Elway may have conflict of issue problems in future due to side holdings

[bayone]

John Elway and Arian Foster Unusual Bedfellows

 

EXCERPTS

 

John Elway, , sits on the board of Fantex Holdings, parent company of the new stock exchange offering shares of Houston Texans running back Arian Foster to the public.

 

Foster would receive that $10 million payment, in exchange for 20% of his future earnings flowing to Fantex. Investors can try to resell the stock for a profit on an exchange run by Fantex, and hope for a dividend.

 

“Fantex represents a powerful new opportunity for professional athletes, and I wish it were available during my playing days,” Elway said in a statement after Fantex’s deal with Foster was announced last week.

 

But as a result of this arrangement, Elway, who has an equity stake in Fantex Holdings, stands to financially benefit if Foster, who plays for another NFL team, succeeds both on and off the field.

 

Doesn’t this arrangement create a natural conflict of interest? The Broncos declined to comment about Elway’s stake in Fantex and directed TIME to contact his agent, Jeff Sperbeck. Sperbeck declined to comment, and said Elway would not be available for an interview. The NFL also declined to comment on Elway’s potential conflict of interest.

 

 

Still, Elway’s position on the Fantex board could incentivize him to sign Foster, or any other Fantex client, to a lucrative contract down the road. “If Fantex takes off and has 40 or 50 players on its roster, instead of just one, this theoretical conflict becomes more real,” says attorney Charles Baker, corporate- and finance-practice partner with DLA Piper’s global sports, media and entertainment group.

 

Read more: http://keepingscore.blogs.time.com/2013/10/21/fantex-makes-john-elway-and-arian-foster-unusual-bedfellows/#ixzz2iSh8BPsw

 

[BrentMc11]

I am not a lawyer (I do not play one on TV either ) but I do see this as a future problem, so a decision should be made soon as to whether this should be allowed to transpire.

 

The problem lies in that If/when it DOES get to numerous players, when will it get cut off and become 'unfair labor practices' as well as 'conflict of interest.'

 

This surely will become under the scrutiny of the Federal Securities and Exchange Commission (Investor Advisory Committee ?) at some point.  Why Foster and Not Peterson (hypothetically)...why?  why?  (No political responses please)  :rulez:

 

It just seems to this old Andy Rooney wanna be something will need to be done....too much at stake as the the cocoon is developed....and the butterfly is fully grown to look away!!  I may be wrong...not an expert.

[SteelCityColt]

Interesting concept... but it could cause a lot of issues all round if it takes off. 

[SkyBane]

I am not a lawyer (I do not play one on TV either ) but I do see this as a future problem, so a decision should be made soon as to whether this should be allowed to transpire.

The problem lies in that If/when it DOES get to numerous players, when will it get cut off and become 'unfair labor practices' as well as 'conflict of interest.'

This surely will become under the scrutiny of the Federal Securities and Exchange Commission (Investor Advisory Committee ?) at some point. Why Foster and Not Peterson (hypothetically)...why? why? (No political responses please) :rulez:

It just seems to this old Andy Rooney wanna be something will need to be done....too much at stake as the the cocoon is developed....and the butterfly is fully grown to look away!! I may be wrong...not an expert.

Its not conflict of interest, as far as I can tell. But its certainly close. Essentially, this whole fantex thing is fantasy football but with money involved. The best performing players become the highest graded stocks to buy in to. Elway stands to benefit as a major holder in the parent company behind the initiative, but he still has to abide by NFL rules in how he signs players, and if someone doesnt fit a scheme for the Broncos, he has no incentive to sign them based on this.

As to why Foster and not Peterson? Fosrer is the guy who signed on the dotted line and agreed to take part lol.

[BrentMc11]

I am not a lawyer (I do not play one on TV either ) but I do see this as a future problem, so a decision should be made soon as to whether this should be allowed to transpire.

 

The problem lies in that If/when it DOES get to numerous players, when will it get cut off and become 'unfair labor practices' as well as 'conflict of interest.'

 

This surely will become under the scrutiny of the Federal Securities and Exchange Commission (Investor Advisory Committee ?) at some point.  Why Foster and Not Peterson (hypothetically)...why?  why?  (No political responses please)  :rulez:

 

It just seems to this old Andy Rooney wanna be something will need to be done....too much at stake as the the cocoon is developed....and the butterfly is fully grown to look away!!  I may be wrong...not an expert.

[BrentMc11]

Its not conflict of interest, as far as I can tell. But its certainly close. Essentially, this whole fantex thing is fantasy football but with money involved. The best performing players become the highest graded stocks to buy in to. Elway stands to benefit as a major holder in the parent company behind the initiative, but he still has to abide by NFL rules in how he signs players, and if someone doesnt fit a scheme for the Broncos, he has no incentive to sign them based on this.

As to why Foster and not Peterson? Fosrer is the guy who signed on the dotted line and agreed to take part lol.

It can be a big time problem in the future as I stated above!...that is all I was saying.  Look up conflict of interest too.  ( Foster is in no way the 'best player' or one of them this year.)

Edited October 22, 2013 by BrentMc11

[TAPLOOK]

I don't see a problem. It business as usual and a scenario they knew going in would come up over and over.

[SkyBane]

It can be a big time problem in the future as I stated above!...that is all I was saying. Look up conflict of interest too. (Got your LOL...and Foster is in no way the 'best player' or one of them this year.)

Conflicr of interest occurs when other holdings or obligations pose a threat to alter decisions made in a leadership position. This doesnt do that as his job is to bring in the best possible players for Denver, and Fantex is essentially a glorified talent grading agency that lets people risk money on whether a specific player would do well or not.

Where conflict of interest would come in is if Elway (or any GM) actually used the service and forced a coach to play a guy based on that. But that would be an insider trading issue, and a nightmare for anyone getting caught.

[BrentMc11]

Conflicr of interest occurs when other holdings or obligations pose a threat to alter decisions made in a leadership position. This doesnt do that as his job is to bring in the best possible players for Denver, and Fantex is essentially a glorified talent grading agency that lets people risk money on whether a specific player would do well or not.

Where conflict of interest would come in is if Elway (or any GM) actually used the service and forced a coach to play a guy based on that. But that would be an insider trading issue, and a nightmare for anyone getting caught.

Could be a FUTURE problem.....good post 

[lollygagger8]

 

John Elway, , sits on the board of Fantex Holdings, parent company of the new stock exchange offering shares of Houston Texans running back Arian Foster to the public.

 

 

 

So how much does a share of Adrian Foster cost? Do I get to pick which piece I get?

[bayone]

So how much does a share of Adrian Foster cost? Do I get to pick which piece I get?

 

article says IPO stock price is  $ 10, u have to read article to see what u can make

 

Maybe u can pick his hamstring ( LOL ) 

[OffensivelyPC]

I don't see a problem. It business as usual and a scenario they knew going in would come up over and over.

Well you and I may not see a problem, but even at that, it just doesn't look right.  If players can't gamble on any game (even if they bet on themselves), then owners or executives shouldn't own companies that sell stock on players of opposing teams.  It's a consistency thing.

[bayone]

Could be a FUTURE problem.....good post 

 

thanks. time wise worse than ever, really picking & choosing my postings and response to comments now as must limit

 

as far as conflict of interest, the look of inappropriate behavior gets increased when, elway, his agent and NFL all refuse comment

[BrentMc11]

thanks. time wise worse than ever, really picking & choosing my postings and response to comments now as must limit

 

as far as conflict of interest, the look of inappropriate behavior gets increased when, elway, his agent and NFL all refuse comment

Hang in there buddy...

 

I agree....lot of legal I's to dot and T's to cross.  I was not kidding when I said this could be a big mess.....

[TAPLOOK]

It's legally sound. You could connect dots from one thing to any other if you wanted to take it far enough. There's zero conflict and never will be. Denver butters Elways bread.

[BrentMc11]

It's legally sound. You could connect dots from one thing to any other if you wanted to take it far enough. There's zero conflict and never will be. Denver butters Elways bread.

OK.  

 

[TAPLOOK]

thanks. time wise worse than ever, really picking & choosing my postings and response to comments now as must limit

 

as far as conflict of interest, the look of inappropriate behavior gets increased when, elway, his agent and NFL all refuse comment

I hope all works out as well as possible for you bayone. My thoughts and hopes are with you.

Nobody is quoting on it because it's simply not worth quoting .

[TAPLOOK]

OK.  

 

I was going to say that should be Denzel but then remembered he's Ironside.

[BrentMc11]

I was going to say that should be Denzel but then remembered he's Ironside.

Perry Mason then Ironside.....Love Denzel by the way too!!!    

 

[TAPLOOK]

Perry Mason then Ironside.....Love Denzel by the way too!!!  

 

darn...so I'm not crazy (I think?). I  don't get the chance to watch much TV nowadays but have always liked Denzels movies and heard good things about the show. 

[BrentMc11]

darn...so I'm not crazy (I think?). I  don't get the chance to watch much TV nowadays but have always liked Denzels movies and heard good things about the show. 

Notice the black and white.....goes way back on those.  I believe Perry Mason even started on radio....

 

OK...better quit...and let the folks get on topic 

 

:topic:

[OffensivelyPC]

It's legally sound. You could connect dots from one thing to any other if you wanted to take it far enough. There's zero conflict and never will be. Denver butters Elways bread.

Of course you can.  But even corporations (and I would bet that if I took a look in the Constitution and Bylaws), it would prevent owners or it's employees (i.e. executives) from investing in property (real, intellectual, or otherwise) where the equity or profit was due to the efforts of another franchise (except obviously things already addressed by the Constitution/Bylaws such as revenue sharing).

[BOTT]

I was going to say that should be Denzel but then remembered he's Ironside.

All black people look alike

[SkyBane]

Of course you can. But even corporations (and I would bet that if I took a look in the Constitution and Bylaws), it would prevent owners or it's employees (i.e. executives) from investing in property (real, intellectual, or otherwise) where the equity or profit was due to the efforts of another franchise (except obviously things already addressed by the Constitution/Bylaws such as revenue sharing).

This isnt the case in this scenario though. Elway makes profits based on investments people make in specific players, rather than the players themselves, making the profits indirectly effected rather than something proveable.

They would like to expand to as many players as possible, and the fact that Foster is just the first to agree to their terms is merely coincedental.

Theres too many variables that make it an impartial revenue stream based on outsider investment rather than direct opposing performance to legally claim its conflict of interest.

It would be conflict of interest if the Broncos had a player that signed up for the system though.

[OffensivelyPC]

This isnt the case in this scenario though. Elway makes profits based on investments people make in specific players, rather than the players themselves, making the profits indirectly effected rather than something proveable.

They would like to expand to as many players as possible, and the fact that Foster is just the first to agree to their terms is merely coincedental.

Theres too many variables that make it an impartial revenue stream based on outsider investment rather than direct opposing performance to legally claim its conflict of interest.

It would be conflict of interest if the Broncos had a player that signed up for the system though.

I get what you are saying.  What I am saying is, legally, it probably doesn't make any difference.  Take a look at Article IX(B)(4) of the constitution/bylaws.  Members (i.e. franchise), offiicer/director/employee (which includes pretty much every owner and subordinates, except maybe GB since it's owned by teh city - not sure how that factors in) shall not "Directly or indirectly share or be financially interested in the compensation of any player in the league."  Given that the stock would be tied to player compensation, I'd say that this clause would be triggered if Elways relationship to Fantex would constitute "indirectly shar[ing] or be[ing] financially interested."

 

As you say, this relationship is indirect.  And I would probably lead towards this clause covering Elways relationshpi with Fantex and stock in Foster.  But who knows how a judge would rule or if the NFL would dispute it.  All the NFL would have to do is amend its bylaws and pass a resolution to permit such stocks in players anyway.  But at the very least, this is a legally disputable conflict of interest.  How it would play otu in a court is just too pre-mature of an assessment at this point.  Too many variables as you say.

[SkyBane]

I get what you are saying. What I am saying is, legally, it probably doesn't make any difference. Take a look at Article IX(B)(4) of the constitution/bylaws. Members (i.e. franchise), offiicer/director/employee (which includes pretty much every owner and subordinates, except maybe GB since it's owned by teh city - not sure how that factors in) shall not "Directly or indirectly share or be financially interested in the compensation of any player in the league." Given that the stock would be tied to player compensation, I'd say that this clause would be triggered if Elways relationship to Fantex would constitute "indirectly shar[ing] or be[ing] financially interested."

As you say, this relationship is indirect. And I would probably lead towards this clause covering Elways relationshpi with Fantex and stock in Foster. But who knows how a judge would rule or if the NFL would dispute it. All the NFL would have to do is amend its bylaws and pass a resolution to permit such stocks in players anyway. But at the very least, this is a legally disputable conflict of interest. How it would play otu in a court is just too pre-mature of an assessment at this point. Too many variables as you say.

Ah, the wording ties it directly to players. That is an interesting legal kink.

I would argue that Elway is not invested in the compensation of the players themselves though, just that people invest in them so he gets his financial kickback, which is not the same thing. He is neither sharing nor being interested in Foster's compensation, just that people invest in athlete stock via Fantex. Its a very fine line, but I believe it toes it.

This whole thing is just an interesting legal quandry when you look at it lol.

[Superman]

Sitting on the board isn't a big deal. Push comes to shove, he'd have to resign as a board member. 

[OffensivelyPC]

Sitting on the board isn't a big deal. Push comes to shove, he'd have to resign as a board member. 

Well, to be fair, most owners do own a portion of the corporation of the board in which they sit.  All of ours (as in the corporation I work for) do anyway.

[OffensivelyPC]

Ah, the wording ties it directly to players. That is an interesting legal kink.

I would argue that Elway is not invested in the compensation of the players themselves though, just that people invest in them so he gets his financial kickback, which is not the same thing. He is neither sharing nor being interested in Foster's compensation, just that people invest in athlete stock via Fantex. Its a very fine line, but I believe it toes it.

This whole thing is just an interesting legal quandry when you look at it lol.

Oh absolutely and that would be the counter-argument.  In any event, I love the idea.  And if it were a corporation owned and run by people with no ties to the NFL, I'd think it would pass all legal hoops (granted, I don't know every law that could conceivably touch upon the subject).  Elway may present an issue, but I highly doubt that the NFL isn't interested in this idea as it provides another stream of revenue and gives the fans another source of interaction with the NFL potentially increasing it's fanbase (and thus revenue).  If there is any friction at all, it will be solely so that the NFL can place a few guidelines to protect the NFL's image so that it doesn't give off the aura of gambling/fraud and take ensure that it can get its slice of the profit pie.

[SkyBane]

Oh absolutely and that would be the counter-argument. In any event, I love the idea. And if it were a corporation owned and run by people with no ties to the NFL, I'd think it would pass all legal hoops (granted, I don't know every law that could conceivably touch upon the subject). Elway may present an issue, but I highly doubt that the NFL isn't interested in this idea as it provides another stream of revenue and gives the fans another source of interaction with the NFL potentially increasing it's fanbase (and thus revenue). If there is any friction at all, it will be solely so that the NFL can place a few guidelines to protect the NFL's image so that it doesn't give off the aura of gambling/fraud and take ensure that it can get its slice of the profit pie.

I believe as it stands, Fantex is independant of the league and is dealing with the players directly. The idea seems to be to incorporate athletes from all sports and not just the NFL.

I imagine they would have similar insider trading rules though, to prevent GMs from investing in their own players, then forcing coaches to play them to artificially raise their value.

[Superman]

Well, to be fair, most owners do own a portion of the corporation of the board in which they sit.  All of ours (as in the corporation I work for) do anyway.

 

 

I think that's a different story, though. He can be a minority owner in an enterprise that has conflicting interests to his role/ownership in the NFL, but if he's not managing that enterprise and making decisions for it, it should be fine. I'm not 100% on this, but I believe he could be a minority owner of Gatorade, for instance, and if he signs a player who endorses Gatorade, that helps his stake. Again, I'm not sure of the rules there. But to me, it's like having your assets in a blind trust. You don't have to liquidate and devolve any interest in any enterprise, but you can't manage those assets anymore. 

 

Just spitballing. I really don't know what the NFL rules are about stuff like this. But I'm sure they know that he's on the board at Fantex.

[OffensivelyPC]

I think that's a different story, though. He can be a minority owner in an enterprise that has conflicting interests to his role/ownership in the NFL, but if he's not managing that enterprise and making decisions for it, it should be fine. I'm not 100% on this, but I believe he could be a minority owner of Gatorade, for instance, and if he signs a player who endorses Gatorade, that helps his stake. Again, I'm not sure of the rules there. But to me, it's like having your assets in a blind trust. You don't have to liquidate and devolve any interest in any enterprise, but you can't manage those assets anymore. 

 

Just spitballing. I really don't know what the NFL rules are about stuff like this. But I'm sure they know that he's on the board at Fantex.

Yeah, well I think it's a lot like the SEC.  You can't prevent all people, whether legally or contractually, from investing in other companies with competing interest.  You just can't.  there's too much information that changes too quickly for anything to really get caught.  The best you can do is ask for fair trade/bartering practices, set regs in place where you have to report certain transactions (designed to monitor the biggest players in teh market), and have the punishment as a deterrent.  So, should someone be doing something fishy, they'll get teh axe depending on the infraction. 

 

That'll be the same thing here.  As you (and Skybane) have alluded to, there's plenty of room for gray areas and, unless it's governed by teh SEC (which I imagine the NFL and Fantex will try to ride the anti-trust exemption and related arguments get out of the SEC's umbrella) the trading of stocks driven by player compensation will be a work in progress for soem time.  You have to imagine that a lot of the old NYSE fraud practices will make a comeback if it's not carefully regulated.

[OffensivelyPC]

Perry Mason then Ironside.....Love Denzel by the way too!!!  

 

Because that's.............. How he rolls. 

 

    I crack myself up! lol

[TAPLOOK]

Of course you can.  But even corporations (and I would bet that if I took a look in the Constitution and Bylaws), it would prevent owners or it's employees (i.e. executives) from investing in property (real, intellectual, or otherwise) where the equity or profit was due to the efforts of another franchise (except obviously things already addressed by the Constitution/Bylaws such as revenue sharing).

 

People owning a competitors stock is very common. People are compensated in stock. People leave for the competition all the time. Look at Wall Street and Detroit for example. I own thousands of shares of my #1 competitor. Why not? I left 17 years ago and they pay the maintenance.

 

If there was a problem Elway wouldn't have done it. It was discussed without question.

[OffensivelyPC]

People owning a competitors stock is very common. People are compensated in stock. People leave for the competition all the time. Look at Wall Street and Detroit for example. I own thousands of shares of my #1 competitor. Why not? I left 17 years ago and they pay the maintenance.

 

If there was a problem Elway wouldn't have done it. It was discussed without question.

I get what you are saying, but he doens't just own stock, he is employed by the Broncos, and is an exec.  He also works ont he board of Fantex (and like any other board member, probably owns stock).  This wouldn't be a problem unless there was something contractually that prohibits it (i.e. non-compete clauses, certain prohibited financial ventures).  These are common clauses in employment agreements and/or corporate governance documents (though not necessarily incorporated in every contract/document as all negotiations are different).  And as I've stated above, the NFL Constitution and Bylaws may very well prohibit this kind of financial venture, since it prohibits "direct or indirect sharing in any players compensation."  Time will tell and there are certainly ways around it, of course.  I don't pretend to know how the NFL or any court would interpret this clause or the final resolution of Elways relationship to Fantex and any stock in a players compensation.  I have no clue.  But I am reasonably certain that there are at least plausible legal arguments that can be made for and against it.