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Future of Fantasy Sports - how the small companies can win

Postby fantasysportsfan » Wed Apr 13, 2005 6:28 pm

FUTURE OF FANTASY FOOTBALL - how the small companies can win

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,

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