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Analysis of the $29 Million Jury Award to Retired NFL Players

October 23, 2008 No Comments »
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On November 11, 2008, it was reported that a federal jury in San Francisco ruled against the NFL Players Association, and awarded the class of retired players approximately $29 million in damages. The allegations were based on claims that the Players Association did not represent the retired players fairly or pay them properly in relation to various licensing deals the players union entered into which implicated the rights of the retired players. This ruling comes about ten weeks after the unexpected death of Gene Upshaw, the controversial head of the Players Association.

One of the primary uses involved in the suit was the popular Madden NFL video game. Information presented at trial included instruction from the Players Association to EA, maker of the Madden NFL video game, to scramble the image and identity of the retired players in order to avoid the legal obligation to pay for and license the retired players. Only active players were compensated from the EA video game, which is estimated to have yielded $35 million for the Players Association in 2008.

The case was spearheaded by Hall of Fame cornerback Herb Adderley. The jury found that the Players Association had breached its fiduciary duty by failing to market the licensing rights of the retired players under a group licensing contract, which includes licensing of electronic games, merchandise and other items. The jury’s verdict included a reported award of $21 million in punitive damages.

Considering the amount of money Madden NFL has yielded over the years, that these “all-time great teams” have been part of the game programming for years, and that the conduct to avoid liability appears to have been calculating and intentional, it is arguable that this award is in fact quite modest. A breakdown of the $29 million award demonstrates this point. Assuming that the lawyers receive a contingency in the forty percent range, plus all costs, the balance of the award is reduced to less than $17 million. Apply taxes in the thirty percent range, and the balance is below $12 million. Then divide it by an estimated 2100 members of the class, and each player in the class action may be receiving only around $5,550. This amount could be significantly less if the cost of the suit over the two years it was pending were substantial, which they likely were, or if the class consisted of more than 2100 players.

As a good friend of mine said after I tested my theory on the breakdown of the damages award, “that’s why it is better to be a plaintiff’s lawyer than a plaintiff.”

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