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Laremy Tunsil’s Social Media Controversy Highlights NFL Draft Risks

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shutterstock_212182807Last night was the first round of the 2016 NFL Draft and the lead story was that of Laremy Tunsil.

By many scouts’ accounts he was one of the most talented prospects in the draft and was expected to be chosen in the top five or six.

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Instead, Tunsil tumbled all the way to number 13 after an untimely video was posted to his Twitter account depicting him smoking marijuana through a gas mask. The tweet was quickly deleted but not before creating a snowball effect that will likely cost Tunsil approximately $8 million in lost contract value, as estimated by Forbes based on the NFL’s Salary Cap and Rookie Compensation Pool (a player chosen at #6 would be expected to receive a contract of $20.4 million, while the 13th pick would receive an estimated $12.4 million).

If you watched the first round coverage last night, the term “risk management” was thrown around generously by commentators. In many cases, NFL draft prospects are investments worth many millions of dollars. But with each investment comes questions of risk versus return.

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The Miami Dolphins, who selected Tunsil, made a decision last night that the investment of approximately $12 million dollars mitigated the risks posed by a player who could have drug related issues that could violate NFL player conduct rules. Moving forward, the Dolphins will have to consider the following risks:

  • Organizational Risk: In addition to the marijuana video, Tunsil admitted to what amounts to violating NCAA rules while in college, which will certainly result in disciplinary actions against his alma mater. The Dolphins still have to sign Laremy Tunsil and now have to determine if they can expect a positive return from a player who demonstrates the potential to weaken an entire institution.
  • Reputational risk: Will there be a backlash from the fan base for drafting someone who clearly demonstrates serious lapses in judgement? Remember, these players are not just investments in terms of their performance, but in the revenue and public relations image they create for their respective team. As has been demonstrated in the past with other NFL teams, reputational risk is not just an external factor but an internal one at that that can affect team’s performance on the field.
  • Social media risk: Laremy Tunsil’s agent claims that his client’s social media accounts were hacked. Regardless of whether or not that is true, the damage has been done. But what prevents any of his accounts from being hacked in the future? Will this inspire other potential black hats to hack athlete’s social media accounts? Can the Dolphins impose a social media blackout on its entire franchise? The Dolphins will need to consider what social media risks Laremy Tunsil may pose to the franchise’s image moving forward.

Overall, if Tunsil is as talented as he is expected to be, then the risk of selecting him will likely be worth the reward.

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Right now, the Miami Dolphins have made a decision that their potential investment of $12 million dollars will benefit the team in the future. Let’s hope for their sake that they have a risk management program in place that will give as much consideration to the risks listed above as they presumably give to winning a Super Bowl title.

NFL Admits Game’s Link to Concussion Risk

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After years of denying that the game of football could have caused degenerative brain disease in some players, the National Football League has finally admitted there is a link connecting the game to chronic traumatic encephalopathy (CTE). According to the New York Times:

Representative Jan Schakowsky, Democrat of Illinois, asked during a round-table discussion about concussions whether “there is a link between football and degenerative brain disorders like CTE,”

Jeff Miller, the NFL’s senior vice president for health and safety policy, said, “The answer to that is certainly, yes.” His response signaled a stunning about-face for the league, which has been accused by former players and independent experts of hiding the dangers of head injuries for decades.

Miller’s comments were backed the next day by league spokesperson Brian McCarthy. Miller’s answer may actually help the NFL, as “It could make it harder in the future for a player to accuse the league of concealing the dangers of the sport,” the Times said.

“Strategically, the NFL’s admission makes a world of sense,” Jeffrey A. Standen, dean of the Chase College of Law at Northern Kentucky University, told the Times. “The league has paid a settlement to close all the claims previous to 2015. For future sufferers, the NFL has now effectively put them on notice that their decision to play professional football comes with the acknowledged risk of degenerative brain disease.”

While CTE has been found in former players, the NFL has for decades denied the danger, even after researchers with Boston University announced in 2014 that, in autopsies of 79 brains of former NFL players, 76 tested positive for CTE. A report in 2003 by the Center for the Study of Retired Athletes at the University of North Carolina found a connection between concussions and depression among former professional football players.

According to a 2007 UNC study, Recurrent Concussion and Risk of Depression in Retired Professional Football Players:

Our observed threefold prevalence ratio for retired players with three or more concussions is daunting, given that depression is typically characterized by sadness, loss of interest in activities, decreased energy, and loss of confidence and self-esteem. These findings call into question how effectively retired professional football players with a history of three or more concussions are able to meet the mental and physical demands of life after playing professional football.

The NFL has directed millions of dollars to research of CTE and head trauma and it gave $45 million to USA Football to promote safe tackling and reassure parents that football’s risks can be mitigated through on-field techniques and awareness, the Times said.

California Seeks to Limit Pro Athlete Workers Comp Claims

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Over the past few years, several former NFL players including Deion Sanders, Marshall Faulk and Michael Irvin have filed workers compensation claims in the state of California despite playing their careers outside of California. On September 9 the California legislature passed a bill intended to prevent these types of claims.

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The bill, AB 1309, would prevent professional athletes who have played less than 20% of their career in California, or have played seven or more seasons outside of California, from filing workers compensation claims in the state of California. Under current law anyone who pays state taxes in California are eligible for workers compensation benefits. This includes professional athletes who play for teams outside of California, but do pay state tax when they play away games in California.

Supporters of the legislation, including the National Football League and the Los Angeles Chamber of Commerce, claim that the legislation closes a loophole that is costing taxpayers money. “The state has a guarantee corporation, funded by taxpayers, that assumes responsibility for claims made and approved in the state, so out-of-state claims cause rates to be driven up for employers and taxpayers in the long run,” said Gary Toebben, Los Angeles Area Chamber of Commerce president and CEO.

The NFL Players Association (NFLPA) and AFL-CIO feel that athletes who play games in California, regardless of whether they play for a California team, should be entitled to benefits because they pay California taxes for the games they do play. The NFLPA claims that professional athletes pay $300 million per year in California income tax. Former NFL player Mel Owens, a county attorney for NBO Law who represents at least 1,000 retired football players suing for workers compensation in the state, claims that professional athlete claims in the state cost “one-tenth of one percent” of total losses to the California comp system. “Calling the California workers compensation law a ‘loophole’ is a fallacy—anyone that has played in California and got hurt in California pays state taxes and is entitled to benefits here,” said Owens.

According to state workers compensation records, there have been more than 4,400 claims filed by professional athletes in the state of California.

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Many of these are for head and neck injuries, with nearly 80% of them coming from former football players. By some estimates these claims could cost professional leagues as much as $1 billion to resolve. More than 2,300 of these claimants were also plaintiffs in the federal concussion lawsuit which the NFL recently settled for $765 million.

AB 1309 was passed by huge margins in both the California Assembly and Senate and is now on the desk of Governor Jerry Brown. The governor has until October 13 to sign or veto the bill.

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Ed Hochuli Negotiates with the Big Boys

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In a colorful presentation at RIMS 2013 in Los Angeles last week, NFL referee and attorney Ed Hochuli shared his secrets of successful negotiations gleaned from decades on the gridiron and in the courtroom. Accompanied by film clips showing him flubbing on-field instructions and being berated by coaches, Hochuli pointed out that there are two types of negotiators. Understanding the strengths and weaknesses of each is how you win the negotiation.

The aggressive type, he explained, are “always on the push.”

They use intimidation, threats, claims of superiority and cast blame on their opponents in an effort to get their way. Aggressive negotiators will make extreme demands and few concessions. While these types will rarely get taken advantage of, they tend to create a feeling of mistrust and are, more often than not, unsuccessful — 75% receive poor results, Hochuli said. Cases take longer to resolve and end up going to trial at twice the rate of other cases.

Cooperative negotiators, on the other hand, try to find agreement and move toward their opponents.

They generally establish credibility and good faith by presenting themselves as trustworthy and fair.

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They are willing to make concessions in an effort to reach the best outcome for both parties. This strategy results in more success and easier settlements, as both parties tend to feel like they’re getting something out of the deal. Of course, this strategy runs the risk of exploitation, especially by an aggressive opponent who considers a cooperative opponent to be weak.

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But Hochuli pointed out that this can still work as long as the cooperative party understands what is happening and doesn’t get rattled.

Hochuli’s final bit of advice for successful negotiation was simple: Make the first offer.

He demonstrated how starting with a low number in a discussion anchors the conversation to that range and can allow you to set the tone for settlement at an appropriate level for your company. It gives the opponent a better idea of what a claim is worth. Or at least what a company is willing to pay.

And when you’re negotiating with, say, the NFL about ending last year’s referee lockout, this is probably good information to have.

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