Wednesday, January 10 at 4:30 PM ET as of now stands to be a busy moment for those interested in sports law. In a Texas bankruptcy court, MLB may argue why Diamond Sports Group, parent of Bally Sports Regional Networks, should make up its mind and decide which of the 11 teams that it has contracts with it will televise in 2024. Last month the two sides said a deal was on the horizon so we’ll see if these two long-time antagonists sing Kumbaya next week.
And over 1,400 miles away in a Las Vegas courtroom scheduled at precisely the same time, counsel for the NFL will tell the Nevada Supreme Court why it should overrule a lower court and compel former head coach Jon Gruden to litigate his claim against the NFL in arbitration rather than in the courts. Gruden charges the NFL tortiously interfered with his $100 million coaching contract with the Raiders by urging the club to fire him following revelations of racist and homophobic emails he had sent years earlier
The DSG case is of course important to MLB and the media plans of the 11 teams, which want certainty where their games will be aired. It is crucial to DSG for its plan to emerge from Chapter 11, a date now pushed into May.
But it doesn’t hold the high-profile legal stakes that Gruden’s case does. Battles over the arbitration clause in NFL contracts have raged for years. Remember Tom Brady suing over his DeflateGate suspension and ultimately losing because of the arbitration clause? And that was a case where Brady submitted to arbitration and sued only after commissioner Roger Goodell handed down his four-game suspension.
Arbitration is critical for the NFL, and other businesses, to keep their disputes behind closed doors. The league also controls the forum (some have dubbed it a kangaroo court), appointing the arbitrators, as opposed to trying the case before a federal or state judge. And courts generally defer to arbitration provisions. Every NFL player and employee contract contains arbitration language, as well as language requiring the signer to agree to the league constitution, which also has arbitration requirements.
So why did a lower Nevada court early last year rule Gruden did not need to go through arbitration? For one, the court ruled Gruden’s employment contract was with the Las Vegas Raiders, with whom he has a severance agreement and not the NFL. Second, the court found that the NFL had not verified the “version of the NFL Constitution and Bylaws introduced into the record was, in fact, the effective version at the time Gruden signed the Agreement.”
In a filing last week to the Nevada Supreme Court, Gruden’s counsel notes that in a similar case, a New York federal judge ruled former Miami Dolphins head coach Brian Flores, who is suing the NFL and six teams for racial discrimination, could have his day in court.
That of course left out the part of the ruling that the judge did send to arbitration the claims against the three teams Flores and his two co-plaintiffs had signed coaching contracts with. For the three teams that only interviewed Flores, those claims can proceed in court, as well as the related claim against the NFL. The league is appealing that part of the decision.
Gruden’s brief last week also cited the July 12, 2023, ESPN.com article in which the outlet reported Raiders owner Mark Davis was “incensed” over Goodell’s urging him “to do something” about his then-head coach.
Gruden’s core argument is not that he couldn’t have been fired for the offensive emails, but that it was an issue between him and the Raiders, not the NFL.
“The heart of this case is Gruden’s contention that `Commissioner Goodell himself directly pressured the Raiders to fire Gruden,’” the former coach’s brief last week read. “While Appellants (the NFL) dismiss this as a ‘wild theory,’ the article and the other allegations in the Complaint show that there is more than just a reasonable possibility that discovery will prove Commissioner Goodell’s direct involvement and direction of the tortious conduct in question.”
So, whichever way the Nevada Supreme Court rules could go a long way to either buttressing the NFL’s use of arbitration or chip away at the procedure.
Meanwhile, as the NFL’s and Gruden’s lawyers spar, MLB and Bally Sports will either be asking the judge to approve a deal, or it will be another fight. The sides have been bickering since well before the March 2023 chapter 11 filing, with MLB resisting Bally Sports wanting streaming rights. The sides pulled out of a December 15 hearing, telling the judge they had made progress, with three of the 11 teams yet to sign on.
“We are in a position to believe that we have a framework to move forward,” MLB’s outside counsel James Bromley told the court. “We have a lot of conditions and issues that we still need to work through. But we think at this point, it’s appropriate to ask the court if we could take the hearing from today’s calendar and move it to a date in January. So January 9, and 10 if possible to allow the parties to come to a fully documented settlement.”
DSG is looking to cut the fees of the three teams, in return for ending their contracts at the end of the ‘24 season. Two of the teams are believed to be the Cleveland Guardians and Texas Rangers.
In bankruptcy, a debtor can choose to walk away from contracts and has until the exit Plan is filed to do so. But MLB has been asking for Bally Sports to do so sooner given the upcoming timing of the start of the baseball season. A deal would mean the 11 teams, or most of them, have agreed to terms for one more season under their contracts with Bally Sports.
