Daniel Kaplan at SportsBusiness Journal is all over the lawsuit filed the organizers of the Hamburg tournament against the ATP. At the core of this debate is whether the ATP is seen as a professional league (which, under U.S. law, is allowed to collude and pool television rights, set schedules, and set terms for athlete participation) or if it’s just a loose group of businesses who all happen to run tennis tournaments. A loss for the ATP could spell trouble for the WTA and other individual sport orgs like the PGA and LPGA tours. Here’s what Kaplan wrote up two weeks ago (on July 7). Subsequent articles to follow.
In 14 days, the ATP World Tour will square off against one of its tournaments in a Delaware courtroom. At stake: Not just the future of men’s tennis, but perhaps the governance of all non-team sports.
Barring a settlement, the antitrust case could determine just how far a rules-making body can go in setting tournament schedules, compelling players to compete in certain events, establishing a ranking system and awarding sanctions. These functions are claimed not only by the ATP, which is being sued to undo a series of schedule changes, but also by other entities ranging from the PGA Tour to Olympic federations.
“An ATP loss would set a dangerous precedent for professional sports governing bodies … that make all sorts of decisions that primarily affect the players regarding format of play, where they are going to play their tournaments, the number of events in which they will participate [and] how the players are going to be ranked,” said Rick Karcher, director of the Center for Law and Sports at the Florida Coastal School of Law. He also has written about the case as a contributor to the Web site sportslawblog.com.
“If any third party can challenge these decisions on antitrust grounds,’ Karcher said, “it puts these organizations at risk.”
The German and Arab organizers of the Hamburg, Germany, tournament are suing the ATP, which is incorporated in Delaware, under U.S. antitrust laws for its decision to downgrade the tourney’s sanction. Hamburg’s demotion arrived as part of the ATP’s 2009 calendar plan, which aims to place top tournaments in strategic locales and compel top players to compete in the tour’s elite eight events.
The ATP served up the stakes in a pretrial brief: “[Hamburg’s] lawsuit challenges the core right and authority of a professional sports league or circuit to structure and conduct its operations. … Without such authority, ATP is nothing more — and likely far less — than a roster and a rulebook.”
Hamburg argues that the ATP is a cartel that illegally manipulates event sanctions and controls player movements.
The trial will not affect team sports, which have U.S. antitrust law exemptions to varying degrees, but individual sports are another matter.
“If the ATP lost the case, the impact would depend on what ‘lost’ means: Does it mean you don’t have scheduling rights? Or does it mean you can’t have mandatory entry forms for players, or you can’t have pooling of TV rights?” asked Donald Dell, who runs the ATP tournament in Washington, D.C., and sued the ATP in 2003 when his event’s date was moved. That case was settled.
“It certainly could impact an individual sport like golf, where [the players are] individual contractors,” Dell said.
Said a spokesman for the PGA Tour, “We’re keeping track of it as we do with most other sports-related cases. Until a decision is rendered, however, it would be premature to comment on what the potential impact might be on the PGA Tour.”
Comments from the LPGA were similar.
“We are following this lawsuit as we do with other legal developments in sports,” said LPGA Deputy Commissioner Libba Galloway, “but we do not comment on pending litigation involving other sports properties.”
The jury trial is scheduled to take two weeks. In pretrial papers, the court laid out 73 jury questions, underscoring the complexity of the case and the possible outcomes.
Mark Levinstein, a partner with Williams & Connolly who more than two decades ago represented tournaments in a similar lawsuit brought against an ATP predecessor organization that ultimately was settled, said the current case could have wide-ranging ramifications.
“This possibly affects all individual sports, like golf, track and field, and swimming,” he said. “When you have an individual sport being governed by the national or global federations, you have a hell of a lot of monopolies. If you have a monopoly in an individual sport, and Hamburg wins, you have a problem.”
At its core, the Hamburg case is about whether the ATP functions as a league. If it is seen as such, then it likely will be afforded antitrust protections held by other sports leagues, which U.S. courts have ruled are allowed to collude to set schedules, pool TV rights and choose which teams are part of the league.
If, however, the ATP is viewed as less than that — say, for example, a disparate set of global tennis events unrelated to one another, no different than non-sports businesses that are not allowed to collude — then the court could tear apart the fabric of men’s tennis.
While the Sony Ericsson WTA Tour is not a party to the case, its chief executive, Larry Scott, is being called as a witness by the ATP. The WTA is implementing a new schedule of its own next year, with similar changes to those planned by the ATP, but it has avoided litigation in making its changes.
Hamburg’s tourney is claiming $76.6 million in damages. While observers are divided on whether the court could find the ATP in violation of antitrust laws, there’s even less certainty of what damages might be awarded.
Because Hamburg existed through this season as one of the top events, making it a party to the current system for many years, a damages amount is hard to fathom, Levinstein said.
“Remember, in the USFL [antitrust case against the NFL], the plaintiff presented $300 million to $500 million in damages,” he said. “That couldn’t be defended, and the jury came up with $1.”
Of course, Hamburg and the ATP could always settle. They held unsuccessful settlement talks in Boston on May 14-15, but since that time, the players have elected new board members to the ATP who could push to settle. The question, though, is whether, with each side having spent more than $7 million in legal fees, the time to settle has long since passed.