NFL and NBA Contract Dilemmas, Legal Coverage, and ADR Methodology In 2023

Much like Hollywood, sports and the two biggest entities are expected to entertain, make money, and adhere to employee standards. The National Football League and the National Basketball Association make the most money of any other sports companies in the United States of America. Their players are the stars, and their games are the movies. The standards for these productions trickle down the hierarchies through contracts, limitations, clauses, norms, rules, regulations, leaders, and morals. Specific dynamics must be clarified when discussing salaries, stipulations, specific incidents, unions, and personalities. Feelings get hurt, rules get broken, secrets get exposed, and people get betrayed like any other highly-profitable business. By studying these relationships and real-world examples, this research will utilize the mindset successful arbitrators and mediators use in the fast paced industry. Examples will use mediation through conflict and the construction of contracts, while others will have missed the opportunity to avoid heavy litigation, dramatics, and harmful punches to their public image. These examples go beyond athletes, managers, and businesses breaking the rules; These examples are conflicts in the sports business and how alternative dispute resolution is utilized to bridge these parties to the next steps to evolve their careers. When there is a high profit in a sports league, there are also higher opportunities for issues, and how these problems are resolved will impact future players, branding, and especially their fans. These situations set precedents for athletes, managers, and lawyers and reflect the ever-changing world celebrating these games that unite millions of people. These athletes commonly have humble beginnings, these businesses have been passed over generations, and these rules attempt to include all the problems in a progressing society. By looking at the relevant cases of Dan Snyder and the Washington Commanders, Ja Morant, Kyrie Irving regarding player trade requests, and Bird Rights, this study will display the benefits of ADR and the endless possibilities that come with gifting new opportunities, maintain meaningful relationships, and keeping the peace.

The National Basketball Players Association paved the first contract example, the players union, for the NBA. It is a labor union, much like worker’s unions in public schools and the film and entertainment industries. A case involving Jeremy Lin Bird, the NBA, and the NBPA was successfully resolved in arbitration. This case addressed players claimed off by waivers and whether they should have Bird Rights, also known as early bird rights, as traditional non-waiver players. This rule allows teams to re-sign their newly free agent athlete up to 175 percent of his previous salary and is used on players that sign a short-term contract, such as one for two years. This rule also allows teams to re-sign their newly free agent for 104.5 percent of their average salary in the previous season, but they will choose whichever number is more significant. Negotiations began once this idea was brought about because enough teams, athletes, and coaches felt it necessary. By the end of the arbitration, the single arbiter was leaning on the side of athletes and NBPA, but this is also highly beneficial to the teams because it maintains better relationships. A judge always aims to make all parties feel they are walking away from the negotiation table equally. Bird Rights are a collective bargaining agreement standard discussed further, used for all teams under the NBA. These rights allow teams to retain their players when their athletes’ contracts end and free agency begins. These rules were made so players and teams have the amicable ability to work together longer and find solutions, even if a team is at or nearing their salary capacity. These rights allow athletes to be paid what they are worth, also allowing an established team to evolve their players. The NBPA posted this statement when they completed arbitration; Arbitrator Kenneth’s Dam today affirmed the National Basketball Players Association’s position that players claimed off waivers retain their valuable “Bird” and “Early Bird” rights when they become free agents. As a result of the arbitrator’s decision, Jeremy Lin and Steve Novak of the New York Knicks will enter the 2012-13 free agency period with “Early Bird” rights, and Chauncey Billups of the Los Angeles Clippers and J.J. Hickson of the Portland Trailblazers will enter the 2012-13 free agency period with full “Bird” rights. Future players claimed off waivers will likewise benefit from today’s ruling.“Bird and Early Bird rights are the lynchpin of our Soft Cap system, and we’re pleased that Professor Dam recognized that a player does not forfeit these important rights unless he makes an affirmative decision to sign with a new team as a free agent” NBPA Executive Director Billy Hunter said. “Players fought hard for a Collective Bargaining Agreement that allows maximum flexibility for free agent players while also permitting teams to retain their core free agents, and today’s decision affirms both of these important principles.”When this ruling came out during the 2013-14 season, the four players were looked at individually and based explicitly on the unique situation that they were in. Jeremey Lin and Steve Novak of the New York Knicks resigned when the team was already over the salary capacity. The Knicks could pay these players for their services with tangible money, contrary to the typical expectations of attempting to fit their salaries in the maximum capacity. J.J. Hickson of the Portland Trail Blazers was a free agent after his contract with the Sacramento Kings. He joined the Trailblazers, which were under their salary capacity. This ruling allowed the Trailblazers to sign Hickson still but leave that excess salary for new talents and trades. They could resign Hickson without having to forfeit their mid-level exception. In the case of Chauncey Billups, this conflict was raised a year before the change. Billups was released by the Knicks, partly due to a significant injury to his Achilles tendon, which is commonly detrimental in basketball. The Clippers signed him on a chance without using their mid-level exception. These Early Bird rights, or what the league calls “Bird Rights,” allows teams to build lasting relationships with these athletes without the political and financial dramas. Another example of this is seen with J.R. Smith of the New York Knicks. He was a free agent and signed a two-year contract. Smith signed two one-year contracts in the same meeting, and this was the only way the Knicks could maintain this symbiotic employment while using most of their Bird Rights. Evolving clauses like this allow the league and players to remain within their employment rules and expand and grow with the upcoming opportunities. Unlike these specific rules, there are other efforts by the league to change with the rest of the world; the NBA and NBPA recently made it permissible for an athlete to invest in cannabis, they removed testing for cannabis, and they also allowed athletes to purchase shares of other NBA and other sports teams.

The NFL is vacuumed-sealed regarding private mediations and arbitrations, so finding an example is extremely difficult; Until investigative journalist Don Van Natta got a hold of one of the most controversial and debilitating cases regarding the owners of the Washington Commanders. Not only does this case talk about big money numbers, like in the billions, but it also calls into question the politics of owning a professional sports team. The relevance of this case to modern sports is intriguing, and many voices are weighing in. Van Natta writes about this in his article “How a Disputed $55M Loan Plays into Feds’ Probe of Commanders,” “The secret $55 million has become a primary focus of federal prosecutors in Virginia who are investigating allegations of financial misconduct by Snyder and the Washington Commanders.” In some miraculous and extremely talented investigative journalistic style, Van Natta reviewed a 61-page arbitration request, which he discusses in depth in his ESPN-published article and the sports journalism podcast Conduct Detrimental. To obtain such a request is highly difficult; Snyder filed this request, and it was between him and his fellow owners in the NFL. The public never sees an arbitration of this level because many people are involved, a lot of money is tied up, and it is highly damaging to peoples’ careers. Essentially, Van Natta says these documents were a “roadmap” to Snyder and the two other significant owners of the Commander’s organization Robert Rodman and Dwight Shar, and their fallout. Snyder owns a minority stake at 40 percent of the Commanders franchise. This issue occurred when Snyder requested a 55 million dollar credit line from the well-known bank and significant partner of the NFL, Bank of America.5 Snyder allegedly requested this 55 million dollar line of credit without anyone else’s permission or knowledge. In this arbitration, Van Natta raises a significant point that Bank of America has a role in this arbitration as they maintain a regular relationship with this team and the entire business of the NFL; Van Netta mentions in the podcast that Bank of America is the NFL’s most used bank. Questions were raised against the bank, such as where is the documentation of this sizable request, what other requests have come through with these parties, and what outstanding balances are due. Allegedly, when these documents were retrieved, and the discovery process occurred, it was uncovered that the Commanders owed the bank nearly 1 billion dollars in debt. In the arbitration process, the lawyers and all owners exchanged text messages that were used in the discovery. The arbitration was filed on June 26, 2020, and investigated by the FBI and IRS. The NFL’s responsibility, in this case, is to hold all parties to their professional and influential standards; however, Van Netta said he did not get a comment from the NFL when asked, and it appeared that the league had “no interest” in getting to the bottom of this expensive mess, or at least not publicly. Brad Karp is the Paul Weiss chairman, a powerful position as an attorney overseeing major companies like the NFL. Karp has commented to the media on this issue, and it is the most valuable resource. At this point in the arbitration, it is apparent that the other owners do not want to be in business with Snyder, and they want to get their lawyers. The other owners said that Snyder was only in this business for his personal banking use and used this credit line for his personal uses. Throughout this case, there are consistent questions as to whether this should be in litigation, if Snyder should face criminal charges if lawsuits are possible, and if the other owners can do anything to remove Snyder from his stake. This public issue is also on top of the problems that the Commander’s franchise is already facing, like low game attendance and player issues. The biggest argument is that when taking a massive loan out as Snyder did, he should have gone in front of a board of 6 members that work under the Washington Commanders like the NFL regulates. The other owners wanted litigation and were growing uncomfortable with the arbitration process, which eventually turned to mediation. The other owners were also apprehensive of arbitration because they believed Snyder should face criminal charges. Allegedly, the NFL and their lawyer Brad Karp were responsible for pushing mediation and convincing the use of private arbitration. One could assume this was to save face for Snyder or the company. The other owners begrudgingly agreed and went through the entire ADR process. This also comes into light meanwhile Snyder is simultaneously facing sexual assault and toxic workplace environment accusations; This does not look good for the franchise, and online commentaries, like those of Van Natta, are accusing the NFL of shady business practices. In researching this messy case, it is vital to acknowledge the hefty non-disclosure agreements that the NFL implements. Allegedly Snyder would discuss selling his share of the football team; it appears that if he was going to do it, it would be on his terms and completed only his way. He did not want to sell it to Jeff Bezos specifically and would ask for more money than it was worth. Snyder is the youngest person to have ever purchased an NFL team in history at age 34, and some speculators valued his share as worth around 3 billion, while Snyder was aiming for a 7 billion dollar sale. This case is important because it sets precedence for all NFL owners. The way that the NFL handled this situation did not sit well with the other owners in the league, as people believed Snyder was guilty of fraud and that this loan from the bank was self-serving embezzlement. An article published by Andrew Lawrence in the Guardian announced that Snyder had officially sold his share. The article was titled “‘The Witch Is Dead’: Disgraced Daniel Snyder Finally Exits the Stage.” Snyder owned his share for over 24 years, making close to what he wanted at 6.05 billion dollars. It is unclear if the other owners, NFL, or rules and out-of-the-stadium legal dilemmas had something to do with the trigger of this sale; however, many Commanders expressed their relief at the exit on social media; Either way, the secret arbitration meetings all connected parts, public opinions, large sums of money, preexisting relationships, and multiple billionaires in one room have everything to do with the mediation process in a massive entity that is the NFL. This case is a perfect example of a private business using arbitration and mediation opportunities, even when some parties are reluctantly showing up. This case is studied not only because it was made public but also because it progressed from arbitration to mediation; In the big business that the NFL is, this is impressive. This means that emotions were honored, people were heard, and everyone had a happy ending. This also means that a strong ADR team endured the stress that these parties were experiencing and bridged these people to peace.

Ja Morant has perpetually been in the news for the 2023 NBA season. He is one of the league’s youngest and most impressively decorated athletes but is highly controversial, and ADR is a tool that has helped him remain in the position he is in today. Through all of his unfortunate headlines, teams of lawyers, mediators, and facilitators are behind the public relations and morals of his punishments. This case is not brought up to discuss all that he did wrong because there is no debate on that, but rather to dissect how this affects the entire league, outside advertisements, set standards, and display how serious the NBA is about keeping their employees in line. This case has not been described as going through an ADR process, but it is safe to assume that is what is happening behind closed doors because they have avoided litigation thus far. The NBA is different from the NFL in that it has fewer players, and these players do not wear covering equipment. Hence, they are commonly recognizable on TV, salaries are more condensed, and more are likely to venture into other businesses with their made-name image and likeness. They are more likely to become public figures than some NFL athletes, which sets them up for more public judgment. Prefacing that, nothing Morant did was blatantly illegal, allegedly, but the NBA is a private business, and Morant is an employee. Morant must follow the league’s rules to join the NBA. Painting a brief background of this impressive talent, there is no negotiating his value on the court; he arguably put his team, the Memphis Grizzlies, on the map for the 2022 and 2023 seasons. He is one of the league’s youngest and most impressive players with a promising future ahead of him. Morant began gaining unfortunate headlines with his off-the-court behavior, and a slippery slope effect came into play in his ultimate punishment. This story begins when Morant took it upon himself to have a “pick up,” or impromptu, basketball game at his residence. One of the attendees, a 17-year-old boy, was personally invited by Morant to participate in the game. Details of what transpired were not made public, but Morant allegedly punched the 17-year-old boy over a dozen times and flashed a gun at him. The Washington Post broke this story. When reporters asked the 17-year-old boy what these punches were like, and he said, “MMA style.” It was also reported that Morant had a friend punch him four more times. Despite the 17-year-old being vocal about this story, no charges were officially pressed. The next incident happened at a mall. Morant’s mother was shopping at the footwear chain Finish Line in the mall when she argued with a security guard who works for the store. The mother called Morant, and he showed up. Police reports say that Morant said threats. The following incident took place in Denver, Colorado. Morant and his team had just won against the Denver Nuggets, and by nighttime, it was time to celebrate. Morant went to an adult club and displayed this on Instagram Live while flashing a handgun. This is arguably the time that Morant did break the law, although nothing was officially filed. In Colorado, being drunk and having a handgun in public is illegal. The NBA does not blatantly say it is illegal for their players to have guns; however, they have a rule: if a player enters an NBA facility with a gun, it is an automatic 50-game suspension. The adult clubs’ security cameras leaked viral photos, and it appears that Morant covered the ground with over fifty thousand dollars and was intoxicated; Once again, this is not illegal, but it is not a good image for the young man. When the Grizzlies played the Indiana Pacers, one of the employees of the Pacers said a laser pointer was on them after the game by Morant and his friends; it is unclear if it was a firearm or not. If it was not a firearm, it truly is a distasteful prank. At this point of controversy, Morant is receiving a lot of backlash, and the league suspended Morant indefinitely, which was concluded by the NBA commissioner and judges behind the scenes. To show accountability without losing one of their star players, the Grizzlies bans Morant for two games. Ultimately the NBA commissioner, Adam Silver, announced that Morant was suspended for eight games after all that had transpired up until now. The NBA released an official statement, and Morant issued a public apology. Unfortunately, the problems did not end there despite Morant saying he would use his time away to seek help. Mediators, lawyers, and arbiters are working on accounting for all of these details into a cohesive punishment, and Morant seemed to want to create a clean slate as he and his team were approaching the NBA playoffs. Morant got busted again when he appeared on a friend’s Instagram Live and flashed a handgun. Morant said this gun was a toy, but many people on Twitter and journalist Dan Lust argued that it does not matter due to his relevant history. This pattern shows that no rules in an industry like the NBA can include all the array of problems that have and will come up, especially when there are second, third, and fourth offenses. Negotiations began once again after Morant kept making public mistakes; arbitrators, mediators, lawyers, and sports contract negotiators were called in because this now would change how much Morant would be paid. Despite his talents, his wrong-doings will triumph. These experts now had time because Adam Silver announced that the league would announce their punishment for Morant when the NBA finals were completed to honor those winning athletes. ADR experts call this “ripeness,” or allowing time to pass in order to come to the soundest solution. Morant lost the biggest advertisement deal an athlete has ever seen with Powerade, a company under CocaCola, which was valued at 10 million dollars. The importance of ADR is that all parties want to negotiate; when an individual blatantly breaks the rules, they lose this possibility when a party completely withdraws. The NBA set an example of working with Morant on a specific basis, arguably giving him too many chances. The power of ADR allows people to learn from mistakes and harvest opportunities. No official documents have been released regarding Morant, his punishments, or how the league reached these conclusions. It is safe to say many negotiations were occurring behind closed doors, and it was better to do so. Ultimately, Morant was suspended for 25 more games in the next season. He announced that he would seek professional help and even mentioned that alcohol had been an issue for him. Either way, the league is giving him another chance, unlike Powerade. He also was at risk of losing the new shoe deal he had created with Nike. Nike also announced that they would continue to work through Morant during this time of difficulty. While many of these problems were unnecessary, and many speculators blame it on his young age of 23, conflict is a chance for change and new opportunities. Seeing a young athlete growing up in front of the world is already hard, so to see companies negotiate, mediate, and uplift these learners is a special act of patience that can only be achieved through the power of ADR.

It is clear at this point that arbitration and mediation are heavily used for NFL and NBA issues, both public and private. Still, these companies are losing out on the possibility these tools can be used to bridge parties to evolution. ADR can also be used to win teams’ championship titles via trades. Trades are an essential element of these sports. Otherwise, all teams would remain the same until players retired and new ones joined. This topic must be discussed as NBA and NFL trades constantly happen outside their non-trading windows. Trades are inevitable and essential to the game dynamics; It is all about fitting the pieces together that create a successful harmony, a great team environment, and a successful group of different strengths and weaknesses. Some notable athletes like Lebron James, Kyrie Irving, and Tom Brady have had the most controversial trade package deals. Jemuel Gascon, a Pepperdine Law School alum, gives great insight into this topic in his writing titled, “Taking a Shot at Mediation is the Solution to NBA Player-Trade Demands.” He writes, “In the long run, teams, and players will work things out no matter how dirty negotiations may get. The real people affected are the fans and people who invest their own hardworking money to watch these players play a game...How fans feel important because they are why the NBA or any other sports league exists.” (Gascon 118). This is all regarding the Collective Bargaining Agreement, CBA, that the NBPA and NBA officially implemented on July 1, 2017.15 This agreement gives a player a salary if they work for a team. The CBA is the basic employment agreement of an athlete in the NBA; This contract is between an athlete, a team organization, and the NBA. The current rules of the CBA expire on June 30, 2024, so it will be interesting to see what and if anything changes. This comes in the relevancy of current-day occurrences like Anthony Davis being fined 50 thousand dollars for requesting a trade from the Pelicans to the Lakers in 2017 or when Kyrie Irving requested an extension on his contract a week before the trade deadline after allegations of antisemitism on his part went public. The CBA is decorated in various clauses relevant to a specific individual, such as a no-trade clause. However, this has not detoured stars from losing money and demanding a trade; this will be the most likely change for that 2024 expiration date. As a result, stars like Kyrie Irving, Jimmy Butler, and Kawhi Leonard are examples of athletes that have lost millions of dollars to escape a contract with a no-trade clause; Even the commissioner of the NBA has publicly expressed that he does not like the idea of players and teams having public disagreements regarding their employment and broken contracts, “we don’t want them to happen” and “player trade demands are a bad thing” said Silver. Gascon profoundly says in his writing,

Mediation is a possible solution to player-trade demands while under
contract. This topic is important because of the money and the millions of people involved in the sports industry. Mediation is a way of venting one’s emotions, and having A neutral party facilitation is the cleanest way to solve this problem. (Gascon 7).

Apparently, it appears most of these demands by the players are emotionally based; if it were for another reason, they would not be content with losing millions of dollars. Even motivation to win a championship is emotionally driven, but mediation would privately honor these emotions regarding all parties involved. Irving, for example, was asked why he was not bothered by losing millions of dollars when he walked away from the Cleveland Cavaliers, and he said, “You can’t put a price on happiness and truth.” What happened between the Cavaliers and Irving is up for speculation, but the bottom line is that he was not happy where he was. The NBPA and the NBA will resolve this issue through ADR professionals’ guidance because this problem has increased with time. With more voices speaking on this issue it would be a good guess that things regarding this will change in the future. Ultimately, through real-world examples, unions and associations, and expert advice of mediators, arbiters, and facilitators, fans, athletes, and business people can and will continue to enjoy the games produced by the NFL and NBA. Despite conflicts and mistakes, successes and adversities, and rules and regulations, ADR methodology has honored each person individually and bridges the gap between all parties involved. Disputes are not always bad in these cases and are used to perfect the rules of these sports. These are simply companies that have grown larger than what is fathomable, so learning will never stop. The legal coverage of these companies is highly impactful, not only on the business members but also on the fans that travel and work hard to see their favorite teams and support their players. Litigation could be something that will come up, but it is apparent that these leagues, players, and owners all have an interest in keeping relationships, entertainment, and happiness intact. Litigation can be harmful to performance as well because there never is a “good” time to have it, it is emotionally draining, and it is public. ADR is forward driven, and with the diverse, evolving, and influential powers that these teams and athlete’s have, it only makes sense to solve conflicts in a communicative, peaceful, progressive and private way. Law in sports is special because sports is what brings people together. Rich, poor, educated, uneducated, religious, non-religious, men, women, young, old, and all walks of human life gather in these arenas and stadiums to uplift their teams. No matter what problem arises, there is no denying that sitting down, looking each other in the eyes, expressing interest and emotions, and respecting each other at a negotiation table is the most effective manner to resolve non-illegal dilemmas. Even after this study, cases that could have quickly gone to litigation were handled in a non-disruptive manner for the greater good of fanatics

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