Introduction
In many ways, 2021 marked a return to a semblance of normalcy in the sporting world. The proliferation of vaccines enabled crowds to return to sporting events, and tent-pole events postponed from 2020 (most notably the Summer Olympics) were able to proceed. In terms of sports-related commercial litigation and disputes, however, the year was anything but "normal." From a landmark Supreme Court decision regarding amateurism to a stunning (and quickly foiled) European soccer conspiracy to lingering litigation resulting from the COVID-19 pandemic and resultant shutdowns, the year featured a bevy of sports-related suits and incidents that could shape the business of sports for years and decades to come. Below is a brief summary of a few of the cases that occurred or were resolved in 2021.
Part I – NCAA
§ 1.1 NCAA v. Alston, 141 S. Ct. 2141 (June 21, 2021)
Directly addressing the antitrust legality of the NCAA's student-athlete compensation limits for the first time, the Supreme Court unanimously affirmed the lower courts' holding that the NCAA's restrictions on "education-related" compensation to Division I athletes were unlawful.
The plaintiffs in Alston were current and former student-athletes in men's Division I FBS football and men's and women's Division I basketball players. Their initial suit challenged, on antitrust grounds, the NCAA rules capping the amount of "grant-in-aid" scholarship a Division I college or university can offer to a scholarship athlete at roughly the "cost of attendance" of the institution. The players argued that, by conspiring to arbitrarily "fix" the compensation student-athletes could otherwise earn in a free market for their services, NCAA member schools violate Section 1 of the Sherman Act under a "Rule of Reason" analysis. In response, the NCAA argued that its interest in preserving "amateurism" justified its grant-in-aid rules and that the Supreme Court recognized that its compensation rules were presumptively legal in its 1984 decision in NCAA v. Board of Regents.
Applying the full "Rule of Reason" analysis, the district court found that the NCAA's restrictions on grant-in-aid were anticompetitive and not justified by the NCAA's ever-shifting concept of "amateurism." However, the court did find that the NCAA had a procompetitive interest in restricting payments to athletes that were "unrelated to education," so as to distinguish student-athletes from their professional counterparts. The district court thus enjoined the NCAA from enforcing rules that limited athletes' "educational" compensation, such as laptops and lab equipment for studies, payments for tutoring, and post-eligibility internships. In addition, the court increased the limit of cash award for athletic achievement to $5,980, the maximum a high-achieving football player could earn in additional cash benefits. The Ninth Circuit affirmed the district court in full, prompting the NCAA to petition for certiorari. The plaintiffs opted against appealing the portion of the judgment preserving the NCAA's ability to limit compensation "unrelated to education."
Writing for a unanimous court, Justice Gorsuch first addressed whether the NCAA's rules were subject to a full Rule of Reason antitrust analysis or were afforded a deferential "quick look" standard. Justice Gorsuch explained that while a "quick look" will often be enough to approve the restraints “necessary to produce a game”—such as rules about the length of a game, the frequency of games, and the number of players on the field or court—a fuller review may be appropriate for other restraints. The Court found that the NCAA's compensation rules fell on the "far side of this line," emphasizing that "Division I basketball and FBS football can proceed (and have proceeded) without the education-related compensation restrictions the district court enjoined; the games go on." The court also clarified that language in dicta from the Board of Regents decision indicating that student-athletes "must not be paid" did not make the NCAA's compensation restrictions presumptively legal, particularly given the explosion of NCAA athletic revenues in the past 37 years. Finally, the court rejected the notion that the NCAA deserves more deference because it is not a "commercial enterprise," highlighting the many commercial aspects of top-level NCAA competition.
Justice Gorsuch then turned to the district court's application of the facts under the Rule of Reason. Spurning the "parade of horribles" that the NCAA warned would arise from allowing "in-kind" academic compensation and limited cash awards, the Supreme Court held that the lower courts' remedy of enjoining certain limits on "education-related" compensation was both judicious and reasonable under the facts.
A concurrence from Justice Kavanaugh also garnered considerable media interest. After lambasting the NCAA during oral arguments, Justice Kavanaugh used his concurrence to take the NCAA to task for its "business model of using unpaid student athletes to generate billions of dollars in revenue for the colleges raises serious questions under the antitrust laws." Justice Kavanaugh indicated that he would be open to striking all of the NCAA's compensation rules as illegal under the Sherman Act.
The Alston decision headlined a watershed year in the law pertaining to collegiate athlete compensation. In addition to the passage of laws in several states authorizing student-athletes to earn "Name, Image and Likeness" (NIL) compensation (and the NCAA's temporary suspension of its rules prohibiting such compensation), a federal court in Pennsylvania cited Alston in denying a motion to dismiss labor-related claims against NCAA members. The National Labor Relations Board's general counsel, Jennifer Abruzzo, later released a memorandum opining that student-athletes qualified as employees under the Fair Labor Standards Act.
§ 1.2 Oklahoma, Texas Bolt for SEC, Spark Wave of Conference Realignment
On July 30, 2021, the Universities of Oklahoma and Texas announced that their respective boards of regents had unanimously voted to accept invitations to join the Southeastern Conference. The move followed weeks of speculation that the two longtime Big 12 stalwarts would join the SEC and came a day after the SEC's 14 current members unanimously voted to extend invitations to the universities.
The Big 12 has neither initiated nor threatened any legal action against Oklahoma or Texas. However, Big 12 Commissioner Bob Bowlsby did send a cease and desist letter to ESPN, in which it accused the sports network of inducing Big 12 members to leave the conference. Bowlsby alleged that, in addition to aiding Oklahoma and Texas's efforts to leave for the SEC, ESPN was "actively engaged in discussions with at least one other conference" to which to funnel other Big 12 members. ESPN characterized the allegations as "unsubstantiated speculation," and neither the ESPN nor the Big 12 have taken further action.
Both Oklahoma and Texas pledged to remain in the Big 12 through June 30, 2025, when the Big 12's current media rights contract ends. Should either or both attempt to leave the conference sooner, the universities would be potentially subject to a penalty of at least $75 million apiece.
The defection of Oklahoma and Texas from the Big 12 triggered an onslaught of conference realignment. On September 10, 2021, the Big 12 formally announced that Brigham Young University, the University of Central Florida, the University of Cincinnati, and the University of Houston would become members no later than the 2024-25 season. The American Athletic Conference responded by swiping six member schools from Conference USA, with the Mid-American Conference and Sun Belt Conference also adding new members. The fluctuating state of Division I conference membership is likely to stoke additional legal conflict between institutions and conferences. The Colonial Athletic Association, for instance, has already banned James Madison University from postseason participation until its departure for the Sun Belt Conference.
§ 1.3 Case No. D2021-2418, WIPO Arbitration and Mediation Center, National Collegiate Athletic Association v. Jules Richard IV, Bachi Graphics LLC
An arbitrator with the World Intellectual Property Organization (WIPO) ordered the owner of domain name "finalfourneworleans.com" to the NCAA, months before the organization was slated to host its 2022 Men's Basketball Tournament Final Four in New Orleans.
Between 1981 and 2005, the NCAA registered several trademarks related to the Final Four, including "FINAL FOUR," "THE FINAL FOUR," "FINAL 4" and others. In 2008, Jules Richard IV registered the domain name "finalfourneworleans.com" Go Daddy, but did not use the domain name to host an active website.
Under the Uniform Domain Name Dispute Resolution Policy, a party seeking to obtain a disputed domain name from another must establish three elements: (i) the disputed domain name is identical or confusingly similar to a trademark or service mark in which Complainant has rights; (ii) Respondent has no rights or legitimate interests in respect of the disputed domain name; and (iii) the disputed domain name was registered and is being used in bad faith.
The NCAA filed its complaint with WIPO's Arbitration and Mediation Center on July 23, 2021, asserting that it enjoys "strong rights in the FINAL FOUR" mark given its longtime use of the phrase and the various registered trademarks. The NCAA further maintained that the domain name finalfourneworleans.com was "identical and confusingly similar" to its mark, since it incorporated the non-distinctive geographic location (New Orleans) where the NCAA happens to be hosting the 2022 national semifinals and finals of its men's tournament. According to the NCAA's complaint, Richard had no legitimate interest in holding the domain, as he had no affiliation with the NCAA and had never made use of the domain name. The NCAA further accused Richard of acting in bad faith by "squatting" on the domain name while knowing of the NCAA's interest in the Final Four mark. Richard did not respond to the NCAA's complaint.
Arbitrator Georges Nahitchevansky accepted the NCAA's arguments. First, Nahitchevansky held, the domain was "confusingly similar" to the NCAA's final four mark, even with the addition of the geographic name "New Orleans." Second, Nahitchevansky found that the evidence indicated that Richard, who appeared to be based in New Orleans, "registered the disputed domain name on the basis that the FINAL FOUR tournament might again be played in New Orleans and did so for [his own] benefit." As a result, the arbitrator concluded that Richard lacked a right or legitimate interest in the domain name. Finally, relying on similar reasoning, Nahitchevansky found that Richard "opportunistically registered the disputed domain name to somehow profit from its association with Complainant" and thus was acting in bad faith.
§ 1.4 Westwood One Radio Networks, LLC v. National Collegiate Athletic Association, 172 N.E.3d 293 (Ct. App. Ind. May 26, 2021)
The Court of Appeals of Indiana affirmed the dismissal of an action brought by Westwood One Radio Networks against the NCAA that, if successful, would have prevented the NCAA from voiding its agreement with Westwood One.
In 2011, Westwood One entered an agreement to serve as the exclusive radio broadcaster of NCAA championship events. The contract obligated Westwood One to pay the NCAA an "annual rights fee" in two installments to preserve Westwood One's exclusive broadcast rights. When the COVID-19 pandemic forced the NCAA to cancel the remainder of its competitions for the 2019-20 athletic season, including the 2020 men's basketball tournament, Westwood One forewent payment of its second installment for 2020, relying on the contract's "Force Majeure" provision to relieve Westwood One of its financial obligation. In response, the NCAA terminated the agreement. Westwood One thereafter filed suit to enjoin the NCAA from terminating the contract, arguing that "it would be virtually impossible to determine or accurately estimate the losses Westwood One would incur over the next four years if the NCAA were to terminate the Radio Agreement." The trial court denied Westwood One's request for preliminary injunction, holding that Westwood One had failed to demonstrate the requisite "irreparable harm."
On appeal, Westwood One argued that it required an injunction because the termination of the contract would damage its future goodwill in a manner that was impossible to ascertain. For instance, Westwood One argued, the end of its relationship with the NCAA could impair Westwood One's relationships with organizations such as the NFL, with which Westwood One also has a broadcasting agreement. The court, to the contrary, found that the trial court had not erred in finding that Westwood One's damages due to loss of goodwill and reputation were readily quantifiable. Accordingly, the court affirmed the trial court's denial of the preliminary injunction. The parties later settled Westwood One's remaining claims for damages.
§ 1.5 Bielema v. The Razorback Foundation, Inc., No. 5:20-CV-05104 (W.D. Ark.)
The Razorback Foundation agreed to pay former University of Arkansas coach Bret Bielema a portion of the amount owed on his buyout, effectively settling the parties' claims against each other stemming from Bielema's efforts to obtain other employment after Arkansas had fired him at the end of the 2017 season.
The Razorback Foundation initially agreed to pay Bielema to $11.94 million to buy out his contract. As part of the buyout agreement, however, Bielema agreed to use his "best efforts" to obtain new employment and earn a reasonable salary. Bielema agreed to become an outside consultant for the New England Patriots in 2018 in exchange for a $125,000 salary. Taking the position that the Patriots position did not constitute Bielema's "best efforts" to find employment at a "reasonable salary," the Foundation ceased making payments to Bielema in January 2019, with Bielema still owed about $7 million of the buyout amount. Bielema sued to collect the remainder of his buyout, and the Foundation filed a counterclaim. In answer to the Foundation's counterclaim, Bielema alleged that Patriots coach Bill Belichick had significantly overpaid Bielema.
The Foundation ultimately agreed to pay Bielema $3.53 million to resolve the dispute between the parties.
§ 1.6 Hobart-Mayfield, Inc. v. National Operating Committee on Standards for Athletic Equipment, --- F. Supp. 3d ----, 2021 WL 1575297 (E.D. Mich. April 22, 2021)
A federal court in Michigan dismissed an antitrust suit alleging that the National Operating Committee on Standards for Athletic Equipment (NOCSAE) illegally conspires with football helmet manufactures to control the market for football helmets and helmet accessories.
Plaintiff Hobart-Mayfield, Inc. markets and sells football helmet shock absorbers called "S.A.F.E. Clips." The NOCSAE, meanwhile, a nonprofit that develops and establishes test and performance standards for athletic equipment, including helmets at the high school, collegiate, and professional levels. NOCSAE has also entered licensing agreements with football helmet manufacturers such as Riddell, Schutt Sports, and Zenith, whom Hobart-Mayfield alleged comprised nearly 100 percent of the football helmet and helmet "add-on" market. Per NOCSAE's policy, the addition of an add-on product such as the S.A.F.E. Clip to a previously-approved helmet "creates a new untested model" and allows the helmet manufacturer to declare the certification of the helmet with the add-on "void. As a result, Hobart-Mayfield contended, NOCSAE and the helmet manufacturers had effectively colluded to exclude add-on manufacturers such as Hobart-Mayfield from the market, in violation of the Sherman Act and Michigan antitrust law.
The court disagreed. Because NOCSAE's did not require that add-on manufacturers such as Hobart-Mayfield be excluded from the market, the plaintiff failed to demonstrate “either an explicit agreement to restrain trade, or ‘sufficient circumstantial evidence tending to exclude the possibility of independent conduct.’” The court similarly held that Hobart-Mayfield had failed to allege a conspiracy between NOCSAE and the manufacturers or intentionally interfered with the plaintiff's business. Accordingly, the court dismissed the suit for failure to state a claim.
Hobart-Mayfield appealed the ruling to the U.S. Court of Appeals for the Sixth Circuit.
Part II – Professional Soccer
§ 2.1 Rise, Collapse of European Super League Sparks Legal Disputes
Following the announcement and immediate, backlash-fueled collapse of plans for a so-called European "Super League" ("ESL") in April, the three clubs who have thus far refused to abandon the Super League project—FC Barcelona, Real Madrid, and Juventus—look set to challenge UEFA and FIFA's legal authority to block or otherwise impair the institution of a competing league.
In April, citing a desire to "improv[e] the quality and intensity of existing European competitions throughout each season," 12 of European football's biggest clubs announced plans to form a new Super League that would consist of 15 permanent members and five rotating spots for other high-achieving European clubs. The 12 ESL founders included six teams from England (Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, and Tottenham Hotspur); three teams from Spain (Barcelona, Real Madrid, and Atletico Madrid); and three teams from Italy (Juventus, AC Milan and Inter Milan). The announcement triggered an uproar among UEFA, national football associations, and fans, particularly in England. In response, nine of the 12 "founding" clubs abandoned their plans to join the ESL.
The remaining three ESL clubs, by contrast, are continuing to mount legal challenges they hope will pave the way for a Super League to come to fruition. In essence, Barcelona, Real Madrid, and Juventus argue that governing bodies such as UEFA and FIFA participate as both regulators who can sanction clubs and commercial competitors, in violation of European competition law. Rather than protecting the game or the sanctity of European competition, these clubs argued, UEFA and FIFA were seeking to protect their own financial interests by using their regulatory power to snuff out a potential competing league. The ESL clubs earned an early victory on this front, with a court in Madrid ordering that UEFA could not discipline or levy "fines" against the ESL clubs for their roles in planning the league, prompting UEFA to suspend its disciplinary actions against the clubs. That court referred the matter to the European Court of Justice ("ECJ"), which may ultimately decide whether UEFA and FIFA can continue to act as regulators in accordance with European competition law, given their status as competitors.
§ 2.2 Spanish Clubs Challenge CVC Investment in La Liga
Although a majority of the league's members have already approved the transaction, FC Barcelona, Real Madrid, and Athletic Bilbao are challenging a venture capitalist's investment in La Liga's media rights under Spanish law.
In August, a majority of La Liga's teams approved CVC Capital's $117.3 million investment in the league's media rights. Under the agreement, CVC is entitled to 11 percent of La Liga's media revenue for the next 50 years. The deal also obligates CVC to provide $2.9 billion in interest-free loans to league clubs. However, according to Barcelona, Real Madrid, and Athletic Bilbao, the agreement violates a number of Spanish laws. The teams claim that the deal was "adopted as part of an highly irregular and disrespectful process toward with the minimum guarantees required."
§ 2.3 Major League Soccer, L.L.C. v. F.C. Internazionale Milano S.p.A (U.S. Trademark Trial and Appeal Board, Dec. 9, 2020)
The U.S. Trademark Trial and Appeal Board ("TTAB") recently issued a ruling favorable to FC Internazionale Milano ("Inter Milan"), dismissing a claim brought by Major League Soccer ("MLS") that Inter Milan's registration of the trademark "INTER" would cause a likelihood of confusion with Club Internacional de Fútbol Miami ("Inter Miami") and other third-party soccer organizations with "inter" in their names.
Inter Milan first applied for a trademark registration in the United States in 2014. The MLS opposed the registration, arguing that the mark was merely "descriptive" in violation of Section 12(e)(1) of the Trademark Act (15 U.S.C. § 1052(e)(1)); and at risk of causing confusion with Inter Miami's alleged mark in violation of Section 12(d) (15 U.S.C. § 1052(d)). Inter Milan moved to dismiss the Section 12(d) claim.
At first, the MLS cited its "intent-to-use" application for a registration on behalf of Inter Miami in asserting that the Milanese club's registration posed a likelihood of confusion. Eventually, the MLS pivoted its argument to focus on the use of "inter" by other soccer clubs and organizations in the United States, including a number of youth clubs. The MLS stressed that it was "deeply involved" in youth leagues and lower tiers professional leagues and thus had an interest in averting confusion between Inter Milan and youth and lower tier organizations that used the word "Inter" in their title. In turn, Inter Milan denied that MLS had established the requisite "direct and substantive connection" with these third parties to state a Section 12(d) claim.
A three-judge panel of the TTAB agreed with Inter Milan that the MLS had "not sufficiently pleaded a 'legitimate interest' in avoiding a likelihood of confusion between Applicant’s mark and the pleaded third-party marks." Characterizing the MLS's relationship to the various organizations and leagues with Inter in their names as "at best, tangential," the TTAB held that even if the MLS's allegations were accepted as true, MLS could not show it would be detrimentally affected by any "likelihood of confusion" between the marks.
As of December 2021, the parties were in settlement discussions regarding the MLS's remaining claim under Section 12(e)(1).
§ 2.4 O.M. by and through Moultrie v. National Women's Soccer League, LLC, No. 3:21-cv-00683-IM, 2021 WL 2478439 (D. Ore. June 17, 2021)
Teenage star Olivia Moultrie won a preliminary injunction against the National Women's Soccer League ("NWSL") that prohibited the league from enforcing its minimum age rule, leading to a settlement that cleared the way for Moultrie to continue playing for the Portland Thorns.
In May 2021, 15-year old phenom Moultrie filed suit against the NWSL seeking a temporary restraining order and injunction precluding the NWSL from enforcing a requirement that players be at least 18 years of age before participating. Moultrie argued that, while she would have to abide by a collectively bargained age limit, the NWSL's rule—which the league's teams had unilaterally implemented—violated the Sherman Act. Moultrie emphasized both that the NWSL was the "only option for women to play professional soccer in the United States" and that there were no comparable age limits in male professional soccer leagues. Enforcement of the age rule, Moultrie maintained, would "continually slow her development, delay her improvement, and more generally impede her career as a soccer player."
After granting the temporary restraining order and holding an evidentiary hearing, District Judge Karin Immergut held that Moultrie had satisfied the requirements for a preliminary injunction. Judge Immergut determined that Moultrie was likely to succeed on the merits of her ultimate claim. The court specifically found that the NWSL teams wielded market power and had engaged in a concerted action to prohibit players under 18 from participating, thereby having an anticompetitive effect on Moultrie's ability to participate in the market for professional women's soccer. The court rejected the NWSL's arguments that the age rule's alleged effect on cost reduction amounted to a procompetitive justification, or that the non-statutory labor exception to the Sherman Act applied, since the age rule had not been collectively bargained. In addition, Judge Immergut found that Moultrie would suffer irreparable harm if she were prohibited from plying her trade in the NWSL for up to three more years. Finally, the court held that the balance of equities and public interest favored Moultrie, particularly given the lack of an age limit or rule in the MLS or other men's professional leagues.
The parties settled soon after, allowing Moultrie to continue her professional career.
