New York Times Story On Fantasy Lawsuit

Greg Ambrosius · Post by **Greg Ambrosius** » Tue May 16, 2006 7:58 am

This story in today's New York Times is drumming up a lot of publicity for the CBC vs. MLBAM lawsuit. It also updates the situation as the case is now tentatively scheduled for trial in St. Louis on Sept. 5th. Take a look at this story, which was done very well by Alan Schwarz, and feel free to provide your thoughts here:

http://www.nytimes.com/2006/05/16/sport ... r=homepage

King of Queens · Post by **King of Queens** » Tue May 16, 2006 8:10 am

I saw this article earlier today, and I'm glad you put it out there for all to read. My thoughts? In a word: greed. Really, some people will stop at nothing to make an extra buck or two (or millions). I'll be watching closely -- as I'm sure many will -- to see how this shakes out.

Greg, on a side note, when did Jeff Thomas become President of the FSTA? Was the election process democratic, or were you overthrown by a coup d'etat?

Chest Rockwell · Post by **Chest Rockwell** » Tue May 16, 2006 8:21 am

IF CDM wins Greg how much would costs industry wide be reduced? 20%?

JohnZ · Post by **JohnZ** » Tue May 16, 2006 8:39 am

Originally posted by King of Queens:

I saw this article earlier today, and I'm glad you put it out there for all to read. My thoughts? In a word: greed. Really, some people will stop at nothing to make an extra buck or two (or millions). I'll be watching closely -- as I'm sure many will -- to see how this shakes out.

Greg, on a side note, when did Jeff Thomas become President of the FSTA? Was the election process democratic, or were you overthrown by a coup d'etat?

Greg's term was up and Jeff was elected.

Greg did an amazing job as president.

Greg Ambrosius · Post by **Greg Ambrosius** » Tue May 16, 2006 8:41 am

Originally posted by King of Queens:

I saw this article earlier today, and I'm glad you put it out there for all to read. My thoughts? In a word: greed. Really, some people will stop at nothing to make an extra buck or two (or millions). I'll be watching closely -- as I'm sure many will -- to see how this shakes out.

Greg, on a side note, when did Jeff Thomas become President of the FSTA? Was the election process democratic, or were you overthrown by a coup d'etat?

I stepped down as president in March because of the conflict of being a licensee in baseball and football and the FSTA filing an Amicus Brief on behalf of CDM Fantasy Sports. It put me in an unenviable position and a conflicting one according to the leagues. I approved the expense to create the Amicus Brief as it was the right thing to do for all FSTA members. Basically, it's now a legal document that all FSTA members can use for themselves and it was presented to the judge to let her know that this decision will affect more than just one company (CDM). She accepted the brief immediately, which shows that she does understand the gravity of the situation.

But the brief put me in a tough spot and I couldn't be the person taking the calls on behalf of the FSTA to answer why we support CDM, when in return I've already agreed to be licensed by MLBAM and the NFLPA. In fact, most of the licensed companies (ESPN, Yahoo, Sportsline, Fanball.com) left the FSTA board in March and a new group of directors have joined the board. Jeff was elected unopposed as the new president and he will do fine during his three-year term. I'll still be a member of the FSTA, but will play a lower profile role until this case is complete.

Greg Ambrosius · Post by **Greg Ambrosius** » Tue May 16, 2006 8:51 am

Originally posted by Chest Rockwell:

IF CDM wins Greg how much would costs industry wide be reduced? 20%? It's really not about the costs. Many companies are unlicensed and don't have the additional costs that some of us licensed companies have, so they won't have any ability to reduce prices. I'm not really passing any of these costs onto you guys, I'm just eating them and I'm sure ESPN, Sportsline, Yahoo and others are doing the same thing. So I don't necessarily think a victory by CDM will be a windfall for consumers.

But it will be a win for consumers just based on selection. There will be no barrier to entry for anyone who wants to start a new fantasy company. Should the leagues win -- and if they do own the rights of publicity with statistics then they can set the industry up anyway they want and I won't have a problem with it -- then it probably means far fewer choices for consumers. MLB currently has only six licensees right now and a victory for them would allow them to decide how many licensees they'd like each year, while having the legal power to shut down unlicensed games and services. That's no different than the rights they own for trading cards, video games, TV, radio and other ventures where images and likenesses are used.

I think both sides feel they have a strong case and many legal experts believe this decision could go either way. The good thing that the NY Times story pointed out is that this is more far reaching than just fantasy sports. This would apply to all forms of rights of publicity, including board games that use names and even game shows like Jeopardy. I think this case will receive national attention if it goes to court in September and I plan to be in St. Louis for every minute of it because it's THAT important to all of us in this industry.

nydownunder · Post by **nydownunder** » Tue May 16, 2006 9:46 am

Greg,

Any chance this battle has more to do with the (possible) fact that MLB would not grant CDM a license? Thus, unless they win this legal battle, they have to close up their Baseball shop!?! I know CDM is was of the more criticized Fantasy Operators out there, thus it wouldn't be a surprise to me.

Greg Ambrosius · Post by **Greg Ambrosius** » Tue May 16, 2006 10:10 am

Originally posted by nydownunder:

Greg,

Any chance this battle has more to do with the (possible) fact that MLB would not grant CDM a license? Thus, unless they win this legal battle, they have to close up their Baseball shop!?! I know CDM is was of the more criticized Fantasy Operators out there, thus it wouldn't be a surprise to me. Yes, this has EVERYTHING to do about being denied a license. CDM was a licensee from 1994 to 2004 and when it applied for a 2005 license it was denied and told to either shut down or send customers to MLB.com for a 10 percent royalty. There was little choice in CDM's mind other than to ask a judge if they really even needed a license and could they run their business without a license until that was decided. That's the basis of the suit: That CDM was denied a license and thus is now questioning whether a license is even needed for a fantasy company. Until that is decided, CDM is running its business without a license.

Why was CDM denied by MLBAM after being a licensee with the Players Association for the previous 11 years? That's a question that only MLBAM can answer, but I think few people question the path that CDM has taken as it had few choices at the time.

Spyhunter · Post by **Spyhunter** » Tue May 16, 2006 12:44 pm

Consider this posting a 'friend of CDM' post. I am really not sure what legal standing MLB has on this. Since statistics were ruled in the public domain (since they are FACTS) and names (not likenesses or team logos) are also in the public domain, I just don't see how MLB can win. There are just too many legal precendents about the usage of facts in society. like the yellow pages case...

Everyone should read the article. I read it on the subway this morning and I particularly liked the fact that MLB tried to take the other side of the argument back in 96 or 97 when they wanted to do promotions... Showed them to be the greedy pigs that they are...

Spyhunter

sportsbettingman · Post by **sportsbettingman** » Tue May 16, 2006 3:55 pm

Seems to me that MLB stresses images and likenesses as their major arguing point.

I see no reason to include team logos nor images of the player for fantasy purposes...we aren't 12 year olds.

I sure hope sound judgment prevails and CDM wins, and the need for license is removed from the fantasy sports business.

~Lance

rmaysey · Post by **rmaysey** » Tue May 16, 2006 8:09 pm

Interesting post Greg--

Under what umbrella does MLBAM fall? Is this under the MLBPA or MLB? Same question in a different way--who are these licenses obtained from--the owners (MLB) or the players (MLBPA)?

Greg Ambrosius · Post by **Greg Ambrosius** » Wed May 17, 2006 2:27 am

Originally posted by rmaysey:

Interesting post Greg--

Under what umbrella does MLBAM fall? Is this under the MLBPA or MLB? Same question in a different way--who are these licenses obtained from--the owners (MLB) or the players (MLBPA)? Good question. The licenses were obtained from the MLB Players Assocation prior to 2005 and currently in football they are obtained from the NFL Players Association. Since fantasy companies don't use team marks, there is no need to be licensed by the leagues, unless of course you want to use team marks and team names. So for years the leagues were not profiting from fantasy sports, but the Players Associations were getting some licensing revenue.

In 2005, the MLBPA sold the rights to MLB Advanced Media (the league's Internet company that also runs MLB.com) for $50 million over five years. MLBAM paid for these rights because they felt they could monetize fantasy baseball rights and the transmission of video online better. No question you're seeing more video of MLB online and I think ESPN, Yahoo and CBS Sportsline.com all use it to some degree effectively. Fantasy baseball has had fewer licensees since this deal was done, going from 18 last year to six this year.

Right now the NFLPA has 16 licensees for 2006, pretty much the same lineup from 2005. Obviously there are hundreds of fantasy football games and services out there, but these 16 are licensing partners of the NFLPA (actually called Players Inc).

The NBA licenses games for the league and the Players Association as they work as one. The NHL Players Association would be the licensing arm for fantasy hockey. I hope this helps.

rmaysey · Post by **rmaysey** » Wed May 17, 2006 2:33 am

That was great Greg--

I thought it must be new, because I had never heard of MLBAM. It appears then, if I understood correctly, that the MLBPA sold the rights to essentially the league, and work in partnership with the league on the licensing of certain products.

Spyhunter · Post by **Spyhunter** » Wed May 17, 2006 5:44 am

Since fantasy companies don't use team marks, there is no need to be licensed by the leagues, unless of course you want to use team marks and team names. So for years the leagues were not profiting from fantasy sports, but the Players Associations were getting some licensing revenue.

They may not have been profiting directly, they CERTAINLY were profiting from the rabid following of fans of their players by attending games, watching ad-sponsored TV, or buying 'season passes' on pay per view / internet TV!

nydownunder · Post by **nydownunder** » Wed May 17, 2006 5:58 am

I have mixed emotions on this issue. For one I don't believe MLB should have right to the stats, but on the other hand I woulnd't mind seeing CDM get what's coming to them.

My motto in life is "what goes around comes around".

Greg Ambrosius · Post by **Greg Ambrosius** » Wed May 17, 2006 7:49 am

Originally posted by nydownunder:

I have mixed emotions on this issue. For one I don't believe MLB should have right to the stats, but on the other hand I woulnd't mind seeing CDM get what's coming to them.

My motto in life is "what goes around comes around".

It would affect more than just CDM, good or bad. There are 242 corporate members of the FSTA and all will be affected by this decision if it goes down this path. As FSTA president, I tried for years to have the NFLPA and MLBPA involved in the association and to find a reasonable licensing fee that would work for everyone, allowing everyone to be licensed properly. But few industries have hundreds of licensees and I understand why this didn't come to fruition. But having a court make this decision could be a huge blow to one of the sides and I still think a workable solution is the best answer.

CDM is a good company with a lot of good people. Their Diamond Challenge game changed the industry and is still among the most popular around. Everyone knows what their biggest fault has been in recent years and it's something hopefully they will fix once this lawsuit is settled.

Greg Ambrosius · Post by **Greg Ambrosius** » Wed May 17, 2006 7:55 am

Originally posted by rmaysey:

That was great Greg--

I thought it must be new, because I had never heard of MLBAM. It appears then, if I understood correctly, that the MLBPA sold the rights to essentially the league, and work in partnership with the league on the licensing of certain products. They sold the fantasy licensing rights to the league, something they have never done before in any industry nor has any other players association that I know of. MLBAM has total control of licensing in this arena, but MLBPA is getting involved in the lawsuit because obviously this will greatly affect them.

JohnZ · Post by **JohnZ** » Wed May 17, 2006 11:24 am

Originally posted by nydownunder:

I have mixed emotions on this issue. For one I don't believe MLB should have right to the stats, but on the other hand I woulnd't mind seeing CDM get what's coming to them.

My motto in life is "what goes around comes around".

I could be wrong on this, but I really doubt the reason they didn't get a license has to do with the concerns you have. If that's not where you were going, then I read your post wrong and am sorry. If it was, then you could go after the "challenge" company they are using now and the companies they have associated with in the past.

The history of this industry is quite interesting, and is full of ups and downs for all companies as any new emerging industry is.

Solid cases can be made on both sides, but I see the scale tipping everyday more to our side, especially after seeing what the ramifications can be to other issues like the "Jeopardy" issue in the article yesterday.

Yesterday, the lawyer the wrote the brief for FSTA was on CNBC for a segment. The publicity can only help us. The brief is truly a work of art.

[ May 17, 2006, 05:30 PM: Message edited by: UFS ]

nydownunder · Post by **nydownunder** » Thu May 18, 2006 3:13 am

In no way do I want MLB to win this thing...I just (personally) dispise CDM. They don't care about the people and I still think they are vague in detailing the costs associated with their competitions. When it comes to that, they kind of remind me of cell phone service provider...there's just all these hidden costs that are in the fine print or worded with vaguness in mind. As for their money (paying) issues, that's just unacceptable.

Regardless, we need for MLB to lose this one.

[ May 18, 2006, 09:14 AM: Message edited by: nydownunder ]

Greg Ambrosius · Post by **Greg Ambrosius** » Tue May 23, 2006 11:08 am

This was the editorial in Saturday's New York Times:

Royalties on R.B.I.'s?

Published: May 20, 2006

Baseball statistics are an unlikely subject for a constitutional battle. But a lawsuit between Major League Baseball and a fantasy baseball company over batting averages and on-base percentages is shaping up to be just that. The narrow question is whether Major League Baseball has a right to keep the fantasy baseball company from using statistics from its games. But the suit has much broader implications for free speech. The courts should make it clear that anyone may use baseball statistics.

The company, CBC Distribution and Marketing, is a leader in fantasy baseball, a $1.5-billion-a-year industry that allows fans to become "owners" of imaginary baseball teams. Participants "draft" real-life major league players, and compete against similar teams. The teams' performance and the winners are determined by the statistics of actual major league players. Major League Baseball insists that it owns the statistics, and that CBC should pay licensing fees. CBC is suing to establish that it does not have to pay to use the statistics.

The case pits the "right of publicity" against the First Amendment. Major League Baseball claims that its right of publicity allows it to control and charge for the use of its statistics. But the right of publicity is narrowly limited to commercial exploitation. The classic case is the unauthorized use of a celebrity's photograph in an advertisement.

Major League Baseball's attempt to stretch the right of publicity is part of a larger trend. Corporations are becoming increasingly aggressive about locking up information. It is the same instinct that led Hollywood studios to push Congress to pass the Copyright Term Extension Act of 1998, which added 20 years to every copyright.

If Major League Baseball is allowed to control the use of its statistics, movie stars could demand compensation from magazines that profile them or put them on the covers. A hero who pulls a child from the path of an out-of-control car could claim that he owns the right of publicity for his act of heroism. But the First Amendment guarantees people the right to discuss public events. A movie star's career trajectory, an act of heroism and a batting average are all facts about the world and the people in it, and belong to all of us.