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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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

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