Impact of 2020 Elections on Sports Law


Thursday, November 5, 2020

Michael McCann

Professor Michael McCann discusses the impact the contentious 2020 election will have on the future of sports law, including topics like Title IX, taxes, marijuana decriminalization, and much more.

Read Professor McCann's article on Sportico on the topic: https://www.sportico.com/business/commerce/2020/election-impacts-sports-1234615914/

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Legal topics include sports law, antitrust, drug legalization, taxes, entertainment, Title IX

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A. J. Kierstead (Host):

Professor Mike McCann gives us predictions on the impact the 2020 election will have on the future of sports law.

A. J. Kierstead (Host):

This is the Legal Impact presented by the University of New Hampshire Franklin Pierce School of Law, now accepting applications for JD graduate programs and online professional certificates. Learn more and apply a law.unh.edu.

A. J. Kierstead (Host):

Opinions discussed are solely the opinion and the faculty or host do not constitute legal advice or necessarily represent the official views of the University of New Hampshire.

A. J. Kierstead (Host):

So Mike, we're recording this in the afternoon of Thursday, November 5th, and things are still being locked down for this presidential election. We recently discussed the impact the newly sworn in Justice Amy Coney Barrett would have on the courts regarding sports law, but what about the president and Congress? I mean, what are some of the key areas that are up in the year that the executive and legislative branch are going to be likely dealing with in the next term?

Mike McCann:

Sure, A.J. So one big one will be Title IX. Title IX, particularly in the context of disciplinary actions within universities, it has been a source of controversy for some time how students who are accused of misconduct, the extent to which they can defend themself within university court systems, essentially. I mean, they're not courts per se, but they function as them, conduct disciplinary proceedings.

Mike McCann:

Clearly President Trump and Vice President Biden have different views about that. So that is one topic that I think will be impacted by whichever of the two wins this election. President Trump under his administration, the Department of Education has focused on ensuring rights for those students who are accused, whereas Vice President Biden, while he served under President Obama, there was more of a focus on victims, those who are accusing students of sexual misconduct. So that philosophical divide I think will play out and Vice President Biden has already talked about making big changes to Title IX.

Mike McCann:

So that's one. And The reason why that's a sports issue is that ESPN has a study on this. College athletes are three times more likely than other college students to be accused of sexual misconduct. So it's a very important topic within colleges in general, but particularly the sports context. That's one topic.

Mike McCann:

Tax policy is certainly another Vice President Biden plans to pursue legislation that would increase taxes on those who earn more than $400,000 a year. That of course would include the vast majority of pro athletes in the major leagues. It would also include sports teams, the owners of those teams, many of the executives. In addition, Vice President Biden has talked about other changes to the tax policy that could impact how inter-family transfers occur in terms of assets of teams, how they'll be valued for purposes of taxes.

Mike McCann:

Now, I think one caveat is if Vice President Biden wins the presidency, it appears that the Senate is going to remain under control of the Republican party. If that's the case, it's going to be difficult for Vice President Biden to change tax policy. So some of these goals are going to be impacted by not only the outcome of the presidency, but the outcome of the Senate races.

A. J. Kierstead (Host):

Now, when it comes to the tax policy, what's kind of unique with regards to sports law especially is it's very much dedicated to specific regions. Like it's not like a manufacturing business that can just move to China or something like that. What sort of retaliation do you think you would see from either teams or players?

Mike McCann:

Well, one possibility is that if Biden wins the election, we'd see many more transactions occur before the end of this year. And I say that because teams, executives, owner, all of them are going to be thinking, if Biden becomes the president, he's going to pursue tax policies that essentially cost us more money. So one way of preempting that would be to engage in more transactions before the end of this calendar year.

Mike McCann:

And I recently have a story with Eben-Novy Williams, he's a writer for Sportico, when we interviewed Robert Rayola, who's an accountant, and he predicts that's going to happen, that if Biden prevails, we will see lots of transactions, including within families. So if a family owns the sports team, having it set up to minimize potential tax exposure in the event tax policy changes.

Mike McCann:

And a big issue there is how a team is valued, so whether the team is valued under its original price, or whether it's valued under its fair market value. If it's fair market value and then it's sold, the profit will be less, right? Because the team is going to appreciate over the years. If it's valued at its original cost, original purchase price, then the profit is going to be huge, there'll be more taxes. So that issue is certainly going to come up. So I would expect we'll see a lot of transactions before the end of the year.

A. J. Kierstead (Host):

Now, an issue that you've had a lot of personal interactions with is name, image and likeness. I mean, what sort of issues would be coming up with that?

Mike McCann:

So it looks like both Biden and Trump support, at least conceptually, college athletes earning income off their name, image and likeness. Whether it's the sort of strength of that endorsement remains to be seen. Neither of them have talked much about the topic, so we're left to speculate a bit.

Mike McCann:

I think it's fair to project that if Biden becomes president, he would be more inclined to support legislation that gives more rights to student athletes versus those of the NCAA. The NCAA has sought so-called guardrails that could restrict how college athletes sign endorsement deals, whether they need clearance from their colleges and compliance officers. The sort of expectation is that Biden would be more inclined to give college athletes more rights essentially, potentially even labor rates. That's part of it too, is if labor law is changed to recognize college athletes as having some type of bargaining power, that's much more likely to happen under Biden than it would under Trump.

Mike McCann:

So we could see some areas of departure there, though, again, if the Senate is controlled by the Republicans, whatever sort of more transformative ideas that Biden has would have to be narrowed or dropped because it would be difficult to get past.

A. J. Kierstead (Host):

We touched on this a bit in the episode with regards to the nomination of Justice Amy Coney Barrett, but what about healthcare? The ACA is obviously going to be, especially if Trump continues for another four years, is going to be really supposedly meeting a bunch of resistance.

Mike McCann:

Yeah. So both Biden and Trump pledge that they support preexisting conditions. Trump has not offered, other than sort of an aspirational executive statement, an actual plan that would cover preexisting conditions.

Mike McCann:

As you alluded to, A.J., the Supreme Court is soon going to hear a case next week that involves, it's California v. Texas, that involves the ACA and aspects of it. Now, how it plays out remains to be seen. Even if the court rules against it, it doesn't necessarily mean preexisting conditions are dropped, but that is one possibility.

Mike McCann:

Biden has said that he'll pursue legislation to not only bring back Obamacare to how it was originally intended, but would expand benefits under it. Trump, again, to his defense has said that he supports preexisting conditions, there's just skepticism as to how he's going to get there.

Mike McCann:

The sports part of it is that although players in leagues have collective bargaining agreements that ensure that they have really the best healthcare around, for retired players, it's a real worry because retired players don't have those same benefits. And a lot of them are beat up. Their bodies are pretty damaged and they've all got preexisting conditions, at least for contact sports players. So I think whether they lose some protections could be troublesome.

A. J. Kierstead (Host):

How would policies regarding marijuana and other drugs have an impact to the sports law industry?

Mike McCann:

So Biden has talked about decriminalizing marijuana, which would suggest, although that doesn't make it legal, per se, it would point in the direction of marijuana more likely becoming legal in more states. That's significant for sports leagues because leagues and unions would be more inclined to support permissive use policies of marijuana if the federal government says we're no longer considering this a crime, if it becomes really just a matter of state choice.

Mike McCann:

President Trump appears more skeptical of that. He appears to view marijuana as more worrisome. We know that he often notes he doesn't drink. He doesn't use illicit drugs. So his views about marijuana appear to be more scrutinizing. So we could see some daylight there. Again, we'll see how the Senate shakes out, but leagues and players associations would likely have more ability to negotiate permissive [inaudible 00:09:42] use policies if Biden becomes president.

A. J. Kierstead (Host):

A recurring kind of topic on my podcast with you is always antitrust. So I'd imagine that's definitely going to be impacted over the next term.

Mike McCann:

Yeah, it's interesting. Biden certainly appears to support a very rigorous antitrust policy, but Trump Justice Department has also pursued pretty significant antitrust cases. Of course, the case against Google would be exhibit A, right? That the government is arguing that Google's market position and its use of exclusive contracts to minimize or even outright prevent other search engines from viably competing constitutes an antitrust injury.

Mike McCann:

Now, Google is going to argue that's not true, that consumers like having a very sophisticated free product and that Google's product line is constantly innovating. But it's interesting that antitrust law has traditionally been viewed as something that Democrats pursue very rigorously, but in the context at least of Google, President Trump has been pretty aggressive on that front. Now, maybe he hasn't been aggressive in other industries, but that's a topic that businesses I think should be worried about either way, to be honest. If the Justice Department, whether under Trump or Biden, starts aggressively pursuing antitrust cases, that's going to limit their ability to dominate any individual market, and it also raises issues with their collaboration with competing businesses.

Mike McCann:

So it's a significant development that either of them could become problematic for a lot of businesses.

A. J. Kierstead (Host):

So I'm going to link to, in the episode description, your article that you co-wrote that's on Sportico on this exact topic. I mean, is there anything else you feel like we should cover regarding this that's going to be important?

Mike McCann:

No, I think we covered the key issues and we'll see what happens with the election. We'll see what happens with the Senate election. But I think it's clear that government's going to be divided and individuals who want substantial reforms, whether it's liberal or conservative, they're probably not going to get them. The country is probably going to remain as is at least in terms of policy. There will be some changes, whether Biden or Trump wins, maybe on foreign policy in particular, but we're going to be in an era of probably incremental change.

A. J. Kierstead (Host):

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