In the middle of last year, an incident involving a licensing organization known as OneTeam Partners, co-owned by the player associations of five significant sports leagues, sparked a controversy. Eight members of the organization’s board of directors signed a resolution to enable the partner unions to receive ‘profits units’, similar to conventional equity. This action could potentially convert into monetary benefits if the company performed successfully.
However, this decision wasn’t received well among all partners. Particularly, an official from the National Football League Player Association expressed repeated concerns. He feared the implication of the resolution might lead to a conflict of interest, with board members seeking personal monetary advantage, possibly at a cost to the union members they represent.
In the contested resolution, retrieved by The Athletic, it was stated that any future payouts, made via the so-called senior employee incentive plan (SEIP), would be directed towards the unions associated with the board members. Another concerning aspect was the potential of a secondary transfer where these unions could pass the money onto their board members.
Reacting to the rising concerns, OneTeam clarified in a statement that though the plan was in consideration, it was ultimately not accepted. However, the controversy did not end there, as federal authorities have initiated an investigation connected to OneTeam Partners and linked union officials. The exact extent of the inquiry, which is being conducted by the Eastern District of New York, remains unknown.
OneTeam Partners counts five major sports unions as equity holders, with the most substantial stakes owned by the NFLPA and the Major League Baseball Player Association (MLBPA) who combinedly own two-thirds of the company. The unions for Major League Soccer, the U.S. Women’s National Soccer Team, and the Women’s National Basketball Association are also shareholders but hold a lower percentage of shares in OneTeam.
Historically, these partnering unions have been intended beneficiaries of the venture. Recently, the FBI initiated contact with members or their representatives from MLB and NFL. As this federal investigation picks up pace, the NFLPA has taken the precautionary measure of employing separate outside counsel.
The NFLPA representative who had initially raised a red flag about the contemplated incentive plan mentioned a potential conflict of interest that could occur. A change to such a plan, they argued, might lead to a dilution of the current stakes that players held indirectly through their unions. It was also pointed out that union officials were on the OneTeam’s board due to their union roles and were already receiving compensation for these positions.
The distribution of board seats with OneTeam Partners reflects their ownership portion, with the NFLPA and MLBPA taking four and three seats respectively. The other unions together share a rotational seat on the board. The remaining 30 percent of OneTeam that is not owned by these unions is held by outside investors.
The controversial SEIP resolution, which was eventually abandoned, had proposed distribution ratios for new plan units that greatly favoured the NFLPA and the MLBPA. The former was supposed to receive 44 percent and the latter 33 percent of these new units.
In contrast, unions from Major League Soccer, the U.S. Women’s National Soccer Team, and the Women’s National Basketball Association were to receive a comparatively smaller fraction of these new incentive units. Interestingly, the outside investors who hold sizable stakes in the company were not slated to receive any of these motivational rewards under the proposed resolution.
This commercial relationship has turned out to be beneficial not only for the member unions but also for the external equity investors partnered in this venture. These stakeholders have experienced significant financial return on investment, further confirming the successes and potential of OneTeam Partners.
An exemplary event is the exit of RedBird Capital, which had a 40 percent stake in OneTeam. RedBird managed to cash out their investment in 2022 when the company had generated a sizable valuation of $1.9 billion.
Though this arrangement had its merits, the controversial resolution and subsequent investigation have raised questions regarding the business model as it straddles the line between potential conflicts of interest and profits. While the decision was ultimately abandoned, it has certainly caused a shake-up in the landscape of sport-union relations.
The unfolding of these events leaves us with an important reminder about necessary checks and balances to ensure fair practices within such ventures. Peer scrutiny and the potential for external investigations act as powerful deterrents against actions that could be detrimental to the unions and their members.
Ultimately, the final processes and structures of business entities, regardless of their size or influence, must maintain transparency, accountability, and the principle of equitable distribution to ensure they align with the broader interests of their various stakeholders.
The post OneTeam Partners’ Profit Unit Controversy Shakes Major Sports Leagues appeared first on Real News Now.
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