ESPN Relies (in part) on CDM Fantasy League Case to Renegotiate Licensing Fees

In today's edition of Street & Smith's SportsBusiness Journal (subscription required), John Ourand and Eric Fisher report that ESPN is renegotiating its digital rights deal with MLB Advanced Media, looking to pay a significantly lower fee after finding several pieces of the original agreement it signed in 2005 no longer cost effective ("ESPN Seeks Better MLBAM Terms"). According to the authors, ESPN is exercising an out-clause three years into the seven-year agreement worth $20 million a year that provided ESPN with numerous digital and fantasy rights.

Ourand and Fisher noted:

ESPN’s push to restructure the deal comes less than two months after MLBAM’s latest court defeat in the CDM Fantasy Sports case at the federal appeals court level. ESPN thinks the court’s decision means that it was paying a license fee for fantasy rights that others, such as CDM, were getting free. It’s unknown if others who are paying for fantasy rights, such as Yahoo!, Fox and CBS Sports, have the same opt-out rights as ESPN.

The day after the Eighth Circuit's decision was rendered, I discussed why the court's "public domain" standard is simply not a practical standard to use in balancing the First Amendment with the right of publicity. Nevertheless, this is the first instance that I am aware of in which a fantasy league operator (other than CDM) has relied on the Eighth Circuit's ruling to justify its refusal to pay a licensing fee for fantasy rights. Keep in mind that this is just one federal circuit court's opinion on the issue, and the decision adds even more confusion to right of publicity law than already existed.

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