July 14, 2012 by Charlie Eisenhood in News with 9 comments
UPDATE: The Constitution have resumed operations. The team said in a statement that they will “continue to negotiate with the league on several outstanding issues.”
UPDATE II: Some further details about the Constitution resuming play.
UPDATE III (7/12): The league has cancelled this weekend’s matchup between the Connecticut Constitution and the Detroit Mechanix. Details to follow.
In its first year as a professional sports league, the American Ultimate Disc League (AUDL) is suddenly facing a crisis. Last Thursday, one of the league’s eight teams – the Connecticut Constitution – abruptly suspended their operations freshly off clinching a playoff berth, after the AUDL sued the team for blocking the sale of a New York City franchise for the upcoming season. While the situation is embarrassing for the young League, the real issues at stake actually run much deeper. What appears to be just a contractual dispute is rooted in dissatisfaction about the league management that raises questions about the long-term viability of the AUDL’s current structure.
The path to this lawsuit began in May, when the AUDL front office informed team owners about confirmed new franchises for next year’s season. Among those announced were New York and Boston, two ultimate hotbeds on the east coast and obvious locations for franchises. However, the Connecticut and Rhode Island franchises, pointing to a small clause in their contract with the League, cried foul. That clause, the Territory License Agreement (TLA), says that no new franchises can be started within 100 miles of their own. New York and Boston both fall within the teams’ respective radii.
[Ed. note: The map above is misleading. New information, found here, tells a more nuanced story about the radius around the Constitution’s territory.]
The two sides began discussions, but didn’t get far. “We tried to get resolve and in our frustration threatened to get lawyers,” said Bryan Ricci, the owner of the Constitution. “So to protect their interests [the AUDL] filed a suit.”
That suit, according to Josh Moore, the President of the AUDL, is “to request judgment as to their radius being enforceable given that they had agreed to the teams previously.” The AUDL stressed in their press release that the owners had verbally consented to New York and Boston franchises in the past. Ricci, who called the lawsuit a “Mickey Mouse move,” disputes that, saying that “we talked generally about where we want locations – there were a lot of conversations.”
However, the terms of the contract are not in dispute. The AUDL included in their initial press release that “[the owners’] purchase agreements do indicate that no new teams, beyond what we agreed to at the start, may be placed within a 100 mile radius,” which they later deleted without explanation.
“The AUDL is absolutely wrong, it’s clear cut,” said Thom Held, the owner of the Indianapolis Alleycats franchise. “There is absolutely no legal room on this.”
Moore responded to questions with a short statement: “We’ve made sure this issue will not be repeated with any of our other territories or expansion plans. Our owners can agree to teams within their territory, which is what Connecticut had previously done and agreed to before they later changed their mind.”
This argument – even if the League produced evidence of Ricci making a verbal agreement to allow a New York team – would be difficult to defend in court. In contract cases, verbal testimony generally cannot be used to contradict the explicit terms of a signed contract. That is, even if Ricci consented to a New York team – which he says he never did – before signing the contract, that would be inadmissible in court in most cases.
However, the owners could still agree to allow the new franchises. But Ricci sees the territory as his to develop as he sees fit. “It’s never been a contention that New York and Boston are bad places to be, maybe we should be there,” he said. “But it’s my territory and I chose to start in Connecticut.” He noted that forty percent of his players come from the New York metro area and added that no major sports league has a Connecticut team with a New York team next door.
Ricci is willing to settle if he gets everything – the lawsuit withdrawn, the new franchises dropped, and the AUDL reimbursing him for legal fees. But he cautiously suggests that he is open to negotiation: “I think I have something valuable and if they want to keep one or both of [the new franchises], they have to compensate me for them.”
That kind of arrangement would not be unprecedented. Though the League would not confirm this, Ricci and other sources say that the Philadelphia Spinners franchise was compensated for both the New Jersey and New York expansions (which fall in their radius). Surprisingly, that agreement, negotiated between Philly and the league, was allegedly made after Connecticut and Rhode Island raised the issue of the territory infringement, but prior to the lawsuit. That, if true, would explain some of the anger directed at the league by Ricci and the Constitution. [Philadelphia has yet to respond to requests for comment].
In an online message board for Ultimate players, one commenter suggested that the dispute is in some ways encouraging, since both sides are “willing to pony up and go to bat to defend their side.” Similarly, John Korber, the General Manager and Coach of the Constitution, said that it has become clear that “spectator ultimate is not an impossibility. People who know nothing about Ultimate are willing to pay five, ten, or fifteen dollars to watch it.” Average attendance at Constitution home games has been around 500; Philly and Indianapolis get even more.
But in many ways the current situation is lose-lose. Although the financial details aren’t clear, it’s hard to imagine either side wants (or can afford) a drawn out court battle. Korber expects the league to settle and says that the current dispute “is not a commentary on spectator ultimate, it’s a commentary on how the AUDL is run.”
The ongoing situation does not help matters. The Constitution’s decision to suspend operations has already caused lost revenue and the cancellation of some games, including a charity event in Indianapolis. Moore said in an interview yesterday that “[the Constitution’s] decision not to play puts financial harm on both Indy and Kentucky that needs to be rectified before they can rejoin the league.” However, Held – Indy’s owner – puts the blame on the League’s front office, even calling Moore’s choice to file suit “the worst decision of his life.”
It is strange to see a professional sports league suing one of its own teams. Most leagues are structured with the team owners or a Board of Directors electing a President or Commissioner to handle front office issues like rules, league expansion, etc. In the AUDL, prospective franchise owners pay the League for the right to play in it, but little else. There have been frequent complaints from players and owners about issues including marketing, sponsorship, profit sharing, insurance, and rule enforcement – the day-to-day operational issues that confront the teams, all of which face tight budgets.
Korber says that AUDL isn’t thinking about that. The League’s incentive, he claims, is to sell more franchises and not to deal with “policies that increase the value of the current teams.” Of course, the owners want to increase the value of their team. “The realities of those incentives have created a completely disjointed operation,” said Korber. He went further, suggesting that you could “effectively see the League as a Ponzi scheme” that sells franchises but does not worry about creating a sustainable league.
Because of this, Korber expects to see a very different League as early as next year. He thinks the current eight owners will either buy out Moore, find a way to put some elective board into place along the lines of Major League Baseball or the National Hockey League, or leave the League and form their own.
What complicates everything is that the AUDL has already sold eight new franchises for next season and twelve for the year after. But two of those, and two of Ultimate’s biggest markets, New York and Boston, aren’t in any way a sure thing.
In an ideal world, this lawsuit offers an opportunity for the owners and the League to discuss how to move forward. There is no question that some of the teams have already begun to build strong brands and fan bases – it seems foolish to jeopardize that. The real issue right now? In the words of Ricci, “It’s not about Ultimate, [and] that’s what we’d like it to be about.” On that, everyone agrees.
Disclosure: My friend and college roommate Husayn Carnegie plays for the Constitution.