Archive | June 2014

Hail To The….?

On June 18th, the United States Patent and Trademark Office cancelled six trademarks belonging to the Washington Redskins on the grounds that the trademarks were improperly granted because the trademarked term was and is disparaging to Native Americans…again.  The same Trademark Trial and Appeal Board ruled this way in 1992 only to have a federal court determine on appeal the plaintiffs lacked standing to bring the suit in the first place.  Robert Raskopf, trademark attorney for the Redskins, stated after the ruling “the Trademark Trial and Appeal Board’s divided ruling will be overturned on appeal.  This case is no different from an earlier case where the Board cancelled the Redskins’ trademark registrations, and where a federal district court disagreed and reversed the Board.”  The lone dissenting board member also pointed out the evidence is the same as the last case, and as in the last case should have been held insufficient to support cancellation.  Still, this initial decision is being lauded by activist groups, Native Americans, and politicians who have been pressuring Redskins owner Daniel Snyder and National Football League commissioner Roger Goodell to change the team name for years.

Even if the decision stands, and given previous history it likely will not, the ruling would not force Snyder to change the name.  The Redskins would be able to remain the Redskins.  However, the value of the right to produce Redskins merchandise would take a substantial hit if the decision stands.  Sports business scholar Marc Edelman has said “the team will face increasing challenges moving forward in preventing others outside the United States from making merchandise bearing their team name and logos, and as a result may face a more difficult time licensing the rights to use their name and logos to third parties, such as apparel manufacturers.  Even if apparel manufacturers are indifferent to the social issues related to the use of Washington D.C.’s football team’s name, they may still be reluctant to pay the same amount to license the rights to use logos out of fear that it would be more difficult to enjoin unlicensed third parties form also using those marks in a competing way.”  The team would still be able to pursue action against unlicensed third party producers via state statutes but this would be difficult, costly, and tedious without the trademarks.

The Redskins will not be alone in having to deal with the economic consequences of the permanent loss of their trademarks.  The Redskins and every other NFL team except the Dallas Cowboys pool and split all merchandise revenue.  The Redskins contribute roughly $145 million to the estimated $9 billion total.  This means every team except the Cowboys receives approximately $290 million per year in merchandise revenue.  If Snyder decides to keep the Redskins the Redskins even if the decision stands, as most believe he will, other owners are sure to be upset by the potential loss, at least initially.  For the sake of argument, let’s pretend the decision stands and Snyder keeps the team name.  Even if Redskins merchandise revenue declines 50% (which is likely an overestimate) to $72 million and as a result the total merchandise revenue falls to $8,928,000,000, each team would still receive roughly $288 million.  I’m not dismissing the significance of $2 million per team, but with these figures it is hard to argue this would be a deal breaking amount of money.  How far would fellow owners really be willing to go over $2 million a year in shared revenue against the owner of the league’s third most valuable franchise?  Perhaps when the revenue sharing agreement is re-negotiated, they can protect themselves from situations like these, but as it stands now it does not appear the revenue sharing agreement provides other owners with much recourse.  Further, for the Redskins, taking the $2 million hit this way might make sense because renaming and rebranding the team has an estimated cost of anywhere from $10-20 million.  Granted, this cost could be offset by the team having unhindered trademarks on a new team name and ostensibly maintaining sales.

Daniel Snyder has an estimated net worth of $1.2 billion and the Redskins franchise is worth $1.7 billion.  FedEx Field will be sold out every game this season regardless of what the team name is.  The franchise will still get their share of television revenues.  Should the decision stand, Snyder could afford to keep the team name if he wants to and thanks to the revenue sharing agreement, other teams will help him (whether they like it or not) bear the cost.  Wednesday’s decision by the Trademark Trial and Appeal Board may have seemed like an important victory for those pressuring Snyder to change the team name, but even if the decision stands the name may as well.

-Keith Pedrani


Information from the following sources was used in this article:

The NCAA’s Collapsing House of Cards

The question is no longer if, but rather when and how college athletes will be compensated beyond scholarships.  Though it is a complicated issue, two factors indicate change is coming sooner rather than later. The recent settlement of the Keller and O’Bannon lawsuits against Electronic Arts, though important, are not what I am referring to.  I am referring to Judge Claudia Wilken and Jeffrey L. Kessler.  Judge Wilken is the federal judge presiding over the O’Bannon anti-trust lawsuit against the National College Athletic Association and Mr. Kessler is a labor attorney who filed an anti-trust suit against the NCAA in March directly challenging the economic model of the organization.

Essentially, Kessler’s lawsuit seeks to allow current college athletes to become free agents and negotiate for their compensation as such.  Kessler is widely credited with ushering in the modern era of free agency in the National Football League.  Kessler’s suit could prove more problematic for the NCAA if successful because they will lose almost all control over how athletes are compensated.  Further, schools paying more for athletes will likely want to restructure agreements with the NCAA (like television contracts) to limit the impact on their bottom line.

This type of change seems inevitable, with the traditional arguments being shut down by critics, attorneys, and most importantly, judges.  Though the NCAA still clings to them, as anyone would holding onto a golden goose, they no longer make too much sense.  Usually, the NCAA first goes with the paternalistic argument.  They claim an education is enough compensation and paying their athletes would corrupt them.  The reality, however, is that graduation rates for athletes in the big money sports (football and men’s basketball) are abysmal and their classes are either a joke or non-existent (just ask Rashad McCants, who accomplished the admirable achievement of Dean’s list without ever setting foot in a classroom at UNC).  To the second point, if the money would corrupt them at the time, then the teams and the NCAA could easily put the money in a trust fund the “student” athletes could not access until their playing days were over.  When this easy fix is pointed out, the NCAA then goes to the Title XI defense, asserting that “paying players . . . would inevitably lead to the elimination of non-revue sports”.  Why the NCAA’s Title XI excuse no longer works, Kevin Trahan. Judge Wilken’s, however, has seen through this argument in the O’Bannon case and ruled they cannot use the argument.  Wilken stated the NCAA “could mandate that Division I schools and conferences redirect a greater portion of the licensing revenue generated by football and basketball to these other sports.  The NCAA has not explained why it could not adopt more stringent revenue-sharing rules”.  Id.  There is a good reason they haven’t: because there isn’t one.  The NCAA is trying to claim they would be unable to govern revenues and in the same breath claim to have oversight of its members.  This did not fly with Judge Wilkens, and if O’Bannon eventually prevails the precedent could prove incredibly helpful to Kessler’s suit.  Kessler has the experience, expertise, and the financial resources to litigate what is sure to be a long legal battle.  The NCAA surely will not allow this without a fight, but it certainly seems they will be on the losing end.


Update coming soon.

-Keith Pedrani