February 16, 2010
Lecturer on Law Peter Carfagna ’79 has been a practicing sports law attorney for nearly 30 years. A partner at Partner, Calfee, Halter & Griswold LLP, in Cleveland, Ohio, Carfagna has built the sports law program at HLS into a series of courses and clinical externship opportunities for students. We recently spoke with him about his career and some of the big trends in the field of sports law.
Why did you decide to go into the field of sports law?
When I was at Harvard, I studied under Paul Weiler, and it was sort of a combination of labor and employment and anti-trust, and a lot of litigation arbitration. I had played varsity football at Harvard, and sports was always a first love of mine, and even though as a specialty it didn’t exist because it required specialties across a number of spectra of legal analysis, it was something I focused on, such as I could, right away.
How did you come to focus your practice on sports law?
When I came home [to Cleveland] to go to Jones Day, where I was a partner, I made it my business to get involved in our representation of the Cleveland Browns and the ownership groups of sports teams as I made my way through the associate ranks to the partner ranks. And then, IMG – International Management Group – became an important client of the firm, and the largest sports representation agency in the world, so I started to do a lot of their work as a Jones Day partner. The ownership [of IMG] invited me to come be their second general counsel, and so I switched over from Jones Day, where I had a general practice with a heavy emphasis on IMG to be general counsel and ultimately chief legal officer over there until we sold the company.
Since the time you entered the profession, what are some of the big changes you’ve witnessed?
Just an explosion of sports law course offerings at both the undergrad and at the law and business school levels. A proliferation of literature on the subject, and a passion and devotion to it as a field of study. That would for sure be one of the biggest changes: the emphasis on students knowing early-on that they can and will get into this field. Students can find courses, get specialized training, even get a masters in sports (not at Harvard, but at other places, in sports management and administration.) And, there are careers for many of them because we’ve expanded to the point where careful lawyering – which is what I really teach – is critical to the success of the entire enterprise: careful contract drafting, careful negotiation – whether it be for the individual athlete or on behalf of the team.
Both representing athletes and teams in negotiations has become a very, very specialized, high-price, high-risk, high-reward, corporate, commercial area of practice where you need to know a lot about contract law but also intellectual property rights. So, I would say one of the biggest changes would be the understanding of publicity rights or intellectual property rights, social media rights, interactive multimedia rights – all the way across the spectrum – and who can monetize them.
How has the recent economic slump impacted the field of sports law?
The economy is why careful lawyering is so important. The pie is expanding, if you will, but to get ever larger slices of it is more difficult than it’s ever been in the current economy. We did a symposium [at Harvard] last year, and we had a lot of guest speakers – economists, representatives of MLB and NFL teams, all talking about the recession, and as it affected sports and the law and marketing. They all agreed that at the high end, things are still ok, but at the intermediate and low end, all the way across the board, it’s much more difficult – the dollars are much harder to come by. It’s had a definite effect – everybody is much more discriminating in how much they spend where and why. Everybody – on all sides of the equation.
A lot of high-profile athletes have unfortunately faced ethics issues recently. How do negotiators attempt to predict and protect an athlete against the fall-out of those issues, and how do ethical problems affect the future of an athlete’s career?
Generally, this brings the general point to the very specific point of each athlete having to have his attorney negotiate very carefully his individual contract, as it would relate to, let’s say, Gilbert Arenas. What happens when you’re gambling? What happens when the gambling turns into a public gunfight, a gun drawing exercise? What does that do to his endorsement deals? What does that do to his team deal? What interaction does the league and the commissioner have? So, you’ve got a window of looking into issues like this that are being tried in the court of public opinion immediately upon their being discovered. Michael Phelps is another example where he was caught unaware smoking marijuana, and the sponsors dropped him. The morals clause, that is heavily, heavily negotiated, and more so than ever in this day in age when the sponsor wants to have the leverage to drop an athlete who falls into disrepute for almost any reason. That reputational harm, that branding disconnect, which is what has happened with Tiger Woods and Accenture, where his clauses and even the laws have not been broken. Clauses are now being written in ways that would allow sponsors to walk away if they feel that the athlete does not match the brand that they signed up for. There are myriad examples, but of course Arenas was dropped, Plaxico Burress, Michael Vick – there are all sorts of examples now, unfortunately. It does cast a cloud over sports marketing.
But then there’s Maria Sharapova, who just renewed a multi-year, multi-million dollar deal with Nike, even though she hasn’t been winning because she may be transcending success on the court. She creates the branding opportunities that the sponsors and others want her to portray on behalf of the products – or the clothing line that she’s now rolling out as part of her new agreement. So, it’s a long answer to a short question, but ethics and moral issues are negotiated more heavily then ever before because of all of these reasons.
Brady Quinn, the quarterback for the Cleveland Browns, recently came to speak to the students in your class. He seemed to have a very complex network of advisors. Is that typical?
A well-informed client does exactly what he has done: sets up a system of checks and balances where it’s not just one voice; he’s not just listening to, in his case, his uncle for his financial manager. Even then, he’s got a separate personal attorney, a separate agent for negotiating his NFL contract, and a separate marketing agent still again. It used to be the one-stop-shop, where we’d say come to IMG and just go play your sport and we’ll take care of everything for you – we’ll call it the national conglomerate agency. More and more, we see the sophisticated agent slicing and dicing. There are specialty agencies where they say, what we do is specialty contract negotiating, what we do is marketing, what we do is financial management, and that’s all we do, you know? The smart athletes, and there are many of them, will do exactly that.
Some people wouldn’t see the field of sports law to be so complex and demanding. What do you say in response to that?
It’s very sophisticated, complicated, commercial lawyering that’s required here. The fact that they are athletes is almost incidental to how careful the lawyering has to be in order to represent these high net-worth clients. Every word, every clause for these guys can be a six to seven figure swing, depending on how it’s drafted. Those who call it frivolous have never done it – have not experienced it. And, it requires expertise in so many different areas, including counseling athletes on the four stages of their career, from amateurism to professionalism to their mature years to their retirement years. That requires a full range of skill-sets, which means knowing your client intimately so you get him or her the right resources to celebrate the success on the field and on the court in a way that they don’t have to worry about post-career success. That involves counseling on post-career planning early on, which none of them want to talk about. What’s it going to be when you can’t play anymore? Is it broadcasting? is it coaching? If you’re really good in this area, you’re really doing career planning through the four stages of an athlete’s career.
Your family owns two minor league baseball teams. Do you think that your experience as a lawyer – on the other side of the table in many cases – has made you a more successful owner?
The advantage I have is I know how short an athlete’s career is. I can empathize. When I meet them, I’m seeing these 18, 19, or 20 year-olds, and in any given year, maybe two, three, or four of them are going to make it to the majors out of 25 or 30. If I have any interface with them at all, it’s to say that we support them completely. I will not and cannot represent any of them at all, so it’s totally friendly chit-chat. I may be more empathetic to them because I know many of them are not going to make it.
What has it been like to be an owner? What has it taught you?
I own one team in Cleveland, and the other one is called the Lancaster California Jethawks. They play the next level up in terms of skill, in the California League. It used to be a Red Sox affiliate, and the fun part of that was that we were affiliated with the Red Sox when they won one of their world championships. We got a ring out of it, which was pretty cool, because they gave their affiliates – their chairperson – a ceremonial, thanks for being part of the family ring. So, we have that in our family trophy case.
What that experience taught me, being with the Red Sox those years, was what it takes to be a world champion in one of the three major leagues. And boy, does it take a monumental, 24/7/365 days a year commitment. These guys are so smart, so strategic, so committed.We really felt a part of it all – we knew how hard they worked to get there, and it really was indefatigable. The next day basically after winning the world championship, they were asking how are we going to win the next one? We got one day off of work, not back to it. And, the Indians are the same way – how are we going to be more strategic? And, so that’s what is so interesting to see – how they operate. Even though we don’t control the talent, we get to see how they play what cards they have and what dollars they have strategically.