As the business of junior hockey rapidly changes in the wake of the NCAA making Canadian Hockey League (CHL) players eligible, famed sports litigator Jeffrey Kessler of Winston & Strawn could play a central role in how the chaotic situation shakes out.
Kessler confirmed to Sportico that he has been retained by the Youngstown Phantoms and another team from the United States Hockey League (USHL). In a phone interview, Kessler said it has “become known” the Phantoms seek to join the Ontario Hockey League (OHL) and have “given indication” of their intent to exit the USHL. The USHL, which is under the control of USA Hockey, has thus far been unwilling to let the two teams leave the 16-team league. Kessler said he is advising the two teams on their options but declined to elaborate.
The OHL, the Western Hockey League (WHL) and the Quebec Maritimes Junior Hockey League (QMJHL) are part of the CHL. The OHL would like to add the Phantoms and another USHL team but have been rebuffed.
Central to potential antitrust litigation brought by the Phantoms is the NCAA opening the door to former CHL players. That move followed antitrust litigation over an NCAA eligibility policy—the so-called “CHL boycott”—that struck critics as antiquated and unfair.
Last year, 19-year-old Ontario hockey player Rylan Masterson sued the NCAA and 10 universities over the NCAA denying CHL player eligibility on the basis of CHL players receiving stipends, typically worth several hundred dollars, to cover living expenses. The stipends were perceived as making CHL players “pro athletes” even though they aren’t payment for labor or NIL. Masterson, whose case remains on the docket and could lead to former CHL players compensated for lost collegiate opportunities, maintains the rule is inconsistent with other recent NCAA eligibility changes.
Those changes allow college athletes to engage in commercial activities, such as NIL deals with third parties and collectives, without forfeiting their eligibility. If U.S. District Judge Claudia Wilken approves the NCAA’s settlement to resolve the House, Carter and Hubbard antitrust litigations, participating colleges will pay D-I athletes for NIL. Colleges can also play former pro hockey players from European teams, which arguably undermined the logic of banning CHL players because they had been paid.
The “boycott” forced many elite teenage players to make a major life decision: play in the CHL, a highly regarded developmental league but one that came with the penalty of losing NCAA eligibility, or play in the USHL, where NCAA eligibility is preserved but with an arguably lesser quality of player development.
Wiith CHL players now eligible to play NCAA hockey, more talented players will populate U.S. college hockey programs. This will take roster spots away from lesser players pushed out by former CHL players. The USHL also no longer enjoys an NCAA eligibility advantage over the OHL, WHL and QMJHL.
Enter Kessler.
His presence suggests the Phantoms are exploring legal options if they remain unable to join the OHL, which like the other CHL leagues will gain a recruiting boost with the CHL boycott iced.
The Phantoms could argue the USHL (and USA Hockey) denying USHL players compensation violates antitrust law. In the face of an antitrust lawsuit, the NCAA eliminated restrictions on former CHL players. The USHL and its competing teams can no longer argue that no-pay rules are necessary to preserve NCAA eligibility. Kessler might assert that if the NCAA is okay with junior hockey players being paid, the USHL should feel the same.
The economics of the USHL could also face scrutiny, particularly with Kessler crafting the arguments. Kessler has long maintained NCAA rules are problematic because member schools, which join hands to restrain how they compete, vary so widely. That dynamic has generated market-restraining rules that protect the weakest members. Some big-time colleges could, and probably would, pay athletes to enhance recruiting. However, NCAA no-pay rules protect colleges that aren’t in a position to pay. If the USHL is structured analogously, meaning some teams (such as the Phantoms) have the wherewithal and interest to pay players while others do not, Kessler might depict the USHL as a mini-NCAA: a league where rules protect the weak from the strong.
The Phantoms might also assert the USHL and USA Hockey have conspired to deny Phantoms players, coaches, fan and media partners a better place in the junior hockey market. Also, if the USHL uses what the Phantoms portray as one-sided and non-negotiable deals to acquire market positioning, a potential antitrust claim could be strengthened.
The USHL would be armed with defenses. The Phantoms voluntarily joined the USHL and contractually agreed to follow USHL franchise membership rules. The team might therefore lack a contractual right to exit a membership contract to join a rival league.
Also, the USHL could argue the marketplace for junior hockey would be harmed if USHL teams flee. Moves that diminish, or even destroy, the USHL could decrease opportunities for players, coaches and fans. The USHL might also argue the no-pay rules help to provide a unique product (the NCAA has made that argument over the years in defense of amateurism rules).
These possible arguments highlight why the addition of Kessler is a major, game-shifting development. An attorney of his caliber, billable rate and fame—Kessler has represented Tom Brady, Megan Rapinoe and other A-list athletes and top players’ unions—taking on a case on behalf of a minor league hockey team in Ohio is unexpected. But the team has deep pockets. It is owned by a group led by Bruce Zoldan, who owns Phantom Fireworks—a leading retailer of consumer fireworks in the U.S.—and Black Bear Sports Group, whose CEO is Murry Gunty of Blackstreet Capital Holdings.
If history repeats itself, Kessler’s addition could foreshadow antitrust litigation.
Last February, NASCAR teams retained Kessler as they negotiated a new charter agreement with NASCAR. Eight months later, Kessler filed an antitrust lawsuit on behalf of 23XI Racing, which is co-owned by Michael Jordan and Denny Hamlin, and Front Row Motorsports, against NASCAR. Those two teams refused to sign charter agreements and insist NASCAR’s control over stock racing is excessive and violates antitrust law. Last month, Kessler’s advocacy led a federal district judge to issue a preliminary injunction against NASCAR that benefited his clients and earlier this month the same judge denied NASCAR’s motion to dismiss. Kessler, in other words, is thus far defeating NASCAR.
Kessler also has an impressive record against another major sports entity: the NCAA. He led a class action antitrust lawsuit brought by Shawne Alston and other athletes against NCAA rules that limited how colleges pay education-related costs for athletes. Kessler secured a decisive 9-0 victory at the U.S. Supreme Court in a decision that ended deferential review under antitrust law for NCAA amateurism rules. Alston has dramatically changed college athletics, with the NCAA hesitant to enforce rules well beyond education-related expenses, including with respect to NIL.
Kessler is also a lead attorney against the NCAA in the House, Carter and Hubbard antitrust litigations. He and the other attorneys and firms on the players’ side are expected to be paid in the ballpark of a half a billion dollars should the settlement gain final approval.
