USA Law and Practice Contributed by: Irwin A. Kishner, Daniel A. Etna, Joel Wagman and Barry Werbin, Herrick, Feinstein LLP
violence if it occurs, including a strong, visible police presence; • install video equipment in the seating area to help deter misconduct and identify spectators in the event of fan violence; • have a designated area in the stadium for visiting teams’ spectators; and • make public announcements before and during the game emphasising standards of spectator behaviour. Each sporting institution should review and examine its culture, prior experiences and resources to prepare for sporting events and to reasonably ensure their safety. Entity selection is an important concern that must be addressed early in connection with for - mation of any professional and non-professional sports clubs (amateur athletics) and sports gov - erning bodies. In all instances, limiting liability against legal claims will be of paramount impor - tance and in the USA will be provided for by resorting, basically, to use of any of the following entities: • limited liability company; • limited partnership; and • corporation (publicly or privately owned). Each of these types of entities are presently rep - resented in all areas of professional and non- professional sports. In the absence of ownership by persons or enti - ties that are non-resident in the USA, the lim - ited liability company form is likely the prevailing form of ownership and operation. These are fre - 4. Corporate 4.1 Legal Sporting Structures
quently referred to as “pass-through entities” for purposes of taxation, providing for a single level of income taxation while affording their owners the ability to construct creative and sometimes unusual distribution “waterfalls” , directing how various revenue streams are distributed. The lim - ited liability company is governed by a limited liability company operating agreement and the state laws where that entity has been formed. Essentially, the operating agreement is a con - tract that provides for nearly unlimited variations of rights and remedies among its owners, which may consist of traditional common equity inves - tors, those with preferred equity investments, and those holding hybrid securities (which may be combinations of debt and equity securities). The applicable state law statutes are structured to defer to contractual rights of ownership and operation negotiated by the owners. 4.2 Corporate Governance Governance in sports spans many partici - pants, including players, clubs, local, national and international organisations, spectators, the media, commercial (sponsors), non-commercial interests, and educational and training bodies. Enhancing governance in sports has undoubt - edly been a priority in response to the public scandals at the highest levels and bears simi - larities to the evolved corporate governance standards and expectations applicable to busi - ness corporations in the public capital markets. However, in the USA there is no “one size fits all” approach recommending or prescribing govern - ing principles and, as a result, codes of conduct abound at all levels (eg, professional, collegiate and youth). This stands in contrast to, for exam - ple, the UK’s Code for Sports Governance, with broad application to all that seek government and lottery funding.
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