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Fantasy: The Future of Fantasy Sports

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posted on Mar, 12 2005 @ 06:17 PM
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FUTURE OF FANTASY SPORTS

Many of you have heard about the shake down in fantasy baseball with the MLB attempting to control the industry. There have been other posts about this topic but let me summarize the current arguments that are being discussed in the landmark case CDM Distribution & Marketing v. MLB Advanced Media and the onslaught of legal questions that are bound to be circulating.

The case that has been referred to as being the silver bullet for the right to use statistics is: NBA v. Motorola and STATS, Inc.

legal.web.aol.com...

I can write 10 pages about this case but here it is in a nutshell.

Prior to March 1996 Motorola, Inc. had a service called SPORTSTRAX that provided real time statistics of NBA games to pagers. STATS, Inc. was the provider of this information. NBA sued for copyright infringement for the publishing of player statistics. At first the NBA won only on the rights to REAL-TIME stats but that decision was later overturned in a federal Appellate court ruling that displaying the raw stats was not a re-representation of the game.

Copyright Infringment or Publicity Rights?

As most already know, CDM Sports has filed a lawsuit against the MLB for the right to use statistics without a license. But I have been amazed that in actuality the case has very little to do with the rights to stats.

MLB has painted themselves into a corner. They KNEW they couldn't win on the rights to raw data. They are very well aware of the case law that exists. From the second the suit was filed the MLB agreed with CDM that statistics are in the public domain. However, it is the Players' Names that violate publicity rights. A bold move to put all of your eggs in one basket. This is quite a little twist because copyrights are protected by federal law while publicity rights are different for each state. We'll see how that plays out.



"It's about the commercial exploitation of players' names or likenesses," said Bob Bowman, MLB Advanced Media chief executive. "It's one thing to say here's the box score from the game; it's another thing to say we've created a separate thing called fantasy baseball. We're no longer reporting the facts; we've now created a game."


MLB figures that it doesn't matter if they win on stats because if they win on player names then the games still can't be played without a license... (or can they).

John Hunt (USA Today) brought up a good point:



Of course, a company might, say, allow customers to fill their rosters not with "Johan Santana" but with "Minnesota 57." Where should the line be drawn, if at all?


Of course every company wants to use the player names but if the CDM case was lost, would you rather have a player reference on your site or pay a licensing fee and a percentage of gross? (remember this applies to the NFL Players Association too which typically takes between 10-15% gross plus a $20k minimum.)

Let's go a step further, shall we? What if a single trusted entity like the Fantasy Sports Trade Association (FSTA) created a master player list of the 4 major sports and their corresponding references? A list of standards that the entire fantasy community could use for free.

Again, this is only assuming CDM loses the case which I don't think will happen. But consider it a Plan B.

We know what the fans want!

Listen, this entire thing is about the greed of MLB. This has nothing to do with the fans. CDM's lawyer, Rudy Telscher said "the MLB already suffers from the image that it's too greedy." He believes it is trying to monopolize the fantasy market. The Internet and fantasy games have revived the baseball industry, and now MLB just wants a bigger piece of the pie.

"Now that [fantasy baseball] has become so popular, MLB looks at the revenue and says, 'We want to exclusively control it,'" Telscher said.

Let's take a look at some of the nonesense that has been spewing out of the MLB Advanced Media (MLBAM).


"All of the [players associations] across the major sports have generally held that the commercial use of player names without a license is an infringement of their rights," Bowman said.


My View: Everyone else is doing it, so that makes it ok. Well hell, the Mafia has been around for over a hundred years. I guess that is ok too.


Bowman says there's only one goal: "We want more fans playing more fantasy baseball."


My View: Let's start by limiting the number of companies, and forcing those who created the darn industry to go out of business, especially one that had 35,000 customers last year.


"We are especially pleased that every fantasy game licensee from last year, with only one exception, will be part of the 2005 fantasy game licensing program," said George Kliavkoff, senior vice president of business development for MLBAM.


My View: Interesting how they suddenly award licenses now that they are being sued, thereby trying to isolate CDM from the rest of the fantasy community. In essence they can now say... "see, all of these other companies don't have a problem with our license."


"To say we need to stay with the status quo is unacceptable," Bowman said. "The core fantasy players, we want them to keep playing, of course. But what else can we do to make this more accessible and more entertaining for a much broader fan base? That's what we're trying to find out."


My View: So you have no clue what the fans want, do you? You just said you are "trying to find out". All you really know is that whatever it is they want, you want your cut.


Bowman believes that what's needed is innovation, such as fantasy games where players get online video highlights and news updates via cell phone about their rosters.
And it's not uncommon for sports leagues to thin out the ranks of its licensees, such as when the NFL let Reebok handle sales for all its game jerseys and Electronic Arts handle its video games. Says Bowman, "It appears that licensors think they can create a bigger business by concentrating licensees."


My View: Let me get this straight...You woke up one morning with the divine vision that what the fans want are video highlights and cell phone updates and instead of just creating those features and finding out if the fans actually do want it, you dictate to the entire industry that they have no choice but to license this crap from you or go out of business. And of course, at first, the licenses weren't even offered. You see, the first deal on the table was, "Give us all of your customers that you've accumulated over the years and we'll give you the privilege of taking a 10% finders fee." So when CDM's lawsuit in essence says, "F**k You, you arrogant a**hole!", you then turn around and award everyone licenses and pretend you were going to do it all along.


"If you're more than 5,000 (customers), we want to have a conversation and understand your marketing commitment," Bowman said. The Sports Business Journal reported that MLB was seeking about $3-million each from its largest fantasy partners in this new agreement. Negociations start at $2 per customerif you want to sell your customer base to them.


My View: --Translation-- If you don't have over 5000 customers, you aren't worth our time and don't deserve to be in business. We will LET you sell your customers to us but we won't let you continue to operate your puny business.

You're right Bowman... it's not about the money... it's all about the fans.


Jim Gallagher, senior vice president, corporate communications for MLB Advance Media, said that baseball officials are not claiming exclusive rights to player statistics. But if a company is trying to use those statistics as a means of financial gain, he said, then MLB has a legal right to demand a license for their use.

"Player statistics are in the public domain. We've never disputed that," Gallagher said. "But if you're going to use statistics in a game for profit, you need a license from us to do that. We own those statistics when they're used for commercial gain."


My View: OH MY GOD, SOMEONE TACKLE THIS GUY!
This is the Senior Vice President and doesn't know what the heck he is saying. First he says that player statistics are in the public domain. BUT, if you are making money THEN "we own those statistics". Are you f**king kidding me? If that is not the most backwards load of garbage I've ever heard. So, if you're making money, they own the stats. If you're not, they are public domain.

If I were the MLBAM lawyers, I'd be begging these guys not to say ANYTHING!

OK, I've gone on enough. It is making me sick, so let's get to the actual legal issues here.

As reported by Tresa Baldas of The National Law Journal:



Intellectual Property litigator Kent Goss, who represents athletes with regard to their rights of publicity, believes that MLB will have a tough time convincing a court that player statistics warrant copyright protection. He said that the test will be weighing MLB's copyrights and the publicity rights of players against what the public wants.

"The public is fascinated with sports, and in particular baseball. Essentially, they can't get enough of stats," Goss said. "I think the courts are going to want to protect the fans' rights to use the stuff."

Goss, a partner in Pillsbury Winthrop's Los Angeles office, cited a 2001 case in which the California Court of Appeal upheld Major League Baseball's right to use historical players' names and statistics. A group of former players sued MLB for printing their names and stats in game programs, claiming their rights to publicity were violated. But the court held that they were historical facts, part of baseball history, and MLB had a right to use them. Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400 (2001).


So, the Players even sued MLB for the use of their names and stats and the MLB won since it was historical data. Now CDM is claiming the SAME thing. How much more ironic can it get?

THREE FINAL ARGUMENTS

If the MLB loses on the rights to stats AND loses on the use of player names violating publicity rights, they can still argue three more positions.

1) They can claim that the methods of compiling stats are copyrightable. I can't see this holding up in court because there are several companies that compile stats (Sportsticker, STATS Inc., TQ Stats, and XML Team just to name a few). Even if you need to pay those companies to get the stats, it has nothing to do with an MLBAM license.

2) It isn't the fact that a player name is used to reference a statistic. That is generally considered "fair use" and the MLB has already said that they have no issue with it. But they could argue that it is the cumulative list of player names that makes the fantasy game possible. Their argument could be that without the player names, there can be no game and therefore their "property" is the determining factor in a fantasy company's ability to produce a commercial gain. Basically, they may believe that the games could not work without the player names and therefore they are not merely suplemental "information or news" but rather an integral piece to the success of the contest and its ability to generate revenue.

Though this is a better argument, I can't see this holding up either. You see, it isn't because of the player names that people play fantasy sports. The competition, the challenge, the bragging rights, and the prizes are the reasons why people play. AND it isn't the player names that create the game either. The interface, the rules, the scoring, and even the presentation and technological process is what "MAKES" the fantasy game. And THAT, the MLB has no right to. It takes a creative effort for each company to produce the end product that the users interact with.

3)What about endorsement? MLB could claim that the list of player names is an implied endorsement of the players. This of course is ridiculous but they can argue the point nonetheless. All it would take is for every company to make every customer agree to a "non endorsement" clause. Heck, users already agree to the Terms of Use and Privacy Policy.

It would be easy to simply have them click a box saying:



"I agree that [company name] is not endorsed by the MLB, any individual player, the MLB Players Association, MLB Advanced Media, or any MLB Team. I further understand that a list of player names for the purpose of creating a roster DOES NOT imply endorsement from any of the aforementioned."


That solves that one. Takes any possible confusion out of it.

I have two more little provoking thoughts:

First, when a Las Vegas casino makes a betting line on a fight or game they often use player names. Does that somehow imply endorsement to the casino? Are publicity rights of players or copyrights of those sports organizations being violated? Is it not being used for "commercial gain"? Yet those casinos don't pay a dime. Please explain that one to me MLB.

And let us not even get into the fact that newspapers have been displaying stats, pictures (or player likenesses), and player names for decades. Most argue that news outlets are prodected by free speach. True, but is it not also being used for "commercial gain"? Would they sell the exact number of copies if there were no box scores?

Second, why is it that in the NFL Players Association group licensing agreement, it states that any company with 6 or more players is a violation of publicity rights and therefore must be licensed. Ok, so 5 players means no violation but 6 players means you owe them thousands of dollars. What kind of moronic b*llsh*t is that? That isn't how the law works. It seems that these giant companies have simply dictated their own RULES that have no backing in law. Just because you SAY something doesn't mean it is legal. EVEN if the players agree to it doesn't mean it's legal. There is either copyright infringement or there isn't. You can't say that 5 players is ok but 6 means you're screwed. Why 6? Why not 4? Why not 50?

What the MLBAM and the NFLPA don't realize is that they are going to make their money from the big 3 companies (Yahoo, ESPN, and Sportsline) REGARDLESS. THERE IS VALUE in being the "officially licensed" game of the MLB. The CDM case will have little or no bearing on the licensing agreement of those companies. They are going to pay to be endorsed!

If they were even half as smart as the common tree stump, they would pour millions into out-marketing everyone else. Get the players endorsing their games saying:

"If you aren't playing an officially licensed game, then you aren't playing fantasy baseball."

or

"MLB.com, the ONLY place that the players endorse."

The idiots don't need to force licensing or limit competition to win in this industry. It is amazing that with all of the money they have and important people they hire, they fail in the most fundamental marketing and business concepts.

Sincerely,

Devoted Fantasy Football Fan

[Edited on 3/12/2005 by fantasysportsfan]

[Edited on 3/12/2005 by fantasysportsfan]




posted on Mar, 12 2005 @ 07:16 PM
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very interesting, when is this case going to be heard?



posted on Mar, 12 2005 @ 09:44 PM
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I believe the MLBAM has until April 5th to respond to the court filing. I wouldn't be surprised if they waited until then.



posted on Mar, 13 2005 @ 09:20 AM
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one would think that at this time mlb needs the good pr more than it needs the money, although i don't have any kids of my own i have always felt that fantasy sports is the ideal father-son/daughter activity, and that these kids are the future paying fans that will sustain the game, gotta wonder what they are thinking, mlb continues to shoot themselves in the foot



posted on Mar, 19 2005 @ 09:07 PM
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FUTURE OF FANTASY SPORTS

The ever so anticipated Fantasy Sports Trade Association (FSTA) meeting was a few days ago. One of the main topics (in fact almost the only topic) was this licensing issue. This is no surprise because for good or bad this issue will have the second greatest impact this industry has ever seen. (The first being the invention of the Internet.)

I think there were about 150 fantasy companies that showed up. Basically the who's who of the fantasy world. The buzz in the room was about the CDM lawsuit and what the future holds for fantasy sports. As CDM co-founder and VP Charlie Wiegert addressed the audience, he seemed to warn that CDM may be looking to settle out of court. Though this was extremely disappointing because the fantasy community has seen CDM as its knight in shining armor that will save us all, I can certainly understand Charlie's decision. He has to look out for the interests of his company.

You see, it could take 15-18 months before it even gets in front of a judge. This is because there will be a HUGE discovery process that will cost thousands of dollars on both sides. THIS IS HOW BIG COMPANIES WIN. They simply out-spend you. Meanwhile MLBAM is collecting evidence with every company they license. The longer they wait, the longer they have to build a history of licensing and a "value" for their product.

An Intellectual Property lawyer, Bill Heberer, cited a number of cases that backed each side of the argument. In typical lawyer talk he protected himself and failed to take a definitive stance on anything. It was more like "This case defends the MLB argument, and this case over here defends your argument." Though I can't blame him totally because it is a complex issue, what bother me is that people still don't get what we are trying to defend.

My View: Bill, every single case you cited that could possibly defend the MLBAM's position had to do with the player "likeness" (like a cartoon of a baseball player in an advertisement) or misrepresenting trademarked material (like a jersey with the Packers colors that says GBP on it). We aren't talking about advertisements or trademarked material, we are talking about the "fair use" of player names in forming rosters, in which NO endorsement is either expressed or implied.

Now I have to give him credit for realizing that this is not a copyright issue. It is a publicity right issue.

Stats are not even part of the equation right now. There really is no defense they can use. Even taking the angle that a "compilation" of stats creates an original work of authorship worthy of copyright protection can not hold up. In Feist Publications, Inc. v. Rural Telephone Service Co., Inc. not only did the court rejected the "sweat of the brow" position but also went on to consider the question of whether a factual compilation was worthy of protection at all, deciding that originality equates an independent creation, not simply copying other works and compiling them into a database.

No, this isn't about stats anymore, this is about publicity rights. The argument now tears and the core of all fantasy games.

So, let me clear up this whole Right of Publicity thing once and for all. Sit back and enjoy the show.

As I have stated before, the Right of Publicity is different for each state, which makes defending such a right on a national scale very difficult. While in some states the right of publicity is only applicable to a celebrity or public personality there are other states where the right of publicity applies to any individual. However, in a number of states the individual's right of publicity is only protected when the misappropriation of the individual's identity has publicity value - meaning that the individual has previously commercially exploited his/her identity. So in some states, you can make money off of someone's name or image if the person has never made money off of it themselves. In essence, it had no value and you created the value (though depending on the case you may still be in violation of their right of privacy).

But fantasy games do not apply to those issues I stated above. Obviously professional sports players ARE public personalities AND have made money from their name before. Our argument is different. It is based on the "fair use" of public knowledge. We'll get to that.

So, though some of these states differ on the "general" use of publicity rights there are common definitions and beliefs that hold true for virtually all states (I've checked 39 states so far).
    Definition: "One who appropriates the commercial value of a person's identity by using without consent the person's name, likeness, or other indicia of identity for purposes of trade is subject to liability for the relief appropriate." This definition in some form is virtually standard across every state.

    Right of Publicity v. Right of Privacy: "The elements of appropriation of invasion of privacy are the same as for violation of the right of publicity with one exception. The invasion of the right of privacy is a personal tort and it generally may not be assigned or inherited. Whereas, the right of publicity, a property right, may generally be assigned and inherited." So, your right of publicity is a form of property that can be sold, transferred, or inherited.

    Permitted Uses: Situations in which use is permitted include the reporting of newsworthy events and uses in which no person is identified or identifiable. Courts generally hold the reporting of newsworthy events to be allowed under the First Amendment which forbids any laws "abridging the freedom of speech or of the press." This is why the reporting of STATISTICS is not an issue. They are historical and newsworthy events.


    But the MLBAM and the NFLPA are not claiming that you need to be licensed to report stats, EVEN if you have a player name with the stat. (though that is exactly what they have claimed in years past).


Their NEW argument is that using player names in the function of the fantasy game itself is a violation. You aren't reporting facts, you are using their name as a "PART" of the product. This whole thing is all about the ROSTERS! They make no distinction between a fantasy game and a shirt with a name on it that is being sold. They just see the "NAME" as being part of the product.

First Amendment Protection

The First Amendment permits a publisher to use an individual's name or photograph on a book or magazine cover when the book is about the individual or the magazine contains an article on the individual but the name or photograph should be used in way that accurately represents the content of the publication. When an individual is the subject of a biography or news article it is permissible to use that individual's name and/or likeness in advertising and promoting the publication. A publisher may also use the name and photograph of any persons whose ideas are discussed in a publication in promoting the publication.
This is why fantasy magazines are protected.

The law attempts to strike a balance between an individual's right of publicity and free speech rights to permit specific uses of an individual's identity. One serious difficulty with relying upon First Amendment protection is the legal unpredictability of First Amendment rules. The First Amendment provides a hierarchy of protection under the newsworthiness exception depending upon how the individual's identity is being used. The greatest protection is provided for news (as I stated above), lesser protection is provided for entertainment and fiction and the least protection is available for advertising uses where a portrayal of a real person's identity is used to sell a product or service.

MLB will claim that fantasy games fall somewhere between the second and third area. Though the games are used for entertainment, the MLBAM and NFLPA can argue that it is used to sell a product or service or is even part of the product or service.

But is that entirely true?

Most publicity law states that a name or likeness can't be used to advertise a product where the person is expressing or implying an ENDORSEMENT. I believe that the vast majority of fantasy football companies do not use player names in their advertisements so we can slice that part of law away. Because we aren't talking about news either, we can slice that part away.

The key is to get to the core of the argument.

There are two Million Dollar Questions that the MLBAM and NFLPA will ask:
    1) Can a fantasy game exist without a player name?

    2) If the answer is YES above, then does the game hold the same value without player names? Meaning, does having player names increase the value of the product?

If you can prove that the game could exist regardless (like using player references) AND that approximately just as many people would play without player names, then their argument is defeated.

This is not to say that we don't have other avenues to pursue.

OUR FINAL ARGUEMENT

We can still bring up the fact that though the player names might be essential to the functionality and playability of the fantasy game, it ONLY requires the names as historical data. (like making a fantasy game about the weather where you had to accurately predict the temperature in various cities. It is historical and public information that is being used.) This is A LOT different than selling a jersey in the Colts colors with "MANNING" on the back. In that case, his name is what creates the value for the shirt. There is an implied endorsement of the product. I believe we can VERY SUCCESSFULLY argue that there is no endorsement expressed or implied by the players on fantasy rosters.

    LET ME BOIL IT DOWN FURTHER!
    It isn't the fact that player names are needed, but rather the fact that WHICH player names we use is irrelevant. So, if Peyton Manning stopped playing football would the game lose value? NO. People retire all of the time, or get injured and are out for the entire season. The game would continue and would retain the same value because it is the cumulative list, and not any individual player that makes the game work. So, the fact that we are using a cumulative list of public information that is ever changing year after year (and sometimes even day after day), CAN NOT violate publicity rights because any specific name or player does not give the game value like it would in selling a picture or jersey of a player.


If you can argue that, you win. I know, easier said than done, but at least you now know EXACTLY what it is we are trying to get a judgment on.

BACK TO THE FSTA MEETING

Knowing that CDM may settle this case, president Greg Ambrosius asked the members if they would like the FSTA to pick up the ball and get a declaratory judgment. There was an overwhelming confirmation and a committee to will be formed (headed by board member James Serra) to plan out the next steps to take.

Though I applaud the FSTA for taking a firm stance on this injustice, I just hope that instead of getting the declaratory judgment that the industry needs, the committee doesn't decide to negotiate a long term "deal".

I believe that most of the FSTA members don't want to pay ANYTHING if they legally do not have to. Even a 2% deal for 30 years is not what the membership wants, unless it is proven in court that they MUST be licensed. Plus, if a "deal" is made with the MLB you would still need to do the same for the NFLPA. As I'm about to explain, that will never happen.

THE NFLPA: "Most of you will go under anyway."

On day 2 of the FSTA meeting, LaShun Lawson from the NFLPA made an appearance. Let me just say that the Devil himself prays at night not to meet up with this woman. Harsh words... I know. But they are completely justified and I am surprised that the FSTA members didn't rush the stage and slay her.

She so eloquently explained that in many major industries there is a natural consolidation in which only a few companies can survive and all others go out of business. She went on to articulate how the majority of the people in that room would be out of business in a year and therefore aren't worth her time.

Now, Greg (being the level headed and logical leader he is) spoke up saying "LaShun, if you were to lower your licensing fees to $10k, I know there are at least 50 companies here that would get licensed without question. That is half a million dollars. Is the NFLPA prepared to do that?"

LaShun's response? "We aren't prepared to handle that many licenses."

ARE YOU KIDDING ME? If you had 50 companies ready to give you $10k, wouldn't you HIRE more staff? What is really involved with managing a license anyway? You pay someone 30k per year to sit there 8 hours a day looking at a spreadsheet with 50 names on it. Every few days the person picks up the phone just to call one of them and see how they are doing.

This lady is the epitome of big business arrogance. She actually told the people that they had no shot at being successful. Some people raised their hand and told her that they've been in business for 10 years and have been stable and slowly growing every year.

I personally think that she loves the controversy. She likes the position of power and being able to say "we will give you the privilege of paying us for a license and staying in business. Oh, but you over there.... you will have to shut down because I don't think you will make it anyway." Ultimately, I think the NFLPA is waiting to see if they can get an exclusive MEGA deal from a major company for 2006. That is why they have only offered 1 year extentions to their 12 licensees. I'm sure they also want to see what happens with this CDM lawsuit.

This is why I must reaffirm that we need to strip the NFLPA of this power. There is no negotiating with them, Greg proved that. Let's get this settled once and for all.

Sincerely,
Devoted Fantasy Football Fan

[Edited on 3/20/2005 by fantasysportsfan]



posted on Mar, 20 2005 @ 07:04 PM
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FUTURE OF FANTASY FOOTBALL - to fight or not to fight

I can't even believe this is the question. There seem to be a couple of people who think that if we do nothing, this issue will go away. Mistakenly, some people are comparing the current threat with those of years past. At the meeting, there were even a couple people saying "I've operated for years and they haven’t shut me down. Why should I worry now?"

Ok, since you asked, I'll tell you.

I don't think anyone can argue that the industry of today is different than the industry 8 years ago... heck, even 3 years ago. It is getting bigger every year. It would be foolish to believe that the MLB (or the NFLPA) is on an altruistic crusade to defend the rights of their players. They couldn't care less about the players' rights, other than the fact that those rights seem to be worth a LOT of money. Proof? Would either organization be defending these licenses if only 10,000 people played fantasy sports every year? Of course not.

All of this talk from Bob Bowman about wanting to give more options to the fans is just smoke. For the MLBAM this is about protecting their investment. Think about it from a business decision. They signed a 5 year, $50 million deal for these rights. So, just to break even, they need to make $10 million per year. That is not even including operating expenses (I'm sure Bob Bowman isn't getting paid in free fantasy games). There is no way they can make up that kind of money from all of these little companies. It's a fact so just accept it. They are trying to get 3 million each from Yahoo, ESPN, and CBS Sportsline. That is $9 million, right there. The additional revenue generated from MLB.com would push it to profitability.

CAN'T YOU JUST LEAVE ME ALONE?

So the next logical question is "well if they sign these big guys and made their money, why can't they just leave us alone? We aren't a threat." Because, if they don't defend and enforce the rights that they are selling licenses for, suddenly the licenses aren't as valuable or worse yet valueless. This entire thing is about keeping those big 3 companies happy (and paying).

Now, what if you were ESPN? If you were paying millions of dollars for licenses wouldn't you be a little upset if a bunch of other companies didn't have to pay at all, or had to pay only a fraction of the price? Part of the value is the "you're the only one" pitch that they can give to these big companies. It is semi-exclusive.

IT DOESN'T AFFECT US...

The most ironic part of this is that two of the 3 big companies have representatives on the Board of Directors for the FSTA. The ideal situation is if ESPN and CBS Sportsline said, "3 million dollars! You are out of your mind." then joined the fight. MLBAM would have no chance at success. One could argue that besides the great PR these two giant companies would get for saving the industry for the fans there could also be a financial incentive. $6 million between two companies can fight one heck of a battle. Even one of them could probably win it. And winning would mean that $3 million would instantly drop to their bottom line each year thereafter (not even including the money they would save from not having to pay the NFLPA either).

But there is another side to this story. Is it worth 3 million per year to put your competitors out of business; to be the only one left standing? It might be.

As far as the FSTA goes, at what point does personal interest end and the obligation as an FSTA board member begin? Am I the only one that sees a conflict of interest here? There is no doubt that everyone on the board is a good guy. They are all smart people that love this industry. But I want to know if the board is going to represent themselves or the hundreds of members who paid to join this association.

DOES THEIR GREED STOP HERE?

The MLB is pricing everyone out of the market. For fewer than 5000 customers you can sell them your customers or maybe they will give you a restricted license for about $10k. However, if you have 5001 customers, the price starts at $500,000. If that isn't a way to protect your golden egg, I don't know what is. It makes it impossible to grow. You either have 5000 customers or have 250,000 customers to afford the price hike. There is no middle ground.

And what people don't realize is that by agreeing to a license (no matter what the deal is) you are agreeing that they have a right to sell the license. You are handing over control of the industry. Sometimes it seems that people can't see more than two feet in front of their face. They are only worried about 2005. What happens if MLB comes back next year or the year after and says, for less than 5000 customers, the license will be $50,000 ($10 per customer)?

Company: "But that isn't fair, I can't stay in business at that price."
MLBAM: "Sorry, that's the price. You have to license or sell your customers to us."

Then are you going to sue them... alone? Any argument that they never had the right to license in the first place is somewhat tainted isn't it, especially after you have already paid for a license in the past?

Even the big companies face the same problem. Why is everyone so convinced that their greed is maxed out at $3 million? What happens when they want $6 million or more? What is the threshold that finally tips the big 3 over the edge?

NFLPA IS GREEN WITH ENVY

If you think the NFLPA isn't looking at this $50 million dollar deal with eyes of envy, you are kidding yourself. They want to cash in too and believe me, they plan to. Another FSTA member made a great point about the meeting with LaShun. As we sat there (or stood there pacing around with fury) listening to this woman make up stories as to why the NFLPA would not give the companies who created the industry the ability to license there were 3 main questions that were running through people's mind.
    1) Why wouldn't they want our money, it is half a million dollars?

    2) For years many companies have continued to grow so why now would they think that we would go out of business?

    3) If I take this chair and smash her over the head with it, I wonder if anyone would notice.


OK, the third one might have just been me (though I doubt it). But here is the point, $500,000 for managing 50 contracts is NOTHING compared to the money they can get with just 1 or 2 semi-exclusive deals.

It isn't that they think you will go out of business; it is that they want to PUT you out of business so they can charge a fortune to the selected few!

Do people actually think they aren't planning this? The writing is on the wall. They have come right out and said that a consolidation is eminent. She brushed off an attempt from Greg for a very fair compromise. There wasn't even a "lets talk about it" or an "I'm sure we can work something out." This isn't a "maybe" people. We are the only thing left that stands in their way.

A THROWBACK TO THE OLD DAYS

Some people have said that, "I'll go back to using paper and pencil. There is no way I'll let them win." Listen, your heart is in the right place but you haven't been listening to what I'm saying. Besides it being economically impossible if you have thousands of users, your defense isn't somehow bolstered or justified if the game suddenly wasn't online. In fact, you may actually be MORE at risk because in order for people to play offline, you would have to print out the roster forms etc., which could actually be seen as even more of a violation of the players' right of publicity.

If you are using player names in rosters, then (according to their argument) you are in violation. You aren't suddenly off the hook because you are doing it by hand. It is true that they may not take the time to go after you because they know you can't survive as a business doing it that way but if you are making any kind of serious money, they WILL go after you whether you are doing it online or not. I'm not even saying they WANT to go after your company. I'm saying they HAVE to go after your company. If they are aware of a violation and don't defend their rights, it can seriously damage their ability to sell licenses in the future. They really have no choice but to sue you.

BUT IT COULD GO EITHER WAY

Some people are scared of a lawsuit because they think it is too "iffy". As one member put it, "There is no way to predict which way a judge or jury will go, no matter how right we think we are."

First off, there is no jury. In a declaratory judgment you are really just asking a judge to make a ruling and interpret the law as it applies to our case.

Second, let's say we sue and lose. How is that so much different than what we have now? Right now they think they have the right to charge for licenses and if they win they would STILL have the same right.

"Yes but then you have made them mad and they won't give us licenses."

If they refuse to grant licenses, it isn't because we made them "mad". What is this, 2nd grade? If the judge rules against us, we immediately file a suit or ask the judge to make a ruling on whether they have the right to limit licensing. That is a whole other argument but monopolistic practices and business interference comes into play. Even other federal agencies get involved at that point (i.e. antitrust lawsuits like the one against Microsoft).

Heck, even if you are dead set and trying to negotiate a "deal", isn't it better to negotiate a deal from a position of leverage with a pending lawsuit filed? This is exactly what CDM has done. The MLB doesn't want to risk losing this case either (which should tell you something about how confident they really are about winning it.) They have $50 million dollars riding on the outcome.

Ultimately, I fear that we will be unable to unite under a common cause and instead will be picked off one by one. We can either fight, or we are all done; if not this year, certainly in the near future. One thing I know for sure. Every day we wait, their case grows in strength... and they know it.

Sincerely,
Devoted Fantasy Football Fan
or simply (DFFF) as some people are calling me

If you want to get involved you can email James Serra, head of the committee set up by the FSTA (james@footballsoftware.com)
He is a great guy and I'm sure he would be interested in hearing everyone's views.

[Edited on 3/20/2005 by fantasysportsfan]



posted on Mar, 21 2005 @ 10:54 AM
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ok, so basically all of this is basically just to get you to pay for your fantasy sports? Like some companies such as espn have you pay for it, but others like yahoo don't at times. So its all a scam so you don't get anything for free now?



posted on Mar, 25 2005 @ 05:34 PM
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Originally posted by toejam
one would think that at this time mlb needs the good pr more than it needs the money, although i don't have any kids of my own i have always felt that fantasy sports is the ideal father-son/daughter activity, and that these kids are the future paying fans that will sustain the game, gotta wonder what they are thinking, mlb continues to shoot themselves in the foot


This is a great example TJ. if it were'nt for fantasy baseball i wouldn't watch more than 20 or 30 games a year, but now i watch every game i possibly can to see my players hit that homerun, and then i watch the comercials and buy the products. MLB should be excited to let fantasy sports use anything they want because it doesn't subtract from their revenue stream at all if anything it makes it bigger.

Fantasysportsfan thanks for this thread it has been very enlightening and keep us posted on anything new that comes about. Good work on the research.


TRD

posted on Mar, 29 2005 @ 03:25 PM
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Great work on the research...

I wouldn't do as many fantasy leagues if i had to pay for them to be honest. I lost interest in the US sports a few years back, but by entering the Yahoo fantasy leagues on here - sportztawk which are free, it has sparked my interest back in the sports and has me watching thm a great deal more.

They have pools in the office, familys do them ect ect, and if everyone had to pay then the numbers would drop dramatically. Unless there is huge prize money involved, people just wouldn't pay for it. The fantasy Football (soccer) over here in the UK is huge, its run by the newspapers, it cost about £5 per team but the prize to win it all is like £250,000.. Would they be prepared to offer prize money like that?



posted on May, 10 2005 @ 03:37 PM
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It has been a little while since my last post. I don't mean to keep kicking a dead horse..... ummmm wait, yes I do. Sometimes it seems I'm the only one talking about the impact this issue will have. Am I the only one who even cares? Maybe.

Well, at least these messages are archived and indexed by the search engines so when some companies inevitably have to deal with this situation first hand, they can do a search and these posts will hopefully come up.

Now, after thinking about this for a long time and spending hours compiling countless case studies and reviewing federal and state laws, I've come up with a solution.

Before I go over a possible solution, I'll first list the issues that the small/mid sized fantasy sports companies are facing.


  1. Even if we are justified in our position, and even if we could win in court, we can't afford to fight and win.
  2. If we fight and lose, we may lose our businesses.


In this world, MOST of the time, the side with the most money will win, regardless of who is right. This isn't always true with criminal cases but is often true in corporate law.

So my solution is to use our size to our advantage; make it economically unviable to follow through with a lawsuit.

If you have read my previous articles, you know that stats are out of the question. They can't win on a company using or displaying historical information. They also can't win on the compilation of the statistics because various fantasy football contests use different stats to calculate scores and rankings and therefore their "format" isn't an issue either.

Basically it is the raw data and not the displayed or formatted data that is being used. So any case law that compares fantasy football sites to a newspapers' right to their formatted box scores is irrelevant.

What is left is the players' right of publicity. Using the names in the rosters themselves.

Their argument is simple: Our players' names are giving value to your contests, so you are making money off of our players.

Without even trying I can smash that argument to pieces. If the names of the players produced the value of the contests, then every contest would be equal right? I mean they all using player names and stats. There should be just as many people signing up on Joe's Fantasy Football League as on Yahoo. Well, we all know that isn't true. But why? It is because any individual player and even a compilation of players does not produce value. It is the ease of use, the presentation, and the features that produce value. Maybe you like that some games tell you how many points you are from first place. Maybe you like how easy it is to make your picks each week. Maybe you simply like the cost/prize ratio of one contest over another. None of these have to do with the players' names.

I'll go further. If you took 50,000 fantasy football players that were all fans of Peyton Manning and asked them if they would continue to play Peyton Manning on their team if he was injured and out for the season, what would be the response?

"Hell no! I'd get no points if I kept playing him."

Exactly! You see, it isn't the players but rather the results of their actions on the field that make the games function. It is the REASON why we classify fantasy football as a game of skill. It takes a skillful and deliberate decision to play or not play someone based on the POINTS you believe they will generate for you.

Now, let's reverse it. Let's say you are a fan of Kordell Stewart. You've followed him his whole career. Maybe you have even met him once and really liked the guy. Would you put him on your fantasy team?

"Hell no! He isn't even starting and he isn't that great of a QB compared to others I could play. It would hurt my team to play him."

Again, the player does not create the value, only the stats they produce which are public domain. In Kordell Stewart's case, the player may actually create a NEGATIVE value for the roster.

Oh I'm not done...

If you had a stack of building materials on a plot of land, does that stack have the same value as a completed house?

"Of course not, what kind of stupid question is that?"

This is the same type of idiotic argument the NFLPA is making. Think of players as RAW MATERIALS from which you are going to build a fantasy football site. You are going to build in features and program scoring functions that make your game unique and "valuable". The ironic part of all of this is that the NFLPA and MLBAM claim that their players are giving value to the contests when in actuality the players names are valueless (in terms of fantasy sports) without the contest.

"Yes but if that is true then just as many people would play Arena Fantasy Football as NFL Fantasy Football."

The ONLY reason people play NFL fantasy football over Arena fantasy football is because of media coverage. It has simply been around a lot longer and is covered by major media networks. It is the exposure that has made the NFL popular. The NFL player names produce no more value to an NFL fantasy football contest then the Arena player names produce value in an Arena fantasy football contest.

Ultimately, their argument is flimsy at best. They can try to present precedence by claiming that there is a history of selling licensing rights to other industries. They will reference the EA Sports deal which not only included using the players' likeness and even motion captured movements but also included players ENDORSING the product. Apples and Oranges.

These facts are HUGE because in means that we aren't dealing with Federal Copyright law here. Instantly this becomes a STATE issue on publicity rights.

One of the advantages that the NFLPA has had in the past is that they file their lawsuit in Washington D.C. or New York (in the backyard of their law firm). It makes it very convenient for them. They undoubtedly even know a few of the judges and which ones may produce a favorable ruling.

They probably spend anywhere between $15k - $50k to prepare and file the documents, and make court appearances. That investment isn't too bad if it puts a notch in your belt and a win in your column.

What if it was going to cost them well over a million dollars to put EACH company out of business?

Listen closely because you must first prepare your company.


  1. Make sure that if you produce fantasy football contests, your site only uses stats and player names but no player pictures.

  2. Make sure your signup includes a NON-ENDORSEMENT clause, thereby eliminating any claim that the customers think the game is endorsed. For added protection, include the clause on the top of any roster page so they are always reminded that it is not endorsed. Users won't care very much but how can a judge ever decide that the player names imply endorsement? One of their arguments is knocked out right there.

  3. Make sure your entry fee is officially a "service fee" to use the features of the website and not an entry fee to payout prizes. (You should do this anyway to comply with gambling laws.) This means you are setting precedence that people are paying to use your SITE and its functions. It helps if you need to contradict their claim that you are making money off of their players. Your response is: "People are paying me service fees to use my site's features."

  4. If you wanted to take additional steps, I would not even show any player stats on your site, though technically you should be allowed to. Link your player names to NFL.com or another site. What we are doing here is focusing it down so much that the NFLPA can ONLY sue you for one thing and that is player names in the rosters. Don't give them ammo and let them include other "infractions" in their lawsuit.


Now, just sit and wait. At some point they may send you a Cease and Desist letter. When they do, you need to hire an attorney to ONLY send back a response asking them to clarify a basis for your infringements. Otherwise you can sue them for business interference. You may even include a list of case law and arguments that I've outlined here thereby letting them know that you are very well aware of the law and your rights to use stats and player names within the construct of a fantasy football contest. Include a list of the active steps you've taken above. It makes it very difficult for them to claim negligence.

This is important. In your letter, make SURE you let them know that this is a publicity right issue and must be filed in a state court.

If they aren't scared away by now and file in a federal court anyway you immediately file a motion to the court explaining that this is not a case of copyright infringement but rather a claim of publicity right infringement and request the case be moved to a state court. Most federal courts will comply as they are already booked and don't want a case on their books that is a state matter anyway.

Once that happens, NFLPA may back off. If they don't, then you do NOTHING. The idea is that you don't have to spend any more money. Let them file the case and spend the money. After several months of waiting before the case even makes it in front of a judge they will likely win because you didn't show up. Who cares! You then file for appeal and wait again. They will spend even more money winning that case.

At this point, they have spent 3-6 months and probably over $100k.

Remember, they have just won in a state court. So you simply eliminate that state from your contest.

Let's see if they will go through this process even 10 times (more less 50 times). Plus, they are spending even more money for their lawyers to travel to each state. What's more, some states have completely different methods of law. Take Louisiana for example that is governed by Napoleonic Code. Do they REALLY want to travel down there and fight a battle in a law they don't specialize in?

If they want to throw down 1 million+ to put a single company out of business, let them.

You simply sell your domain and customer base to another entity (offshore if you want) and let them go through the entire process again. I wouldn't worry about offshore companies. Fantasy Football is not illegal from a gambling point and I'd only worry about an offshore company (and them tracing it back to you) if you were doing something that broke federal laws. You aren't, these are state laws.

You see, there is one HUGE advantage to being small. You are nimble. ESPN and YAHOO are not going to shut down their companies and transfer assets, but you can fairly easily in a week with minimal cost.

If you were really smart, you wouldn't even own your domain or software at all but would instead be "leasing" it from another company you set up. They can't sue the company who owns the domain because they aren't violating anything.

They also can't sue the company who owns the software because that company is not responsible for how that software is being used. When the software is sold, they assume the purchaser is licensed. This same issue is currently being fought in the Supreme Court for peer-to-peer file sharing software.

In essence, would the NFLPA spend millions putting us out of business only to find out that they CAN'T?

AND THIS IS ASSUMING THEY WIN!! It is entirely possible that if you wanted to defend this case, they could actually LOSE on the right of publicity in each state. Do they want to risk that? If they lose, they have spent even MORE money because they would have to pay for your attorneys fees as well.

As most of you that have read my articles already know, I have been very passionate about this topic. I was intrigued at the audacity of it all; that these organizations would try to control something that they not only didn't create, but also have no legal right to.

After stepping back and analyzing the legal process that would likely ensue, I realized that we could make it economically unviable for them to even attempt to shut us down, and have a strong enough argument that if they tried we could likley win anyway.

I'm not saying that it would be without cost, but it certainly would be FAR less than fighting a full fledged battle. Keep in mind, that if we are proactive and sue them first, we would need to do the SAME thing they need to do.... win in every state.

Just my thoughts,

Devoted Fantasy Football Fan

[Edited on 5/10/05 by fantasysportsfan]




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