Do Something … or go BROKE

Last week I wrote about a number of athletes who suffer sever financial distress after their playing career.  (Located here.)  This week, ESPN ran a “30 for 30” film entitled “BROKE” documenting the same issues.  “Broke” highlighted a number of ways current and former athletes spend money, and gave reasons for this epidemic in our society.  (More details on the extravagant expenses are below.)

30 for 30: Broke

“Broke” was interesting, but displayed by ESPN in the typical voyeuristic fashion.  Andre Rison’s shades were extremely dark, but even they could not have hid the shame and embarrassment on Keith McCants’ face.   Former NFL great Bernie Kosar’s level of disappointment was as obvious and uncomfortable as the sweat that glistened from his face to his chest.

Commentators agreed that players who experienced the “Sudden Wealth Effect” suffered financial trauma across all playing fields.  Players failed themselves because they failed to develop management skills to control and maintain their wealth.  Where I felt “BROKE” fell short is that it failed to offer legitimate solutions.

Hard Work Pays Off

In the film Mori Taheripour (the WhartonSchool) aptly points out, sports are a true meritocracy.  Grit, hard work, and strong competitive instincts propel athletes into professional sports.  The fundamental desire to be the GOAT, or the best that gets better every day, is clearly a learned behavior from years of practice.

That level of determination must pour over into one’s aspirations and dreams for a lifetime of wealth.

Players young and old must learn to guard their money as much as they do the ball.  The idea that “it’s not going to happen to me” is nothing more than pure denial… unless you do something markedly different than the majority of guys in sports.

Above Average

Simply put, no one bats for .300, runs a 4.40 40 yard dash, or becomes and All-Stay by being average.  Top performers do not do practice and train the same as the rest.  They work harder, smarter, and exploit opportunities at every turn.  If they didn’t, they wouldn’t be great.

The same is true for wealth.  You must do more than the average guy in order to avoid suffering the same “BROKE” fate. Right now, the average guy does nothing.  My answer is the same as last week, do something.

Whether it come in the form of life insurance, a prenuptial agreement, legal trusts (BERT, Gift, Irrevocable, Charitable), or other mechanisms, there are ways to master this challenge.

Next Level

College athletes that go pro … choose to take their game to the next level.
Pro athletes who continue to succeed … elevate their game do so to stay employed.
So too must athletes raise their game and their expectations to achieve long lasting wealth.

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30 for 30 Detailed Expenses:

1. Cars: more cars than the number of parking spots available.
2. Homes: Yourself, parents, and friends

– 50,000 sq ft home for 1-2 people

3. Clothes, Suits and… fur coats
4. Entourages: Bankrolling 5-40 people at a time
5. Extravagance: $10k club bills, $250k jewelry bills, over $5-10k meals
6. Gambling debts
7. Taxes
8. Risky business and investment deals

– Restaurants, bars, clubs
– Car washes
– Record labels and albums
– Friend’s business ideas

9. Loans to friends and family
10. Divorces:

– Michael Strahan: $15M
– Greg Norman: $105M
– Michael Jordan: $100M+
– Tiger Woods: estimated hundreds of millions

11. Child Support

Who Dat Filing Lawsuits in my Court?!

Do you think New Orleans Saints player Jonathan Vilma bet his attorney his lawsuits will get kicked out of court?  Who knows… But it is likely Vilma’s team prefers the lawsuits stay in court.  That way he is able to readily access media attention and keep the public pressure on the NFL.

Last week, however, I ran across an article about Vilma’s cases and noticed one interesting fact.  This fact may foreshadow the court’s next steps, and determine whether Vilma has his day in court.

For all of you thrill seekers out there, it revolves around the RULES OF CIVIL PROCEDURE.  Who said civil procedure wasn’t fun?!?!  Everyone in my law school, mostly.

• Sidebar: civil procedure is the structural framework in place to administer a civil lawsuit.
• Jonathan Vilma filed multiple non-criminal (i.e., civil) lawsuits against the NFL and commissioner Roger Goodell, so civil procedure is in play on both the offensive and defensive side of the ball.

Lawsuits Filed by Vilma

• #1: May 2012 – Claim: Defamation
  • Location: Federal court inNew Orleans,LAseeking damages from Goodell for defamation of character.

• #2: June 2012 – Claim: Breach of Collective Bargaining Agreement (CBA) re: appeal
  • Location: Federal court in New Orleans, LAand also seeks for a temporary restraining order to allow Vilma to continue working if Roger Goodell upholds the suspension.

NFL Response The NFL requested an Aug. 1 hearing date to dismiss the two lawsuits.  The NFL believes they should be heard through the arbitration process if at all.  The CBA contains a rule that any dispute arising out of any provision of the agreement must go to arbitration, not court. That means a lawsuit improperly filed in court will get kicked out to arbitration.

Court’s Action There was one little thing … The court consolidated Vilma’s lawsuits.  (<< did you see that?!?!)  The court did so on its own, not based on a request by the NFL.  Without help or guidance from the NFL, by consolidating the cases, the court may be telling Vilma something, and intercepted his play.

Analysis:

Lawsuit #2: It is reasonable that a claim regarding Vilma’s suspension due to the Saints bounty scandal falls under Article 43 of the CBA, and should be resolved through arbitration.

• This case is going to arbitration.

Lawsuit #1: The attention grabber. Vilma filed it against Roger Goodell himself, not the NFL, and argued the CBA does not protect Goodell from defaming players outside the commonly accepted standards of the law.  This is Vilma’s best shot at keeping the case in court.  At the August 1 (or sooner) hearing, the court coulddetermine these claims are state claims which may properly proceed in court rather than force them into arbitration.

• This one’s a wobbler… Maybe it could stay in court (read: media), or maybe  it goes to arbitration.

What Does it all MEAN?! Here’s the catch… Remember the court consolidated the two cases?  Perhaps the court determined that the two lawsuits “involve a common question of law or fact.”  Or perhaps the court did so to “expedite and economize” later rulings.  (FRCP No. 42) Either way, it is unlikely the court would consolidate the two cases into one, only later to split them sending one to arbitration and one to federal court.  Even the last paragraph of the order consolidating the cases said “In the event the case is separated… [counsel  must] designate documents necessary to continued litigation.”  My judicial dictionary translator says that  means: “Who Dat Filing Lawsuits in my Court?!”

It seems pretty clear the court tipped its hand that both of Vilma’s cases belong in arbitration rather than federal court, and Vilma will be forced to sit out this (court) battle too.

Eagles’ Owners’ Divorce May Cause NFL Fans To Have “EYES WIDE SHUT”

First Tom Cruise and Katie Holmes, now Jeffrey and Christina Lurie are divorcing. Admittedly, this is sad, but let’s look on the bright side… Right now you happily sip coffee under the belief that you will remain largely unaffected by the Lurie divorce, just as with TomKat.  Actually, that may not be true if you are a fan of the Philadelphia Eagles or the NFL.

A Few Good [Facts]

Jeffrey & Christina Lurie own the NFL’s Philadelphia Eagles. Their divorce could very well affect the ownership status of the team.  In light of the divorce, the Lurie’s released a statement Wednesday stating: It is “perfectly fair … to examine the possible impact” their divorce will have on the Eagles.

While few couples welcome an investigation into their divorce, this divorce is different than most.  The proactive move by the Lurie’s came in response to last year’s high profile divorce between Frank and Jamie McCourt.  The McCourts sloppily dragged their divorce through the courts and eventually led them to sell the Los Angeles Dodgers.  The team lost fans, ticket sales, and the trust of their players.

Risky Business

How we got here: California is a “community property” state.  That means assets the “community” (i.e., husband and wife) hold all assets, debts, payments, etc. during marriage. The law then requires an even split upon a divorce.  The law characterizes certain ownership interests in a business as one that belongs to the “community.” This makes for a complicated division of the assets.

In a non-community property state such as Pennsylvania, the law requires an “equitable” split.  In the Lurie case, that means Jeffrey Lurie must equitably compensate Christina for her share of the value of the business assets, namely the Philadelphia Eagles.

Show me the Money!

The value of the Philadelphia Eagles, including the team, licensing, and perhaps a current television deal, is believed to me more than one billion dollars.  How does one “equitably split” a one billion dollar asset?  The easiest way, or maybe the only way, is to raise funds through a sale of the asset.

A few caveats: A pre or post-nuptial agreements could be in effect which proactively and independently characterize the ownership of the asset. Perhaps the asset is owned in trust, or perhaps the court would not consider a split of the asset (Philadelphia Eagles) as an “equitable split.”

Mission Possible

Should you choose to accept it, every asset is divisible, and there are a few options in play.

1. A pre-nuptial agreement if Jeff Lurie acquired the Eagles before the marriage.
2. A post-nuptial or business entity formalization (LLC, S Corporation, etc.) could split the equity of the business, while retaining certain decision-making powers with one party.

Special thanks to Ed McGlynn on this post. He can be found in Chicago at: http://www.llmlegal.com/attorney_mcglynn.php

In Defense of Roger Clemens

Roger Clemens’ defense team rested their case recently without forcing Clemens to take the stand in his own defense.  While this decision often frustrates people (i.e., OJ Simpson, Martha Stewart, or Dr. Conrad Murray), it is an extremely complex decision.  This time around, the Roger Clemens comments went something like this: “‏@JonHeymanCBS: so clemens wont testify. jury supposed to take no negative inference. but wouldnt man innocent of perjury get on stand?”

Even though Heyman’s probably observed dozens of athlete-focused trials over the years, I’ll cut him some slack because he’s not a professional.  The professional lawyers likely have numerous reasons they made this decision.

One of those reasons includes an aim to avoid trial surprises. The decision also includes weighing the pros and cons within a set of Federal Rules of Evidence.  Some say those rules are stacked against the defendant, but regardless, they are the rules in which you play the game.

PROS

The positives in allowing a defense witness to testify are relatively obvious, the IT guy tells his side of the story, looks directly into the eyes of the jury, and presents himself and his reputation on his own.  Just keep in mind that every witness on the stand testifies, subtly or not, that s/he is a truthful person.  The defense attorney is not likely to run into any surprises with his own client, so it seems like a good idea, until…

CONS

The negative implications, which are also much more subtle, are considered.  Let’s start with the Federal Rules of Evidence #404:

“Evidence of a person’s character is NOT admissible for the purpose of proving an action is in conformity therewith on a particular occasion…”

That means the Rules do not allow a party to say “You’ve lied before in your life, correct?  OK, then ‘once a liar, always a liar.’”   It simply wouldn’t be fair.  Each person accused of a crime is on trial for that crime alone, not a lifetime of indiscretions.

There is a major exception to this rule that most impacts the accused defendant.  It states in essence:

“In a criminal case, evidence of a pertinent trait OFFERED BY THE ACCUSED… [allows for admissible] evidence of the same trait [to] be offered by the prosecution.”

LET’S PLAY IT OUT

Defendant Testifies

1. Defendant: He takes the stand, part of his goal is to tell his story, demonstrate he is a truthful and trustworthy witness, and provide factual evidence as a part of a defense to his claims.
2. Prosecutor: The prosecution NOW may rebut the same evidence presented by the accused WITH character evidence. Enter (nasty) surprises. Defendant opens the door to attacks on his character, reliability as a witness, honesty, morals, etc. This is where it could get ugly and dangerous for the defense.

On the flip side: Defendant Does Not Testify

1. Defendant: Does not take the stand, the accused “offers no evidence” of himself per Rule #404, and therefore does not open the door for the prosecution.
2. Prosecutor: They prosecution does not have any personal character evidence offered by the accused, so in keeping with Fed Rule Evidence #404 “character evidence of the accused is not admissible.”

An innocent man may very well want to take the stand, but may decide the uncertainty is too risky.  If that is the case, he is forced to provide all of his evidence through other means to avoid a character attack and damning surprises at trial.

Allen Iverson Fights About not Being in a Fight

Iverson’s Issue: Allen Iverson flew off the handle at a recent deposition.  Some might say this is not surprising since the case centered in on his involvement in a bar fight.  He told the lawyer “go to hell… I die before I let you get me this time” and “How the hell you live?”  (It is true that the same attorney deposed Iverson twice before resulting in six figure settlements, so he’s got a basis for his anger.)  This time Iverson avoided a payout… He did not, however, avoid embarrassment.

What struck me was that this entire incident was completely avoidable.  A reasonable attorney should be able to diagnose the other side’s behavior, and manage the situation without a blow-up.

So with that, let’s talk about how it got this bad, and how to avoid it in the future. Likely, one of two things happened.  One, the opposing attorney provoked him with an aggressive strategy.  Two, this attorney was a jerk.

Option 1 – It’s a Strategy Session:

An opposing attorney’s traditional strategy is to get the result he wants. S/he knows the issues, and wants your understanding of the scenario, your facts, and sticks to business.

Option 1 – Plan of Attack:

1. Build a Relationship: There is a purpose to a deposition and the deposing attorney has legitimate goals.  Overall, it should be a factual and witness investigation, not a personal attack.
2. Control the Message: Another goal is also to determine if a witness is likeable and credible.  (Ever seen a liar? Try to remember you’re not the only one who can recognize a liar.)  The sooner you establish credibility, the better.
3. It’s not Rocket Science: Be straightforward, be honest, stay calm, and don’t cause any surprises.
4. Safety Valve: At any time, if things get heated, take a break.

Option 2 – You’re a Jerk:

This also may not be surprising, but attorneys have egos… usually big ones.  Some use those egos to make character attacks instead of searching for facts.  Again, this should be easy to spot.

Option 2 – Plan of Attack:

Everything above still applies, but in this instance, it is important to explain the ramifications of losing your cool on the record.  Especially in a bar fight case, losing your cool is more obvious than a punch line in a sitcom.  But just like in a sitcom, a manager’s edits are the key to success.  I would instead suggest:

1. Patience: Allow the guy a little leeway. Everyone has bad days, maybe this is his and he’s projecting.
2. If at First You Don’t Succeed… This is when the lawyer should break in.  It’s time to change the dynamic, discuss the other side’s approach on the record, or take a break.
3. Be the Shoulder: Lastly, when your client has a problem, he should know the first person to discuss it with is you, not through a confrontation with the other side.  (Just like everyone can spot a liar, everyone can also spot a hot-head.)

At the end of the day, the attorney’s strategy could have been to provoke Iverson… It was, after all, a case about his role in a fight.  If so, he’s brilliant because it worked and Iverson’s attorney let it happen.  Granted, Iverson didn’t pay this time, but he still made the news and it wasn’t for an MVP award or Finals appearance.

Let’s be honest, some people play dirty, but it’s your attorney’s job to keep it clean.