Canadian Football League

Wednesday, June 29, 2005

Canadian Football League Buy-Out

Canadian Football League clubs have agreed to pay Brad and Bill Watters as much as $1 million should the minority owners of the Ottawa Renegades drop their consideration of a lawsuit over the oft-violated salary cap.
The Citizen has learned that each CFL team, excluding Ottawa, is expected to pay $125,000 to keep detailed player-expense data out of the public record, which would have happened had a suit been filed. It is believed the payments will be deducted from league disbursements to the teams and that only the Toronto Argonauts are balking at this point.
"All comments on the Ottawa situation must go through the commissioner's office," Argonauts president Keith Pelley said yesterday.
A league spokeswoman said commissioner Tom Wright would not comment on the matter.
The settlement, which was reached late last month and first reported in the Citizen on June 1, was tied to a sale of 51 per cent of the Renegades franchise late last month to Detroit businessman Bernie Glieberman.
The Watters had staked out legal territory in case league governors did not approve their choice of buyer (Glieberman) or the league attempted to revoke their franchise, as happened in Toronto and Hamilton in 2003. Plans had been afoot for months, with lawyers having already interviewed former CFL and team officials about the league's dodgy player-compensation system.
The Watters believed they had a case against the league and its teams for not enforcing the $2.6-million salary cap, which was part of the expansion agreement and, according to former club president Brad Watters' comments over the years, contributed to a broken business model in Ottawa.
Brad Watters did not return a call seeking comment yesterday. He and his father continue to own a small portion of the club, partnered with Glieberman and original investor Bill Smith.
The elder Watters also refused to comment yesterday, saying he was always a silent investor and had nothing to do with several agreements that needed to be reached for the sale to be completed.
That process proved to be lengthy and complicated. Toward the end, many officials, including Wright, referred to various "moving parts" of the transaction.
Smith first reached a deal to buy out former Renegades governor Randy Gillies and minority investors Rick Baker and Kevin Kimsa before forging his union with Glieberman.
"I have not sued and I have no plans on suing," Smith said yesterday.
"Any money my partners might have gotten was from Bill Smith's own pocket. Randy, Rick and Kevin had no desire to go after the league. Never did."
It is believed that the money the Watters will receive for settling the dispute will be paid to them by the league through Smith.
Governors feared the suit, but not so much the legal merits of the case.
The action would have triggered a discovery process in which clubs would have been required to turn over to the court detailed financial information that they keep secret from the CFL office.
The clubs were worried that those disclosures could spark the interest of tax authorities on both sides of the Canada-United States border because of non-salary benefits that are paid to players, but are not included in the contracts that are registered with the league. Those benefits could include such things as paying for cellphones or club memberships, for example.
The governors' worries should go away if the settlement is finalized. What remains unclear is whether the nine teams are sufficiently spooked to begin enforcing the cap or whether the settlement allows them to preserve the status quo.
The Renegades' expansion agreement says the CFL constitution governs league procedure, and the constitution sets out the parameters for a salary cap, including penalties for violators, which have not been enforced.
Wright has said the cap will have teeth in 2006, but his future is also unclear.
He was offered a one-year contract extension with no raise from his $400,000 salary, and the contract still hasn't been signed.


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