The new year will bring new developments in the intersection between sports and law. One development became apparent on Tuesday, when Major League Soccer notified the MLS Players Association that it will invoke a force majeure clause. Here are five other key industry trends to follow:
1. The Legal Fallout of Sports Slowly “Returning to Normal”
The sports industry was sharply disrupted by the coronavirus pandemic in 2020. As 2021 begins, the pandemic is deadlier than ever. But with U.S. Food & Drug Administration approval of vaccines, the tide should turn. Eventually.
To that end, public health experts estimate that about 75% of the population must receive a COVID-19 vaccine for life to resemble the pre-pandemic world. It remains unclear when this critical mass will be reached. Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, recently suggested that the fall is a possibility. But that projection hinges on effective distribution of vaccines and the willingness of people to be vaccinated.
For pro leagues and colleges, this hazy timetable will present major operational challenges.
Take infection rates: As they drop, political leaders will face increased pressure to permit ordinary business activity. Stay-at-home orders, gathering restrictions and travel prohibitions will be lessened or lifted. Teams will permit more fans into ballparks, arenas, stadiums and rinks. In doing so, they’ll need to balance the pursuit of revenue with continued vigilance for public safety. Consider the risk of an outbreak from a crowded sports facility, especially one indoors. A recent Pew survey found that 39% of Americans “definitely or probably would not get the vaccine.” How many “anti-vaxxers” will attend games?
Teams can mitigate health and legal risks. Game tickets are revocable licenses, wherein the license to enter and traverse a sports facility is contingent on adhering to a fan code of conduct. Tickets can stipulate that spectators will be denied entry or removed if they refuse to wear a mask. Liability disclaimers, which have long appeared on tickets to thwart potential claims for foul-ball and other on-premise injuries, might also prove crucial.
Labor issues will garner attention as well. Pro leagues and their respective players associations will continue to amend workplace and economic terms to reflect evolving pandemic conditions. This will mean reconfiguring schedules for the preseason, regular season and postseason; dividing diminished pools of revenue; administering the vaccine among players, coaches and staff; and revising COVID protocols for players in their personal time—a topic that Houston Rockets star James Harden knows all too well.
It’s a different dynamic in college sports, where the players aren’t recognized as employees and are barred from forming a union. Schools, conferences and the NCAA will manage the transition from pandemic to post-pandemic—and reap the additional revenue it generates. Yet analogous considerations are apparent, including in regard to safety.
There are also far-reaching insurance legal issues that will play out in courts. A number of pro teams, including those in the MLB, NFL and NBA, have brought business interruption lawsuits against insurance companies. New insurance policies, with rates and terms reflecting recalculated risks, will emerge.
Last but not least are immigration considerations. As Canada has adopted tighter restrictions on crowds, the Toronto Blue Jays and Toronto Raptors have played pandemic-era home games in the U.S. Meanwhile, the U.S. Department of Homeland Security has barred international students from entry when their schools pivot to online learning. To the extent the U.S. experiences a longer period of battling COVID-19 due to challenges in distributing vaccines and/or convincing people to take a vaccine, Canada—where a far smaller percentage of the population intends to shun the vaccine—might impose immigration barriers to U.S. travelers, including on athletes employed by U.S. teams.
2. The U.S. Supreme Court’s Ruling in NCAA v. Alston
On a date to be determined in the spring, the U.S. Supreme Court will hear oral arguments in NCAA v. Shawne Alston et al. The nine justices will review a specific question: whether the U.S. Court of Appeals for the Ninth Circuit “erroneously held, in conflict with decisions of other circuits and general antitrust principles, that [NCAA] eligibility rules regarding compensation of student-athletes violate federal antitrust law.”
This question has profound implications for college sports and, more broadly, higher education.
For decades, the NCAA and its members have agreed (or, more critically phrased, conspired) 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. As a practical matter, this means colleges can’t compete with one another by offering recruits market-value scholarships and other types of compensation that reflect the fruits of meaningful competition. Meanwhile, colleges collectively spend billions of dollars competing in other ways for athlete recruitment. They construct the most state-of-the-art stadiums and hire the most famous coaches. Why can’t colleges, if they so wish, also compete by paying athletes?
The Ninth Circuit held that NCAA rules preventing such competition violate antitrust law. Yet the court’s remedy was tightly constrained to university spending on athletes’ education (like technology fees). The NCAA can continue to prohibit schools from compensating athletes for their sports involvement.
The Supreme Court, which only grants cert in between 1% to 2% of petitions, could rule in very different ways. It could agree with the NCAA that amateurism rules ought to be exempt from antitrust scrutiny and reverse the Ninth Circuit’s ruling. Or the Court could find that amateurism rules are fundamentally anti-competitive and illegal. Such a holding would open the door to aggressive compensation for elite recruits and athletes, who could be paid their market value.
Much has been made of the Supreme Court being comprised of six conservative and three liberal justices. But does “conservative” mean upholding NCAA traditions, or promoting economic freedom?
We’ll find out in 2021.
3. The Marketplace for NIL in College Sports Emerges Amid Looming Litigation
This much is certain: In 2021, athletes at NCAA member schools will be able to hire agents, sign endorsement deals and sponsor summer camps for pay. They won’t be “pro athletes” in the sense of employment or labor rights—NCAA grant-in-aid rules will continue to limit their “compensation” from schools. But for college athletes with enough marketability, the chance to sign a promotional contract with an apparel company, camp or car dealership will mean a new source of money.
The NIL world will represent a new, and more specialized, college sports industry. The marketplace is already adapting. Colleges are hiring consulting firms and experts to help them prepare for the transition and manage the expectations of corporate sponsors, boosters and fans. For law school and business school grads eyeing careers in the sports industry, there should be more jobs where they can apply their skills and training.
Yet the road ahead could be bumpy. There are three voices on NIL—the NCAA, state governments and Congress—and they might all be singing different tunes.
This month, the NCAA is expected to announce specific NIL rules that would go into effect in the 2021-22 academic year. The organization intends to feature “guardrails” to ensure that colleges maintain substantial control over how their athletes pursue endorsements. As explained on Sportico, these guardrails could run afoul of recently enacted state NIL statutes.
To complicate matters further, a federal NIL law could conflict with both NCAA rules and state statutes. Even if a federal law attempted to preempt both, preemption can invite legal challenges. There are also unsettled questions as to how agents for college athletes will be licensed and regulated.
There’s a lot to unpack and, odds are, courts will have a decisive voice.
4. MLB and MLBPA Labor Disharmony and an Expiring CBA
Of all the major pro leagues and their respective players associations, Major League Baseball and the MLBPA have experienced the most conflict in adapting their sport to the pandemic’s realities. Their inability to resolve differences over salary and employment rights is a key reason why their 2020 season ran to only 60 games.
With the 2021 season only a few months away, their bargaining woes have resurfaced. USA Today reported that MLB wants players vaccinated before they arrive at spring training facilities. Such a move could require a delay in the start of the season to May and a reduction in the season’s length from 162 games to 140 games—with a corresponding reduction in player pay. Yet, as detailed by Sportico’s Barry Bloom, MLBPA is moving ahead with plans to play a full season. The players are aware that the 2020 season was successfully played without a vaccine.
Lurking beyond the 2021 season is the expiration of MLB’s CBA on Dec. 1. Given the animosity between the two sides, it’s possible the CBA will expire without a replacement. That development would not, by itself, trigger a legal controversy. Under federal law, the terms of the expired CBA would remain in effect so long as MLB and MLBPA engage in good faith bargaining.
Yet if their talks break off, baseball could be in for a very dark winter. At that point, both sides might turn to offensive uses of labor law.
MLB could lock out players, thereby depriving them of pay and benefits, whereas MLBPA could commence a strike—the last players’ strike was in 1994 and wound up in court—or vote to decertify. A successful decertification vote would provide MLB players with the opportunity to sue the league under antitrust law. While MLB enjoys an exemption from antitrust law pursuant to the U.S. Supreme Court’s 1922 ruling in Federal Baseball Club v. National League, that exemption was significantly narrowed by the Curt Flood Act of 1998. The exemption no longer extends to labor relations at the Big League level.
The combination of a lingering pandemic and an expiring CBA could constitute a disastrous recipe for baseball and its fans.
5. Biden-Harris Administration Reshaping Important Topics Related to Sports
In a matter of weeks, President-elect Joe Biden and Vice President-elect Kamala Harris will take control of the executive branch of the federal government. Their policy choices will have substantial impacts on sports and the law.
Take taxes: Biden and Harris are expected to seek legislation that would roll back tax cuts obtained under the administration of President Donald Trump and Vice President Mike Pence. The new administration also intends to reduce the values of estate and gift exemptions, moves that would be tantamount to tax increases—particularly for wealthy Americans such as families who own sports franchises. These changes would become more plausible should the Democrats become the majority party in the U.S. Senate following the Senate runoff elections in Georgia on Jan. 5. For pro team owners and players, as well as for numerous managers, coaches and other officials at the pro and college levels, they can expect to pay more come tax season.
Title IX regulations are also in store for change. Title IX is not a “sports law”; it governs civil rights in higher education. Yet Title IX controversies often surface in athletics. A recent ESPN study concluded that college athletes are three times more likely to be accused of sexual misconduct in Title IX complaints than are other college students.
This dynamic has presented difficult challenges for universities, which want to both protect and balance the sometimes-competing rights of the accuser and the accused. Under U.S. Education Secretary Betsy DeVos, accused students have seen an expansion of rights from under the administration of former President Barack Obama and his vice president, Biden. Biden and Harris are expected to reshape Title IX procedures. For university and athletic department administrators, regulatory shifts will create operational hurdles.
There are many other aspects of the sports industry—including in regard to healthcare, trade, the environment, gaming and immigration—that will be altered by changes in the White House and federal agencies.
As always, stay tuned.