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How a Soccer Court Case Changed the WNBA Forever

If you want to know the most important year in WNBA history - after 1997, of course - that year is 2002. Particularly, the most important date is March 20, 2002 when a decision was handed down by the United States First Circuit Court of Appeals that would change how sports franchises in the United States were managed. It would have important consequences for the future of the WNBA.

Previous to 2002, the NBA collectively owned all of the franchises in the WNBA and the NBA owners in the WNBA cities operated those franchises. The NBA had complete control over player salaries and sponsorships. So before 2002, there was no risk in "owning" an NBA team because even though your name was on the plate you were sharing the risk with all of the other non-WNBA owners in the NBA.

In a lot of respects, the WNBA ownership model prior to 2002 was centralized, much like that of Major League Soccer. David Stern - a lawyer by trade - must have taken a good look at the case winding itself through court, that of Fraser vs. Major League Soccer and he undoubtedly had a great interest in what the judges would decide.

Eight MLS players sued Major League Soccer for monopolistic practices related to its ownership model. As the case document of Fraser vs. Major League Soccer reads:

In a nutshell, MLS recruits the players, negotiates their salaries, pays them from league funds, and, to a large extent, determines where each of them will play.   For example, to balance talent among teams, it decides, with the non-binding input of team operators, where certain of the league's “marquee” players will play.

The MLS players believed that the MLS used this structure to conspire as a group to create a monopoly that could hold player salaries down. The MLS's argument was that Major League Soccer was a single entity, not a collection of teams. In order for the players' argument of a "conspiracy" to hold, MLS's response would be "We're just a single corporate being - and how can one person form a conspiracy with himself?"

The question is an interesting one: is the NBA one entity, or is it thirty? Does a club have the same relation to the league in the same way that the McDonald's a half-mile from my house has with its parent company, or is the relationship more like that of an association of businesses? The court dodged the question in the end - the court decided MLS couldn't monopolize the market for major league soccer because no active market existed when MLS was created - but the court in Fraser vs. MLS concluded that:

MLS and its operator/investors comprise a hybrid arrangement, somewhere between a single company (with or without wholly owned subsidiaries) and a cooperative arrangement between existing competitors.

Single entity organizations had a lot of advantages. When new sports leagues start, many of the franchises are financially unstable and will be for some time. The single entity structure of the WNBA allowed the league to distribute its losses among all of the NBA teams (*) and Stern must have hoped that the WNBA's organization would help it avoid the perils associated with new sports leagues.

This decision from the US Court of Appeals must have made David Stern very uncomfortable if he was ever aware of it. First, the WNBA had been designed very much like a single entity. Second, unlike the MLS case, there *was* an active market for women's pro basketball before the WNBA came along - that market was the American Basketball League. And - far from cooperating with the ABL - the WNBA's unstated goal had been to drive the ABL out of existence and take over the market completely.

Furthermore, the first collective bargaining agreement with WNBA players expired on September 15, 2002. This put the WNBA in a position of weakness at the bargaining table. What was going to prevent some group of WNBA players or the players association from claiming that the WNBA was a monopoly, and that its centralized arrangement made it vulnerable to an anti-trust lawsuit?

Fraser vs. MLS showed that the court was going to demand a higher standard of "unity of interest" that organized sports previously thought the courts would accept. This would have serious ramifications for the WNBA, MLS, the Women's United Soccer Association (WUSA) and all other sports organizations which had attempted to organize as "single entities" to avoid anti-trust.

In October 2002, the NBA Board of Governors changed the single-entity structure of the WNBA. It transferred the ownership over to the franchise operators, and allowed them to sell those teams if they wanted to. The individual owners would now have to make their own sponsorship agreements and pay the players. It is my suspicion that Fraser vs. MLS proved that the days of "single entity" leagues were now dead, and the WNBA would have to adjust itself to that reality and begin behaving like a conventional sports league.

So what happened? Very shortly afterwards, Orlando sold its franchise to Connecticut and San Antonio - which was interested in a franchise now that they had a new arena - took Utah's team.

The bloom immediately fell off the rose in Miami. Now that *they* would have to raise the money, the owners looked hard at the books and decided that their efforts would be best spent taking care of the NBA Heat. And the NBA Blazers turned their WNBA ownership right back over to the WNBA, which let the Portland Fire die on the vine.

As for the other franchise shutdowns after that:

<strong>2003: Cleveland</strong>. Cleveland was simply given a one-year respite by the Cavs ownership - Cleveland is just the scenario above delayed one year. They couldn't find new owners, bye bye Rockers.

<strong>2006: Charlotte</strong>. They had been without an operator since the Charlotte Hornets left town in the spring of 2002. They were picked up by Robert Johnson, who would own Charlotte's replacement team, the Bobcats. But Johnson claimed financial woes and turned ownership of the league to the WNBA. After a planned sale to Kansas City fell through when Kansas City's prospective owners couldn't raise the funds, Charlotte folded.

<strong>2008: Houston</strong>. This is what happens when you sell a franchise to someone who doesn't have any money.

<strong>2009: Sacramento</strong>. The Maloofs. Nothing more need be said.

After 2002, the league actually found three new locations: Chicago, Atlanta, and Tulsa (which took over the Detroit franchise.). Chicago, Atlanta and Tulsa thought they could at least make some money with this WNBA thing.

So in effect, looking at the league pre-2002 and post-2002 is almost like looking at two different leagues. This leads to the interesting counter-factual of "what would it be like if Fraser vs. MLS had never taken place?" More than likely, the old ownership structure would still be in place and we might still have a 16-team league. There would be nothing stopping it if the WNBA could hide its losses in the NBA's larger stack of money.

Would it be better for the players? Probably not. Under "single entity" the players would have fewer options for legal redress. Without single entity (the present system), the WNBA can simply threaten to lock out the players just like they did in 1999 unless the new players union consented to collective bargaining. Even with Euroball, many players don't have the cash reserves to beat the owners in a lockout.

So who can you blame for the changes after 2002? David Stern? WNBA management? Short-sighted NBA owners? Short-sighted WNBA owners? Major League Soccer? The United States First Circuit Court of Appeals? Or those guys who started the lawsuit? Whoever you blame, you can't doubt that the WNBA was never the same after October 2002.

==BACKGROUND==

A great article to read is "Analyzing the WNBA's Mandatory Age/Education Policy from a Legal, Cultural, and Ethical Perspective: Women, Men and the Professional Sports Landscape" by Marc Edelman and C. Keith Harrison.

http://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1017&context=njlsp

Another good article to read is "The Flight from Single-Entity Structured Sports Leagues" by Lacie L. Kaiser.

http://laworgs.depaul.edu/journals/sports_law/Documents/Kaiser%20leagues.pdf



(*) But single entity structure was not always an advantage, in that it hindered a franchise's ability to seek out local sponsorship deals which had to be approved by the central office - as the WUSA learned to its detriment.




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