Tag Archives: Kevin Robertson

Owning a Player: Fantex and the Arian Foster IPO

November 23, 2013

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By Kevin Robertson – Thompson Rivers University 3L JD Student

A vast number of people grow up dreaming about becoming professional athletes but few ever reach that level.Instead they are relegated to playing sports recreationally, cheering on their team, and participating in a fantasy league.In a fantasy league a person acts as a combination of owner, general manager, and coach in an effort to run their team better then their opponent.While pride may be one the line, oftentimes there is also money up for grabs.

In American football, due to the constant injuries and changing focus of teams (say from running to passing, or vice versa) it is often necessary for a person to add or drop players based on how a person believes they will perform in future games.In a sense, a person is stating their belief over how the player will perform in the future.Simply put, if a person believes that a player will do well then they will play them.Alternatively, if the person believes that the player will not do well then they will not use them. 

In this way, a fantasy football league is similar to how a person plays the stock market.Buy the stocks that you think are going to perform well and sell the stocks that you believe are going to do poorly.When you consider the dedication that people put into researching their choices the parallels become even more apparent.

However, things are about to change.Fantex is launching a new program whereby for $10 a person can buy a percentage of a player’s future earnings. The first player to sign on with Fantex for this program is NFL Texans running back Arian Foster.In exchange for giving Fantex a 20% share of his future football earnings he will receive $10 million USD.Fantex will then take the 20% share and divide it into one million shares, which will then be sold to investors through an Initial Public Offering (IPO).

As with all things of this nature, someone is going to lose money.It’s possible that Foster will go on to have a healthy career and thus earn those who own his stock a healthy profit but it is also possible that he gets injured in his next game and never plays again.

What is fascinating and will be a huge point of contention in the future is that the contract does not only include his NFL salary but also includes any related fields.In defining related fields the prospectus for the stock gives a few examples such as broadcasting and coaching.That being said, there are a lot of things that could fall into the grey area and possibly result in disputes.If Foster opened a sports bar, which was named after him, could that be considered a related field?What about if he was selling autographs?

As well, there are a couple of other things that could pose problems in the future.The contract does not expire so Foster will be giving 20% of football related income to Fantex for the rest of his life.While the freedom of people to enter into contracts on their own volition is well established, the shear length of the contract will likely bring up concerns.One issues is that Foster has in effect “sold his soul to the devil” for a one time monetary payment.The contract only ends if he pays back the full amount plus a penalty.He cannot get out of the contract without Fantex’s agreement.In this way, if he retires within 2 years of signing the contract for any reason other than injury, illness or medical condition Fantex can unilaterally cancel the contract and demand repayment of $10.5 million USD.

In Foster’s case his contract might only be for 20% of his future income but what would happen if it were for more?Say 50% or 100%?There is something morally wrong for a society that has moved past slavery to then allow a person to become indebted to another for life.

It is unclear whether college players will sign up with Fantex.While the NCAA has been adamant that they are not interested in paying the players for their services, it would be hard for a lot of the players to turn down a lump sum payment even if the terms were not favorable in the long run.

In fact, it would be possible for a college player to game the system in a certain situation.Taking Foster’s contract as an example, a college athlete could get a lump sum payment and then pay it back (along with the penalty) with a signing bonus if they make it into the league and get a large contract.A strategy such as this would be very smart if the player knew that they had an even larger endorsement deal coming in the near future.Once again, legally this would be a grey area in that Fantex is registering each player under the Securities and Exchange Commission, which has strict rules governing insider trading.As well, with college players there may be issues due to them being minors.

Like many things in sports, the IPO into Arian Foster will garner a lot of money for some people, even if it isn’t in the best interest of the game or society.

The prospectus for the IPO is available to read here and contains some very interesting information not only on his health but also his contracts with both the NFL and endorsement deals. 

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“The Sean Avery Rule”

November 4, 2013

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By Kevin Robertson – Thompson Rivers University 2L JD Student

Few in the game of hockey are more loathed than Sean Avery. However, it is not for his devastating skill but instead for his tendency to push the grey area of the rules a tad to far.  One such incident occurred in April 2008 during a playoff game between the New Jersey Devils and the New York Rangers. Avery, playing for the Rangers, occupied his usual spot in front of the opposing goalie but then he did something unheard of in his attempt to block the goalies view, he turned around. 

Having a (usually large) player stand in front of the goalie in an attempt to block their view is a standard procedure. However, it has always been done with the players back to the goalie (face to the puck). The benefit of this is that the player can watch for the puck and potentially deflect it into the goal.  In fact, the move is so common it even has a name: screening the goalie. 

Most goalies attempt to overcome the body in their way by either looking over the players shoulder or to the side of the body. This has always worked because the player has to split attention between the puck and the location of the goalie.  When Avery turned his body to face the goalie (in this case Martin Brodeur) he completely disregarded the puck and instead focused solely on obstructing the goalies view. Now Avery did not simply stand there and let his body block the view of the goalie, instead he waived his hands in front of the goalies head. 

While Avery did not break any sort of established rule many players complained that it should not be allowed. Montreal Canadians goalie Carey Price even went so far as to state that “it’s almost an unwritten rule.” 

What is most shocking is the speed by which the NHL had reinterpreted an existing rule to prevent the type of play from happening again; it was ready to go the day after the game. Colin Campbell, the NHL director of hockey operations clarified the rule saying that:

“An unsportsmanlike conduct minor penalty will be interpreted and applied, effective immediately, to a situation when an offensive player positions himself facing the opposition goaltender and engages in actions such as waving his arms or stick in front of the goaltender’s face, for the purpose of improperly interfering with and/or distracting the goaltender as opposed to positioning himself to try to make a play,”

The most interesting aspect was not that the NHL desired to end this type of conduct (this view was widely supported throughout the league), it was the speed and monopolistic manner with which they reinterpreted a rule to cover a situation that was not contemplated in the first place.

Nowhere in Rule 75 of the NHL’s official rules (which outline unsportsmanlike penalties) does it forbid “improperly interfering” or “distracting the goaltender” (wouldn’t a team encourage this?). The only way that the rule change could be situated as any sort of “reinterpretation” would be if one considered Avery’s conduct to be “disorderly” (which would place it in violation of Rule 75.1). In effect, the NHL used a catch-all provision regarding disorderly conduct on the ice to ban this type of maneuver. 

Whatever a person’s opinion is regarding the rule itself, it is disconcerting how the NHL was able to essentially impose a new rule on the game in such a short time period without consulting with NHL Players Association. Such a short turnaround can only occur in a situation where the governing body has complete and utter authority to act in a monopolistic manner. 

To put this in perspective, typically a rule change would be a 3-step process consisting of General Managers recommending a rule change, the Competition Committee (half players and half club officials) which ordinarily meets twice a year to analyze the proposed changes, and the Board of Governors who then votes on it. Historically rules changes have also been tested in either other leagues or pre-season games before they are ratified. 

Only after all steps are complete does a supported rule change become active. 

There was no reason, such as immediate player safety, to circumvent the established rule change process. It appears that the NHL wished to save face by outlawing the screening of a goalie’s face à la Sean Avery.  The NHL has shown that they can effectively alter the rules on the fly by disregarding the established process. It is surprising that the NHLPA did not publicly decry the procedure through which the rule change was instigated. It is hoped that future instances of rule changes made in response to an unforeseen development on the ice will conform to the collective agreement and due process.

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