November 29, 2021

Volume XI, Number 333

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November 29, 2021

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Florida Broker Denied Assist in Argentine Soccer Media Rights Deal

2014 has been a decent year for soccer – ahem, fútbol – in Argentina.  An Argentine club team (San Lorenzo) won the 2014 Copa Libertadores, South America's premier international club competition, the Argentine national team jumped to number two in the FIFA/Coca-Cola World Rankings after narrowly missing out on 2014 World Cup glory, and two of the game's top talents – Lionel Messi and Ángel Di María – hail from the South American country.  But not everybody in the Argentine soccer community is in a celebratory mood.  A recent lawsuit claims that Asociación del Fútbol Argentino (the "AFA"), the governing body of soccer in Argentina, breached a broker agreement when it scored a valuable media rights deal back in 2009.

Founded in 1893, the AFA is tasked with organizing and governing all Argentine soccer leagues (youth, amateur and professional), including the Primera División, which is home to world-renowned clubs such as Boca Juniors (former club of the country's, and arguably the world's, greatest player of all time, Diego Maradona) and Newell's Old Boys (boyhood club of one of the few other soccer players who may have an equal claim to being called the "greatest of all-time," Lionel Messi).  The AFA also oversees the Argentine national team – or "La Albiceleste" (the white and sky blue, referring to their iconic jersey) – one of the world's most celebrated and decorated squads, with 16 World Cup appearances, five finals appearances, and a championship trophy in both 1978 and 1986, the latter made famous by Maradona's "Hand of God" goal and "Goal of the Century".  Trying to cash in on its long-standing success, in 2006, the AFA struck a deal with GMI, LLC ("GMI"), a Florida broker, granting GMI the exclusive right to market and sell its television and media rights, a deal that GMI now claims was sidestepped when the AFA subsequently secured a sale of these rights directly.

According to a complaint filed in Florida state court, in 2006, the principals of GMI, Alejandro and Gustavo Mascardi, were approached by then-President of the AFA, Julio H. Grondona, about brokering a sale of the AFA's television and media rights for its soccer matches.  In 2007, GMI and the AFA, through Mr. Grondona, entered into an Exclusive Authorization Agreement (the "Broker Agreement"), which, according to GMI's complaint, granted GMI the exclusive right to "make ... any arrangements aimed at having [a buyer] acquire the image, marketing and transmission rights for any platform ... in any language and for any country in the world ... for ... championship football matches [the AFA] puts on" (the "Media Rights") (see GMI, LLC v. Asociación del Fútbol Argentino, No. 2014-21682-CA-01 (Fla. 11th Cir. Ct., filed Aug. 20, 2014)).  GMI also asserts that the Broker Agreement required the AFA to "reach an agreement with the buyer on the financial compensation due [GMI] for organizing the [the Media Rights purchase]."  While the Broker Agreement did not explicitly state the amount of commission that GMI was to receive, GMI claims that the industry standard for brokering television and media rights is 15% of the purchase price. 

Upon executing the Broker Agreement, GMI initiated a campaign to locate potential buyers, including various international power brokers and corporations.  Throughout 2009, after struggling to find a buyer, GMI purportedly brokered a series of meetings with Argentine government officials in hopes of securing a deal with the Republic of Argentina itself.  However, in August 2009, Mr. Grondona allegedly attended a meeting with Argentine officials without GMI – a meeting that resulted in the execution of a Partnership Agreement for the Transmission of Soccer Events between the AFA and a group of Argentine government entities (the "Media Rights Agreement").  Pursuant to the Media Rights Agreement, the AFA assigned to the Argentine entities the Media Rights for a period of ten (10) years in consideration for 50% of the total net sums generated thereby, with a guaranteed annual minimum of 600,000,000 Argentine pesos (approximately $70,000,000 at current exchange rates).  Though it asserts that it set up the deal in accordance with the Broker Agreement, GMI claims it has not seen a single peso to date.

In its complaint, GMI cries foul over the AFA's decision to deal directly with the Argentine government, effectively cutting it out of the lucrative, long-term arrangement.  It asserts that the AFA was playing dirty when it secured the independent deal, bringing claims for breach of contract and, alternatively, unjust enrichment.  In short, GMI alleges that it fulfilled all of its obligations under, and complied with all terms of, the Broker Agreement by securing a purchaser but received no compensation as required thereunder.  As such, the pending suit seeks to recover monetary damages, presumably approaching 15% of the overall value of the Media Rights Agreement.

The defendant AFA has yet to file an answer, and it remains to be seen whether GMI can sustain its attack or whether the AFA will simply park the bus in defense.  In the meantime, the Argentine club teams will continue to battle it out for the coveted Copa Campeonato (the Primera División trophy) and La Albiceleste will continue to prepare for the 2015 Copa America, the main international tournament for South American national teams, a tournament that Messi – or "La Pulga" (the flea, referring to his stature, quickness and ability to drive opposing defenses crazy) –  has claimed he is desperate to win.  Assuming Messi can keep up his current form, when it comes to soccer in Argentina, 2015 could shape up to leave 2014 in its dust, lawsuit or not.

© 2021 Proskauer Rose LLP. National Law Review, Volume IV, Number 317
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L. Robert Batterman, Labor, Management, Sports, Attorney, Proskauer, Law Firm
Partner

A partner since 1974, Bob Batterman has considerable experience representing both individual employers and multi-employer groups in union relations and collective bargaining. Much of Bob’s time is spent in day-to-day contact with clients, often in “crisis” situations where a rapid resolution of union-related problems is vital.

Bob is a senior member of our nationally recognized Sports Law Group, serving as labor counsel to the National Hockey League, Major League Soccer and the National Football League. He has extensive experience in collective...

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Michael Cardozo, Commercial Litigation Attorney, Proskauer, Law Firm
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Michael A. Cardozo is a Partner in Proskauer’s Litigation Department and the former Corporation Counsel for the City of New York. As the city's 77th and longest serving Corporation Counsel, he was the city’s chief legal officer, headed the city's Law Department of more than 700 lawyers, and served from 2002 through 2013 as legal counsel to Mayor Michael Bloomberg, elected officials, the city and its agencies.

Michael’s experience managing large litigations in both the private and public sectors provides him with unique insight into litigation assessments, risk management and...

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Robert L. Freeman, Technology, Media, Sports, Attorney, Proskauer, Law Firm
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Robert E. Freeman is a Partner in the Corporate Department and a member of the Sports Law Group and Technology, Media & Communications Group.

Rob began his career as an intellectual property litigator before shifting the focus of his practice to intellectual property-related transactions. Today, he helps lead a team of media, sports and entertainment attorneys representing clients such as Time Warner Cable, Discovery Communications, the WTA, the Orlando Magic, Scripps Networks, Armstrong Cable, the PAC-12, Insight Communications and CBS Sports. Rob’s work for these clients...

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Howard Ganz, Sports, Employment Attorney, Proskauer, Law Firm
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Howard Ganz is co-head of the Sports Law Group and former co-Chair of the Labor & Employment Law Department.

Howard represents and counsels clients with respect to a wide variety of labor and employment matters, such as employment discrimination, sexual harassment, wrongful discharge, defamation, breach of contract, discipline, and large-scale reductions-in-force. His litigation experience has run the gamut, from single plaintiff lawsuits to major class actions, in federal and state courts in New York and elsewhere. The clients Howard has represented include the National...

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Wayne D. Katz, Finance, Sports, Attorney, Proskauer, Law Firm
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Wayne D. Katz is a Partner in the Corporate Department, specializing in the sports industry.

Wayne's experience includes the representation of the National Basketball Association and National Hockey League in their various corporate matters, including team ownership transfers and team financings. Major transactions he has worked on for the leagues include the NBA’s purchase and sale of the New Orleans Hornets; the NBA's grant of expansion franchises to Toronto, Vancouver and Charlotte; the NHL's grant of expansion franchises to Nashville, Atlanta, Columbus and Minnesota; the NBA’s $...

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