The NFLPA co-founded and owns 45 percent of OneTeam Partners, the sports group licensing agency valued at billions of dollars. So why are the counsels for the union and the agency in a tense dispute over access to OneTeam’s internal records and the contours of the NFLPA’s ongoing probe into its ties to the marketing firm?
Last month, an NFLPA outside counsel wrote to OneTeam Partners alleging that it is prolonging the labor group’s probe by withholding documents and other materials, according to a source that read portions of the letters to Awful Announcing.
The source said that in five letters sent from January 31 to February 18, the two parties bickered over the probe’s substance and importance and the discovery the NFLPA is entitled to.
The NFLPA launched the probe (referred to by many inside the union and agency as simply an audit), late last year and is led by outside counsel Richard Smith of Linklaters. Smith is primarily focused on whether OneTeam, which is owned by sports unions and a private equity fund, granted or intended to grant equity options to the unions’ executive directors or to the unions. The executive directors of the NFLPA, MLBPA, MLSPA and WNBPA are board members.
In a letter sent by Smith to OneTeam’s outside counsel Mark Schamel of Venable, the NFLPA takes issue with Schamel’s depiction of the reporting on the probe as sensationalized. Awful Announcing in December reported on an MLBPA whistleblower’s regulatory filing charging in part executive director Tony Clark taking improper benefits from OneTeam. That report sparked the NFLPA probe, which was reported on by Front Office Sports. Schamel wrote to Smith that the inquiry had delayed and jeopardized tens of millions of dollars of business opportunities for the agency, the source said reading the letter.
In a reply, Smith takes issue with the depiction of the whistleblower report as sensationalized and, in response to OneTeam’s position that no equity options were issued, asks for information on the motive and intent behind any discussions underlying such prospective grants. That suggests OneTeam did not issue any equity options, but the NFLPA still wants to know the who, why and where of the discussions on granting them that appeared to have occurred.
OneTeam manages group licensing for its member unions. The executive directors are already paid by their unions and, in certain cases, their for-profit commercial subsidiaries. So, hypothetically, receiving an equity option from OneTeam could be viewed as getting compensated again for the same work.
The dispute is hovering over the suggestion that the Department of Labor could intercede. Schamel wrote to Smith that any regulatory review would begin and end with the fact that no equity options were issued to individuals. In his reply three days later, Smith wrote that he disagreed with the OneTeam position on the prospects for regulatory review.
Schamel and Smith are no strangers to each other. In 2013, they represented Richie Incognito on behalf of the NFLPA in the so-called bullygate scandal (which Jonathan Martin himself recently called into question). Schamel’s bio on Venable’s site says he “represents individuals and corporations in complex civil litigation matters, white collar criminal defense, and government investigations.”
OneTeam appears to have hired Schamel in mid-February. Tim Slavin, the agency’s chief legal officer, sent a February 5 letter from OneTeam to Smith. The next OneTeam letter to Smith is from Schamel.
In a February 18 letter, Smith pushes OneTeam to allow him to inspect the agency’s books and records, citing section 18-305 of the Delaware LLC Act, which governs in part what a minority shareholder like the NFLPA is entitled to access at the parent company.
Smith also wants documents tied to OneTeam’s internal review, which concluded that nothing untoward occurred in its governance. He asks to be connected with the outside firm that conducted the review and adds Linklaters has tapped an e-discovery firm to assist OneTeam if required. The NFLPA declined to comment.
The highly involved legal back-and-forth seems like a lot for a probe into equity options that were apparently never issued. OneTeam may have wanted to award the options to more closely replicate the structure of a for-profit entity and align the board members’ incentives with capital growth. But the plans for such options have sparked a legal tussle.
