Peter Waldman’s report today in the Wall Street Journal (subscription required) about the bitter relationship between Don Nelson, coach of the Golden St. Warriors, and his former boss and current owner of the Dallas Mavericks, Mark Cuban, underscores the importance of contract law as it pertains to professional sports.
Per the subject of numerous reports, Nelson and his lawyers allege that Cuban still owes Nelson $6.6 million in differed compensation from his eight years as Mavericks coach. And according to Frank Zaccanelli, a Dallas real-estate developer who was a minority partner and president of the team when he negotiated Nelson’s original contract, the deferred salary “is not an issue. He earned that money. He only stretched out the payment as a favor to us to help our cash flow.”
Nelson’s lawyer, John O’Connor of San Francisco said that his client wishes to settle the financial dispute “amicably.” That said, Nelson is in the process of making an arbitration claim against the Mavericks for the $6.6 million in deferred salary the coach believes he is owed. And Nelson is no stranger to the arbitration process. Ironically enough, he won $1.6 million from his current employer, Warriors owner Chris Cohan, after his first Golden State stint ended in 1995.
Waldman’s piece points out that Cuban has yet to publicly declare “why, legally, he believes he doesn’t owe [Nelson] any back pay.” As any first-year contracts student could tell you, however, the devil will be in the details, specifically in the “four corners” of Nelson’s contract, as well as any oral or written parole evidence documenting the deferred compensation plan. And to speculate, one may surmise that Cuban’s argument will center around the fact that he felt Nelson “quit” on his team and was in breach of his duty [either express or implied] to the team, and moreover to Cuban (he may even reference the 2004 playoffs when Nelson, against Cuban’s express orders, refused to play star Dirk Nowitzki during the playoffs due to injury), and that his actions rendered any past agreement null and void. In other words, Cuban’s theory will be a long shot at best, depending on how Nelson’s employment agreement with the team was worded. More likely is that Cuban will sling mud at Nelson during the proceedings and somehow hope some of it sticks and/or creates enough doubt in the arbitrator’s mind for him to come down [to some degree] from the $6.6 million figure. But expect Nelson to again emerge victorious from arbitration (as well as perhaps on the court; the Warriors lead the series 3-1).
From an agent’s perspective, however, the ensuing dilemma underscores the importance of contract negotiation; of detailed, written documentation in the event of the contract’s modification; and perhaps most importantly, of always keeping the worst case scenario in mind. Very few parties sign a contract with the belief that their mutual accord will inevitably fail or be the subject of further dispute. However, wise parties are always mindful of this possibility, and they will tend to tightly tailor their contracts accordingly.
— Jason G. Wulterkens