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The Value of Advanced Planning: The Business Lessons we can take from WWE v. the Denver Nuggets

david — Mon, 25 May 2009 16:54:10 +0000

Imagine the following scenario: You have just experienced an unprecedented event in the growth of your business. You’ve reached a level of success that you have not achieved in years. But then suddenly, there’s a snag. A contract you signed almost a year before creates a business conflict which places your business in a less than advantageous position, causing you to lose not only short term revenue, but a long time customer.

This is exactly what has happened to the Denver Nuggets, the Pepsi Center and the owner of both entities, Stan Kroenke, in the last week. In a period where they should be excited about reaching the Western Conference finals for the first time in years, the Nuggets are now engaged in a war of words with World Wrestling Entertainment (WWE) and its verbose owner, Vince McMahon.

The issue arises over the WWE entering into a leasing agreement on August 15 of last year to use the Pepsi Center for a live broadcast of its flagship program, Monday Night Raw tonight. The Nuggets even confirmed the agreement on April 15, 2009 of this year, knowing the playoff schedule and their status as the number 2 seed in the West and a favorite to be in the conference finals.

Therein lies the problem. The Nuggets reaching the conference finals results in there being a home game for the Nuggets also scheduled tonight. So by failing to plan ahead for playoff success, Kroenke and his team have been forced into a very public contractual dispute with a publicity savvy opponent.

As a result of the failure to plan, Kroenke is taking a beating both business wise and in the media. The WWE has moved its show to Los Angeles, the home of the Lakers, the Nugget’s opponents in the Western Conference finals. Worse for Kroenke and the Nuggets, the WWE intends to spend much of the show lampooning Kroenke (who their webpage refers to as “the Chicken Nugget”) and the Nuggets. On a more serious note, the WWE is releasing statements that it will use other arenas in future trips through the Denver area.

So what can we take from this? Even in these difficult times, you have to plan for being successful. We all spend time planning how to make our businesses successful, but we also need to be sure to plan on what to do once we get there. Had Kroenke and his staff chosen to plan for the success of their team, they could have avoided this issue entirely.

Who Watches the Watchmen? Smart Business People Should

david — Wed, 14 Jan 2009 22:01:37 +0000

The seminal graphic novel Watchmen by Alan Moore and Dave Gibbons centers around an unlikely grouping of retired superheroes fighting to stave off a disaster of epic proportions. Recently, the attempt by Warner Brothers to release a movie based on the graphic novel has generated a legal controversy which could be a disaster of epic proportions for Warner Brothers, unless an even more unlikely group of heroes, a group of corporate lawyers, can save the day.

Specifically, the right of Warner Brothers to release the film has been the subject of a contract dispute in which 20th Century Fox is claiming a copyright interest in the release of the film. In fact, late last year, a Court in Los Angeles ruled in Fox’s favor. The situation has now become deadly serious for the team at Warner Brothers as the 139 million dollar film is scheduled to be released on March 6, 2009.

The crux of the legal issue is the purchase of the movie rights by Fox in the late 1980’s with the intent to produce a film. Fox eventually abandoned the project and it took nearly 20 years before a film version was finally made in the last two years by Warner Brothers.

However, a ray of hope has emerged recently as the two sides are engaged in serious settlement discussions to resolve the issue. The hope from all concerned, from the fans awaiting the film to the executives who’s careers may hang in the balance, is that these settlement discussions will, in fact, settle the dispute.

Is there a lesson in all this? There are several. First of all, this whole situation shows the absolute necessity of doing your homework as to any project you undertake as a business. Had Warners done so, they might have been able to avoid this issue entirely.

The second is an illustration of the power of documentation. As we’ve noted before, proper contract preparation is imperative to protecting your business interests. The fact that a federal court determined that the contracts that Fox signed 20 years ago still have power and effect today shows the value of recording your business dealings in writing.

The third and final thing we can take from this is the value of settlement. At the end of the day, both sides are realizing that they need to settle the issue. There is nothing to be gained by continuing to fight, just for the sake of fighting. A protracted battle over the issue would not only jeopardize the film’s profitability, but would erode the good will of the fans towards both Warners and Fox. Regardless of the personal rancor between the sides, cooler heads need to eventually prevail and settle the issue.

Protecting Your Business by Getting Everything in Writing

david — Fri, 01 Aug 2008 17:33:43 +0000

One common problem I encounter regularly as a part of the business litigation practice here at Mesriani Law Group is the fact that my client failed to put an agreement in writing. Many small businesses tend to act on a handshake basis, working from an oral agreement. Unfortunately, if an agreement is only oral, there is no real evidence it exists.

I find that many of my small business clients will tell me that they didn’t get the agreement in writing because they trusted the other side and the other side “gave their word.” Businesses dealing with each other on an honor system where everyone’s word is their bond, is a wonderful theory, but it only works if both sides are adhering to the honor system. If one side does not and there is no written agreement, the result is invariably that one side refuses to cooperate, causing a dispute that can lead to the need for litigation.

To protect yourself, you should not enter into a contract unless it is in writing. If you do make an oral contract with another party, you should make sure that you reduce it to a writing to memorialize it. Even if it’s just a letter to the other party saying that the letter confirms the deal.

You should follow through in this way, even if you are dealing with a family member or friend. Many of the clients I mentioned above were dealing with “friends” and did not memorialize their agreement for that reason. Then those “friends” refused to honor the agreement, resulting in our involvement. It doesn’t matter if it’s your own mother or father you are dealing with, you need to be sure that every agreement you make is in writing.