As you will quickly come to learn from reading my posts, I am both a legal nut as well as a sports nut. My law practice is primarily focused on business and real estate law, with an "eye" for contractual matters. Sports law and the related entertainment law are two niches within the business realm.
If you, like me, are a baseball fan, you may recall a player named Rickey Henderson. Mr. Henderson, a recently inducted Hall of Fame player, was one of the standout speed demons of the 80's, a lead off batter who, once on base, was pretty much a lock to score because he could get to 2nd base on his own. He also had surprising power and could occasionally hit a long ball and drive in runs. The Oakland Athletics signed him to what was at the time (early 80's) a nice multiple year contract. At some point, Mr. Henderson's notoriety for stealing bases drew to him a large fan base, which, in turn, inflated Mr. Henderson's ego even more than it already was. He decided to hold out if the team did not renegotiate his contract. Thus, in the sports age, we entered a new phase, a new chapter in labor, a new beginning to contractual enforcement.
What would happen if you walked into a Honda dealership, negotiated a final price of $30,000 for a Honda, and, after purchasing the car, driving off the lot, and spending a year or two with the car, received a call from Honda claiming that the car's popularity required that they renegotiate the price? What if the dealer held the pink slip because you had financed the car through its finance department?
In the real estate field, homeowners seek refinances of their mortgages all the time. However, the refi is a different animal since both parties agree. Think about it, the news is ripe with homeowners pleading with the banks for loan modifications, refinances, or approvals for short sales. In each of the foregoing instances, the homeowner is seeking lender approval to modify the contractual terms previously agreed to. The lender, as we have also seen over the past 2-3 years, may not be inclined to accept the new terms. If the new terms are NOT agreed to, the homeowner will either continue to pay the old monthly amount, or more likely, be forced into foreclosure. In California, a homeowner may walk away from the contract (and the house), but the lender is limited in its ability to seek further $$ from the homeowner, except in certain instances, because California is a non-recourse state - the amount owed is secured by real property, which is the lender's sole recovery tool (again, exceptions abound).
The ability to hold out is a key component of sports player negotiations - several players held out or threatened to do so prior to the start of the 2010-2011 NFL season. But, should the parties have a mechanism to nip such actions in the bud? If you execute a 3 year contract, and after year 1 want to revise the contract to get more $$ or else you won't play, can the team demand the return of already earned $$? I guess it would depend on how the contract was written? Is the compensation yearly based or is it contract term based?
Importantly, and as you will soon learn by reading my daily posts, I am a prolific believer in "preventive" law - that is, in making certain that your contract takes into account as many potential liabilities as possible, and making certain that you are protected in the event of unforeseen circumstances that may arise down the road.
Have a great day!
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