Monday, May 22, 2006

Hot Topics

Aaron and I attended the “Hot Topics in Arts, Entertainment & Sports” seminar at the Boston Bar Association last Friday. It wasn’t quite as well-attended as I expected (though some were viewing online), and that’s a shame as it was very interesting indeed. Of particular note was the discussion led by Lucinda Treat of the Red Sox and John Mula of the New England Patriots. Other than showing off their championship rings (which are as impressive in person as you’d expect), they discussed merchandising deals, the art of managing the salary cap (NFL) or luxury tax (MLB), and players’ rights of publicity.

Mr. Mula’s dissection of the changes ushered in by the latest CBA extension (.pdf) with respect to payroll was a head-spinning tale of very large numbers and competing interests. One point I came away with is that the new minimum salary requirements, combined with a smaller amount of cap space to be devoted to signing draft picks, means we may see fewer 6th or 7th rounders get contract offers. He also touched on an interesting aspect of incentive-laden contracts as a method of managing cap space. Whether the incentive counts against the cap depends upon whether that incentive is likely or unlikely to be met. As may be obvious, for a first-year player none of the incentives are likely to be met, as he hasn’t played a down.

On the subject of players’ rights of publicity, Mr. Mula explained that if the marketing effort involves the use of four or more players, the NFL Players Association must sign off on it (see, for example, those recent American Express ads featuring Tom Brady and his offensive line). Ms. Treat noted that in the baseball world, the use of three or more players gets the MLB Players Association involved. Fewer than that, and it's a matter between the team and the league. And where only one player is involved and the marketing effort isn't directed at the team (e.g., Vinatieri for Pizza Hut), the player simply needs approval from the team. Then there's the case of a certain former local player who appeared in an ad for a certain chicken restaurant a year or so ago without permission from a certain team. They let that one slide, but you will note I said "former" player.

Unfortunately, discussion of the MLB's lawsuit against a private fantasy league was cut short due to time constraints. Both Ms. Treat and Mr. Mula did take pains to state (unconvincingly) that the MLB and NFL had no opinion about the relationship between fantasy leagues and gambling.

In both the Red Sox and Patriots we see ownership that is very savvy at squeezing every last dollar out of their very successful products. So it was no surprise to hear both Mr. Mula and Ms. Treat point out that while their teams used to be open to unsolicited licensing opportunities, they now have the leverage to be far more selective. While it sometimes appears that the Red Sox quest for dollars is accelerating beyond what we’ve seen in the past, upon reflection I must admit much of what is visible to the fans is fairly inoffensive, and in most cases beneficial. Those Red Sox Nation membership cards are a bit much, though.



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