SAME AS IT EVER WAS

     As we approach this weekend’s USATF Indoor Track & Field Championships in Albuquerque, New Mexico, once again we find the advance stories focusing as much on the politics of the sport as on the competition itself.  The wedge issue currently roiling the sport – as it has since the USATF annual convention in St. Louis last December – is over the number of sponsorship logos athletes can display on their competition singlets, the size of those logos, and at which competitions those regulations will be fully enforced by USATF, the sport’s governing body.

According to stated USATF rules, which follow international IAAF regulations, an athlete can only display two commercial logos or one club logo and one commercial logo.  But as reported today on LetsRun.com, in a nod to athlete demands, USATF has agreed to allow athletes with a club logo to have two commercial logos on display, as well. For their part, athletes want the right to display one club and three commercial logos.

Regardless, while USATF and the athletes go back and forth over number, size, and where the uniform rules will be enforced, the USATF Board’s legal counsel Larry James wrote a memo to the Board stating his concern that any deviation from the stated rules might be seen by Nike – sponsor for the USATF Indoor and Outdoor National Championships  – as reducing the value of its own contract with USATF, and thereby, under the terms of that contract, would allow Nike to pay a lesser amount to USATF for its own visibility.  And since more athlete logos appearing on athletes’ singlets might thus be interpreted as a reduction in value by Nike, USATF is forced to implement its uniform restrictions, irrespective of the gentleman’s agreement they came to in St. Louis with athlete legal counsel David Greifinger to hold off on the implementation at domestic events.

You can read the whole account on LetsRun.com, but the bottom line according to David Greifinger (the former legal counsel to USATF, by the way) is, as currently worded Nike can argue anything reduces the value of its contract. “Taken to its logical extreme, Nike would have veto power over the composition of USATF’s Board and committees, USATF’s Bylaws, Regulations, and Competition Rules, and all matters pertaining to competitions and athletes’ rights.”

That a kerfuffle like this is still taking place 34 years after the institution of USATF as governing body for track & field, road racing, youth running, masters running, trail running, race walking is evidence enough of the limitations of the institution.  However, history, too, may be instructive for the current situation.

MEDOFF MATTER

In the turbulent 1980s when the sport of road running was going through its own wrenching change from an amateur past to a quasi-open future, the staunchly conservative Boston Athletic Association was being forced to come to an accommodation with the new professionalism sweeping the sport.

At an April 27, 1981 BAA board of governors meeting there was general agreement that a substantial increase in sponsorship revenues was needed to sustain the prestige of the Boston Marathon.  A motion was therefore presented to grant then BAA president and Boston Marathon race director Will Cloney authority to negotiate and execute agreements for the presentation and underwriting of the marathon.

But in September 1981 Cloney signed a secret contract with Marshall Medoff, sole proprietor of International Marathons, Inc., which made IMI the exclusive promoter of the Boston Marathon.  According to the financial terms of the agreement, an “annual sponsorship fee” of $400,000 was due to the BAA.  All sponsorship revenues in excess of $400,000 would be payable directly to IMI.

When the contract came to light, the BAA board claimed it had only given Cloney the authority to solicit contracts himself, not turn solicitation over to a separate organization which would substantially benefit from that solicitation.  Under the legal doctrine of apparent authority, ‘an officer of a nonprofit corporation cannot have apparent authority to encumber the principal function of the corporation and to divert the substantial earning capacity of the corporation to private benefit.’

In March 1983 the Massachusetts Attorney General’s office ruled that the contract was unenforceable, as the Boston Athletic Association, which conducted the marathon, was run as a charitable organization, and the contract violated the state law that limits the amount a professional solicitor for charities can earn, which is 15%.

The case went all the way to the Massachusetts Supreme Court where the attorney general’s ruling was upheld. The Boston Athletic Association vs. International Marathons, Inc. ruling stated, “It is entirely inconsistent with the nonprofit nature of the organization to permit such a substantial segment of the revenue earning capacity of the Marathon to be used as a vehicle for personal gain.”

The entire Medoff Matter, as it became known, caused the BAA to turn inward and defensive in the area of race sponsorship and athlete funding for several years, even as the sport spread virally around the globe. It wasn’t until Boston Mayor Ray Flynn entered the picture in 1985 that the BAA was forced into the modern era when Flynn threatened to withhold Boston city permits if the BAA didn’t offer prize money to resurrect the prestige of the marathon in light of the new competition in L.A. London, Pittsburgh, etc.

Subsequently, John Hancock Financial Services was signed as the pivotal race sponsor for the 1986 event, and prize money was introduced to the Boston Marathon. At the same time, the BAA remained recalcitrant in the area of appearance money, and refused to offer such inducements to lure top pros to Boston. Thus, John Hancock hired Patrick Lynch, a well-respected (and connected) member of the Boston running scene, to sign top athletes to contracts to appear at John Hancock-sponsored clinics at area schools, which served as a substitute for appearance fees to race the Boston Marathon.

Today, that arrangement still exists even as running in general continues to suffer from a neither-amateur, nor-professional public identity, which, to some degree, restricts public interest in the sport.  While other sports generate interest via telephone number sized contracts and prize purses, the majority of money going to runners, whether in road racing or track & field, remains hidden via under-the-table appearance fees and unreported shoe contracts.

Yet here the sport is again, arguing over such minutia as the size of sponsor logos on competition singlets.  What makes the BAA vs. International Marathons, Inc. case interesting is that the courts ruled that the BAA, as a nonprofit agency, did not have the right ‘to encumber the principal function of the corporation and to divert the substantial earning capacity of the corporation to private benefit.’

So the question becomes, does the language of the Nike contract with USATF “encumber the principal function of the corporation”, not by “diverting substantial earning capacity of the corporation to private benefit”, but by restricting its application from an integral element of the corporation?

Under the USATF By-laws, Purposes, 4. Marketing: (USATF should be ) Generating public awareness, appreciation, and support for Athletics and for USATF, creating opportunities for athletes and Athletics events, and generating sponsorships to aid this corporation in help fulfilling its purposes and duties.

Does “creating opportunities for athletes” mean simply staging competitions, or can it be read to include allowing for the advancement of financial opportunities for athletes of their own making, which might be seen as being restricted by, or coming into conflict with, either the preceding purpose of “generating support for…USATF” or the following purpose, “generating sponsorships to aid this corporation, etc.”?

Neither Nike nor USATF is a bad actor in any of this, it would seem.  Rather, the professional athletes of the sport continue to find themselves caught in the never-ending cross currents of an amateur past and an unrealized professional future.  And not because they are being governed, but marketed, by a body responsible for a cradle-to-grave, amateur-to-professional oversight and advancement, an arc of constituencies and responsibilities which are manifestly beyond the capability of any single organization to pull off without constant conflict.
END

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