Suit targets SAG exec's former firm

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When Doug Allen of the NFL Players Assn. joined SAG as national executive director in January, his experience co-founding licensing company Players Inc. was touted as a plus that could bear dividends for the guild.

Since then, Players Inc. seems to have sprouted a legal headache.

The 13-year-old company brokers marketing deals on behalf of 1,800 active and 3,500 retired athletes, exploiting players' likenesses, images and voices via video games, trading cards, clothing and other merchandise. Players Inc.'s Web site promotes the company as a $750 million retail licensing business.

But five weeks after Allen took up his SAG post on Jan. 8, Players Inc. came under fire. Retired NFL players Bernard Parrish and Herbert Adderley sued the company Feb. 14 in U.S. District Court in San Francisco, claiming to be among the 3,500 retired NFL players allegedly owed tens of millions of dollars in unpaid residuals.

"Players Inc. has ... diverted millions of dollars from Players Inc. to the NFLPA in order to support overhead, substantial salaries and perquisites to NFLPA management and employees," the suit alleges.

Players Inc. is affiliated with the NFLPA, where Allen was assistant national executive director for almost 20 years. The suit names the NFLPA and Players Inc. but does not name Allen or other individuals.

According to Labor Department filings, Allen's union compensation totaled $1.9 million during the 2005-06 reporting period, representing a fourfold leap from the previous reporting period.

Allen's wife, Pat Allen, then Players Inc.'s COO, saw her pay roughly double to $633,534 during the same period; NFLPA executive director Gene Upshaw received salary and bonuses totaling $6.7 million, making him the highest-paid union chief in sports, according to a July 9 article in SportsBusiness Journal.

Allen resigned from the NFLPA and Players Inc. to accept the SAG post, and Pat Allen retired from her position when the couple relocated from Washington to Los Angeles. (Separately, Players Inc. vp player marketing Howard Skall subsequently resigned to take a job at CAA Sports in Los Angeles.)

Plaintiffs attorney Ron Katz of Manatt, Phelps & Phillips said Allen likely will be deposed if the lawsuit continues.

Katz filed a second amended complaint June 25, with NFLPA attorneys then seeking a dismissal of the lawsuit. A hearing is set for Aug. 30 in San Francisco federal court.

Allen declined comment on the litigation.

"I think our complaint raises some serious questions about where this money is flowing and how it's flowing and (if) they are keeping their fiduciary duties," Katz said. "But we don't have the answers yet. ... We haven't had a judge or jury make decisions on this -- that's the important thing."

Katz claims that his clients haven't seen any profit from the union affiliate but aren't sure what they are owed. Parrish signed a number of agreements with Players Inc., the attorney said.

But NFLPA general counsel Richard Berthelsen said Parrish, a star with the Cleveland Browns, never signed a "proper" agreement that would entitle him to any profit.

Adderley, a Pro Football Hall of Famer who played with the Green Bay Packers and Dallas Cowboys, has a 2003 letter from Players Inc. stating that he would get a 6% royalty rate from a deal struck with Reebok to print his and other players' images on jerseys, T-shirts and caps, Katz said.

With both the NFLPA and Players Inc. named as defendants, each filed briefs on their motion to dismiss the suit. Among the arguments in its brief, Players Inc. said the plaintiffs fail to identify any promised source of royalty money other than the Reebok deal.

"But Adderley does not claim that he failed to receive any money he was due from that program," attorneys for the defendant argued.

According to the suit, Allen addressed retired players' queries about not receiving money in an undated letter.

"Hundreds of retired NFL players have received payments from Players Inc., but every retired NFL player has benefited from Players Inc.'s creation," Allen wrote. "How? Because 40% of Players Inc.'s operating revenue is paid to the NFLPA. ... This allows the NFLPA to provide extensive services and benefits to retired players in return for modest retired-player dues of $50 per year."

Katz suggests that the funds would have been better distributed to individual players instead of being earmarked for union pension, health fund or any other accounts.

Allen has not said whether he intends to pursue setting up an entity similar to Players Inc. and affiliated with SAG. But he has said licensing members' likenesses or other intellectual property potentially could benefit members and their unions.

"It's a really important concept for everybody who's involved in the labor movement to explore," he told The Hollywood Reporter in a Jan. 8 interview.

Lauren Horwitch is news editor of Back Stage West.
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