Good morning, and thanks for spending part of your day with Extra Points. It’s been a big few days in off-the-field stories…so let’s get into it. | So what happens if the FTC actually just killed noncompetes? | Earlier this week, the Federal Trade Commission, not an agency we’re in the habit of mentioning here on a sports business newsletter, announced a final rule that will ban virtually all noncompete agreements in employment contracts. Existing noncompete contracts with “senior executives” can remain, but once the FTC’s ruling goes into effect, existing worker noncompetes will no longer be enforceable. | In the broader college sports industry, this is a big deal, but maybe not exactly how you might think. | Based on my professional experience in reading a gazillion of these contracts, explicit non-competes are not super common in coaching or senior college administrator gigs, although they do sometimes exist. The mechanism that is meant to prevent coaches from leaving for direct competitors at the drop of the hat is the buyout, a tool that would still be legal under this FTC ruling. Lower level athletic department employees often work without formal contracts, | But elsewhere in the sports world, these arrangements are pretty common. Every single media job I’ve ever had, (or have been formally offered) included noncompete language, with some extending more than a year after I would hypothetically leave a position. For personnel that work in industries that serve and support college athletics, like athletic apparel, NIL education and software, multimedia rights, gambling education and more, noncompetes are common, even among junior employees. These contract clauses are also very much a thing in professional sports administration, gambling companies, and more. | If all of those restrictive covenants are suddenly unenforceable, I’d imagine you’ll see pressure to improve wages/working conditions, as well as new contractual “sticks” to prevent employees (and institutional knowledge) from walking out the door to competitors. | But there’s a legitimate chance this ruling is never actually put into place. The US Chamber of Commerce has already announced they plan to sue, claiming the FTC has exceeded its constitutional authority. Given the conservative bent of the current Supreme Court and many district courts, I think the odds that some judge somewhere will claim this act violates Section 8 of the Constitution are pretty high. Where the case eventually ends is outside the prognostication powers of this humble didn’t-go-to-law-school newsletter. | But in the short term, I can absolutely see the ruling giving major college sports business-adjacent firms a reason to maaaaaybe not depend on that non-compete being ironclad. Good news if you’re a reporter, college sports SaaS developer or sales manager. Probably bad news if you’re an executive. | Hey, speaking of lawsuits, |
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| Florida AG to sue ACC over ESPN contract and open records laws | Typically, when a public school signs a contract, enterprising members of the public can file an Open Records Act request to get a copy. I’ve made inspecting contracts, emails, text messages and vendor agreements a core part of my professional toolbox over the last decade, as have scores of other journalists. Coach contracts, software purchasing agreements, ticket scan data for basketball games…these are the sorts of things anybody can get a copy of. | But generally, conference-specific contracts aren’t considered open records. Ohio State and Purdue may be public institutions, but the Big Ten isn’t. That means that conference broadcast media agreements generally are not considered public records, even though they were voted on by public school administrators. Believe me, I’ve filed for these things dozens of times in my career, from the Big Ten to the Big Sky. No dice. | Florida Attorney General Ashley Moody was also unsuccessful in her attempt to obtain a copy of the ACC TV contract with ESPN via public records. This week, she announced she plans to sue for it. | | | | | If you’re interested in public records based reporting, you’ll really want to upgrade to our premium membership | |
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| Beyond claiming that the documents aren’t public records because they’re contracts between two private entities, the ACC is also claiming that the documents contain trade secrets that would harm the conference. While every state’s open records laws are different, it isn’t uncommon for there to be exceptions to allow institutions to protect trade secrets. | To be fair to the state of Florida and Florida State fans everywhere, it’s not uncommon for public schools to explicitly try to evade public records laws by keeping sensitive records exclusively in the hands of a conference office, or by making sure all conference correspondence is done away from official phones, emails or record-keeping systems. | I’m very much on the side of more disclosure…but I have to admit, Florida State is being hypocritical about all of this |
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| In 2019, Florida State set up their athletic department as a Direct-Support Organization (DSO), which essentially protects much of the department’s activity from pesky open records requests (Florida and UCF have done the same). If the university and their backers are somehow moved by the spirit to push for substantially more open access to athletic department documents…wonderful! They can start with their own campus. | And that goes for the State of Florida too. | If the state prevails, it’s entirely possible that media rights contracts involving other in-state institutions, like the Big 12, AAC, CUSA, ASUN and more, could become public, along with other previously sealed vendor agreements. That’s great news for reporters like me, sports business researchers, public transparency and nosy fans. Maaaaybe not ideal for anybody trying to negotiate an expensive media rights broadcast agreement. |
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| Another D-III school is launching a collective?!? | Every single P4 program has a collective, if not multiple collectives. Almost every single D-I conference has at least one school with a collective, and low-majors are launching new ones all the time. | But collectives are very uncommon at the D-II and D-III levels, for obvious reasons. But that isn’t stopping Two Rivers Trust, a group launched to support the Marietta College Pioneer men’s basketball program. | Marietta is a pretty good men’s basketball program. The last two years have been slight down years (and by that, I mean they’re still well over .500), but the Pioneers have been NCAA Tournament regulars over the last decade, even making the Final Four in 2022. | But…it’s also a very small school (enrollment under 1,500 students) in a very small region. Marietta (the town) has under 15,000 people, and the entire Parkersburg–Vienna metropolitan area has under 100,000. They’re one of the leading schools across all of D-III in basketball attendance…and still draw under 1,000 a game. | Two Rivers Trust is advertising itself as a “marketing agency and fan club” that works to both create promotional opportunities for athletes in the community, and create unique experiences for fans. | I think this is all a noble mission, but I struggle to see how the math can math in a way that is a) sustainable for a collective’s long-term options, b) provide meaningful value for athletes and c) provide meaningful brand value for businesses and organizations. It’s rare that a collective for a large D-I brand is able to sustain itself with primarily small donations and promotional deals grounded in market reality. Everybody is trying to move more in that direction, but it’s large donors, or whales, who dictate the fundraising for most groups. | I don’t think there’s enough market-centered commercial activity out there and donor money to raise enough dough to swing roster decisions, even at the high-end of D-III. If a fan in the Mid-Ohio region really wanted to support Pioneer athletics, in the long run, I personally think they’re better off just donating to the athletic department. | But I could be wrong! And if I am, I wonder if other fanbases will follow suit. There’s no way the collective model is going to scale across D-III, but if it can work for Marietta basketball, there are probably a handful of other places it could work too. | | I’ll see y’all on the internet next week. | | | | | | | |
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