Tye Gonser is an attorney with Weinberg Gonser LLP in Los Angeles. He has a J.D. and M.B.A. from Florida State University. Gonser practices sports and entertainment law and advises athletes and sports agencies with respect to all legal needs, including endorsements, licensing deals, branding and crisis management. Gonser was also a speaker at UCLA School of Law’s forum on Sports Transactional Law. The Legal Blitz caught up with him for this interview.
How has having both a JD and MBA helped your career?
Having a solid understanding of business concepts and the ability to read financial statements gives me additional tools to add value in my role as a corporate attorney in advising athlete clients on business opportunities and life after sports. However, I do not believe that a person has to have a MBA to understand business or jump start a career. Starting and running a business is an invaluable experience (I know entrepreneurs with high school degrees that have unbelievable business acumen).
Los Angeles has a lot of lawyers working in sports and entertainment, how do you attract clients? What are some keys to building relationships that could lead to business?
I attract clients within the “sports industry” through referrals from friends, clients, lawyers, agents and other professionals. My experience in-house and on the business side of sports representation provided me with unique knowledge, perspective and relationships that traditional lawyers do not have; for example companies engage my firm to do deals (i.e. endorsements, licensing, equity participation, etc…) with celebrities and athletes not only because we can paper the deals but also because we add value through our relationships and knowledge of the market (i.e. what to pay the talent, who is easy to work with, etc…). Moreover, agents are comfortable referring me athlete clients as they know I’ve worked around the “agent” side of the business and I have no interest in working with athletes outside of my capacity as a lawyer ever again.
I believe that the best way to build relationships that may lead to business is to be yourself and “network” in ways that are true to who you are. For example, I have a hard time connecting with people at large events where walking up, introducing yourself, finding out what the other person does and exchanging cards is the norm. I prefer to meet in small groups or one-on-one for drinks and get to know someone without focusing on “business”. I enjoy meeting and learning about people and I’ve found that while my approach does not usually lead to immediate business, it is effective in building long term relationships that I enjoy and it’s a bonus when any such relationship results in business.
As a former college athlete, how do you think the NCAA has handled recent compliance violations?
The NCAA has the unenviable task of regulating hundreds of athletic programs that all have their own issues and problems. Compliance violations have been a part of big time college athletics since its inception…the proliferation of investigative journalism and the internet have brought these issues to the attention of the general population and will hopefully engender well thought out, positive change. It is this new hype and media attention on compliance violations that has encouraged the NCAA to dole out harsh penalties and set dangerous precedents; these precedents will be tested with the Miami situation and will likely lead to continued criticism with respect to the inconsistency of the NCAA.
If you could rewrite the NCAA rule book, is there anything in particular you would change?
I would eliminate archaic rules and clarify the remaining rules to make them easier to interpret and enforce. The 2010-2011 Division 1 Manual (contains the operating bylaws) is approximately 420 pages long and loosely drafted. The NCAA seems to prefer ambiguous language so that it can interpret and apply the rules in a manner that best serves its goals given a specific situation. This approach is available to the NCAA as it is the judge and jury of infractions cases and is not bogged down by hindrances like the rules of evidence. Unfortunately, the ambiguity of the rules and their arbitrary enforcement make it more difficult for schools (and their athletic programs) to comply with the rules and to focus their limited resources on guiding student athletes to do the same.
One of the fall-outs from the recent Miami football scandal surrounding Nevin Shapiro’s allegations is that he has named more than 50 athletes who allegedly broke NCAA rules, used drugs, prostitutes, etc. How do you think this could affect those athletes’ marketability now, particularly in endorsement deals?
The allegations will have little to no impact on 99% of the athletes involved because most if not all of the athletes mentioned do not have much marketability (based on professional success, position, city, personality, etc…).
Assuming an athlete is marketable, the negative impact on his marketability would be directly proportionate to how serious the specific alleged actions of such athlete are perceived to be by the casual fan (i.e. general population/consumers). For example, allegedly receiving free meals or drinks would likely have little to no impact on an athlete’s marketability as the casual fan is desensitized to such indiscretions and may even condone accepting such benefits. Conversely, bedding prostitutes could greatly decrease an athlete’s marketability as the casual fan likely finds prostitution to be morally repugnant (not to mention illegal).
There are a handful of athletes in the group of the accused who have existing endorsement deals (mainly apparel deals, i.e. Nike, Adidas, etc…) that may be in jeopardy. Endorsement agreements typically contain a provision called a Moral Turpitude clause. This clause allows the company to terminate the agreement if the athlete commits certain acts. The exact language and breadth of the moral turpitude clause is negotiable. The goal of the talent is to limit a breach to defined and proven acts such as the conviction of a felony, whereas the company wants open ended language where a breach is determined pursuant to the company’s discretion (see footnote for example of pro-company provision, focus on clause (iv))1. The Miami scandal may give a company a free pass to terminate an underperforming endorsement agreement with an athlete involved in the scandal (i.e. Rashard Mendenhall/Champion).
If a client of yours were named in such a scandal, how would you advise them to react? If proven innocent is there anything an athlete can do to try to clear his name and even collect on potential damage to his commercial image/brand?
I don’t see much of an upside in any of the athletes allegedly involved in the Miami scandal addressing the allegations. If an athlete felt obligated to say something, I would advise issuing a simple statement such as “in deference to the University of Miami and its ongoing investigation, I will not comment on the allegations at this time. However, I plan to cooperate with the University of Miami if requested.” Some Miami players, alumni and supporters made character attacks on Nevin which only succeeded in extending the life of the story.
Effectively advising clients in a crisis requires you to implement a strategy only after you have objectively analyzed the legal and non-legal (i.e. business, societal, unintended effect on 3rd parties, reputation, etc…) ramifications with respect to the client. In many circumstances where an athlete or celebrity is caught in a scandal, I believe the best strategy is to be accountable for one’s actions and make a contrite apology (assuming doing so will not create legal liability, etc…). This approach is effective when executed sincerely as we live in a very forgiving society that is willing to overlook character flaws and indiscretions…especially where the person wins.
The “death penalty” rumors are swirling around Miami. Do you think it will ever happen again given the huge impact it had on SMU?
I don’t think Miami will be hit with the death penalty. The NCAA is in a tough spot given its recent punishment of USC and the severity of the Miami allegations. The NCAA has to hit Miami very, very hard if it wants to retain any credibility, however, the NCAA runs a business (regardless of its contention to the contrary) and eliminating a profitable, storied program like Miami is bad for business.
How has the “recession” impacted corporate endorsement deals for athletes and entertainers, if at all?
The recession has caused big companies to reevaluate their spending on endorsement deals which has decreased the aggregate amount of marketing dollars available to non-superstar athletes and entertainers. The superstars (which is a very small group) are still inking big money deals. The recession and the advent of social media have led to more creative deals and truer pay for value relationships that I believe engender longer relationships between talent and a brand or company.
Since you’re in LA and there is now a plan in place for a new NFL-ready stadium, do you think the city is ready for another team?
I think a LA team will do well from an economics perspective as a big part of LA thrives on status and ego and having a box or tickets to the LA NFL team will be the new, “it” event. This is also why the LA team will have one of, if not the worst home field atmosphere in the league (unless Jacksonville is not the team that comes to LA…). It’s hard to wave a terrible towel like Pittsburgh fans or reach a crazy decibel level like the Saints’ Superdome when your fans are looking around the stadium to see where Leo is sitting or what the Kardashian sisters are wearing.
That being said, I am still excited for LA to get a team as LA will be a great host city for the Super Bowl and will drive even more revenue for the NFL given the size of our media market.
1 Company may terminate this Agreement at any time upon written notice to Athlete if: (i) Athlete is convicted of, or pleads guilty or nolo contendere to, a misdemeanor, felony or charge involving moral turpitude or the purchase, sale, possession, or use of an illegal substance or prohibited substance; (ii) Athlete is suspended or takes a leave of absence from professional competition because of alcohol or drug use or psychological/physiological problems; (iii) Athlete enters an alcohol, drug or psychological/physiological treatment program, (iv) Athlete attracts publicity which in the reasonable judgment of Company has an adverse effect upon the status or reputation of Athlete or Company.