The Arkansas State University Master of Science in Sport Administration online program features a course in sports law that explores legal issues including tort law, negligence, contracts, antitrust, labor, and licensing law, among other sports-related legal matters. Here, we provide a broad overview of some of these key legal concepts, along with examples, that are common in various aspects of sports. We see these issues arising in areas from the management of community athletic centers to the organization of amateur/school sports activities and the major leagues.
Employment Contracts and Systems
The professional sports leagues in the United States have complex systems that protect both employers’ and employees’ financial interests and legal rights. The NFL, NHL and NBA have salary caps that limit how much each team can spend on players, though the NBA has a “soft cap,” allowing teams to exceed limits if they are willing to pay the league a luxury tax. The salary cap in each league exists to limit the spending on players to a percentage of revenues and to protect owners from cannibalizing their own profits by outbidding each other to an extreme for players’ services. It also helps to make small market teams more competitive, which has been a problem in baseball, where large markets can vastly outspend small markets.
Players sign contracts that guarantee a certain amount of pay, spread over a certain number of years. When agents negotiate these contracts, they can include clauses that limit the club’s rights to trade a player, or a strict no-trade clause. They may also negotiate incentives, so that the player can earn more if he or she exceeds certain goals. Options in the contracts enable teams to exercise a right to retain a player, after a set number of years, at a percentage of the previous year’s salary. Owners use the salary cap as a bargaining tool with player contracts, arguing that salaries in excess of certain figures “bust the cap” and make it impossible to field a winning team.
In the NFL, teams have what are known as 5th year options on players drafted in the first round of the NFL draft, that enable them to keep players who have performed well up to 5 years. Other clauses in the contracts enable teams to cut players not performing up to expectations, owing an agreed-upon sum when the player is released.
Torts
A tort is a wrongful act or infringement of a right leading to civil legal liability. In sports, courts decide whether wrongful acts or infringements of rights have led to the injuries of athletes, spectators and other parties involved. Courts decide on the reasonable level of care that a party owes toward another party, given the circumstances of a particular situation.
In motorsports, fans assume a certain level of risk. Flying debris from motorsports accidents could penetrate the protective netting and cause injuries in the stands. In specific instances in which accidents have resulted in harm to spectators, spectators have sued, claiming that the facilities did not exercise reasonable care in protecting them. William Fulton was one such fan injured by debris from a massive crash. Fulton sued, but ultimately filed paperwork agreeing to drop the lawsuit after reaching a confidential settlement.
Antitrust Issues
Antitrust refers to a contract or conspiracy to promote anti-competitive behavior or to restrain free commerce and restrict supply or demand. Antitrust laws and institutions exist to protect consumers from the fallout of anti-competitive behaviors. For instance, The Sherman Antitrust Act prohibits monopolies and price fixing. Violations of this act may lead to criminal fines by the government or civil damages. The National Labor Relations Act (NLRA) guarantees the right to form labor unions and requires employers to deal with elected union leaders. The National Labor Relations Board enforces the NLRA and investigates charges of unfair practices.
The professional team sports of football, baseball, basketball and hockey have all had legal battles over the application of antitrust laws. Although Major League Baseball (MLB) has held an exemption from antitrust laws, which have kept new, competitive leagues from forming, because the MLB could restrict its players from joining another league.
The reserve clause in the MLB antitrust exemption, which prevented players from moving from team to team or having teams compete financially for their services, was challenged in the 1970 case Flood v. Kuhn. Ultimately, the Supreme Court ruled in favor of MLB, upholding the 1922 ruling that established the antitrust exemption. Though Curt Flood failed in his bid, the reserve clause was struck down in 1975, which opened the doors to modern free agency.
Exculpatory Agreements and Liability Waivers
Owning a sports facility or franchise carries risk. One way to manage this risk is with an exculpatory agreement, also known as a liability waiver. This type of agreement is a contractual provision, typically contained in the back of a receipt or invoice, or in a digital “accept” window online, that has one of two stipulations: Either one party is relieved of liability from the other’s activity on premises or in an organization, or one party is freed of all liability arising out of the performance of a contract. These agreements include the type of activity being addressed, circumstances covered under the agreement and the scope of the agreement. The enforceability of these agreements is often resolved in legal proceedings and often pertains to the language in the contract, which must be clear, explicit and specific in order to be enforceable.
For example, when a recreational skier purchases a lift ticket, the back of that ticket often contains a liability waiver, releasing the resort from liability from any foreseeable accidents that may occur on the slopes, not due to the negligence of the resort in maintaining reasonably safe skiing conditions. In professional contact sports, there is a degree of inherent risk in the sports, regardless of how many precautions team owners may take to protect players. Professional athletes’ contracts in these sports include exculpatory agreements to protect owners from lawsuits arising out of the performance of the contract.
The risks and rewards of sports demand an increasingly complex set of laws and institutions in order protect the interests of team and facility owners, athletes, and even fans and other stakeholders. Opportunities abound for graduates of the online M.S. in Sport Administration program who choose to pursue careers in and around the legal aspects of sports.
Learn more about A-State’s Master of Science in Sport Administration online program.
Sources:
Sports Law: Professional Athletes
MWL: The Blame Game: Understanding Exculpatory Agreements and Liability Waivers
LawInSport: An Overview of Key Case Law Relation to Negligent Liability for Sports Injuries
KFKlaw: Sports Waivers and Releases of Liability