Telemundo lawsuit claims 'shakedown' over Trinidad World Cup qualifier TV rights
Telemundo, a subsidiary of Philadelphia-based Comcast, has sued two marketing firms which it alleges are assisting the Trinidad & Tobago Football Association in a 'shakedown' of the U.S. television network over World Cup qualifying rights fees.
Telemundo, a subsidiary of Philadelphia-based Comcast, has sued two marketing firms which it alleges are assisting the Trinidad & Tobago Football Association in a "shakedown" of the U.S. television network over World Cup qualifying rights fees.
The rights in question were acquired by Telemundo in December of 2014. The deal became public knowledge in February of 2015, when the network announced that it had acquired Spanish-language broadcast rights in the United States for all CONCACAF World Cup qualifiers played outside of the U.S., Mexico and Canada.
This happened because the Caribbean Football Union, an overarching body for all national associations in that part of CONCACAF, agreed to collectively sell rights to qualifiers played in those nations to Traffic Sports and Media World, which in turn struck a deal with Telemundo.
(Nations in the Central American union UNCAF struck a similar agreement, leading to a similar deal with Telemundo. And thanks to this case, we now know that Telemundo paid a rights fee of "over $30 million" to Traffic and Media World.)
Traffic Sports and Media World were nailed by the U.S. government's investigation into corruption in soccer rights deals across the Americas. But Telemundo's deal remained in place, as did other deals struck before the government's hammer came down. Indeed, none of the indictments invalidated any existing deals. (beIN Sports' deal for English-language rights is one example).
Everything proceeded without any problems through the first set of "Hexagonal" final-round qualifiers in November. That included Trinidad & Tobago's home game against Costa Rica, a 2-0 Ticos win.
Sometime between then and early February, the Trinidad & Tobago Football Association tried to back out of the Caribbean Football Union's deal with Telemundo, claiming that it could do so because of Traffic's collapse. On February 7, the the Trinidad & Tobago Football Association put out a series of announcements which said:
• March 28, 2017: Trinidad & Tobago vs Mexico
• September 1, 2017: Trinidad & Tobago vs Honduras
• October 10, 2017: Trinidad & Tobago vs USA
The statements were signed by the Trinidad & Tobago Football Association president David John-Williams, and backed up with the signature of a notary in San Fernando, Trinidad. The last one was an attempt to cover Elite against potential lawsuits from Traffic and Telemundo.
Among the listed games are two cash cows: Mexico's visit on March 28, and the United States' visit on October 10. So it's likely not a coincidence that the the Trinidad & Tobago Football Association tried to pull this move right now.
On February 9, Telemundo Sports executive vice president Eli Velasquez received an email from Ylan Singer, CEO of Elite Soccer Agency, which said:
In a court affidavit, Velasquez said he "was not acquainted with Mr. Singer before I received his email," and added that he was "puzzled" by the note.
On February 15, Velasquez received an email from Santiago Martinez, owner of broadcast production firm Nexus Sports. It said (in Spanish, translated here by the court):
Nothing more is said about "Rodriguez and Nasser," so we don't know for sure who they are. I've heard, though, that they are Juan Carlos Rodríguez and Nasser Al-Khelaifi, the respective heads of Univision Deportes and beIN Sports. (Which doesn't surprise me, and probably doesn't surprise you either.)
A day after Martinez sent the above email, he wrote to Velasquez again:
On February 22, Singer sent another email, stating (in Spanish, translated here by the court):
Eventually, according to the affidavit, Velasquez did call Singer. Velasquez said Singer "did not provide any evidence to support his position that Telemundo's exclusive license to the Trinidad games was no longer valid."
On February 24, Velasquez got an email from another marketing firm, Publicidades USA. Its president, Francisco Salcedo, said:
That "to hinder Telemundo's ability to broadcast the games" wasn't just an idle threat. According to the lawsuit, the Trinidad & Tobago Football Association was already causing trouble behind the scenes:
Velaszquez also said this in his affidavit:
intended to deny the production company access to the stadium in Port of Spain, Trinidad.
On March 3, Velasquez wrote to John-Williams:
On the same day, John-Williams wrote a reply that included the following statement:
The next letter to John-Williams came the following day, and it came from Telemundo's lawyers in Trinidad:
That letter then cited the relevant Caribbean Football Union statutes, and asserted:
On March 10, Velasquez received an email from Linus Sanchez, who identified himself as "a member of the TTFA Congress." Sanchez wrote:
That sentiment began with John-Williams himself - and it began well before last November. A few hours before this story was published, well-known Trinidadian journalist Lasana Liburd of 868Sports.com sent me a letter John-Williams wrote to the Caribbean Football Union in February of 2016 which asserted that the Trinidad & Tobago Football Association should be able to get out of the CFU's deal with Traffic.
(Liburd also confirmed Sanchez's identity to me. He's the president of a regional association in Trinidad that oversees a lower-division league.)
John-Williams' letter said, in part (all emphasis his):
Telemundo filed a federal lawsuit on March 14 in the Southern District of Florida, home of both defendants and the network's Miami studios. The case is Telemundo Network Group LLC v. Elite Sports Agency et al., 1:17-cv-20952, if you'd like to follow it yourself.
Telemundo requested an expedited hearing, since the March games are coming soon. It also requested oral arguments, which would potentially put people in the case on the witness stand. A judge granted the request for a hearing, and set March 20 as the date for it to happen.
From here on, you can read excerpts of various filings in the case. The language is pretty straightforward as court cases go.
2. Telemundo purchased these rights to broadcast the 2018 and 2022 CONCACAF World Cup qualifiers for tens of millions of dollars in December 2014, in an arms-length, well- publicized transaction with non-parties Traffic Sports USA, Inc. ("Traffic") and Media World, LLC ("Media World"). Telemundo plans to broadcast these games as part of its comprehensive coverage of the World Cup qualifying rounds to its millions of viewers in the U.S., and has already invested heavily in the preparation for and promotion of these broadcasts.
3. Just last month, Telemundo was contacted by Defendant Elite Soccer Agency, LLC ("Elite"). Elite purported to be authorized to re-sell the broadcast rights to certain CONCACAF qualifying matches to take place in Trinidad & Tobago ("Trinidad"), which Telemundo already had bought and paid for as part of its transaction in December 2014. Telemundo also learned that Elite reached out to Telemundo's competitors to offer to sell them the rights belonging to Telemundo.
4. As Telemundo also learned very recently, Elite and Defendant Publicidades USA Inc. ("Publicidades") claim to have obtained the right to license these matches in Trinidad from non-party the Trinidad & Tobago Soccer Association (the "TTFA"), and they have been working through the TTFA to hinder necessary pre-production work at the soccer stadium in Trinidad, thereby threatening to prevent Telemundo from exercising its rights to broadcast important upcoming matches in Trinidad on March 24 and March 28, 2017.
5. Defendants' conduct is a brazen attempt to interfere with Telemundo's rights and to coerce Telemundo into paying more for a license that - as Defendants are well aware – Telemundo already purchased in a legitimate, good faith transaction for valuable consideration years ago. Defendants seek to justify their unlawful conduct with allegations made by the TTFA that there were deficiencies in a contract in 2012 whereby TTFA sold the rights that later were acquired by Telemundo in December 2014, multiple links down the contractual chain. Defendants' position is nonsense. Even if a contract upstream from Telemundo's purchase of the rights were deficient in some way, Telemundo is a good-faith, innocent purchaser for value and its exclusive license must be honored. Indeed, until last month, neither Defendants nor anyone else questioned the legitimacy of Telemundo's license – even when Telemundo, via an affiliated network, broadcast the most recent CONCACAF qualifying match in Trinidad last November. Defendants are engaged in nothing more than a cynical, unlawful shakedown of Telemundo.
12. Telemundo owns the exclusive Spanish-language rights to broadcast CONCACAF qualifying soccer games leading to the 2018 and 2022 World Cups in the United States via television and digital media (the "Content Rights") pursuant to a Soccer License Agreement (the "Telemundo Agreement") between Telemundo, as the Licensee, and non-parties, Traffic and Media World, which together are the Licensor under the Telemundo Agreement. A redacted copy of the Telemundo Agreement is attached as Exhibit 1.
13. For both the 2018 and 2022 CONCACAF qualifying Tournaments, Telemundo's rights extend to:
a. All Mexican National Team away qualifiers (other than those played in the United States).
b. All U.S.A. National Team away qualifiers (other than those played in Mexico).
c. All other CONCACAF countries' home qualifiers, except Mexico and the United States.
21. The CFU Statute governs the relationship between the CFU and its member associations, including the TTFA, with respect to the broadcast rights over soccer games. Section 8.2 states:
The CFU and the Member Associations shall have the exclusive rights to broadcast and use, as well as authorize for broadcast and use, by picture, sound or other data carriers of any kind (including data carriers which have yet to be developed), matches which come within their jurisdiction, either live or recorded, in whole or as excerpts.
And Section 8.1 states:
The CFU shall exploit all rights which it owns or shares with third parties, such as property rights of any type, intellectual property rights and rights for audio-visual and sound-broadcasting transmissions by picture or data carrier of any kind (including all means of transmitting computer images, with or without sound, such as Internet, on-line services or the like, whether existing already or not). This includes the production, duplication, dissemination and broadcasting of pictures, sound or data carriers of any kind by the CFU alone or with third parties.
22. Thus, pursuant to these provisions, the CFU had the right to exploit the rights to broadcast games of the CFU and its Member Associations, pursuant to the CFU Statute.
23. In addition, on or about August 29, 2012, the TTFA (then known as the TTFF) entered into a written Transfer of Broadcast Rights Agreement with the CFU (the "CFU-TTFA Agreement"), pursuant to which the TTFA irrevocably transferred to the CFU the exclusive right to broadcast the home games to be played by the national soccer team of Trinidad and Tobago (the "Trinidad National Team") in the 2018 and 2022 CONCACAF World Cup qualifying games. A true and correct copy of the CFU-TTFA Agreement is attached as Exhibit 3.
24. In the CFU-TTFA Agreement, the TTFA acknowledged and represented that:
d. The TTFA is "a full member" of the CFU and it "owns the Rights (as defined below) associated with the home matches for the 2018 FIFA World Cup qualifying matches and the 2022 FIFA World Cup qualifying matches." Exhibit 3, CFU-TTFA Agreement at ¶ 2.
e. The TTFA "was present and duly represented on 22 May 2012 at the XCXXV CFU Ordinary Congress (the "Congress") in Budapest, Hungary at which the majority of the membership of the CFU agreed that the CFU should enter into negotiations," to commercialize the rights to broadcast said home games by negotiating to sell them to Traffic. Id. at ¶¶ 3, 4.
f. The TTFA "entered into this Agreement without coercion and are in possession of all our faculties and with the full knowledge that the CFU will in turn be transferring the Broadcasting Rights to Traffic." Id. at ¶ 8.
25. In addition, the TTFA specifically agreed as follows:
The parties agree that any agreement or arrangement negotiated by the CFU with Traffic or any other third party with respect to such Rights will be binding upon the members and no member may unilaterally opt out of the provisions thereof.
Id. at ¶ 4 (emphasis added).
26. Both the CFU Statute and the CFU-TTFA Agreement were intended by the TTFA and the CFU to allow the CFU to package the Trinidad National Team home games together with the home games of the other 31 CFU Member Associations' national teams for resale to one or more commercial entities, such as Traffic, who would, in turn, commercialize the rights by licensing them to broadcasters, like Telemundo.
27. In this case, the CFU sold the rights to broadcast the home games of its 31 Member Associations' national teams to Traffic in or around August 2012 pursuant to a written agreement between the CFU and Traffic (the "Traffic-CFU Agreement"). A true and correct copy of the Traffic-CFU Agreement is attached as Exhibit 4. Traffic partnered with Media World to commercialize the rights through licenses to broadcasters.
28. Traffic and Media World, in turn, licensed the Content Rights at issue here to Telemundo on an exclusive basis pursuant to the Telemundo Agreement, which was signed in December 2014.
29. In exchange for these exclusive Content Rights, Telemundo became obligated to pay Traffic and Media World a total of more than $30 million for qualifying CONCACAF games for the 2018 World Cup, of which almost three-quarters has already been paid. The next installment in the amount of several million dollars is due no later than March 31, 2017.
34. On or about February 7, 2017, the TTFA purported to enter into an agreement with Elite to allow Elite to market and sell the broadcast rights to the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to broadcasters (the "Elite-TTFA Agreement").
35. At the time that Elite and the TTFA entered into the purported Elite-TTFA Agreement, Elite was already aware that the TTFA had previously sold the very same rights to the CFU, which in turn had sold the rights to Traffic, which in turn had sold the Content Rights to Telemundo pursuant to the Telemundo Agreement.
37. Importantly, through the Elite Letters, the TTFA (and by adoption Elite) admitted that they were both aware at the time of the Elite-TTFA Agreement that (a) the TTFA had previously sold the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to the CFU; (b) the CFU sold rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to Traffic; and (c) Traffic sold the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to broadcasters, like Telemundo, who purchased them in good faith and for value.
38. Telemundo assumes that the reference to "irregularities" in the Elite Letter is a reference to the fact that some former officials of Traffic, Media World and the CFU and were among the more than 40 individuals and entities who were indicted in the highly publicized criminal case that U.S. federal prosecutors brought in 2015 over FIFA-related corruption. No one associated with Telemundo was charged or even mentioned in the indictment or superseding indictment filed by federal prosecutors. At the time it purchased the Content Rights in good faith and for tens of millions of dollars in value, Telemundo was not aware of any allegations of wrongdoing by anyone at Traffic, Media World or the CFU. Telemundo negotiated the Telemundo Agreement with Traffic and Media World in good faith and at arms' length. Neither the Defendants in this case nor anyone else has brought to Telemundo's attention any evidence that any court has invalidated any of the contracts among the TTFA, the CFU and Traffic.
39. As a part of the Elite-TTFA Agreement, the TTFA agreed to indemnify Elite from expected claims by Traffic and its licensees, including Telemundo (the "Elite Indemnity").
40. The Elite Indemnity is a further admission by the TTFA and Elite that at the time of the Elite-TTFA Agreement they were both aware that (a) the TTFA sold the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to the CFU; (b) the CFU sold rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to Traffic; and (c) Traffic sold the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games to broadcasters, like Telemundo, who purchased them in good faith and for value.
41. The TTFA's attempt to resell the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games constitutes a breach of the CFU-TTFA Agreement. Similarly, the TTFA's attempt to resell the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games also causes CFU to be in breach of the Traffic-CFU Agreement. Finally, the TTFA's attempt to resell the rights to broadcast the Trinidad National Team's 2018 and 2022 World Cup CONCACAF qualifying home games causes Traffic and Media World to be in breach of the Telemundo Agreement.
46. Elite's interference with the Telemundo Agreement is not legally justified. As Elite and Publicidades were informed, Telemundo acquired the exclusive U.S. Spanish-language broadcast rights to the games in Trinidad in good faith and for valuable consideration. Further, Telemundo is not aware of any court ruling in any jurisdiction that invalidated the grant of rights from the TTFA to the CFU, from the CFU to Traffic, or from Traffic to Telemundo. Moreover, on information and belief, the TTFA has never returned the money it was paid in exchange for the rights.
4. Telemundo acquired its broadcast rights to CONCACAF qualifying games in a transaction with Traffic Sports USA ("Traffic") and Media World, LLC ("Media World"). The rights that Telemundo acquired include all CONCACAF qualifying games except Canada, Mexico and USA home games. On information and belief, Traffic and Media World are marketing agencies that have been in the business of acquiring and reselling the broadcast rights to sporting events for many years. In this instance, it is my understanding that Traffic and Media World each acquired rights to CONCACAF qualifying games from the regional soccer associations within CONCACAF: the North American Football Union, the Union Centro Americana de Futbol and the Caribbean Football Union (the "CFU"). In turn, I am aware that these regional associations derive their rights from the national associations that make up their membership. Traffic and Media World then partnered to sell those rights to broadcasters, including Telemundo. Telemundo negotiated with Traffic and Media World in good faith, agreed to pay more than $30 million to buy the broadcast rights for the CONCACAF qualifying games leading up to the 2018 World Cup, and ultimately entered a detailed, written contract with them in December 2014 (the "Telemundo Agreement," and copy of which, redacted to preserve the confidentiality of financial terms, is attached as Exhibit A).
5. Telem undo already has paid almost three quarters of the rights fee agreed upon in the Telemundo Agreement. The next payment under the agreement, of several million dollars, is due on March 31, 2017.
10. In May 2015, five months after Telemundo signed the Telemundo Agreement, a former high-level executive of Traffic, and the former president of the CFU, along with 25 other individuals, were indicted by U.S. federal prosecutors in connection with alleged corruption by officials of FIFA, including CONCACAF, in various transactions involving soccer tournaments and sales of rights to games. Also in May 2015, federal prosecutors announced that Traffic had pleaded guilty to criminal charges in connection with the FIFA investigation. I am informed and believe that Traffic has cooperated with the Government's continuing investigation into FIFA-related corruption.
11. In December 2015, federal prosecutors released a superseding indictment that charged additional individuals in corruption related to FIFA. Prosecutors also announced that the former executive of both Traffic and Media World, and the former president of the CFU, as well as the CEO of Media World, each had pleaded guilty to criminal charges in connection with the Government's FIFA investigation.
12. No one associated with Telemundo was charged or even mentioned in the
indictment or superseding indictment filed by federal prosecutors. At the time it purchased the Content Rights in good faith and for tens of millions of dollars in value, Telemundo was not aware of any allegations of wrongdoing by anyone at Traffic, Media World or CFU. Telemundo negotiated the Telemundo Agreement with Traffic and Media World at arms' length.
13. To the best of my knowledge, the FIFA-related proceedings did not result in any determination by a court or U.S. authorities that would render invalid Telemundo's license to broadcast the CONCACAF qualifying games in Trinidad. As far as I know, no court in any jurisdiction has ruled that any contract that licensed or transferred broadcast rights for any Trinidad home games is invalid or unenforceable for any reason. Neither the defendants in this case nor anyone else has brought to Telemundo's attention any evidence that such a court ruling
14. The charges brought against the former CFU president, Traffic, and the Traffic and Media World executives were widely publicized throughout the world after being announced by U.S. authorities in 2015. But until February 9, 2017, neither the defendants in this case nor anyone else suggested to Telemundo that its license to broadcast CONCACAF qualifying games, including the Trinidad home games, was invalid or unenforceable in any respect. Nor did anyone tell Telemundo about any alleged defect in the chain of title whereby Traffic or Media World acquired the rights they sold to Telemundo in the Telemundo Agreement.
18. Although the TTFA referred in its document to "significant irregularities" in the sale of broadcast rights for the Trinidad CONCACAF qualifying games, the TTFA has never, to Telemundo's knowledge, challenged in court the enforceability of any contract for the sale of those rights, nor has the TTFA returned the consideration it received for those rights or legally rescinded any contract for the sale of those rights.
19. Naturally, I was puzzled by Mr. Singer's email, since Telemundo had bought and paid for the exclusive rights to these qualifying games pursuant to the Telemundo Agreement that we signed in December 2014. Until I received Mr. Singer's email, no one had suggested to Telemundo that its rights were invalid - even when Telemundo broadcast the Trinidad vs. Costa Rica game in November 2016. I called Mr. Singer. On that call, Mr. Singer did not provide any evidence to support his position that Telemundo's exclusive license to the Trinidad games was no longer valid. I told Mr. Singer that I needed to review his claims with my organization since it was new information and because, as he could imagine, it was my understanding that the rights to the matches in question already belonged to Telemundo.
20. In addition, two in-house lawyers at NBCUniversal, Telemundo's parent
company, named Brett Goodman and Erik Bierbauer reached out to a lawyer named Josh Markus who represents Traffic, one of the two parties that Telemundo had contracted with in the Telemundo Agreement in 2014. Traffic's lawyer explained that the TTFA was in a dispute with Traffic, Media World and the CFU, to which the TTFA had transferred the broadcast rights to the Trinidad qualifying games in 2012. Traffic's lawyer said that TTFA was asking CFU for more money for the rights that the TTFA already had transferred in 2012, he expected the dispute to be resolved shortly, and Telemundo still owned the license to broadcast the games to be played in Trinidad.
21. On February 15 and 16, 2017, I received two emails from Santiago Martinez of Nexus Sports, whom I knew from past contacts in the sports television business. Mr. Martinez urged me to contact Mr. Singer about the rights to the Trinidad games, because Mr. Martinez had begun shopping those rights to broadcasters on Mr. Singer's behalf and there was a lot of interest in them. A copy of Mr. Mai1inez's February 15 & 16, 2017 emails, along with a translation of them from Spanish to English, is attached as Exhibit F.
22. NBCUniversal's in-house counsel also communicated agam with Traffic's
lawyer, who confirmed that Traffic had sent letters to other broadcasters, including Telemundo's chief competitor, Univision, to inform them that the rights for the qualifying games in Trinidad were not properly up for sale.
Excerpts from Telemundo's contract with Traffic Sports and Media World
(You've read this far, so you deserve a little easter egg.)
5.2. Licensor will produce (a) all fourth (4th) and fifth (5th) round Games and (b) any first (1st), second (2nd), and third (3rd) round Games between a Caribbean National Team or Canada and a National Team from Panama, Honduras, Guatemala, El Salvador, Costa Rica, or Jamaica. If Licensee desires that any other first (1st), second (2nd), and third (3rd) round Game be produced, then, upon reasonable advance written notice from Licensee to Licensor, Licensor shall produce such Games and Licensee will promptly reimburse Licensor for its direct out of pocket costs related thereto upon receipt of invoice; provided that if Licensor is producing such Games otherwise, it will provide such Games to Licensee free of cost. For clarity, Licensee shall not have the right to produce any such Games.
5.3. All Mexico National Team ("MNT") Games licensed under this Agreement must be scheduled so that the kickoff occurs no earlier than 7:00 p.m. and no later than 11:00 p.m., Eastern Time, Monday-Friday, or at any time on Saturdays and Sundays. If the kickoff of an MNT Game is scheduled outside of these times, Licensee will be entitled to deduct [redacted] from the License Fee for each MNT Game so scheduled, as its sole remedy for Licensor's failure to comply with this Section and Licensee covenants not to make any contention to the contrary or claim breach of this Agreement for such reason.
5.4. In the 4th round of each qualifying round, Licensor will assure that at least two (2) Games per day do not overlap (i.e. Games are not being played simultaneously during any part of the Games), provided that in no event may any MNT, U.S. National Team ("USA") or top rated Central America team Games overlap. Licensee will provide Licensor with prior written notice of which games in the 4th round it does not want to have overlap. If any overlap occurs contrary to this provision, Licensee will be entitled to deduct [redacted] from the License Fee for each Game that overlaps, as its sole remedy for Licensor's failure to comply with this Section and Licensee covenants not to make any contention to the contrary or claim breach of this Agreement for such reason.
5.5. In the 5th (final) round of each qualifying round, Licensor will assure that there is no overlap between any MNT Game and any Game involving the USA, unless CONCACAF decrees that all Games must start at the same times. If any overlap occurs contrary to this provision, Licensee will be entitled to deduct [redacted] from the License Fee for each Game that overlaps, as its sole remedy for Licensor's failure to comply with this Section and Licensee covenants not to make any contention to the contrary or claim breach of this Agreement for such
5.6. Notwithstanding the foregoing, none of the License Fee deductions specified in the foregoing Sections 5.4 and 5.5 shall apply in the case where a scheduling conflict is mandated by FIFA or CONCACAF.
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