A Guide To The AUDL Lawsuit

Need to get caught up on the latest surrounding the American Ultimate Disc League (AUDL) lawsuit against their teams, the Connecticut Constitution and Rhode Island Rampage? You’ve come to the right place.

This is a short summary of the AUDL news we’ve published so far, with links included for more details and context.

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The AUDL, a professional Ultimate Frisbee league, began with eight franchises competing in the 2012 inaugural season, which finished in August. Each team signed a contract with the league (called a Territory License Agreement — you can see a sample here) which spelled out the legal details of their involvement.

In those contracts, there was a “non-compete” clause — typical in franchise agreements — that said that the AUDL cannot establish, run, and/or operate a new team within 100 miles of the franchisee’s territory. This seemingly innocuous clause in the contract has become the legal lynchpin for a major lawsuit between two teams and the league.

So let’s back up. Over the course of 2010 and 2011, Josh Moore, the President of the AUDL, gathered interest from potential franchise owners. As with any business, there were early successes and failures — the league was initially planned to begin with 16 teams, but ended up with just eight. Two of those eight were the Connecticut Constitution, based out of Hartford, and the Rhode Island Rampage, operating in Providence. They signed their contracts to join the league in March and June 2011, respectively. (Source)

The season started off great — Philadelphia’s team had over 1500 fans at their first game, and game attendance in many of the cities surprised critics of professional Ultimate. However, as the season’s pressed on, there were doubts and complaints from the team owners about the league’s operation.

Much of that is due to the league’s organization, in which the vast majority of the financial risk falls to the team owners, but they have little say in the direction of the league. Teams must cover the costs of travel, stadium rental, uniforms — almost all daily operational costs. But they do not have an ownership stake in the league, like in most professional sports. Moore owns the league, determines all expansion plans, and earns all the proceeds from new franchise buyers. The team owners do have voting rights on some issues, but, by and large, they are left on their own to run their team, earning profits only from game sales and individual sponsorship deals. (Source)

Increasing dissatisfaction from some team owners with the league front office came to a head in May 2012, when Moore announced new expansion teams for the 2013 season, including New York, New Jersey, and Boston. Immediately, Bryan Ricci, the owner of the Connecticut, and Emerson Kilgore, the owner of Rhode Island, cried foul, pointing to their non-compete clauses, since New York and Boston — two of Ultimate’s biggest markets — fall within 100 miles of the respective franchises. (Source)

The teams demanded compensation for the breach of their territories. Discussions broke down in June, and the teams threatened legal action. The league responded by filing a lawsuit against Ricci and Kilgore, contending that the contract was “unreasonable and unenforceable” and that the owners had previously agreed to allow teams in those cities.

There was more discussion in late June, including some settlement offers, but Ricci did not agree to the league’s terms. On July 5th, he announced publicly on the Constitution’s website that the team was being sued and suspended operations indefinitely, allegedly due to legal costs.

The team missed two road games during their suspension, saving Ricci a significant amount of money. Shortly after, the team resumed operations. The league responded by fining the team $20,000 — $10,000 for each game missed (the maximum allowed in the AUDL operations manual) — for causing financial harm to the home teams of the canceled games. Ricci challenged the fine and did not pay; the league then canceled their subsequent game.

Additional details unfolded that explained some of the teams’ anger. Philadelphia’s owner Jeff Snader was compensated by the league for the New Jersey and New York franchises breaching his territory, before the lawsuit was filed against CT and RI. Snader called the lawsuit “ridiculous.” Additionally, the disputed Boston franchise was purchased by Brent Steepe, the owner of the Detroit franchise as well as the Vice President of Marketing for the AUDL, after a controversial vote that many owners felt was a conflict of interest.

As this news was unfolding, Ultiworld began a series of legal analyses. We covered the team contracts, the lawsuit, and how the league might legally be able to put a team in New York.

Throughout July and August, there was some discussion of a settlement, but the two sides never got close to a deal. In the middle of this, the owner of Columbus abruptly left the league after facing financial difficulties and major disagreement with the league. Emails leaked showing increasing dysfunction, with some showing that Moore was considering letting the Constitution play again during the playoffs. That did not happen.

In late August, Kilgore, Rhode Island’s owner, expressed his desire to move his team to Boston, saying Providence could not financially support a team. A settlement offer including some revenue sharing from the Boston franchise was declined.

During the league’s playoffs, little news broke and the games went off smoothly (without the Constitution, who had earned a spot in the postseason). The Championship game in Detroit faced major financial hurdles due to a too rosy estimate of attendance and very likely lost money.

The owners of the disputed New York franchise spoke on the record about their plan to move forward despite the lawsuit, even if that meant locating deep in Brooklyn, outside of Connecticut’s 100 mile radius. New Jersey’s general manager also discussed the lawsuit.

More news broke in early September when a co-owner of the Indianapolis franchise — one of the most successful teams in the league — said he was likely leaving the team and was considering starting his own rival league (legal analysis here). He had been critical of the league’s decision making throughout the year and was a staunch supporter of CT and RI.

In September, the AUDL sent letters to Ricci and Kilgore that alerted them to their contracts being terminated unless they paid league-imposed fines. Rhode Island was fined $9,000 — the maximum allowable — for being late to two games, plus another $1,000 for reimbursement to the league for unpaid referees. Connecticut still owed the $20,000 from earlier in the season, and was fined an additional $10,000 for the game that was canceled later in the season. The teams did not pay the fines and were kicked out of the league on September 21st.

Legal discussions were at an impasse, but finally made progress in November. The two sides finally struck a deal in early December and announced the settlement of the lawsuit on December 12th. The details of the settlement aren’t completely known, as both parties are operating under a non-disclosure agreement. Bryan Ricci, the owner of the Constitution, did tell Ultiworld, “The terms of the deal are that all lawsuits are dropped, the TLAs are ceased or rescinded, the names and trademarks stay with the teams…and there is compensation [from the league to the teams].”

The league will also be able to place teams in the New York and Boston markets, the disputed territories that initially caused the lawsuit and the subsequent issues.

The following week, Connecticut Constitution owner Bryan Ricci announced that he had joined Major League Ultimate as its Chief Financial Officer. The Constitution may become an MLU franchise for the 2013 inaugural season.

Then, just before Christmas, the AUDL announced a major leadership change, as President Josh Moore sold 90% of the league to a new investment group led by Toronto Rush Chairman Rob Lloyd and Windy City Wildfire owner Steve Gordon (who will now serve as Commissioner of the AUDL).