In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the introduction of new sports leagues, growth of franchises, and expansion of existing leagues with the added importance of leadership and governance.
You can read the full column below.
There has been in influx of new high school sports leagues over the past two-three years. One is the Overtime Elite basketball league for high school athletes that want to get paid, broker name, image, and likeness (NIL) deals, and receive education at a separate institution from where they are playing. More recently, a former executive with the United States Football League (USFL) started the Prep Super League for elite high school football players for the same business reasons as the Overtime Elite league. There has also been a growth in professional sports leagues like Major League Cricket, the USFL, XFL, and growth in franchises for Major League Soccer, lacrosse, and pickleball. There is also the iconic proposed merger of the PGA Tour, LIV Golf, and the European Tour. The National Thoroughbred League was also created.
At this point in sports history, franchises have never been worth more. Sports broadcasting rights have never been more expensive to license. Athletes have never been afforded more freedom and liberty to explore NIL deals and are receiving the more money through salary and winnings as ever before. For each of the aforementioned points, there does not seem to be a slowing down of the rise in cost or value. It makes sense therefore that leagues are being created and growing.
With growth, however, comes the responsibility to manage. Managing the changing landscape so that athletes, fans, investors, and leagues are protected for sustained growth and best practices and outcomes.
One of the issues includes whether universities restrict incoming high school athletes from making money for playing, whether in NIL or salary dollars? It is clear that NIL has been cleared by the NCAA for use, but not necessarily for high school or junior college athletes that have yet to step foot on a four-year college campus to study and play. Furthermore, what financial training is being made available to high school athletes that choose to play for money or are receiving NIL? Indeed, the parents must be involved and lead when children are in their teenage years, but what professional advice is provided or even required? NCAA President Charlie Baker will be busy.
Should high school athletes and their parents be required to open and manage Coogan accounts similar to the entertainment industry in California? Per the Screen Actors Guild (SAG-AFTRA) on Coogan accounts, “[s]ince a minor cannot legally control their own money, California Law governs their earnings and creates a fiduciary relationship between the parent and the child. This change in California law also requires that 15% of all minors' earnings must be set aside in a blocked trust account commonly known as a Coogan Account.” Coogan accounts are currently required in California, Illinois, Louisiana, New Mexico, and New York where the entertainment industry (e.g., filming for feature films and television series) are prevalent. The law in California would seem to indicate that a Coogan account is required even if the athlete is not an actor. Again, financial literacy will be very important as it is with college athletes.
The PGA Tour, LIV Golf, and European Tour proposed merger has raised questions of player assimilation, compensation, and government (Federal Trade Commission, FTC) approval for antitrust law and compliance. For months the dispute between the traditional and new fought only to merge for a more prosperous future. In the end, the players will be happier to be together in one super league, with changed rules, more money, and opportunity (and fun). Without much competition in terms of competing leagues in existence now for professional golf and the general acceptance in law and practice of sports league antitrust exemptions, it would be highly unlikely that Congress or the FTC would interfere with the merger. Mostly Congress and the FTC want to make sure that it is informed and that a fair deal was/is brokered. Congress has made similar threats before when Major League Baseball consolidated the Minor Leagues, through the Steroid Era, and when the players went on strike. Congress is mostly responding to public and constituent pressure to respond to a change in the sports industry.
Whether the golf merger is or will be a good thing or whether high school athletes should be professionalized is another question. On the one hand, sports leagues and schools through their athletic departments have made decisions to make revenue from sports at the high school and college level, but education should be a focus if sports are connected to a school or university and if not connected (e.g., Overtime Elite, Prep Super League, G league), then parents and leagues need to make room for financial, general, and trade education. The numbers do not lie, most athletes will not be working in professional sports. Roughly 6% of high school athletes will play an NCAA sport and 1-2% will play in a professional league.
New leagues and expansion are great, but leadership and governance are indeed important too.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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