Weekly Column: Endeavor Ownership or Representation?

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the growth of Endeavor and its ownership and representation interests in entertainment, media, and sports properties and talent.

You can read the full column below.

Endeavor, the well-known entertainment and sports agency with ties to William Morris, the original Hollywood talent agency, and owner of multiple content properties and brands is now receiving calls from the Major League Baseball Players Association (MLBPA) to divest of its Minor League Baseball (MiLB) team ownership or to end its representation of MLBPA members/players. This feels like a blast to the past. It was in 1948 when the United States Justice Department forced Paramount and other studios to break-up production from distribution. In other words, the studios from the theaters. Studios could not contract talent, produce film projects, and own theaters thus blocking certain films from being distributed or fluctuate ticket pricing based on the studio that owned the film.

Per the DOJ’s press release on August 7, 2020, which cancelled the decrees from 1948: “The litigation underlying the Decrees dates back to 1938. After several years of litigation, including a Supreme Court’s decision in United States v. Paramount, 334 U.S. 131 (1948), the Antitrust Division and the defendants entered into a series of consent decrees, collectively called the Paramount Decrees. These Decrees required the movie studios to separate their distribution operations from their exhibition businesses.” The decrees set-up the precedent for what would become agency-studio relationships where talent was represented versus being “under contract” for an exclusive term, sometimes for life. Streaming platforms have changed distribution and so ownership control over theaters is not much at issue anymore. However, the divide between management or ownership and labor is, and continues to be in dispute.

Actors today handle projects for multiple studios and streamers and often own their own production and studio companies, some of who are professional and retired athletes. Of course baseball followed a similar trajectory under the “reserve clause” until Curt Flood and his call for free agency changed the game forever. Indeed, Endeavor’s investments may come into question if the dispute with the MLBPA drags on.

For example, Endeavor owns Ultimate Fighting Championship (UFC), On Location Experiences, and ten MiLB teams plus Endeavor Content and the company has agents representing talent across the entertainment, media, and sports spectrum, and in particular in the sports leagues and entertainment projects where the company holds ownership stakes. The National Football League (NFL) just exercised its option to increase its ownership shares from 13.5% to 45% for On Location Experiences, but Endeavor holds the majority of the shares, but also represents NFL players. Likely not a conflict there as those services are separate and mostly unrelated. UFC is not unionized so no legal or written conflicts there, but on its face, Endeavor agents may represent UFC fighters and also own the fighting circuit.

However, owning a minor league baseball team and a representing MiLB and MLB players in a union environment? That is where it gets tricky. MLB teams sign Player Development Contracts (PDC(s)) with minor league clubs, so the big league club controls the players. Nonetheless, the collectively-bargained agreement (CBA) between the MLB and MLBPA provides that agents like those at Endeavor/WME cannot also hold an ownership stake in a MLB franchise and MiLB clubs are owned directly by MLB clubs or controlled through PDCs. There is some gray area because in many circumstances MiLB clubs are affiliated, but operated independently. On the other hand, MLB has made a major push to consolidate the minor leagues and to have more control, so the MLBPA’s dispute with Endeavor is as much about conflicts of interest as it is about the future of the game.

It is of note that Endeavor and the other big agencies in Hollywood recently agreed with the Writers Guild of America (WGA) to divest of more than 20% ownership in any production house or studio and to phase out the practice of packaging in film and television projects because of perceived conflicts of interest. Maybe the MLBPA/MLB broker a similar deal with Endeavor, maybe there is litigation, or additional changes to the game and industry in general. History has a way of repeating itself—showing ways to do something over—hopefully with a change in approach. Lew Wasserman, an icon of Hollywood and mogul at MCA, which preceded Universal, was a mentor of Ari Emanuel, and no doubt learned the business from him. Emanuel, the head of Endeavor/WME along with Patrick Whitesell, no doubt want in on the business of content and control, but like everyone else have to live within the league and industry rules, unless changed. Business-savvy moves and decisions, indeed.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clientele in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.