Nasir and Matt get into a discussion about the Oakland Raiders cheerleaders labor dispute. They also answer the question, "I want to start a fantasy football league with my employees. Are there any legal issues with this?"
NASIR: Welcome to the NFL episode of Legally Sound Smart Business and this is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: And welcome to the podcast where we cover business in the news and also answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org. If it’s a question about your NFL football team, then just put in NFL in the subject line so we know that’s you.
MATT: Are you going to be able to contribute this episode? I mean, you actually know a good amount about it. In your whole sports realm, NFL seems to be something you know about so I think we’ll be okay.
NASIR: Yeah, I think so. I’m not really sure what NFL is though. What does it stand for?
MATT: You know. I don’t know. I can’t come up with something funny on the fly. I’ll come up with something funny and we’ll edit it in and it will be funny down the road.
NASIR: Yeah, exactly.
MATT: Well, like you said, football episode, first one is this – a lawsuit dealing with a couple of the Oakland Raiders cheerleaders and they sued the NFL and that seems to be one of the important parts of this story. A little bit of background, I guess, in the past, prior to this year, the Raiders cheerleaders were paid $125 a game, that’s it. I don’t know how many hours that breaks down to.
NASIR: Okay. Let’s say… how long is a game? Like, three hours? Including halftime?
MATT: At least, yeah.
NASIR: Maybe three and a half including halftime and maybe an hour before at least and then maybe a half hour after so that’s four or five hours? But not including travel time either.
MATT: And not including practices.
NASIR: So, they don’t get paid for practice?
MATT: I mean, I could be wrong but I thought, the way this is worded, it seems like they just get paid the $125 a game.
NASIR: Yeah, you’re right, and hadn’t received compensation for anything beyond that so that’s all they get is per game.
MATT: If you look at the current minimum wage, $9.00 an hour breaks down to a little under 14 hours for the $125. That’s what they used to get paid. Now, they’re getting paid $9.00 an hour which is California’s minimum wage, and this is just the Raiders. But they sued the NFL for obviously minimum wage claims and the NFL’s response was this, and this is an interesting response saying that, you know, “We don’t have to do anything. We’re immune to these state labor laws and you should have sued the Raiders and not us, the NFL.”
NASIR: I don’t know what we’re missing here because I think what the attorney or the argument they’re trying to make is saying that it’s not that they have to be in compliance with any state law but basically they’re saying that they’re under federal law because they’re a national organization and so forth. I understand the argument. I think it’s a silly argument because, when you have a national entity hiring employees throughout the different states, there’s a well-established law that the state where the employee works is the law that applies – very simply.
MATT: And this is just so stupid because the NFL makes – let’s see – I think this year they’re estimated to make $9 billion in revenue. I think you can afford to pay the cheerleaders. I guess they are part of the individual teams. Either way, the teams make a ton of money too so it’s not like they’re not making out with anything. This just seems like pretty silly thing all around. Like, the NFL is not doing the right thing and the teams aren’t paying these cheerleaders enough. I don’t know who would even want to be a cheerleader if you’re getting paid this little for so much time. I guess you get a lot of presents.
NASIR: Yeah, I don’t really understand that industry and it’s strange. It’s not like they don’t have the money. Why aren’t they suing the Raiders? Are they not employees of the Raiders or are they employees of the NFL?
MATT: That’s what didn’t make sense. I mean, I get the NFL’s argument – at least from what their attorney is saying – you know, you sued the wrong people. “We’re protected.”
NASIR: Yeah, that’s legitimate.
MATT: Why didn’t they sue the actual team? I don’t know. They’re obviously employees of somebody because they’re suing for minimum wage claims. I would assume they’re employed by the actual individual teams, right? I have no idea how it actually works.
NASIR: We’ll have to find out more about how they’re actually employed because it doesn’t say in this particular story but NFL though has a history of trying to get out of certain things. One classic thing that many people don’t know is the NFL is actually a non-profit organization. Does anyone else think that’s weird? But they are and how they get away with it is all their franchises are for-profits and so all the profit gets passed down. Even though I think the commissioner of the league, I think he gets $10 million a year. Again, that seems strange for them to be a classified as a non-profit but, hey, they’ve gotten away with it for a while and it doesn’t seem like anyone’s challenging them any time soon for that.
MATT: Yeah, there’s a lot of problems. I don’t know if I’ll say corruption but it’s just a lot of issues with the league but it makes so much money, people don’t seem to really care. You know, this is something you’ll like about this story. The NFL’s argument is based off a case from 1983 with the Chargers. A former player sued.
NASIR: Oh, nice, yeah. But that makes sense. It was basically an anti-trust law. The argument was, okay, you can’t sue under California anti-trust law but it was against the Chargers so I don’t know. Somehow, the court must have found it in their favor. They argued very eloquently that federal anti-trust laws apply, not the state. I don’t know the reason though.
MATT: The important thing is the cheerleaders are getting paid minimum wage now so I guess that’s something.
NASIR: Wait, wait, did they win?
MATT: No. This year, I think they’re suing for previous seasons. I thought I saw they’re getting paid for the first time this season, the Raiders offer cheerleaders a new contract to begin paying them $9.00 an hour.
NASIR: And how many cheerleaders could there be per team, right? Paying them minimum wage – by the way, it’s not even a full-time job. I’m not saying that they don’t work hard or do spend a lot of time but I don’t think they spend 40 hours a week and this is also for how many weeks out of the year now? Counting pre-season games, it’s like 15, 16, or what?
MATT: I guess 16 regular season. I think they bumped it up to 5 pre-season games so we’re talking 21. But I don’t think they travel to away games. They’re only working the home games.
NASIR: Yeah, that’s even crazier. I don’t know. It seems like a very low-cost thing to go through in order to make them happy and it’s good PR, frankly.
MATT: Yeah, I was going to say we’ll keep an eye on this but I probably won’t.
NASIR: Because we always say that but we never do.
MATT: Ah, we’ll definitely update. We should just have one episode where we just update all the previous.
NASIR: For sure.
MATT: Question dealing with the NFL.
MATT: “I want to start a fantasy football league with my employees. Are there any legal issues with this?”
This is kind of similar to what we talked about…
NASIR: March Madness.
MATT: March Madness, right. But this is different and I didn’t even know about this until I started looking into it. So, the Unlawful Internet Gambling Enforcement Act of 2006 – or UIGEA – I was trying to just come up with an acronym for it. It’s a specific carve-out for fantasy sports which I thought was pretty interesting.
NASIR: Really? Oh, I had no idea.
MATT: As long as it meets the criteria of the value of the prizes is not determined by the number of participants or the amount of fees paid…
NASIR: Which it kind of is not.
MATT: All winning outcomes reflect the relative knowledge and the skill of the participants in the fantasy games results are not based on the final scores of any real world games.
NASIR: I’ve read that, yeah.
MATT: I gave up playing fantasy football about five or six years ago and it was one of the best decisions I ever made in my life because you don’t enjoy the games when you’re watching them and you feel like you have to watch all of them to kind of track players and having not have to do that anymore is a huge burden off of your shoulders. But I still know about how it works.
The first criteria piece, the value of the prizes is not determined by the number of participants or the amount of fees paid. That’s going to be a problem right there because every league bases the amount of money on how people are participating. That’s just a standard thing that’s going to go with that.
NASIR: That is so weird. I think, by the way, the acronym is pronounced UIGEA – just for the official one.
MATT: Too many vowels for me. It was difficult.
NASIR: It seems strange that they have this carve-out which I’m sure people are glad that there is a carve-out but it seems so odd. It just seems like some kind of exception that some lobbyist was able to get in just the legislation of this act but, nonetheless, that does change things. Think about it. Now, March Madness is not okay but fantasy football is okay? Seems strange.
MATT: Yeah, because it’s still based on real players and real games so it’s not like it’s just made-up football that isn’t real. I just saw a stat. You know how we talked about the March Madness that first weekend, that Thursday, Friday wasting time? Let me ask you. Fantasy football, how much do you think it costs employers in wasted time per year?
NASIR: That’s a good question. Well…
MATT: Just in the US?
NASIR: First of all, I’ve done fantasy football a while ago – I think when I was in college so I’m not too familiar and that was kind of early in the game and I think I did it because I was a computer geek, not because I was into football – but, generally, you set up your line-up on a Wednesday or a Thursday, right? Something to that effect. Usually before the first game.
MATT: Yeah, you have until usually the first game or there’s a lock-in time on that Sunday, typically.
NASIR: I’m sure the rules are different for each, right?
NASIR: One thing I know is that I used to forget to do that so I’d always have injured players on and stuff like that but I think most people, maybe some people are serious about it but they have to maybe do some research, maybe during the week? But, generally, all the football games are on Sunday and Monday nights and Thursday nights sometimes. And so, the actual watching, really, you’re talking about the time that’s spent in preparation. I would assume it’s very low. I would say, I don’t know, $3.00 total.
MATT: You’re a little bit off. They estimate it at $6.5 billion.
NASIR: What? $6.5 billion. I mean, I don’t know. Maybe some guy out there is just spending $6.5 billion on fantasy football stuff and using the employers’ bank account for it. That’s what it sounds like.
MATT: Here’s the problem, and it’s every type of employee from the person that gets paid the least to the CEO. They’re spending all this time during the week tracking injuries, trying to pick up players on the way over wire, proposing trades, posting stuff on the message boards. That’s all it is. It almost consumes your life, that’s why I got out of it, just because it wasn’t fun anymore.
NASIR: Yeah, I can see that, but I also am of the opinion that, if there’ somebody – if you want to call it a waste, let’s call it a waste for now – if they waste their time on stuff, if they weren’t doing that, they’d be doing something else and so in a sense it’s like, “How much are people wasting on Facebook or what-have-you?”
MATT: That’s a good point.
NASIR: We do have to mention that some states, even though that federal law pretty much applies, there are some states that do have even more restrictions.
NASIR: I don’t think any of the states that we cover but Arizona, Louisiana, Iowa, and then maybe some other states out there, too.
MATT: I mean, Iowa doesn’t even have a professional sports team so I don’t know why they care.
NASIR: Well, that’s why. They’re anti-Niffle.
MATT: Louisiana and Arizona do but, yeah… Keep that in mind for those people listening in those states.
NASIR: And I assume too, I’m sure Yahoo! Sports and some of the other more common fantasy football leagues are probably compliant in the category but I would be careful with some of these less popular ones to make sure that they’re compliant. That’s our football episode and we’ll be doing football every week now, right? Until the playoffs.
MATT: Yeah, we’re dangerously close to the start of the season at this point.
NASIR: What do you mean “dangerously”? What’s going to happen?
MATT: I don’t watch it as much as I used to but it just consumes. You get college football on Saturday, pro-football on Sunday, and it’s just all day, especially if you’re on the West coast time, it’s even worse because it starts at 9:00 and 10:00 a.m. If you want to watch, you don’t even get your mornings. You don’t start at noon like you would on the East coast.
NASIR: This is where it makes sense to pick a team and just watch those games and don’t let it waste your life away. Go out there and do some volunteering. Give something back to the community. That’s just my suggestion. All right. Well, thanks for joining us everyone.
MATT: Keep it sound and keep it smart.