Fantasy Stats and the Intellectual Property Debate

It was bound to happen. Baseball eventually had to put the shift on given the amount of money being made. It was something that simply couldn’t be overlooked.

We’re talking player contracts, right? No.

imageOh, then we’re talking about back in the day with bubblegum cards and player merchandise? No, try again.

Fantasy leagues? Now you’re talking.

Maybe the term “intellectual property” doesn’t ring a bell, but if I mention the use of MLB player statistics in conjunction with fantasy leagues, the big shiny thing over your head lights up and your head begins to nod.

I mentioned that the amount of money attached to fantasy sports leagues was something that simply couldn’t be overlooked. While football eclipses all other sports (according to estimates in Forbes magazine from the Fantasy Sports Trade Association, football pulled in $100 million in sales for 2004), baseball raked in approximately $20 million in sales for 2004 alone, and as of 2005 six million play fantasy baseball. How much are users spending? Some estimates project an average of $175 a year is spent on fantasy baseball, thus making fantasy baseball a $1 billion annual business. These numbers will continue to grow, especially with the advent of interactive TV that will be tied into games in the near future, and the increasing penetration of cellphone technologies that allow users to access statistics.

Who couldn’t overlook these revenues and profits, and want to control that revenue? Major League Baseball Advanced Media.

On Jan. 19, 2005, MLB Advanced Media and the MLB Players Association announced a historic agreement via press release:

The five-year agreement, valued in excess of $50 million, extends beyond the expiration of the current collective bargaining agreement between Major League Baseball and the MLBPA. It provides MLBAM the exclusive rights to use, and to sublicense to others, Major League Baseball player group rights for the development and creation of on-line games, all other online content, including fantasy baseball and interactive games, as well as all wireless applications including cell-phone enabled games.

The announcement sent shockwaves through the fantasy sports industry.

Sports industry attorneys are trying to keep pace with numerous copyright violations that they claim are occurring in this web-based media.

At the crux of many of those complaints is the claim that profits are illegally being made by companies that are unlicensed. It’s not the use of the statistics, in and of themselves, that is at issue, but rather using stats in conjunction with a player’s name or player number and team that is at the heart of the intellectual property debate.

In that sense it’s a clever way of killing the golden goose: You can use the stats all you want, but stats without the ability to associate them to a player is nothing more than a collection of numbers that serves no purpose in a fantasy league format. For that purpose, the new agreement brokered by the MLBPA and MLBAM requires that a business be licensed to do so—for a fee.

Needless to say, not all within the fantasy sport industry agree with the sentiment of the MLBAM and the MLBPA. At its core, this agreement has set off a firestorm of debate:

Who owns player statistics?

For over 25 years, fantasy sports have been conducted, starting with baseball Rotisserie Leagues. It was the advent of the Internet that has changed it from a game played between a handful of friends via letters sent through the postal service, to a game with millions of users on the web.

A Hardball Times Update
Goodbye for now.

In that sense, the paradigm has shifted.

On Feb. 7, 2005 a member of the fantasy sports industry fought back. After being denied a license renewal, CBC Distribution and Marketing, Inc. filed a complaint in US District Court, Eastern District of Missouri, against the MLBAM over the right to produce and promote fantasy league games without the licensing of stats through the MLBAM and MLBPA.

Within the complaint’s “Prayer For Relief” section is the following:

WHEREFORE, CBC respectfully requests this Court to enter a judgment:

5. Declaring that Plaintiff CBC’s actions related to its business of providing and running sports fantasy teams do not violate any rights possessed or controlled by Major League Baseball and are not in violation of any state or federal statute

CBC’s lawyer, Rudy Telscher has said, “The Supreme Court has held that mere raw data where creativity is not involved is not something that would be protected by copyrights … I don’t see how anyone could argue that player names and stats are something that are protected by copyright.”

What’s clear is that those in the business of sports marketing will continue to look to make in-roads into this growing market. As Greg Ambrosius, the president of the Fantasy Sports Trade Association, said, “Last year, fans averaged 2.4 weeks a year in fantasy baseball activities. The past two years the fantasy sports industry has grown by 11% and predictions are for a 7% growth in the coming year.”

It has been argued by some analysts that MLB, and by extension, MLBAM, were slow to move on the use of licensing for statistics earlier, before the fantasy industry had grown into such a cash cow. As for burgeoning technologies, such as subscription-based tickers that run across the bottom of your screen updating you on fantasy stats, increase, revenues and profits will continue to climb, making the CBC case even more relavent.

If this case were to go in favor of CBC, surely the NFL Players Association, NHL Players Association, and NBA Players Association would file motions in defense of their professional sports brethren, the MLBPA. In CBC’s favor is the 2001 case Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400 – (file type: PDF), in which former players Al Gionfriddo, Pete Coscarart, Dolph Camilli, and Frankie Crosetti, sued MLB for printing their names and stats in game programs, claiming their rights to publicity were violated prior to 1947. The standard players contract within the Basic Agreement has since been revised to read:

[3.] (c) The Player agrees that his picture may be taken for still photographs, motion pictures or television at such times as the Club may designate and agrees that all rights in such pictures shall belong to the Club and may be used by the Club for publicity purposes in any manner it desires.

The court, however, held that the names and statistics of the players were historical facts, and therefore, part of baseball history. MLB was, therefore, allowed to use them. This case may set precedent for the CBC case.

Given these factors, the CBC case will not be the end of the story on the use of statistics and intellectual property rights. The issues surrounding the case will continue to be a hot topic, especially as the financial rewards continue to climb.

As the baseball season approaches, and you slide up to your computer getting ready to register for your fantasy league of choice, remember another game is being played out in the background where the numbers and the outcome are far from fantasy. When you’re checking to see how your team is doing sometime around the Mid-Summer Classic, the CBC v. MLBAM case is scheduled to be in court.

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for freelance and looks forward to your comments.

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