off the top.  The owners are currently proposing a 50/50 split after the owners take $2 billion off the top.  The owners need the added money to cover the cost of building new stadiums, and the players should still make at least as much in absolute terms because the new deal would prolong the season to 18 games, thus leading to more revenue -- largely from television deals.

Sporting News provides this run-down of the two sides' positions on the other issues, including the proposed rookie pay scale, benefits for retired players, and the level of the salary cap.  The two sides' positions started off $1 billion apart.  They negotiated down to around $185 million apart, but then talks broke down when the owners refused the players' request for financial information about the various NFL franchises.

The final major dispute between the two sides is level of the salary cap.  The players have said the owners’ current offer is based on unrealistically low revenue proposals.  According to ESPN.com the owners’ have offered an increase in the salary cap from $131 million to $141 million for next season in their most recent proposal.  The players reportedly seek a cap of $151 million.  

The New Yorker's James Surowiecki is most eloquent on the reasons why "in a contest between millionaire athletes and billionaire socialists it’s the guys on the field who deserve to win."

[Jared Vasiliauskas & JT]

Gottfried Gottfired Because Ducks Shouldn't Tweet

Gilbert Gottfried, pictured at left, is a comedian, but he is probably best known for providing the voice of that delightful duck in those Aflac commercials.  Who knew insurance companies could be so charming?!?  On the right, we have a picture of a duck, but this duck is not the actual Aflac duck, as far was we know.

The New York Times reported this week that Aflac has fired its spokesduck -- or at least its voice -- on the ground that Mr. Gottfried posted some insensitive jokes on his Twitter account about the earthquake and tsunami that have had devastating effects in Japan.  Aflac did not find Mr. Gottfried's jokes funny -- his jokes rarely are -- but the company found these particular jokes especially unfunny, given that Aflac derives 75% of its revenue from the Japanese market, according to the Times.  Friends of the blog will not be surprised to learn that, in canning Gottried effective immediately, Aflac invoked a morals clause, according to the Times.  These clauses raise no end of interesting issues.  I mean, is it really credible for Aflac to claim that it is shocked, shocked to learn that Gottfried posted tasteless jokes on his Twitter page?  What else does Gottfried post?

Interestingly enough, the same week, Cappie Pondexter, a member of the WNBA's New York Liberty team, made a series of posts on her Twitter page reasonably construed to indicate that Pondexter believed that the Japanese deserve whatever happened to them.  As reported in the New York Times as well, the Liberty and the WNBA seem to have elected not to discipline Pondexter for her tweets.  Pondexter has apologized and both the league and her team seem to think the apology suffices.  Safe to say that Japan does not account for 75% of the WNBA's market.  

[JT]

 

Will Sabathia Opt Out of the Bronx?

As Spring Training keeps moving on towards opening day, an interesting option looms for the Yankees' star pitcher CC Sabathia.  Sabathia has a clause built into his current contract with the team that allows him to opt out of his contract at the end of the 2011 season and become a free agent.  According to ESPN, by opting out, Sabathia would walk away from approximately $90 million in guaranteed salary.  However, Sabathia has hinted at the idea after seeing Cliff Lee (age 32) sign a five- year, $120 million contract with the Phillies this past off season.  Sabathia would be 31 at the end of the season and still able to command top dollar.  However, if he waited until the end of his current contract, he would be 35 years old and may no longer have the bargaining leverage necessary to secure a long-term, high-salary contract.

If Sabathia decides to opt out of his contract at the end of the season, the decision could impact the rest of Major League Baseball and perhaps the entire sports industry.  Prominent players may decide to ask for opt-out clauses in their contracts similar to Sabathia’s.  Such clauses would enable star players to leave their teams if they were not happy with the atmosphere or the direction the team was going.  It would also mean that players with opt-out clauses could choose to test the market if they think they could receive a higher salary on the free agent market after several years of solid performance.  From the player’s perspective, such a clause is a win-win.  The player has the option to stay with a guaranteed, long-term agreement or to seek a still richer payoff elsewhere.

If the opt-out clause becomes de rigueur among star players, the owners could respond by refusing to enter into long term contracts.  If that were to happen, players would obviously be the big losers, as guaranteed, long-term contracts are an insurance policy against injury or Milton Bradley-like underperformance.  In the alternative, the owners could demand a reciprocal opt-out option.  Such an option could provide, for example, that if the player has not played a certain percentage of games during the first part of his contract due to injury, the team could opt out or could renegotiate the salary.  It could also provide that if a player did not average certain statistical numbers over the first part of the contract, the team could opt out of the contract.  This would get us closer to the pay for performance that this blog has explored in the past.

[Jared Vasiliauskas & JT]

Should the Mets Leave the Concession Stands at CitiField to an “Even Higher Authority”?

The owners of the Mets have a $300 million Madoff problem, but that hasn’t distracted them from attempting to ban a kosher concession stand from selling food at CitiField during the Sabbath. 

Kosher Sports has a 10-year contract to sell hot dogs at the stadium and it sued the Mets last summer after being told it could not operate on Friday nights and Saturdays.  In August, Judge Jack Weinstein ordered the Mets to stop banning the company’s sale of food during the Sabbath.  At the time, he said with a smile, “I cannot get involved in (a dispute) over rabbinical law.”

Perhaps that is why the case ended up before Magistrate Judge Andrew Carter.  But, he recused himself earlier this week because a Kosher Sports lawyer spotted him wearing a Mets hat outside the courthouse.

I imagine that this is a dispute about what the word “kosher” means in the 10-year contract.  The Mets say the food isn’t “kosher” if the stand operates during the Sabbath.  Kosher Sports begs to differ, and (likely) adds that the contract does not expressly restrict Sabbath sales.  What’s the answer?  What’s “kosher”?  Apparently, whether a purveyor can sell food on the Sabbath and retain kashrut status is very complicated under Jewish Law.  Some won’t allow it at all; some will allow it with particular conventions followed (conventions which are difficult to follow in a stadium on a Saturday because they require proper supervision and the qualified supervisors are prevented from stopping by on the Sabbath).

No wonder Judge Weinstein did not want to get involved, there’s an even higher authority involved in this dispute:

Certainly, this could be handled with more precise contract drafting in the future.  Though, the inability to operate a concession stand on Friday nights and Saturdays (when, I imagine, the stadium has the highest turnout for games), could make it a losing proposition.  Which, in the end, could mean no kosher option at all (whatever that means).

[Meredith R. Miller]

Pujols' Future in Doubt: It Is the Duty of Every Citizen to Remain Calm

The deadline set by Albert Pujols to negotiate a contract extension with the St. Louis Cardinals passed at noon et on Wednesday February 16, and his future with the team remains uncertain.  According to mlbtraderumors.com, Pujols declined multiple offers from the Cardinals, the last one reported to be for 9 years and over $200 million.  According to ESPN.com, Pujols is looking for an extension of 10 years that would make him one of the highest paid players in the Major Leagues.  It is likely that he is looking for a contract comparable to Alex Rodriguez at 10 years for about $28 million a season.  We have pondered the imponderables of such contracts in the past here and in passing here and here.

The passage of the deadline does not automatically means that Pujols is destined to become a free agent.  MLBtraderumors.com explains that the Cardinals will have a five day exclusive window to negotiate with him at the end of the upcoming season.  If the two sides are unable to reach an agreement in that window of time then he would become a free agent and able to sign with any team he wanted including St. Louis. 

Mlbtraderumors.com explains that the Cardinals may have trouble financially signing their star because of money that they have committed to other players.  This means that the team may have to get creative in order to keep their star.  This could mean that the team could ask other players to defer some of their contract salary in order to allow the team to sign their star.  Cardinals All- Star Matt Holliday has hinted that he would be willing to defer some of his large contract in order to allow Pujols to sign.   The team may also have to explore the option of trading some other players with large salaries in order to free up money under their budget. 

Another interesting option that the two sides may be able to explore is having Pujols himself sign a contract in which he is paid considerably more per year near the end of the contract than the beginning.  Since baseball contracts are guaranteed, this is an option that both sides may consider.  That is, Pujols could potentially be paid tens of millions of dollars to sit on the bench if he is incapacitated by what everyone knows to be a career-ending injury.   

[Jared Vasiliauskas & JT] 

What's the Harm in a Missed Super Bowl?

As reported here earlier, there was "a bit of a kerfuffle" at the Super Bowl this year.  Now, the National Football League is trying to figure out what it can do to address the harm to the fans who were sold tickets to effectively non-existent seats.   Of the 1260 fans effected, about 2/3 were sent to alternative seating in the stadium,  The remaining 400 had to view the game on video monitors or from standing-room only spots. As reported here on Slate.com, the 400 have the following options.

First, the NFL offered the 400 $2400/ticket, three times the face value of the tickets, plus a ticket to next year’s Super Bowl which they could keep or resell.  In the alternative, the NFL offered the 400 a nontransferable ticket to the future Super Bowl of their choice plus accommodations and airfare but they would not receive the $2400.  The third option would be to join a class action lawsuit in the Dallas District Court filed against the NFL, the Dallas Cowboys, and Cowboys owner Jerry Jones.  A fourth option is that the 400 could make an epic movie based on the graphic novel that tells the story of how 400 outraged football fans held their position at the narrow passageway through which a throng of enemies tried to invade their homeland.  The screenplay is still in the works, but you can get a sense of what it will look like from this prequel:

Those not willing to become action heroes may be inclined to join the class action lawsuit.  Attorney Tom Goldstein explains that fans electing this route will likely not get anything more than the NFL is already offering.  According to Goldstein, this is due to the fact that in order to succeed the class action would need to demonstrate that the NFL knew that the portable seats were not going to be ready for patrons by game time and therefore failed to inform them of this.  Goldstein predicts that the class action would likely settle out of court for something very similar to the offers that the NFL has already made.  On the other hand, the attorney representing the class action, Michael Avenatti, says that the compensation offered by the NFL would not cover the full expenses of the patrons and therefore at this time there is not enough information to settle.    He claims that based on pricing of the tickets the day of the game, and other expenses of the displaced patrons the average displaced patron lost almost $4,000, meaning that the NFL offer would not fully compensate them.  Regarding the second option, Avenatti explains that there has been no information provided to the fans as to where their seats for the future Super Bowl will be located, what the airfare will include, and what other accommodations they will receive. 

The class action may enhance the negotiating power of the aggrieved 400, but it also may make it more difficult and more expensive for the NFL to settle the claims.  Are lawyers a good thing or a bad thing?

The NFL has also acknowledged that in addition to the 400, and the 860 fans who were assigned "nosebleed" seats when their assigned seats turned out to be unusable, 1,140 fans were delayed entry to stadium because of the problem.  The NFL has apparently now offered fans in the latter two categories either face value for their tickets or a ticket to any upcoming Super Bowl.  

 As Slate's Jeremy Stahl explains, the best option for the fans depends on the nature of their harm and the nature of their animus.  One reasonable Chicago Bears fan might be happy to have watched the Bears' 46-10 trouncing of the New England Patriots in Super Bowl XX from the comforts of home, thus saving something like $4000.  Another Chicago Bears fan might place the value of being there to see Walter Payton winning his Super Bowl ring at $10,000.  And what would have been the value to hypothetical fans of the New England Patriots if they were displaced and thus forced to miss the humiliation they would have experienced had they witnessed the Bears' 46-10 demolition of their Patiots in Super Bowl XX?

[JT and Jared Vasiliauskas]

Bumped at the Superbowl

Looks like there was a bit of a kerfuffle over seating at the Superbowl (the game is on as I blog).  According to YahooNews:

Approximately 850 fans with tickets in temporary seating sections were relocated to similar or better seats. Four hundred fans who were not accommodated with seats inside the stadium will each receive a refund of $2,700 – triple the cost of the face value of their ticket.

According to the article, which is citing these angry ticket holders, "stuff blocking the seats" was the reason given for the unceremonious bump. 

Perhaps a good contracts hypo for determining damages - as one member of the crowd yelled, "what about our travel and hotel expenses?"

[Miriam Cherry]

Are Baseball Players Suckers for Oddball Incentive Clauses?

With the Superbowl coming up this Sunday, many sports fans currently are focused on football (or at least on the commercials to air during the football telecast).  However, a recent story collecting oddball terms in professional baseball players' contracts recently grabbed my attention.  Most of the terms detailed are incentive clauses of the "do "this thing, get this much more money" variety.  What makes these incentive clauses particularly interesting, however, is that many of the triggering actions appear impossible or near impossible to achieve.  For example, some players that have World Series MVP incentives play for teams that stand little chance of winning games let alone the World Series (sorry, Pittsburgh).  In another perplexing example, a player who is a designated hitter (meaning that he does not play in the field--ever) has a clause promising to pay him extra money if he wins a Gold Glove, an award given to the best fielding player at a particular position.  Ultimately, the article raises an interesting question that some of our readers may be able to address...why?  Why are these clauses, many of which sound downright silly, in these contracts at all?  Is it because the agent copied and pasted the terms from another player contract?  Is it because the player is delusional?  Or, is it because these incentives somehow help the contracts satisfy rules that apply solely to professional sports contracts (such as terms insisted upon by the players' union)?  If anyone has an idea, please post in the comments.  And enjoy the Superbowl!

[H.R.A. w/ hat tip to student Ron Angerer]

A Heroic Breach of Contract

As the New York Times reports today, Gil Meche (pictured), until recently a pitcher for the Kansas City Royals, has breached his contract.  He was due to be paid $12 million for the 2011 season, but he has a bum shoulder, and he has chosen to retire rather than to be paid what he called "a crazy amount of money for not even pitching."  As the Times points out, Meche's decision is not entirely without precedent, but in most cases, injured players go through the motions of surgeries and rehab even when they have little hope of returning to the game.  Baseball management does not expect them to retire -- career-ending injury is simply a risk assumed by management when it enters into guaranteed contracts with ball players.  

Why did Meche do it?  He says he did it because he didn't feel right taking more money from a team that had already given him over $40 million.  The Royals had signed Meche in 2007 to a five- year, $55 million contract, and they were widely criticized for having done so.  Meche seems to be very grateful to a team that believed in him when others did not.  He wants to retain his dignity, free up some cash for the organization, and (this is inevitable) spend more time with his family.

It's a wonderful story.  I wonder what other professional athletes think of this.  After all, although the players are well paid, they are still the employees of fabulously wealthy professional sports franchise owners.  Meche's decision could become a precedent that the Steinbrenners of the world could wield to exert pressure on their aging stars to go gently into the good night of minor league coaching or whatever.

[JT]

Fired for Behavior Unbecoming of a Pirate?!?

As reported in the Setonian here, Bobby Gonzalez, former head coach of the Seton Hall University men's basketball team, the Pirates, filed suit last week, alleging that he was terminated in violation of the covenant of good faith and fair dealing.  Gonzalez was fired following a Seton Hall loss in the post-season NIT.  During that loss, a Seton Hall player was ejected after having twice punched an opposing player in the groin.  Usually such behavior just leads to the Pirate in question being told to swab the decks.  But that was not the only incident during the game. Gonzalez was assessed his seventh technical foul of the season, which is kind of a lot for a college basketball coach, and so they made him walk the plank.

Announcing the decision to fire Coach Gonzalez, University President Msgr. Robert Sheeran remarked that the NIT loss was "the crystallization of all that was really wrong with the coaching and leadership."  According to the Setonian, two former members of the team were arrested after the game and charged with kidnapping, aggravated assault, robbery, burglary and weapons violations.  These events may have been the last straw.  However, as reported on Wikipedia, there may have been grounds for Seton Hall administrators' discomfort with Gonzalez already.  There was concern that he was filling his roster with transfer students who, while gifted on the court, struggled academically and may have appeared too many times in courts without hoops or hardwood.  

Apparently, Gonzalez's suit turns on the suspicious timing of his for-cause termination, which deprived him of entitlement to two years of base salary.

[Jeremy Telman]

Brad Stevens Not Going to Ball State

As reported in the Los Angeles Times, Butler University basketball coach Brad Stevens has agreed to a lengthy extension of his contract.  Although most reports suggest that this is a 12-year deal, the truth is that the contract will run for 12 years or until Mr. Stevens needs to shave, whichever comes last. 

This puts an end to speculation that Mr. Stevens might take Dave Letterman up on his offer (or was it a joke?) to pay Mr. Stevens his (that is, Letterman's) salary for one year if Mr. Stevens would agree to coach at Ball State.  The full interview, with an annoying ad, is below.

The excitement about Butler's performance in the NCAA basketball tournament was quite intense here in Valparaiso.  You might think that folks around here would be hostile to Butler, our Horizon League rival.  Not so.  I asked a random colleague what her connection to Butler was.  Her answer was reminiscent of Marisa Tomei's response in My Cousin Vinny when asked why she was qualified to testify about cars: "My brother went to Butler, my sister went to Butler.  My uncle and three of my cousins went to Butler.  Two of my nephews are at Butler now, and I'm not saying we're avid Butler Basketball fans, but the only kind of dog anybody in my family has ever owned so long as I can remember is a bulldog."

[Jeremy Telman]

University of South Florida Football Coach Sues for Breach

 It seems there have been a lot of cases recently involving college sports coaches who claim that they were terminated without cause and are entitled to damages.  In January, we reported on a suit involving Texas Tech football coach, Mike Leach.  About that, there have been some very interesting developments, reported on ESPN.  Last week, the University of South Florida Oracle reported that former USF football coach Jim Leavitt is bringing suit alleging wrongful termination.

The University fired Leavitt in January for cause on the ground that he had grabbed a player by the throat and slapped him.  Leavitt's suit alleges that the University acted based on hearsay and that its investigation of the incident was not thorough.  His suit alleges that he has therefore been terminated without cause and is entitled to $7 million in additional payments.  The Oracle story is a bit unclear, but it looks like Leavitt is also arguing In the alternative that, even if his termination for cause was appropriate, he was still entitled to 1/12 of his remaining salary rather than the 1/12 of his annual salary that the University already paid.  The difference is over $300,000.

The lawsuit also demands access to public records, disclosure of which Leavitt maintains is required under Florida law.

[Jeremy Telman]

The Race Goes to the Swift (Or to the Team with the Best Lawyers)

We reported over a year ago about the legal wrangling that has become a necessary prelude to a running of the world's most prestigious yacht race, the Americas Cup.  Well, the race is finally underway, sort of.  As reported here on NJ.com, Race 1 of the best-of-three "Deed of Gift" match was scheduled for Monday but had to be postponed due to "unstable wind conditions."  Yesterday's attempt at a race was rendered impossible by waves that averaged 1.3 meters (about four feet) and that could have reached a peak of 1.8 meters (less than six feet).  If you are wondering what a "Deed of Gift" match is, I'm sorry to say that it would be easier to explain the plot of ABC's Lost than it would be to answer your query.  Suffice it to say that in a Deed of Gift match, like in a 19th-century duel, there are only two competitors. 

The 23-page Notice of Race which governs the competition provides that the next attempt to run the boats will occur on Friday, if it's not too windy or wavy, so long as there is enough wind and the water's not too cold and it's not raining and not a full moon and none of the principals of the race is needed for a conference call.

The two 90-foot multi-hulled yachts in the race are marvels of engineering, as described here in the New York Times.  The question is whether or not the legal wrangling over the meaning of the relevant documents that set out the rules for the race -- the Notice of Race and the Deed of Gift -- leaves room for anything that resembles a sporting event, in this case a boat race.  If you are looking forward to seeing heavily muscled men turning cranks and leaning over the edges of the boats to provide counterbalance, advances in technology have now rendered such feats of strength and athleticism quaint.  In addition, these boats are built for speed and do not apparently maneuver like sailboats.  There will be little or no jockeying for position.  Rather, according to media reports, each boat will find its line and its wind and will attempt to travel from point A to point B and then back to A as quickly as possible with very little tacking.

As the New York Times reported, Ernesto Bertarelli, the owner of Alinghi, the current champion and holder of the Americas Cup trophy, has accused the challenger, owned by Larry Ellison of BMW/Oracle, of attempting to win the coveted trophy in court.  Last month, the New York Supreme Court told the parties to go race, but it may be too late to prevent the outcome from being determined by the parties' differing interpretations of the governing documents.  Although those documents look like regulations created by a neutral sports governing body, given that this race is really about Bertarelli and Ellison going mano a mano, those documents have a contractual feel to them and the entire competition seems to be as much about creative interperetation of contractual language as anything else.

[Jeremy Telman]

Gilbert Arenas' Contract in Doubt

 A New York Times story published last week provides all sorts of interesting details about the negotiations of basketball star Gilbert Arenas' contract with the Washington Wizards.  Arenas has been in the news a lot lately.  He brought some guns into the arena where the Wizards play and the guns allegedly figured in an argument he had with a teammate in the team locker room.  Arenas was charged with, and plead guilty to, the felony of carrying an unlicensed handgun.  The league has suspended him indefinitely.

The Times reports that Arenas represented himself in the negotiation of the contract.  Maybe that's why his nickname is "Agent Zero."  In order to avoid insulting him with a low-ball offer, the team offered him a very generous contract, with the option to take a bit less so that the Wizards could still retain some other top players.  The result was a six year, $111 million deal.

The team still owes Arenas $80.2 million on the contract for the next four NBA seasons, but the Times suggests that the Wizards are seeking to avoid any further obligations by invoking the contract's morals clause, which is standard on all NBA contracts.  The standard clause requires players to conform their personal conduct to standards of good citizenship, good character and good sportsmanship.  By good character, the league means that players must not engage in acts of moral turpitude, whether criminal or non-criminal in nature.  

This is a shockingly elastic standard that I would argue could be invoked at random.  For example, last season, LeBron James refused to shake hands with opposing players after his team lost a playoff series.  Many commentators viewed this conduct as evidence of poor sportsmanship, but there was no invocation of and no talk of invocation of the morals clause.  Nor was there any such talk with respect to Kobe Bryant's morals clause although he allegedly admitted to shocking marital infidelities.  Now, the reasons why the teams and the league did not invoke the morals clause in those cases are obvious, and I am not suggesting that the clauses should have been invoked.  I am simply wondering about the boundaries of the teams' and the league's discretion in invoking the clause and whether that discretion does not render the clause void for vagueness.

[Jeremy Telman]

Tiger Woods' Amicable Separation -- From His Sponsors

We have posted before about rumors that Tiger Woods is negotiating with his wife so that she will stay in the marriage.  Well, it seems that he has chosen not to take the same approach with his corporate sponsors.  The New York Times reports that AT&T severed ties with the world's best golfer without paying him fees still owed under the parties' agreement, and it did not have to go to court in order to do so.  Although nobody wants to talk on the record, the Times story prints off-the-record conversations with people in the know who claim that the agency that represents Tiger Woods let the corporate sponsors out of the contracts in order to preserve its good relations with those corporations. 

Ordinarily, a sponsor would protect itself and leave itself a contractual out through a morals clause that would permit it to sever the relationship if the celebrity spokesperson for the product turned out to be unsuitable.  The Times report suggests that Woods might have had sufficient bargaining power so as to eliminate the morals clause or to insist on one with very limited applicability.  Nonetheless, the Times also points out that Woods likely would not want to have his conduct further scrutinized and subject to public inquiry.  In these circumstances, it may have been best for all involved to simply part company. 

But the report also raises troubling issues about an agency that might have to balance its relationship with sponsors against the interests of its clients.  The best interests of the agency will not always coincide with the best interests of the agency's client. 

[Jeremy Telman]

Hadley v. Baxandale in the News

 National Football Post is not the place one looks in the hopes of finding a reference to Hadley v. Baxandale, but the case figures prominently in this report on the Washington Redskins' new head coach, Mike Shanahan.  The article assumes a level of knowledge regarding the NFL to which I can only aspire, but I glean from it, with the help of Wikipedia, that Mike Shanahan was formerly the head coach of the Denver Broncos.  He was sacked after the 2008 season and sat out this past season but was still paid under his old contract.  Now, he has been hired by the Washington Redskins, thus mitigating the damages due to him under his contract with the Broncos.  

So, what does all this have to do with Hadley?  Fair question.  I do not know.  The National Football Post cites to Hadley and accurately recites its basic facts, but the issue here is mitigation of damages, not foreseeability of consequential damages.  Hadley would seem to have no application at all.  

Apparently, NFL coaching contracts clearly spell out a duty to mitigate damages.  The result is that Coach Shanahan will only make slightly more than he would have made under his Denver contract.  However, if he had not actively sought work, Denver might have refused to pay, citing the duty to mitigate.  But Hadley would only come into play if Shanahan were, for example, claiming entitlement to further recovery contingent upon information that the Broncos did not have at the time the contract was executed.

This is what happens when reporters call audibles too close to their publication deadline.

[Jeremy Telman]

Smart Money Backs Fired Texas Tech Coach in Case of Suit Against His Former Employer

 Readers of this blog probably mostly associate Texas Tech with its University Press, which has brought forth some of the best formal poetry of the early 21st century.  Apparently, the school also has a sports program. 

An Associated Press report posted on ESPN.com states that Texas Tech's President fired the university's football coach Mike Leach for cause based on allegations that he had mistreated a student-athlete who has suffered a concussion.  Leach was fired one day before an $800,000 bonus would have been triggered.

On January 8th, Leach sued, as reported on RedRaiders.com, sued for breach of contract, fraud and defamation, among other things.  Texas Tech is claiming sovereign immunity to suit, but Leach is claiming protection under Texas' whistleblower statute and claims that under that statute, sovereign immunity does not apply. 

According to this report on RedRaiders.com, Leach has a good chance of succeeding in his lawsuit.  According to the report, Leach's best legal argument would be to claim that his conduct did not rise to the level that would justify a "for cause" firing.  The report suggests that the good people of West Texas will support Coach Leach regardless of any misconduct, and that attitude might force the university into a settlement.

[Jeremy Telman]