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Week in Review

By Chris Helsel

Off Broadway Company Fights to Retain Right to Buy Helen Hayes Theatre

Second Stage Theater (Second Stage), an off Broadway company, has brought an action in New York state court seeking an extension in order to secure financing to complete its purchase of the Helen Hayes Theatre (the Hayes). The deal, originally negotiated in 2007, calls for Second Stage to purchase the theater for $25 million. The closing was set for last Tuesday, but when Second Stage could not come up with the money, the Hayes sought to void the deal. Second Stage contends that the Hayes intended to offer to the theater, which has likely grown in value since 2007, to a higher bidder. The Hayes' owners, meanwhile, claim that they were ready to sell on Tuesday but would now prefer to retain ownership of the theater and have no plans to sell it to anyone else.

On Thursday, Judge Joan M. Kenney of the New York State Supreme Court urged the two parties to settle the case, rather than prolong litigation. Attorneys from both sides have made contradicting claims about settlement negotiations conducted last week. Both parties indicated they had been willing to accept a deal whereby Second Stage would pay $175,000 in exchange for a 90-day extension - both sides then said the other party rejected the deal.

Meanwhile, the Hayes' owners now claim that the delay in finalizing the purchase has cost them significant rental income for the theater. "We had several producers who were interested in putting shows in the theater this spring, but that won't be possible," said one of the Hayes' co-owners.


Letters of Intent Called Into Question

The official process by which high school athletes make their college choices, which has long been derided as unfair and exploitative, may have reached its tipping point. This year, on National Signing Day (February 4th), a star high school football player in Georgia announced on national television that he would be attending the University of California at Los Angeles (UCLA). What he did next may alter the history of college recruiting forever.

Traditionally, a player signs his letter of intent and sends it in to the school. The player is then bound by that agreement, and no other school can recruit him. The chosen school, though, has no obligations to the player. It can drop the player (that is, revoke his acceptance and scholarship) at any time between the receipt of his letter of intent and the commencement of preseason practice.

For obvious reasons, this practice has been railed by critics as monumentally one-sided in favor of the schools. High school athletes, however, typically do not complain - they are thrilled to be offered scholarships and announce their decision on national television. In many cases, however, schools pull the rug out from their recruits and revoke their offers after receiving letters of intent. These players are often stuck, as virtually every other school has filled its scholarship limits and have no room for the now-available player.

Another way this system can harm the players is if a school's coach decides to leave. In many cases players are recruited by a college coach, sign a letter of intent binding them to attend that coach's school, only to later learn that the coach had subsequently accepted a job elsewhere. In that case, because he signed the letter of intent, the player has no choice but to attend the school despite the coach's departure, or sit out a full year before enrolling elsewhere.

The aforementioned high school football player from Georgia, however, appears to have changed the game. On ESPN, Roquan Smith announced that he would be attending UCLA. However, acting on the advice of his high school coach, he declined to sign a letter of intent. This leaves him free to switch schools at any time before the start of the preseason.

The wisdom of his decision revealed itself almost immediately. In the hours following Mr. Smith's televised "commitment" to UCLA, the school's defensive coordinator, Jeff Ulbrich (who had been Mr. Smith's primary contact during the recruitment process), accepted an NFL coaching position with the Atlanta Falcons.

According to Mr. Smith, during the recruitment process, Mr. Ulbrich outright told him that he had turned down the offer to join the Falcons. Thankfully, Mr. Smith never submitted his letter of intent, so he was free to rescind his acceptance and enroll elsewhere once the truth was revealed. He announced on February 13th that he would be attending the University of Georgia.

Going forward, it seems likely that many high school players (at least the top-ranked players - those with many college options) may opt out of the practice of signing a letter of intent. As Mr. Smith's case demonstrates, the letters of intent serve only to bind the player to the school, but do nothing to stop the school from acting in its own best interest - often at the expense of impressionable 17- or 18-year-old young men and women.


Lance Armstrong Ordered to Pay $10 Million to Sports Insurance Company

Earlier this month, an arbitration panel ordered American bicyclist Lance Armstrong to pay $10 million to SCA Promotions (SCA) for bonuses fraudulently won as a result of his seven Tour de France victories.

In 2005, Mr. Armstrong sued SCA, a sports insurance company, seeking to recoup a $5 million bonus that the company had withheld after allegations of Mr. Armstrong's doping surfaced. During that proceeding, Mr. Armstrong stated under oath that he did not use performance-enhancing drugs. Without probative evidence, SCA could not prove that Mr. Armstrong was not entitled to the bonus. The case was ultimately settled, with Mr. Armstrong was collecting the $5 million bonus, plus $2.5 million in fees.

Mr. Armstrong retired from competitive racing in 2011, as he faced a U.S. federal investigation into allegations of doping. The following year, federal prosecutors dropped their criminal investigation. However, the United States Anti-Doping Agency (USADA) conducted its own investigation, and found that Mr. Armstrong had indeed violated the World Anti-Doping Agency (WADA) code throughout his career. In August 2012, USADA issued Mr. Armstrong a lifetime ban from all sports that follow the WADA code, and stripped him of all seven Tour de France titles. The international cycling federation, Union Cycliste Interationale (UCI), upheld USADA's decision in October 2012.

Soon thereafter, SCA announced its intention to recoup the amount it paid to Mr. Armstrong. In January 2013, Mr. Armstrong finally admitted to using performance-enhancing drugs throughout his career in a television interview conducted by Oprah Winfrey.

On February 4th of this year, the arbitration panel awarded SCA $10 million. The panel's decision highlighted Mr. Armstrong's prior declaration under oath that he had never doped, and declared, "Perjury must never be profitable." The decision referred to Mr. Armstrong's doping regimen, bullying tactics against whistle-blowers and steadfast denials as "almost certainly the most devious sustained deception ever perpetrated in world sporting history."

SCA has now filed a claim in Texas state court, asking the judge to enforce the arbitration ruling. In addition, SCA has sued Mr. Armstrong in Texas civil court for an additional $5 to $10 million. SCA's attorney, Jeff Tillotson, said, "This is just a very good start to getting SCA full compensation. Oh, no, we're not finished with Mr. Armstrong yet."

In addition to the SCA actions, Mr. Armstrong faces a $100 million federal whistle-blower case, in which the U.S. Postal Service (USPS) claims that he defrauded it during its sponsorship of his riding team. The USPS sponsorship contract demanded that Mr. Armstrong not use performance-enhancing drugs, which he (until recently) vehemently denied he ever did.

As if 2015 wasn't going poorly enough for Mr. Armstrong, he received two traffic tickets this month for his involvement in a hit-and-run in Aspen, Colorado. His girlfriend originally took the blame for the accident, but later told police that she had lied about driving the car in order to protect the car's actual driver - Mr. Armstrong - who had been drinking.


NHL Concussion Suit Gains Steam

While the class action suit brought by former players against the National Football League (NFL) has garnered the majority of concussion litigation headlines in the past few years, the National Hockey League (NHL, League) also faces a similar legal challenge.

In 2013, following the announcement that the NFL had reached a preliminary settlement in the suit involving thousands of former players, 10 former NHL players brought a suit of their own. That suit, which now includes over 70 named plaintiffs, raises many of the same arguments as the NFL case. Specifically, the players argue that the League failed to address the dangers of head injuries, despite mounting evidence of the long-term ramifications of concussions.

The case has returned to the headlines in recent weeks as an additional 29 former players signed on and another, Steve Montador, was found dead at age 35 last Sunday. Mr. Montador had a history of concussions, which forced his premature retirement, and had hired an attorney with plans to join the suit before his untimely death. His brain will be studied by scientists to determine whether he suffered from chronic traumatic encephalopathy (CTE), a degenerative brain disease, which has been linked to the early deaths of numerous other former NHL and NFL players.

In the current case, the NHL has raised two main defenses. First, like the NFL, the League contended that the suit was preempted by the collective bargaining agreement with the players. Second, the NHL has also argued that most of the plaintiffs' complaints are barred by the statute of limitations. Those arguments were heard in January, and a ruling is expected shortly.

In the meantime, the class continues to grow. According to plaintiffs' attorneys, another 200 former players have retained counsel with plans to join, and roughly 500 have expressed their support.


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This page contains a single entry from the blog posted on February 21, 2015 8:56 PM.

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