Lawsuits, litigants and big, big money!
Charles Rogers is looking at loaves and fishes; RichRod is looking at a $5 million tab
Ahhhh, spring. When a young man's fancy turns to court orders, lawsuits and well, passing out drunk in a Mexican restaurant. (Wait. Did we say that out loud?) It's time to sneak another peek behind the curtains of some of the strange goings-on in the world of sports and the law. Today, we start with
Feeding the multitude
The career statistics for NFL bust Charles Rogers include a jail term for passing out drunk in a Mexican restaurant, an arrest for domestic violence, three failed drug tests, three attempts at rehab, two violations of probation, an indefinite suspension from the NFL and seven children.
As if that isn't enough, now there's this: A federal judge in Detroit told Rogers this week that he must return $6.1 million to the Detroit Lions. It's the bonus money the wide receiver "collected" -- as opposed to "earned" -- after the Lions made him the No. 2 pick in the 2003 NFL draft behind top choice Carson Palmer.
"It would take a miracle on the order of the loaves and the fishes for Charles to pay the bonus money back to the Lions," observed Rogers' Detroit attorney, Michael Cafferty, referring to the New Testament account of Jesus feeding 5,000 followers from a basket that contained only five loaves of bread and two fish.
It's the latest chapter in what ESPN.com's Jemele Hill insightfully and accurately described this past August as an "epic NFL failure." At 6-foot-4 and blessed with legitimate 4.4-second speed in the 40-yard dash, Rogers looked like the next Randy Moss. But a toxic combination of injury, alcoholism, addiction and what a Rogers pal calls "Lamborghini living" ended his NFL career after 15 games, 440 yards in receptions and 4 touchdowns.
But, for Rogers and Cafferty, it's a career with life yet to be lived.
"Charles is working out three times each day and hopes to be able to return to football," Cafferty told ESPN.com. "If he can play in the CFL or the NFL, he would send a portion of his pay to the Lions to pay back the bonus. It's the only way he will ever be able to pay them."
It will not be easy for Rogers to return to the NFL. He is still serving the indefinite suspension that began in 2007. NFL spokesman Greg Aiello says Rogers must apply for reinstatement, a process that became more difficult in January when another Detroit judge sent Rogers to jail for 60 days after he was arrested in the Mexican restaurant.
It may not be "on the order of the loaves and the fishes," but miracles do happen in the world of rehab and recovery. If Rogers can somehow stay clean and sober, he would add an impressive new category to those career statistics.
Condos made of stone-a
Michigan football coach Rich Rodriguez has won only eight of 24 games since he arrived in Ann Arbor, and that has become a problem among some disgruntled alumni and fans. But his biggest problem might be coming from a different source than the X's and O's that aren't working very well on the field.
It's the crushing load of debt Rodriguez has accumulated in a series of dubious real estate investments.
The idea must have seemed good at the time. Rodriguez and others would build condominiums that overlook college football stadiums at South Carolina, Alabama and Virginia Tech, then sell them to alumni and fans. How convenient it would be for fans to be able to walk to six or seven home games each season!
It didn't work.
The Rodriguez group managed to build the apartments at Columbia, S.C., and Tuscaloosa, Ala., but not Blacksburg, Va. And then the real estate market crumbled, and the mortgages and loans fell into default. In a lawsuit filed against Rodriguez in Tuscaloosa last month, one of the group's lenders asserts that the developers have paid back only $5,000 of a loan for $1 million.
Added to an earlier lawsuit filed in South Carolina, Rodriguez now faces obligations of nearly $5 million. The lenders are looking primarily to Rodriguez for payment because they recognize that his $2.51 million salary at Michigan is their likeliest path to collecting on their loans. His best hope is to somehow extract contributions from his fellow investors, an unlikely prospect.
It's a bad situation that is likely to worsen. Rodriguez may be able to start to win on the field, but it's hard to imagine how he'll win in the court battles.
It is worth mentioning, too, that two years ago, Rodriguez agreed to give West Virginia University $1.5 million in three annual payments (the first $500,000 check was due earlier this year) as part of the buyout of his coaching contract there so he could take his services to Ann Arbor. The rest of that buyout was picked up by the University of Michigan, which has already handed over its $2.5 million share.
Some of those disgruntled alumni and fans might be wondering about the Wolverines' financial investment in Rodriguez. That's a lot of money for eight wins.
Howlin' over the Coyotes
This time it's personal for the NHL and commissioner Gary Bettman.
Although the Phoenix Coyotes are enjoying a surprisingly successful season under the interim stewardship of the NHL, the league and the commissioner are not entirely happy. They are still furious about the attempts of former Coyotes owner Jerry Moyes to sell the team and to move it to Hamilton, Ontario.
They are so furious that they've filed a lawsuit against Moyes, his wife, Vickie, and a family trust. In unusually harsh language, the NHL accuses Moyes of "secretly plotting" against the league while "pretending to cooperate with the NHL" in a search for a new owner.
The lawsuit, filed in New York, far from the Moyes base of operations in Phoenix, demands at least $60 million in damages from the trucking mogul and offers a powerful account of Moyes violating a series of written agreements with the NHL.
On May 5, 2009, for example, Bettman traveled to Phoenix to meet with Moyes and discuss the league's arrangements for a proposed purchase. As Moyes listened to Bettman describe the proposed sale, the suit states, his lawyers were filing for bankruptcy protection, a maneuver that Moyes hoped would allow him take control of the sale away from the NHL and then sell the team to Jim Balsillie, a Canadian billionaire who developed the BlackBerry and wanted to move the team to Hamilton.
As if that were not enough, Moyes filed an antitrust lawsuit against the NHL three days later, claiming that the league's use of its monopoly powers to control the sale of his team entitled him to treble damages.
A bankruptcy filing, a secret agreement to sell and move the team and an antitrust lawsuit if the accusations in the lawsuit are correct, it's no wonder Bettman and the NHL's other owners are infuriated. All three Moyes actions appear to be violations of the contracts he signed with the NHL when he purchased the team and when he later asked the NHL for help with team finances.
After a protracted court battle, the NHL prevailed over Moyes and Balsillie and kept the Coyotes from moving to Hamilton. It was a great triumph for Bettman and the owners, but it apparently wasn't enough. They want more.
Moyes, whose trucking business has annual revenues of $3.4 billion and operates 17,000 trucks, has pockets deep enough to make this attempt at revenge worthwhile.
Thanks, Uncle Sam!
Economists and tax experts can argue endlessly about the reasons for skyrocketing prices of tickets to sports events. Some say it's a simple matter of supply and demand. Prices increase when more fans want to see the games. Others say rising prices are the result of increases in player payrolls.
Chances are, the experts will never agree on the relative importance of supply, demand and salaries. But there is agreement on one factor that invariably results in higher ticket prices: Fans in regular seats pay for them with real money, while big businesses in skybox suites buy their seats with government-subsidized play money.
When a big business buys a skybox, current tax laws permit the company to deduct some of the expense. Every dollar that a company spends on a luxury suite results in a savings on the company's annual tax bill. It gives big business a discount on skyboxes that the average fan will never enjoy in the purchase of normal seats.
And, according to recent articles by two tax experts in The New York Times and in a widely read journal called "Tax Notes," the business-expense deduction for skybox tickets also pushes up the price of regular tickets.
Richard Schmalbeck, a tax law professor at Duke, and Jay Soled, a business professor at Rutgers, explain that new stadiums include more skyboxes to allow team owners to collect greater revenues. A stadium design that includes more skyboxes, the professors suggest, results in fewer regular seats. The new Yankee Stadium, for example, has 3,000 fewer regular seats than its predecessor but three times as many skyboxes. With fewer regular seats available, the price for them increases, the professors say.
The professors have an answer to the problem: Eliminate the business deduction for skyboxes. Schmalbeck says, "It would increase revenue for the government, it would increase the fairness of tax policy and it would allow families to go to a few games at a reasonable price."
So when you're wondering why your ticket cost you nearly $100 the next time you find yourself sitting 30 rows back of the dugout, cast an eye for openers on the .500 pitcher with a salary of $12 million out there on the mound. But then look back behind you at the suits in the skyboxes who are enjoying government-subsidized entertainment.
Financial adviser Larry Harmon says on his Web site that he has "built a dynamic model for managing athletes overall financial life" and that his "approach is unmatched by any other financial service provider."
Ask NBA stars Carmelo Anthony and Ben Gordon, though, and they'll tell you they sincerely hope that Harmon's approach really is "unmatched." They assert in lawsuits against Harmon that he has taken $2.6 million of their money without explanation and refuses to give it back.
A highly respected federal judge in Chicago, Charles P. Kocoras, already has agreed with Gordon, ordering Harmon to pay $1.4 million to the Pistons guard. The judgment against Harmon includes the $1 million that Harmon removed from Gordon's accounts in late 2006 plus interest.
Although Harmon signed a promissory note pledging to return the money to Gordon, he so far has refused to follow the judge's order to repay it. Tax returns that Harmon's attorneys filed in court on Thursday indicate that he is well able to pay Gordon. When Jeffrey Katz, one of Gordon's attorneys, informed the judge on Thursday of Harmon's refusal to pay, Kocoras ordered Harmon, of Roseville, Calif., to appear in court in Chicago on April 27 to explain his actions.
The Nuggets' Anthony and his lawyers are following a similar path in their efforts to collect $1.6 million that Harmon allegedly took from his accounts between June and October of 2008.
According to court papers, Harmon once claimed that he had invested Anthony's money in a partnership, then later claimed that he had "borrowed" the money from Anthony. Harmon's claims are, of course, irreconcilable.
Asked why he had not returned the money to his now-former clients, Harmon told ESPN.com, "I really don't want talk about it now."
Is his approach to financial management "unmatched," as Harmon says? Let's hope so.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.