Harvard Law Bulletin on Peter Carfagna and Negotiation as a Professional Sport

Many thanks to Robb London, Editor of the Harvard Law Bulletin (and Harvard Law School class of 1986), for his mention of Sports Law Blog in his wonderful piece on Peter Carfagna, a 1979 graduate of Harvard Law School and former chief legal officer/general counsel of IMG. (London, "The Natural," Harvard Law Bulletin, Fall 2005). A leading expert on sports negotiation, Peter is now a partner at the Cleveland-based law firm Calfee, Halter & Griswold. The article also notes how Peter owns the Lake County Captains, the Cleveland Indians' single A team, and his interest in sports ownership.

This article is an excellent summary of Peter's career, and also an inspiration to those law students interested in pursuing careers in sports law. Like many in the sports law industry, Peter "got his break" by simply working very hard and writing an outstanding paper in law school (he wrote it for Professor Paul Weiler, arguably the most prominent sports law professor in North America and who both Greg and I also had for sports law, although we took his class a few years after Peter did!).

Here are some excerpts from the piece:

Carfagna has witnessed the transformation of sports negotiation from a fledgling field marked by simple agreements and modest sums into a sophisticated specialty involving highly detailed contracts worth hundreds of millions of dollars, with clauses covering every imaginable contingency.

"When I came out of law school, sports law was mainly just a small part of labor law," Carfagna said. "Now it's an increasingly competitive set of specialties, and it's morphing fast into new areas."

The term "sports law," once a rubric for rather straightforward employment contracts between professional athletes and teams, now encompasses an expanding variety of negotiated agreements. According to Professor Paul Weiler LL.M. '65, who supervised Carfagna's third-year paper in 1979, it covers sports marketing deals, contracts between players' unions and leagues, deals between leagues and television or radio networks for broadcast rights, representation agreements between athletes and agents, endorsement agreements, licensing agreements with makers of sports gear and memorabilia, amateur eligibility rules, antitrust issues, insurance policies spreading the risks of player injuries and other eventualities, franchise relocation agreements and stadium subsidies--in sum, contracts for every aspect of the commerce of sports.

A recent trend, Carfagna says, is an almost obsessive attention now paid to morals clauses in sports contracts, especially in the aftermath of the O.J. Simpson and Kobe Bryant criminal cases. "Morals clauses are now the most heavily negotiated terms," he said. "And the steroid scandal in Major League Baseball is putting even more pressure on sponsors to negotiate escape clauses in contracts with athletes who test positive for illegal performance-enhancing drugs."

Lawyers hash out as much as they can foresee before a contract is finalized, says Michael McCann LL.M. '05, who, together with Greg Skidmore '05, maintains a popular sports law blog, sports-law.blogspot.com. Must an athlete be convicted of a crime before a company will be released from an endorsement contract? If so, must it be a felony? Is a mere allegation or charge sufficient to void a contract? Does a single positive test for steroids give Nike an out? What about gambling, domestic violence, an admitted extramarital affair or anything in an athlete's private life that does reputational harm--will an allegation or admission release a company from continuing to honor a contract?

The Baltimore Orioles recently invoked the morals clause to void the remainder of the contract of pitcher Sidney Ponson after his third arrest for alcohol-related violations. Ponson had one year left to play under a contract that would have paid him $10 million in 2006.

The latest twist in the evolution of morals clauses, said McCann, is the "reverse morals clause," which gives athletes the right to cancel an endorsement deal with a corporation whose reputation is harmed by revelations of corporate malfeasance. Agents have been negotiating such clauses in the wake of Enron and other recent scandals, he says. "I don't know of an athlete invoking a reverse morals clause yet, but it's bound to happen," he added. In addition to running his blog, McCann teaches sports law at Mississippi College School of Law in Jackson.

Carfagna's gravitation to sports law seems to have been natural. After playing football for Harvard College and capping his academic and athletic accomplishments with a Rhodes Scholarship, the self-described "sports nut" attended Harvard Law School just when Weiler was showing that sports law was a subject of serious merit. After graduating, Carfagna practiced law at Jones Day in Cleveland, where he worked frequently on IMG matters. He paid his dues writing up some of the informal understandings that Arnold Palmer had reached with Mark McCormack, IMG's founder. He moved to IMG's legal department in 1994. In 1996, Carfagna found himself drafting Tiger Woods' first representation agreement. Woods, then a junior at Stanford, was trying to decide whether to join the professional golf circuit.

This article also features a well-deserved note of appreciation for Professor Weiler:

The Weiler Effect

Peter Carfagna is just one of many former students of Professor Paul Weiler's who have carved out careers specializing in sports negotiation. Among those who wrote third-year papers under Weiler are Jeffrey Pash '80, general counsel for the National Football League; Rob Manfred '83, head of labor relations for Major League Baseball; and Brian Burke '81, who oversaw labor relations for the National Hockey League before becoming president and general manager of the Vancouver Canucks and now general manager of the Anaheim Mighty Ducks.

Pash, Manfred and Burke are scheduled to return to HLS this spring, as guest lecturers in the law school's Sports and the Law course.

Also, for those interested (and we will post more on this next week) Peter Carfagna, Alan Milstein, Joe Rosen, myself and others will be speaking at the Case Western Reserve School of Law's symposium on Sports and Eligibility, and it will be webcast Friday, November 11, from 8:30 AM to 3:45 PM -- here is the schedule.

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