While playing fantasy sports is meant to be fun, the reality is that most people play for money. Besides combining the enjoyment and passion for sports with a general sense of competitiveness, there is an underlying motivation to achieve financial rewards for the hard work and diligence you put into a fantasy sports season. There is nothing wrong with that, as evidenced by the fact the fantasy sports industry generates billions of dollars in business. So in order to make money, you must pay money to be in most leagues. Depending on your financial situation or the seriousness of your league, an entry fee can range from $10.00 to $10,000. Regardless of how much it costs to participate, there is a general expectation of sportsmanship that every person will pay their league dues. It is usually the league commissioner who is responsible for collecting the money, securing it, and then distributing it to the winners at the end of the season.
But what happens if a league member does not pay? What happens when someone takes advantage of a commissioner’s leniency and is afforded the same rights and privileges as every other team who has paid already? Unfortunately, this scenario is all too common. The Supreme Court of Fantasy Judgment recently received a case with this very fact pattern. Please read the case decision below advising on how to appropriately handle such circumstances. As always, your comments and feedback are appreciated.
SUPREME COURT OF FANTASY JUDGMENT
Cleveland Steamers v. League Commissioner
ON PETITION FOR WRIT OF CERTIORARI FROM THE LOVEABLE LOSERS FANTASY BASEBALL LEAGUE
Decided July 6, 2011
Cite as 3 F.J. 63 (July 2011)
A fantasy baseball league named the Loveable Losers Fantasy Baseball League (hereinafter referred to as “LLFBL”) is a 14-team, non-keeper rotisserie league using both AL and NL players. Each league member participated in a snake draft on March 27, 2011 selecting 25 players to build their respective teams. Like many rotisserie leagues, the LLFBL is a 5×5 league using the standard hitting and pitching categories (AVG, HR, RBI, Runs, SB, W, ERA, K’s, SV, WHIP). Statistics are cumulative throughout the season and each team will accrue points based on their standings for each individual scoring category. Each team has a budget of $250 to purchase free agents through a blind auction bidding process after the draft concluded.
The LLFBL has existed since 2006 with each team responsible for providing a $150 entry fee. The $2,100 collected in league fees is then distributed to the top four teams at the end of the season with first place winning 50 percent, second place winning 30 percent, third place winning 15 percent, and fourth place winning 5 percent of the pot. Since the inception of the league, the Commissioner has requested payment of the entry fee by the time the draft takes place.
The rules and guidelines of the league are delineated in a written document called the “LLFBL Constitution.” However, the LLFBL Constitution is devoid of sections or language regarding league finances. The $150 entry fee was an agreed-upon amount established verbally by all league members when the league was formed prior to the 2006 fantasy baseball season. The money prizes were also agreed to verbally at the initial draft in March 2006, and they have remained the same ever since.
Starting in 2007, the LLFBL Commissioner issued an email to all league members requesting payment of the $150 entry fee prior to or at the upcoming 2007 draft. No penalties were threatened if a team failed to make their payment by that time. In 2007, two teams failed to provide their payment to the Commissioner by the time the draft took place. One of the teams made their payment in April 2007, and another never did make his payment during the season. That team did in fact finish in 2nd place and was entitled to $630 in winnings. Since he did not make his payment, the LLFBL deducted $150 from his winnings and issued a check for $480.
In 2008, 2009, and 2010, the LLFBL again requested, via email, that all teams make their payments no later than the date of the draft. Each year, at least one team failed to make their payment by that time. In each instance, the delinquent team eventually did make their payment well into the course of the season.
On February 10, 2011, the LLFBL Commissioner wrote an email to the league again requesting payment by the time the draft took place on March 27, 2011. On the day of the draft, all teams except the Cleveland Steamers made their payment to the Commissioner. As of Monday, July 4, 2011, the Cleveland Steamers still had not provided their payment of $150. In an email dated July 4, 2011, the LLFBL Commissioner requested payment from the Cleveland Steamers immediately or else the Cleveland Steamers’ roster would be frozen, his free agent auction budget would be depleted, and he would be precluded from making trades for the remainder of the season. The Cleveland Steamers did not respond to this email. On July 5, 2011, the LLFBL Commissioner did in fact implement the penalties he threatened and wrote to the Cleveland Steamers proclaiming these penalties would be lifted upon receipt of his payment.
Upon the Cleveland Steamers’ failure to respond to the Commissioner’s July 4, 2011 by the end of July 5, 2011, the LLFBL Commissioner removed his free agent auction budget and decreed to the league that he was not permitted to make trades until payment was provided.
On July 6, 2011, the Cleveland Steamers responded to the Commissioner’s email challenging his ability to take such action. Nowhere in his correspondence did the Cleveland Steamers make any reference to his own delinquency for failing to pay, nor did he make any assurance that payment would be made.
The 2011 version of the LLFBL Constitution does not contain any provisions or language pertaining to league finances or penalties imposed as a result of failing to pay.
(1) Does the LLFBL Commissioner have the authority to impose such penalties against the Cleveland Steamers for failure to pay the league entry fee?
The Supreme Court of Fantasy Judgment is a strong advocate for having written Constitutions that govern fantasy sports leagues. See John Doe v. Fantasy Football League Commissioner, 2 F.J. 21, 22 (October 2010). There are a myriad of reasons why the Court believes having a Constitution in place is the best way to run and maintain a fantasy league. One of the primary reasons behind this rationale is that all league members are aware of the rules and guidelines in place that govern the administration and function of the fantasy league. When a league Commissioner writes out the rules and distributes them to the league, it shifts the burden onto the league members to read, understand, and adhere to the rules that are delineated. See Shawn Kemp is My Daddy v. Fantasy Basketball League Commissioner, 2 F.J. 24, 25 (October 2010). If a league member has an issue, question or challenge to one of the rules in the Constitution, they are welcome to raise this with the Commissioner before signing it or agreeing to its codification. See Machine v. Fantasy Football League Commissioner, 2 F.J. 1, 2 (September 2010).
While a Constitution was in place to govern the LLFBL, it was devoid of language that directly applies to the issue at hand. When a league Constitution is silent on a particular issue, the Court will defer to the default premise that a league Commissioner has the authority and discretion to handle an issue of first impression within the best interests of the league. See George v. LOEG Commissioner, 2 F.J. 42, 44 (October 2010). Commissioners should be entitled to have a certain amount of authority and autonomy to run and administer fantasy sports leagues. See Flemish USA v. League Commissioner, 2 F.J. 35, 36 (October 2010) (holding the league Commissioners are entitled to arbitrarily make decisions that do benefit the league as a whole).
One of the most important aspects of running a fantasy baseball league is collecting money from the league members, securely storing that money during the season, and distributing it in full to the teams that are entitled to financial prizes at the end of the season. This is the cornerstone of establishing trust in the commissioner and maintaining the integrity of a fantasy league. Being entrusted with league members’ money is a tremendously important burden placed on the commissioner. Additionally, a commissioner is left with the unpleasant, unrewarding, and at times daunting task of collecting such money from people. But this is a necessary task that must be done to fulfill the purposes of participating in a fantasy league that involves money. If for whatever reason the commissioner has to distribute more money than is collected, it creates a scenario where the commissioner either pays the difference out of his own pocket or decreases the payouts proportionately. Neither of these scenarios is ideal.
To his credit, the LLFBL Commissioner extended tremendous leniency to the league members who did not adhere to his requests from 2006-2010 to provide payment by the time of the draft. He had discretion to permit late payments because there were no written rules requiring such payment by a certain date, nor were there any penalties in place to castigate league members who were delinquent. League commissioners should enforce all rules and guidelines consistently. If the commissioner makes an exception for someone, it should be explained thoroughly why such an exception to the rules exist. See Machine v. Fantasy Football League Commissioner, 2 F.J. 1, 3 (September 2010). The LLFBL Commissioner finally lost his patience in waiting for payment to be made by the Steamers. In the past, other teams have failed to pay by the verbal deadline of draft day. But in those instances, payment was made shortly thereafter and certainly well before July 4 each year. Because this was an extended failure to provide payment, the LLFBL Commissioner was within his authority to treat the Steamers differently than others in the past.
The Court is consistently presented with questions about a league commissioner’s powers to enact, enforce, and modify rules within the league without any challenge to his/her decision. In most instances, the Court will side with the commissioner assuming the commissioner’s motives are benevolent and it is in the best interests of the league overall. See Afraid of Change v. Fantasy Football League, 1 F.J. 11, 12 (September 2009). Here, it is indisputable that the LLFBL Commissioner did not prejudice the Cleveland Steamers in any way. In fact, he was extremely lenient in allowing so much time to go by without receiving his payment. By the time the season was halfway over, the LLFBL Commissioner rightfully requested payment with penalties to be imposed if the Cleveland Steamers failed to comply. Granted, the Commissioner did not allow much time for the Steamers to reply before the penalties were imposed. But no excuse was provided by the Steamers explaining their lack of response over a 36-hour time frame. Additionally, the Commissioner stated that the penalties would be lifted upon receipt of the payment. This was reasonable given the circumstances and demonstrated the Commissioner’s seriousness about the issue.
Based on the aforementioned reasons, the LLFBL Commissioner was well within his authority to demand payment from the Cleveland Steamers and impose penalties for failing to comply. It is recommended that the LLFBL Constitution be amended for 2012 to include language regarding payment of entry fees and penalties to be imposed if such requirements are not met. Despite such language not existing for the 2011 season, the Commissioner’s actions were appropriate and should be upheld.
IT IS SO ORDERED.