USA Rugby – PRO Rugby Sanction Agreement Outlines Incompetence, Dysfunction, Mismanagement

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“U.S.A. Rugby has a policy not to comment on agreements we have with third parties, other than what we have disclosed in a public statement.”Will Chang, USA Rugby Board Chairman

“No comment.”Dan Payne, USA Rugby CEO

“No comment.”Doug Schoninger, PRO Rugby Owner

NEW YORK, NY – There are instances in life where you’d almost prefer remaining in the dark; when you’d prefer to keep your head in the sand when it comes to the actions of some person or some organization that you hold dear. You hope that your gut instincts are off and that everything will be okay. You hope that wrongs will be righted, hard work will be rewarded and that everything will come to be just as you hoped. This is one of those times. But things became irrevocably real and the desire for inaction was overtaken by a call to action. That call came in the form of the Professional Rugby Sanction Agreement between USA Rugby and the PRO (Professional Rugby Organization), which fell into my hands.

After sorting through butterflies not unlike those that come during that awkward time between the pregame warmup’s end, the opening kickoff and that initial slam into an opponent, questions started swirling in the red that I was seeing. Surprisingly, they were not about the shockingly amateur agreement signed by then-USA Rugby CEO Nigel Melville and PRO owner, Doug Schoninger. Instead, they were questions for those sitting on USA Rugby’s Board of Directors. These individuals allegedly oversaw and approved this agreement and, therefore, are complicit in what many feared was true; that “the National Governing Body for the Sport of Rugby in America” has been a catastrophic train-wreck, rife with incompetence, dysfunction, and mismanagement.

Faces of players past and present, male and female, flashed in my head and the immediate questions for the Board were for them; Lou, Phaidra, Petri, LaValla, MacDonald, Kosanke, Emerick, Thiel, Suniula, Potter, Niau, Fry, Clever, Denham, O’Brien, Taku, Scully, The Polar Bear, Vivolo, Mate, Testy, Barrett, Baumann, Wyles. The list goes on and on and with it comes a flood of emotional questions for the Board:

Do you understand the physical and mental toll our women and men endure while sacrificing their body, family and job for the chance to represent us on the international stage?
Do you know how many have life-long injuries are incurred while toiling in set-ups that are not conducive to winning?
Did you pound your fist and bellow that a per diem for all of the above (in most cases) is/was simply not acceptable?

Emotion aside, the answers as per this Agreement, point to a collective “NO.” There are likely some Board members that will say they didn’t know about a lot of what’s in it. That may be an honest admission but it reeks of apathy and is equally unacceptable. A follow-up question, one that seems too basic in nature might be: What have you ever done, exactly?

Since USA Rugby was founded in 1975, the only real currency players have gotten in return was the right to wear the jersey. By no means is that a slight of that honor. They will have that exclusive claim for the rest of their lives. This Sanction Agreement, though, suggests a systemic dysfunction that goes back years and has likely kept our players and coaches from actually earning rent money. Is that too much of leap? Not if you consider that there are successful business people on the Board that either signed off on this Agreement or didn’t read it. Moreover, they didn’t enforce certain critical aspects of it.

But really, can one Agreement (which may or may not have side agreements we don’t know about), be so poorly executed that it should see a Board of Directors dismantled or –at the very least – restructured? Let’s go through it and you can be the judge…

NOTE: PRO Rugby is the “N.A. Rugby Union LLC,” USA Rugby or United States of America Rugby Football Union, is the “Union.” The rugby league is referred to as the “Competition.”

The 3-year clock apparently started ticking in April of 2015:
This Professional Rugby Sanction Agreement (the “Sanction Agreement” or the “Agreement”) is entered into this 21st day of April 2015….

This is important and contrary to what has been represented in public. Effectively, PRO’s sanction only has 14 months left. Is that time enough for two seasons? Not likely.

Here’s more important language re the term:
Article I – Term
1.1   This Sanction Agreement shall be for an initial term of three years (hereinafter the “Original Term”) and will thereafter be automatically renewed at the end of the Original Term for an additional three-year term, and thereafter, every three years, three-year increments (hereinafter, each a “Renewal Term”) unless (a) the N.A. Rugby Union LLC fails to hold a complete, or substantially complete, season of the Competition in 2018 or any year thereafter or (b) either party hereto gives written notice to the other not less than 180 days before the expiry of the Original Term or any Renewal Term, of their intention to not proceed with any further renewals hereof (hereinafter collectively referred to as the “Term”). Notwithstanding the foregoing, if the Union shall fail to comply with its obligations in Article 4 of this Sanction Agreement, the Term shall automatically be extended for the period of time that the Union failed to comply with its obligations in Article 4.
1.2  The Original Term shall commence on the date of execution hereof.

Since it was signed on 4/22/15, we can likely call that the “date of execution.

Board Agreement Question #1: After looking at (b), why didn’t USA Rugby exercise “their intention not to proceed” once players and coaches stopped being paid? As rudimentary as this sounds, it would put PRO in a “lame duck” situation and could be a basic negotiating tool. If nothing else, it would demonstrate to those not being paid that something was being done on their behalf.

Article II – Competition Administration
2.1
g. N.A. Rugby Union LLC agrees to appoint Rugby International Marketing as its exclusive Player Representation agency through which it will contract with all Players and Coaching staff on a to be agreed fee basis (it being understood that such agency shall be the subject of an agency agreement and shall not be effective until such agency agreement has been executed by N.A. Rugby Union LLC and Rugby International Marketing). Rugby International Marketing shall perform such services in a professional, workmanlike manner consistent with the level of care and skill ordinarily exercised by companies of the same industry under similar conditions (but in no event less than a reasonable level of care) (the “Performance Standard”). If N.A. Rugby Union LLC determines in its reasonable discretion that Rugby International Marketing has failed to meet the Performance Standard, N.A. Rugby Union LLC shall have the right to remove Rugby International Marketing as its exclusive Player Representation agency, upon written notice of the failure to meet the Performance Standard and a 30 day opportunity to cure.

h. N.A. Rugby Union LLC agrees to appoint Rugby International Marketing as a non-exclusive agency to present the commercial rights of the Competition to potential sponsors on a to be agreed fee basis (it being understood that such agency shall be the subject of an agency agreement and shall not be effective until such agency agreement has been executed by N.A. Rugby Union LLC and Rugby International Marketing).

Board Agreement Question #2: Did anyone consult those players and coaches subject to this representation arrangement? Many questions have surrounded RIM since its formation. Yet, we’ve heard nothing from those in charge to put the speculation and doubt to bed… and this won’t help. Is this assignment of representation to an entity that you own the majority of even legal? At best, it seems ethically shady. As an actor, I have multiple agents. The RIM arrangement would be like having the Producer doubling as my agent and negotiating my actor’s contract for the film he’s producing. It certainly wouldn’t be in my best interests.

Board Agreement Question #3: What is RIM doing as the representative for the players and coaches that aren’t getting paid? My agents would be suing anyone and everyone.

Further, what is RIM doing as non-exclusive marketer of commercial rights?  What are they getting paid? Surely, the USA Rugby Membership cannot be happy with the commercial exposure of this league. The guess here is that this arrangement never materialized, and that RIM needs to be light years more transparent.

Article III – Financial Responsibilities
3.1N.A. Rugby Union LLC shall have sufficient financial resources as reasonably necessary to fulfill its obligations under this Agreement (taking into account commercial arrangements entered into by N.A. Rugby Union LLC in respect of the Competition). At least six (6) months prior to the first Competition game in the first season covered by this Agreement, the parties shall agree on financial resources that would be sufficient for N.A. Rugby Union LLC to fulfill its obligations under this Agreement and the evidence required to demonstrate that N.A. Rugby Union LLC has sufficient financial resources to fulfill its obligations under this Agreement (for example and without limitation, a letter of credit, dedicated bank account with sufficient funds that cannot be withdrawn for purposes other than those covered by this Agreement, commercial arrangements relating to the Competition, etc.). At least three (3) months prior to the first Competition game in the first season covered by this Agreement, N.A. Rugby Union LLC shall provide to Union such evidence that it has sufficient financial resources to fulfill its obligations under this Agreement. The Union shall have the opportunity to review such evidence and determine, in its reasonable judgment, whether the evidence provided is sufficient to satisfy the requirements agreed upon pursuant to this Section 3.1. For the avoidance of doubt, the Union’s rights granted pursuant to this Section 3.1 shall be limited to the review of the evidence provided by N.A. Rugby Union LLC to determine whether N.A. Rugby Union LLC has satisfied its obligations under Section 3.1 consistent with the agreed upon financial resources.

Board Agreement Question #4: What is the amount of the “financial resources that would be sufficient?”

Board Agreement Question #5: Where are those “sufficient funds that cannot be withdrawn for purposes other than those covered by this Agreement?”

If this mandate was enforced, the money for those not paid would be readily available. If it wasn’t enforced, there is Hell to pay for leaving USA Rugby-sanctioned players and coaches exposed. The ball was dropped, one way or the other.

Article V – Exclusions to Sanction
4.1 The Union hereby sanctions the Competition for the duration of the Term as the exclusive domestic club 15-a-side professional rugby league within the United States of America (hereinafter the “Sanction”). The Union agrees to reasonably cooperate with N.A. Rugby Union LLC to enforce the exclusivity of the Sanction against challenges from non-sanctioned groups over the Term

5.1 N.A. Rugby Union LLC hereby specifically acknowledges and agrees that the Sanction does not apply to, or include, competitions or games in which the Union’s National 15-a­side Teams participate. N.A. Rugby Union LLC further acknowledges and agrees that nothing in the exclusive rights granted pursuant to Section 4.1 shall prevent Union from sanctioning other events as part of Union’s role at the National Governing Body for the sport of rugby in the United States, which sanctions may include events in which professional rugby players participate, provided that such sanction does not cover a domestic club 15-a-side professional rugby league in the United States.

This clearly outlines the exclusive sanction only pertaining to a domestic league. It should in no way keep USA Rugby from talking to the Guinness Pro 12 about putting a franchise here.

Board Agreement Question #6: Why publicly shy away from the Pro 12/USA franchise conversations when the above Sanction clearly outlines “a domestic club 15-a-side professional rugby league?” 

Okay, now for the part of all of this that may keep you awake at night.

Article VI – Sanction Payment and Game Board
6-1… In consideration of the Union granting the Sanction, N.A. Rugby Union LLC hereby undertakes and agrees to pay the Union the sum of One Thousand ($1,000.00) Dollars (USD) per annum during the Term, the initial payment due and payable on the date of execution hereof, and each subsequent annual payment due and payable on the anniversary date hereof, in each year during the Term.

Board Agreement Question #7: With your CEO telling the Membership, fans and whomever else was tuning in on Facebook Live that USA Rugby has a budget deficit of $1,000,000.00 (one million dollars), how did you come up with $1,000.00 (one thousand dollars) as the exclusive sanction fee?

Hopefully the answer is not about how PRO’s anticipated losses in the first years of the league making a higher amount impossible or unrealistic. We’re talking a thousand bucks here. Is the explanation, therefore, related to the potentially sweetheart grant of commercial rights to RIM? If so, what is the value of that grant? One dollar? One million dollars? Does any Board member know? Does any Board member care?

Okay… one last bit that caught the eye.

Article IX – Legal Claims And Record Keeping
9.1
N.A. Rugby Union LLC hereby covenants and agrees to:
a. within 10 business days of notice thereof by N.A. Rugby Union LLC, provide the Union with written notice of all legal, judicial or administrative proceedings commenced against N.A. Rugby Union LLC or the Participants and to use its commercially reasonable efforts to assist the Union and its agents and representatives in seeking protective or other court orders as they deem necessary or advisable;

Board Agreement Question #8: Has PRO notified you within 10 business days of all legal, judicial or administrative proceedings commenced against N.A. Rugby Union LLC ? For if they haven’t, you can use this as a tool to… do something.

So what can a paid member of USA Rugby do about all of this?

It is important to understand that the USA Rugby Board takes in applications for vacant seats and picks a candidate. The USA Rugby Congress then ratifies that new Board member. One could argue that if this was simply reversed, USA Rugby would be better off. Regardless, you can contact the Board members and let them know how you feel about this Sanction Agreement. Further, the Congress convenes this weekend in Austin. They have the power to make changes. Reach out to them and ask them to ask their Board of Directors these three most elementary of questions:
Who actually read this Sanction Agreement?
-Who approved this Sanction Agreement
?
How is this Sanction Agreement beneficial to USA Rugby’s membership?

Finally, the irony of ironies, found near the end of the Agreement:
17.10 Time shall be of the essence in this Sanction Agreement.

That’s all for now, please feel free to comment below, look for and “Like” our Facebook Rugby Wrap Up Page and follow us on Twitter@: @RugbyWrapUp@Luke Bienstock, @Junoir Blaber, @MeetTheMatts, @Ronan Nelson, @Brian C Cole and @Declan Yeats. We’re also on Instagram – @rugbywrapup.

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About the Author ()

Matt McCarthy comes to RugbyWrapUp.com from their partner in the USA, MeetTheMatts.com. RWU and MTM feature a stable of diverse contributors, with coverage that is both serious and with a wink. Find him on twitter: @Matt_McCarthy00
  • Jim Powers

    Thanks for writing this. This murky b.s. does not help the game at all. Let;s get some answers here. Bravo, Matt.

  • Finns

    Way to call out the “board” and this pathetic contract! Does anyone give a shiit about the players

  • Aaron

    Matt,

    Could you provide a full PDF Version for download of the copy you have? See my outrage via the twitter.

    It’s not that I think RIM was to represent the Players and Coaches, but that RIM was required to negotiate for PRO with the players and coaches on their contracts? Was that done?

    RIM was responsible for the Marketing of PRO…wow.

    Does RIM have any documents showing negotiations made with PRO for the fee basis?

    So in theory, USA Rugby could sanction the Cal Cup and the MRC as B-Side events?

    Why weren’t there stipulations regarding front office staff, and then staff per team? Because there should have been team doctors per club, not one for the entire league. Geeze.

    • Hi Aaron,

      We will not be making the full version available yet. As for the Cal Cup, MRC, etc., the Sanction does call for exclusive domestic 15-a-side league. But we are not attorneys here.

      Cheers.

      • Patrick Kane

        So you are picking and choosing what you make publicly available? Why? So you can comment on and express your opinion on things without anyone who reads those comments being able to understand what you are commenting on in the full context? Seems like precisely the type of thing people criticize USAR for.

        • Patrick… Just responded to this on FB… We put it in there… As it is, it’s way too long a written piece for the social media age. Folks tend to look at a title, look for cool pix/clips and check out the word count. The reading of this is a very big ask. Tried gettingthe nuggets of most interest from 14 pages of legal terminology and opinion of that does filter in.

          • Aaron

            I’m just asking for a link on google drive…I’ll read it in whole.

          • Can’t. That’s all for now. Sorry.

      • Aaron

        That’s why I stated sanctioning those as B-Side events. However, USA Rugby didn’t sanction the events as part of their Club Schedule, which I believe was the point of: “If member clubs desire to play non-union scheduled events, that’s on them,” approach.

        Patrick, I agree…although he said “yet”.

        • OldStyle

          What do you mean by “b-side events”? I don’t believe I’ve heard that term before.

          • Aaron

            So PRO is saying they are the Professional A-Side, so Tier 1 Competition. B-Side would be Tier 2. When I was in college we didn’t use the designation of JV, we had A, B, and C Sides. So if a club has more than 30 players you would have a B or what they call developmental/social side in addition to the A Side in senior mens competition.

          • OldStyle

            Ah, I see what you’re saying now. Like how USA Soccer sanctions one “first division” league, MLS, but also leagues at lower divisions. Since there’s no mention of the exclusive sanctioning being limited to a “top level”, it appears that sanctioning those competitions as pro leagues would be a violation of the contract even if they play at a supposed “lower” level.

          • Aaron

            Which was a contention of DS…but before that he violated the sanctioning agreement by failing to pay his vendors, then failing to pay his league doctor, then failing to pay his coaches and players. It’s over.

          • Eileen Nuestadt

            A side are best players on a team. B side younger, learning side. Usually play after A side plays. If B side has no match with opposing team, they might play when A side player substituted or hurt. Toward end of a season, many B side players usually get to play toward end of last match.

          • OldStyle

            Right, I should have clarified that I know what B-sides are for club matches. I’d just never seen the term in context of an entire professional league – terms like first/second/third division are much more common for what’s being described here. Without asking, I would have assumed Aaron was talking about something like the North America 4, a competition that featured developmental squads which could be considered B-sides for the national team.

        • Aaron Lindquist

          I think there is a misunderstanding. The agreement covers XVs as a code. It’s 15-a-side or 15 players per side. It is not saying club 15s A-side.

          • Aaron

            Ah…language sometimes doesn’t get the point across…

  • OldStyle

    On question #6, I’m pretty sure “domestic” in this sense doesn’t mean specifically founded and grown within the U.S. but is more simply referring to anything not involving national team play. The two parties that came to this agreement seem to have the same understanding of what that term means (based on PRO’s complaints and USAR’s own releases), so I’m going to stick with that interpretation of the term.

    The other questions are very fair though. It is fairly obvious that USAR didn’t carry out due diligence before entering into this agreement. The agreement was entered into on April 21st? They must have been celebrating the holiday the day prior in Boulder while they negotiated – really the only logical explanation for this level of incompetence.

  • twinkletoes

    :-O

  • Bret Costain

    Outstanding reporting

    • Eileen Nuestadt

      Great Matt~lots of questions that need to be addressed in Austin. Won’t hold my breath. Know someone attending.

  • Matt Manley

    I am sure that there is an explanation buried somewhere, but who is our congress and how do they get into those positions?

  • Cutegirl

    What ashame. Thanks for reporting

  • Jen Cole

    While I’m sad and full of regret that the truth was as bad as some – myself included – had thought. I am still hopeful that the hole dug by the former CEO can be climbed out of. For that to happen we as a whole community need to get behind Dan Payne and his vision. We need to hold ourselves accountable by continuing to ask questions and require complete answers. However slow, however painful in the short term I think the rugby community is resilient and can move from this and and just plain do better.

  • Nick Attewell

    Interesting piece Matt. Well researched.

  • The Donald Trump

    I would fire ‘Little Me’ Schonny and the Chang kid.

  • Big Fat Prop

    All we hear has been about how bad Shoninger is but this makes USAR look ridiculous. Both need to get their acts togehter and fix this. Hope they do.

  • Cal
  • nicosk03

    When all this disaster will end and people seat around a table to deliver a professional rugby league?

    • AirForceRugger

      Not up to all the politics but the owner should pay what he promised are not continue. Seems pretty simple.

  • Junoir Blaber

    Careful with all this real journalism. It may get dangerous out there.

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