Declaration of Sunil Gulati in Support of USSF Opposition To NASL Injunction

Case 1:17-cv-05495-MKB-ST Document 26-1 Filed 10/16/17 Page 1 of 78 PageID #: 744
UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
NORTH AMERICAN SOCCER LEAGUE, LLC,
Plaintiff,
v. Civil Action No. 1:17-cv-05495-MKB-ST
UNITED STATES SOCCER FEDERATION, INC.,
Defendant.
DECLARATION OF SUNIL K. GULATI

IN SUPPORT OF DEFENDANT UNITED STATES SOCCER FEDERATION, INC.’S
OPPOSITION TO PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION
DECLARATION OF SUNIL K. GULATI
I, Sunil K. Gulati, under penalty of perjury, under the laws of the United States and the
State of New York, do declare as follows:
1. I am submitting this declaration in connection with the opposition of the
defendant United States Soccer Federation (“USSF”) to the plaintiff North American Soccer
League’s (“NASL”) application for a preliminary injunction in the matter entitled North
American Soccer League, LLC v. United States Soccer Federation, Inc., Case No. 1:17-cv-
0549506-C-5724 now pending in the United States District Court for the Eastern District of New
York. I have first-hand knowledge of the facts set forth herein and, if called as a witness, I could
and would testify competently to these facts.
I. BACKGROUND
A. General
2. I graduated magna cum laude with a B.A. in economics from Bucknell
University in 1981 and received an M.A. in 1983 and a M. Phil. in 1986 in economics from
Columbia University.
3. I served on the Columbia University economics faculty full-time from 1986
until 1990, where I taught multiple courses. In 1991 I went to work for the World Bank in
Washington, D.C. where I served as a “country economist” for the emerging country of
Moldova. I returned to the Columbia University economics faculty in 1995 where I served as an
adjunct professor until 2003. In 2003 I resumed my position as a full-time member of the
Columbia University economics faculty and have continued as a full-time member of the faculty
to this day.
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4. I have also been involved with the United States Soccer Federation in various
capacities for more than thirty (30) years, all as a volunteer.
5. Throughout the 1980s and 1990s, I was appointed by the President of the USSF
then in office Werner Fricker (1984-1990), Alan Rothenberg (1990-1998) and Dr. Robert
Contiguglia (1998-2006) to serve on and sometimes chair a number of different USSF
Committees and Task Forces. Among other things, I was the Managing Director of National
Teams, responsible for the development of the USSF’s senior men’s and women’s national
teams; member and Chair of the International Games Committee, responsible for international
exhibition matches involving FIFA-affiliated teams and clubs as well as matches played by the
senior men’s and women’s national teams; Chairman of the Technical Committee, responsible
for overall player development; Chairman of both the U.S. Cup ’92 and U.S. Cup ’93, an
international round-robin tournament leading to up to the 1994 FIFA World Cup; and a member
of the World Cup Bid Committee from 1986-1988 which secured for the United States the right
to host the 1994 FIFA World Cup.
6. I also served as a delegate to the USSF’s National Council (see below) and as a
member of the USSF’s Board of Directors as a representative of the Professional Council (see
below) from 1995 until 2000. Moreover, from 2000 through the present I have served as an
elected officer of the USSF.
7. I was elected Executive Vice President of the USSF in 2000 and served in that
capacity until 2006 when I was elected President. I was re-elected to additional four-year terms
as President in 2010 and again in 2014.
8. I was also appointed to the Board of Directors of the FIFA Women’s World Cup
USA 1999 and again in 2003 (when the USSF agreed, at the last minute, to host the 2003 FIFA
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Women’s World Cup because of the SARs outbreak in China where the tournament had
originally been scheduled to take place).
9. I have been a member of the CONCACAF (defined below) Executive
Committee and have served as the chair of several CONCACAF committees.
10. In 2013, I was elected to the FIFA Council. Both before and after my election to
the FIFA Council, I have served on various FIFA committees.
B. Formation of the United States Soccer Federation
11. The USSF is, and at all times during my association with the USSF has been, a
New York non-profit corporation. The USSF was formed in 1913 when the American Football
Association joined with the American Amateur Football Association to form the United States of
America Football Association, the original name of the USSF. A true copy of the April 15, 1913
Organizational Minutes of the USSF which have been maintained by the USSF in the ordinary
course of its business, are attached hereto as Exhibit 1. As the organizational minutes reflect,
one of the founding organizations, the American Football Association, was comprised primarily
of professional teams and leagues.
12. In 1914, the USSF was admitted as a National Association member of The
Fédération Internationale de Football Association (“FIFA”), the international sports federation
governing soccer (known as football in other countries) among its members.
13. The USSF (under its then-current name, the United States of America Football
Association) was formally incorporated in New York in 1914. A true copy of the original
Articles of Incorporation of the USSF which has been maintained by the USSF in the ordinary
course of its business is attached hereto as Exhibit 2. Among the purposes of the USSF set forth
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in the original Articles of Incorporation was “supreme control . . . of Association Football” (a
FIFA term) and the “regulation of all international games and questions.”
C. The United States Soccer Federation is also the “National Governing Body
for the Sport
15. In addition to being a National Association member of FIFA, the USSF is also
recognized by the United States Olympic Committee, as the national governing body (an
“NGB”) for the sport of soccer in the United States pursuant to the Ted Stevens Olympic and
Amateur Sports Act, 36 U.S.C. §§220501 et seq.(the “Ted Stevens Act”). Among other
requirements, to remain a designated NGB, USSF must be a member in good standing of FIFA,
the international federation governing the sport of soccer.
II. ORGANIZATION OF INTERNATIONAL SOCCER
A. FIFA
16. FIFA is recognized as the international governing body for the sport of soccer.
FIFA is a membership organization whose powers, duties and responsibilities are those granted
to it by its members.
17. FIFA’s members consist of National Associations, each of which represents a
different country or independent state. Each National Association member, as a condition of
continuing membership, must, among other things, comply fully with the FIFA statutes,
regulations, directives and decisions and ensure that their own members do the same.
18. The FIFA Congress (FIFA’s legislative body, which promulgates the FIFA
Statutes and Regulations) is comprised of delegates from each of FIFA’s National Association
members. Each National Association member has one vote in the FIFA Congress which meets at
least annually.
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19. FIFA also has an executive branch, the FIFA Council, which consists of a
President elected by the Congress, 8 vice presidents and 28 members elected by the
Confederations (described below) and the British Associations (for historical reasons).
20. Finally, FIFA has an administrative branch headed by the General Secretary as
well as several judicial bodies responsible for addressing various types of disputes.
21. FIFA members have delegated to FIFA the right to control “Association
Football” which encompasses both amateur and professional soccer, among its National
Association members and the members of the National Association members. Indeed, as early as
1924, FIFA made clear in its Regulations that, among its members, it “fosters and governs
amateur sport and controls professional football.” See the 1924 FIFA Rules on Amateurism and
Professionalism, a true copy of which is attached hereto as Exhibit 3. 1
22. The FIFA Statutes require that National Associations like USSF “be responsible
for organising and supervising football in all of its forms in its country . . .” Supra, Exhibit 5,
FIFA Statutes Art.11(1), April 2016 Ed., (emphasis added). The FIFA Statutes further
recommend “that all member associations involve all relevant stakeholders in football in their
own structure.” Id. (emphasis added).
23. FIFA, through its members, oversees numerous aspects of professional soccer.
For example, any effort by a league, professional or amateur, to deviate from the FIFA “Laws of
the Game” (playing rules) must be submitted to FIFA for consideration. FIFA regulations also
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The breadth of control over the sport of soccer that FIFA, through its members, exercises and
expects of its National Association members has been consistently reflected in its Statutes and
Regulations. (See e.g., FIFA Statutes, 1958 Ed., a true copy of which is attached hereto as
Exhibit 4 (“The objects of [FIFA] are to develop the game of Association Football in every way
which seems proper to the F.I.F.A. or to its Executive Committee; to encourage Amateur
Football; to control Professional Football . . .”); FIFA Statutes Art.2(d), April 2016 Ed., a true
copy of which is attached hereto as Exhibit 5 (“The objects of FIFA are: . . . to control every type
of association football. . .”).
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govern the method, manner and mechanics for the international movement of players from team-
to-team.
24. In addition, Article 14 of the FIFA Statutes provides that member associations
like the USSF are obligated to “manage their affairs independently and ensure that their own
affairs are not influenced by any third parties . . .”
B. CONCACAF
25. FIFA recognizes six regional confederations, one for each of the six continents
on which Association Football is played. CONCACAF is the regional confederation of FIFA
encompassing the North American, Central American and the Caribbean nations.
26. CONCACAF organizes competitions, offers training courses in technical and
administrative aspects of the game, and helps to build Association Football throughout the
region.
27. The USSF has been affiliated with CONCACAF since CONCACAF was
founded in 1961.
III. The United States Soccer Federation – Its Mission and Governance Structure
28. The USSF’s mission is, and always has been, to grow and develop the sport of
soccer of all types (e.g., boys, girls, men’s, women’s, Paralympic, indoor, outdoor, futsal) and at
all levels (recreational and competitive, youth, adult, amateur and professional) in the United
States both directly and through its members. The USSF supports a variety of programs in aid of
its mission. In pursuit of this goal, the USSF, among other things (a) selects, funds, trains and
manages the various United States national soccer teams including the senior men’s and
women’s teams, the men’s and women’s Olympic soccer teams, and the numerous boys and girls
aged-based (U-23, U-20, U-18, U-17 and U-15) national teams; (b) supports a national
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development program for talented youth participants under the age of 14; (c) trains and licenses
both coaches and referees at all levels; (d) supports national training centers in various locations
throughout the country; and (e) seeks to resolve disputes between and among its members.
29. Like FIFA, the USSF is a membership organization which is governed by its
constituents, whose representatives promulgate the rules to which they are bound. And, as a
condition of membership in the USSF, each member must agree to be bound by and comply with
the USSF’s bylaws, policies, rules, regulations and decisions as well as those of both FIFA and
CONCACAF.
30. During my 30-year plus association with the USSF, the USSF’s membership, as
is required by FIFA, has included the full range of participants and stakeholders in the sport of
soccer in the United States including, by way of example, youth organizations such as United
States Youth Soccer (USYS), American Youth Soccer Organization (AYSO), and the various
state youth associations; adult amateur organizations like the United States Adult Soccer
Association (USASA) and the many state adult associations; the U.S. Power Soccer Association
(representing power wheelchair users); the National Soccer Coaches Association of America
(NSCAA, now known as United Soccer Coaches); and multiple professional leagues.
31. To correct any misperception about the governance of the USSF and the amount
of influence of Major League Soccer (“MLS”), one of the USSF’s member professional leagues,
plays in USSF decisions, let me briefly explain the governance structure of the USSF, all of
which is set forth in the USSF’s Bylaws. A true copy of the Bylaws of the USSF, (as revised and
Amended, Effective May 1, 2017) is attached hereto as Exhibit 6.
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A. The National Council
32. The legislative body of the USSF is and has been the National Council. The
National Council consists of delegates selected by the USSF members.
33. The USSF membership is principally divided into four (4) membership
categories or administrative councils: a Youth Council, which includes members whose
principal focus is youth soccer; an Adult Council, whose principal focus is adult amateur soccer;
a Professional Council, representing the professional league members of the USSF; and an
Athlete’s Council. Pursuant to the bylaws of the USSF, each of the Youth, Adult and
Professional Councils have equal voting strength on the National Council and the Athlete’s
Council is allocated twenty percent (20%) of the voting strength as required by federal law (see
below).
34. In addition to the four councils, other members are also entitled to vote. Each
member of the USSF Board, each USSF Past President, USSF Life Members (up to a maximum
of 12 votes), individual sustaining members (up to a maximum of 6 votes) and each member in
certain other USSF membership categories are entitled to 1 vote on the National Council.
35. As a practical matter, each of the Youth, Adult and Professional Councils
accounts for approximately 25% of the voting strength on the National Council, the Athlete’s
Council accounts for 20% and the remaining 5% is controlled by the other categories described
above in ¶34.
36. Each of the Youth, Adult and Professional Councils, along with the Athlete’s
Council, is responsible for making policy recommendations to the USSF and voicing the views
of their constituencies on issues affecting their respective members.
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B. The Professional Council
37. The selection of representatives to the USSF Board of Directors by each of the
Youth, Adult and Professional Councils is based on a weighted voting system. For the Youth
and Adult Councils, the weighted voting is based on total membership and other criteria. For the
Professional Council, the weighted voting is based on the number of teams in each professional
league and the total attendance at league games for the immediately preceding season.
C. The Athlete’s Council
38. Again, to clear up any misconception about the athlete representatives who serve
on the USSF’s Board of Directors, I briefly describe in the next few paragraphs the origin of the
Athlete’s Council, its voting strength, its representation on the USSF Board of Directors and
other policy making committees and the participation of such Board members on issues directly
affecting the professional leagues.
39. First, as a condition of being designated an NGB under the Ted Stevens Act, the
USSF is required to provide athletes with at least 20% of the voting power on its Board of
Directors as well as all other governing bodies. See 36 U.S.C. §220522(a)(10); Bylaws of the
United States Olympic Committee (March 9, 2017 Ed.), Section 8.8.1, a true copy of which is
attached hereto as Exhibit 7.
40. To be an eligible athlete representative on the USSF Board, the individual must
have (a) represented the USSF in the Olympics, the Pan American Games, the Paralympic
Games or a World Cup or World Cup Qualifying match within the prior 10 years or (b) within
the prior 24 months been a member of a USSF national team. USOC Bylaws, Section 8.8.2 (c).
41. Pursuant to the USSF Bylaws, all athletes who meet the USOC criteria and who
are at least 18 years of age, are eligible to elect representatives to the Athlete’s Council. The
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number of representatives who sit on the Athlete’s Council is determined by the Council, and the
members of the Athlete’s Council elect their representatives to the USSF Board. USSF Bylaws,
supra Exhibit 6, Sections 321-323. In other words, neither the USSF nor any of the professional
leagues plays any role in the selection of the athlete representatives on the USSF Board of
Directors.
42. Of course, given the eligibility criteria to serve on the Athlete’s Council and be
selected to serve on the USSF Board, it should not be surprising that, historically, many of the
athlete representatives selected by their peers to serve on the USSF Board had a connection with
one of the professional league members as a player and/or in some post-playing career
administrative capacity. This is true of both the male and female athlete representatives.
D. The Board of Directors
43. The USSF’s Board of Directors consists of 15 directors, constituted as follows:
 The USSF President
 The USSF Vice President
 The Immediate Past President (non-voting)
 The Chairperson of the Adult Council and 1 other Adult Council delegate
(elected by the Adult Council)
 The Chairperson of the Youth Council and 1 other Youth Council delegate
(elected by the Youth Council)
 The Chairperson of the Professional Council and 1 other Professional

Council delegate (elected by the Professional Council)
 3 athletes (elected by the Athlete’s Council)
 1 “at large” representative (elected by other USSF members)
 3 Independent Directors elected by the National Council (or selected by

the Board in the event of a mid-term vacancy)
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Accordingly, the Professional Council, of which MLS is one member, elects two members to the
USSF Board of Directors and wields approximately 13.33% of the voting power on the USSF
Board.
44. The National Council elects two officers, a President and a Vice President. At
all times during the NASL’s existence, I have served as President of the USSF. Mike Edwards, a
representative from the adult amateur side of soccer who served as a director of the New Mexico
State Soccer Association and as vice president of the US Amateur Soccer Association, was Vice
President from 2006-2016. Carlos Cordeiro, an independent director since 2007 and former
Goldman Sachs executive, was elected Vice President in 2016. Neither Mr. Edwards nor Mr.
Cordeiro is or was affiliated with MLS or any of the USSF professional league members.
45. The table below identifies the members of the USSF Board of Directors selected
by the Athlete’s Council’s since the NASL joined the USSF in 2011 and notes whether they
were/are affiliated with MLS at the time of their Board service:
Year Athlete Council MLS

Board Reps Affiliation
2011 Jeff Agoos Yes
Danielle Fotopoulos 2 No
Jon McCullough 3 No
2012 Jeff Agoos Yes
Danielle Fotopoulos No
Jon McCullough No
2013 Jeff Agoos Yes
Danielle Slayton 4 No
Jon McCullough No
2014 Jeff Agoos Yes
Danielle Slayton No
Jon McCullough No
(partial year)
2
College coach and former WNT member.
3
Former Paralympian.
4
Former WNT member and retired women’s professional league player.
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Cindy Cone (partial No

year) 5
2015 Jeff Agoos Yes
Chris Ahrens No
Cindy Cone No
2016 Jeff Agoos Yes
Chris Ahrens No
Cindy Cone No
2017 Carlos Bocanegra Yes
Chris Ahrens No
Angela Hucles 6 No
46. In addition to its many volunteers, the USSF employs a paid professional staff
headed by the Secretary General and CEO who is appointed by the President, subject to the
approval of the Board of Directors. Dan Flynn has been the USSF’s Secretary General and CEO
since 2001.
47. At no time, including since the NASL joined the USSF as a Division II league,
has MLS had sufficient voting power at the National Council or on the Board of Directors to
direct or control the USSF.
IV. THE 1994 WORLD CUP, MLS AND THE UNITED STATES SOCCER
FOUNDATION
A. Selection of the USSF to Host the 1994 FIFA World Cup and Formation of MLS
48. Professional leagues have enjoyed membership in the USSF since its founding
in 1913. Unfortunately, through the 1990s, the United States soccer landscape was littered with
multiple failed professional leagues and hundreds of failed teams. The most notable of these
leagues was the original North American Soccer League (“Original NASL”) which lasted from
5
Former WNT member and women’s professional player and coach.
6
Former WNT member and retired women’s professional league player.
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1968 to 1984. But, after years of significant financial losses and internal turmoil, the Original
NASL ceased operations in 1984.
49. As noted above, I was a member of the USSF’s World Cup Bid Committee from
1986-1988. In 1986, the USSF commenced its efforts to bid for the right to host the 1994 FIFA
World Cup.
50. In 1988 the USSF was awarded the right to host the 1994 FIFA World Cup. As
part of our presentation to FIFA and at FIFA’s insistence, the USSF committed to facilitate the
development of a sustainable first division outdoor professional men’s soccer league.
51. Having a viable first division men’s outdoor professional soccer league was
considered critical by the USSF to its mission of growing and developing the game at all levels
and eventually producing national teams that would perform well in both the Olympics and
World Cup competitions – something the United States had never done. Such a league would
provide an aspirational incentive to young athletes to play soccer rather than some other sport,
knowing that a professional career would be possible if they worked hard and demonstrated the
technical skills necessary to succeed. In addition, it was expected that the development of a first
division league would provide a place for members of the United States Men’s National Team to
train and play when they were not occupied with national team duties. This would give them an
option of playing domestically rather than having to pursue playing opportunities in foreign
professional leagues.
52. As then-required by FIFA, the USSF established “Ninety Four, Inc.”, the world
cup organizing committee (“WCOC”), a separate legal entity to operate the 1994 FIFA World
Cup. The entity went through several name changes over the next several years.
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53. Eventually, the WCOC entity was reorganized and reconstituted as World Cup
USA 94 (“USA 94”). I was initially selected to be Senior Vice President and Chief International
Officer of USA 94 and was subsequently elevated to the position of Executive Vice President.
54. One of the primary tasks of USA 94 was to facilitate the establishment of the
first division outdoor professional soccer league as part of the build-up to the 1994 World Cup.
In this regard, after a lengthy process, three groups presented their plans, including the financial
wherewithal of their backers, to the USSF’s Board of Directors. Ultimately, in late 1993 the
USSF Board of Directors selected Major League Professional Soccer, Inc. (“MLPS”) to develop
the new league.
55. The 1994 FIFA World Cup was played in the United States between June 17 and
July 17, 1994. Matches were played in nine (9) venues throughout the country including, among
others, Giant’s Stadium in East Rutherford, New Jersey, Soldier Field in Chicago, Illinois and
the Rose Bowl in Pasadena, California. At the time, the 1994 World Cup was the most
successful FIFA World Cup ever, both financially and in terms of attendance.
B. The United States Soccer Foundation
56. The 1994 World Cup generated a surplus in excess of $40 million. After the
conclusion of the 1994 World Cup, USA 94 contributed all of its assets including the surplus to a
non-profit entity which had been previously established (but not yet operational), the United
States Soccer Foundation (the “Foundation”), whose mission is to assist and grow the sport of
soccer in the United States with a special emphasis on underserved communities.
57. I was elected to the Board of Directors of the Foundation upon its formation and
have remained on the Foundation Board since that time. The Foundation is a separate legal
entity with its own administrative staff and independent Board.
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58. As part of its commitment to facilitate the development of the new professional
league, USA 94 agreed to loan $5 million to MLPS to help fund various start-up costs. After the
1994 World Cup, MLPS was reorganized and reconstituted as Major League Soccer, LLC
(“MLS”). The $5 million loan to MLPS was transferred to and became the obligation of MLS.
59. Among the assets contributed by USA 94 to the Foundation was the $5 million
note from MLPS, now MLS.
60. Several years later, the Foundation’s Board agreed to enter into a marketing
services agreement with MLS which would provide the Foundation with various marketing
services and certain funds. In turn, the value of the MLS services to be provided would be used
to pay down the loan and accrued interest.
61. Because of its non-profit and tax exempt status, the Foundation Board required
that an independent expert be retained to value the proposed marketing services agreement with
MLS to ensure that the Foundation was receiving fair value for the services when compared to
the amount of the MLS loan. The Foundation-retained expert valued the marketing services
agreement and apprised the Board that the Foundation was receiving fair value for the services
which, over time, would be more than sufficient to fully amortize the remaining balance due on
the MLS loan and accrued interest.
62. In approximately 2008, and pursuant to the marketing services agreement, the
MLS note, plus interest, was fully paid off.
C. MLS and its Inception
63. Developing a first division men’s professional soccer league proved very time
consuming. Among the factors impacting the development was that, unlike in many other
countries throughout the world, soccer was not very popular in the United States among sports
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fans. The United States already had very successful sports leagues in football (the NFL),
baseball (MLB), basketball (the NBA) and ice hockey (the NHL). This made it difficult to
convince investors who had the capacity to finance the start of a new league to invest and absorb
the significant losses that were expected as the new league tried to gain a foothold in the
professional sports landscape in the United States.
64. Given the failure of predecessor Division I leagues and the USSF’s belief that
stability and the avoidance of consumer confusion were critical to building a solid foundation for
the development of professional soccer in the United States, the USSF’s Board of Directors
determined that it was in the best interest of soccer to not sanction any other league as a first
division (Division I) men’s professional outdoor league until MLS had finished its second full
season in 1997 – to give it a “runway” of sorts. USSF made it clear then, and has reaffirmed its
position periodically thereafter, that if after 1998 another league could satisfy the existing
standards for a men’s Division I outdoor league, it would be willing to sanction a second
Division I league (or multiple leagues in one of the other divisions).
65. MLS commenced play in 1996 and has operated continuously as a men’s
Division I professional league since then. And, until 2015, no other existing or proposed league
indicated an intention to seek a designation as a Division I men’s professional outdoor league
from USSF.
D. My Role With MLS
66. In the summer of 1995, after my role with USA 94 had come to an end, I
accepted a position with MLS. In 1996, I was named MLS Deputy Commissioner, a position
which I held until 1999.
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67. After leaving the MLS league office, I was hired on a part-time basis to serve
first as managing director and later as President of Kraft Soccer Properties. Kraft Soccer
Properties operates the New England Revolution, an MLS team. Kraft Soccer Properties is
affiliated with the Kraft family which owns the New England Patriots of the National Football
League and Gillette Stadium in Foxborough, Massachusetts -- the home stadium for both the
Revolution and the Patriots. I subsequently became a consultant to Kraft Soccer Properties. I
ceased working for Kraft Soccer Properties in 2013.
V. HISTORY AND DEVELOPMENT OF THE PROFESSIONAL LEAGUE
STANDARDS
A. Professional Soccer
68. FIFA, through the powers delegated by its National Association members,
controls all forms of Association Football played by its members and the members of its
members, including professional soccer. While I understand this to be the case at all times
during the USSF’s membership in FIFA, it has certainly been the case since my association with
the USSF began nearly 30 years ago.
69. Indeed, and as noted above, when the USSF was originally formed in 1913, it
was formed by a combination of two organizations, one of which, the American Football
Association, was compromised principally of professional leagues and teams.
70. At all times during my association with the USSF, professional league members
have had representation on both the National Council and the Board of Directors. I have listed
below some of the professional leagues which, at various times during the applicable decade,
were members in the USSF (not including MLS):
1980s
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North American Soccer League
Major Indoor Soccer League
American Soccer League
1990s
American Professional Soccer League
Major Soccer League (indoor)
National Professional Soccer League (indoor)
United States Interregional Soccer League
Continental Indoor Soccer League
A-League
W-League (women’s)
2000-2009
Women’s United Soccer Association
Women’s Professional Soccer
W-League
A-League
United Indoor Soccer League
Major Indoor Soccer League
2010-Present
National Women’s Soccer League
United Soccer League
NASL
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B. Professional League Classifications
71. Since I first became involved with the USSF in the 1980s, the Federation has
always classified the professional leagues by division – the level of play. In short, the
classification system was not developed upon the formation of MLS but had existed for many
years before the MLS came into existence.
72. Classification of professional leagues in soccer is consistent with how
professional sports in the United States is conducted and with what is familiar to the consumers
of most United States professional team sporting events. For example, professional baseball has
Major League Baseball at the top of its pyramid and, through contractual arrangements, a series
of minor leagues including independent professional leagues, a “rookie” league and increasing
through single A, double AA and triple AAA ball. The professional ice hockey pyramid has
semi-professional leagues, the East Coast Hockey League, the American Hockey League and the
National Hockey League (“NHL”) as the first division league.
73. In addition, and contrary to the allegations in the Complaint, most major soccer-
playing nations have a professional league pyramidal structure. While the system for the
movement of teams between the professional soccer leagues in many countries is different than
here in the United States, the different leagues are stratified. Three examples are set forth below,
showing the leagues from the top of the pyramid down:
England
Premier League
English Football League (which has 3 divisions)
The Championship (Level 2)
League One (Level 3)
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League Two (Level 4)
Germany
Bundesliga 1
Bundesliga 2
Liga
Regionalliga (semi-professional level 4)
Australia
A- League
National Premier League
C. Professional League Standards -- Generally
74. Given the history of failure of professional soccer leagues and teams in the
United States, the USSF implemented new and more specific Professional League Standards
than had previously existed before the commencement of MLS’ first season. The purpose of
these standards has never been to hinder or impede competition. Rather they have been designed
in an attempt to (a) reduce (not eliminate) the risk of league and team failures, particularly during
the middle of a season, and (b) further USSF’s mission of growing the game at all levels. Some
of the professional league standards are required by FIFA and others represent the judgment of
the USSF regarding what is necessary in order for a professional league to successfully compete
against other American professional sports for the entertainment dollar of American consumers.
75. The standards typically have included requirements relating to the minimum
number of teams, size of the market in which the teams must play, the minimum number and
location of time zones in which the league must have teams, the size and playing surface of the
soccer “pitch” (the field), minimum stadia capacity, the applicable coaching licenses, league and
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team organization requirements and each team’s commitment to the development of soccer in its
home market. Of course, some of the requirements, such as the minimum number of teams,
stadium capacity and financial wherewithal vary depending on the division in which the league
desires to operate. These standards are not arbitrary. They are the kinds of personnel,
operational, ownership and financial viability standards that we have observed are maintained by
successful clubs and leagues around the world in the sport of soccer as well as other major
professional sports.
76. The Professional League Standards in force and effect in 1996 are attached
hereto as Exhibit 8. These task force which developed these initial standards was chaired by
Burton Haimes, a lawyer in the New York office of Orrick, Herrington & Sutcliffe and a USSF
board member representing the USSF affiliate member, the American Youth Soccer
Organization.
D. The Process of Revising the USSF Professional League Standards
77. The USSF Professional League Standards, just like standards in the automobile
industry, the pharmaceutical industry and just about every other industry have not remained
static over the last 20 years. As the historically unsteady soccer landscape in the United States
stabilized and the importance of professional soccer continued to grow over time, USSF has
continued to review the Professional League Standards with an eye towards determining whether
the standards should be improved and/or made more rigorous, not for the purpose of protecting
MLS’ position as the only men’s Division I professional league as the NASL suggests, but for
the purpose of further developing the sport of soccer and nurturing the growing popularity and
importance of the sport in the United States.
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78. The Division I PLS were adopted in 1995 and the Division II and III PLS were
adopted in 1996. Supra, Exhibit 8. The PLS were then revised in 2008, 2010 (for Division II
only) and in 2014. In 2015 the standards were in the process of being further revised but the
proposed changes were never implemented at the insistence of the NASL.
79. The process for reviewing and approving the Professional League Standards has
been the same since the standards were first amended in 2008. First, USSF appoints a
Professional League Standards Task Force (the “PLS Task Force”). The task force does not
include any members of the USSF Board of Directors or any individuals then-associated with
any of the professional leagues. All of the task force members are selected from among those
individuals in the soccer community at large whom USSF believes to be familiar with
professional soccer. The task force has included, from time-to-time, a former General Counsel
of the USSF and now law professor at the University of Michigan, the former Non-Executive
Chairman of Freddie Mac and an executive from UEFA, the European soccer confederation.
80. The PLS Task Force considers the existing standards in light of the current state
of professional soccer in the United States and then determines whether to suggest changes to the
Professional League Standards. If the PLS Task Force decides to recommend a change in the
standards, the proposed changes are submitted to each of the then-existing men’s and women’s
professional leagues for their review and comment. The comments and suggestions of the
professional leagues are then reviewed and considered by the PLS Task Force. Next, the PLS
Task Force forwards a proposed final set of revised standards to the USSF Board of Directors for
consideration. Throughout this process, the USSF staff provides assistance to the PLS Task
Force as necessary.
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81. Once a proposed revised set of Professional League Standards is submitted to
the USSF Board, the proposed standards are discussed at a USSF Board meeting and then voted
upon. But, in order to avoid any suggestion of a conflict of interest, all Board members who
have a then-current relationship with any of the professional leagues abstain from voting on the
proposed changes to the Professional League Standards.
E. The 2008 Revisions to the Professional League Standards
82. Between 1996, when MLS first commenced play, and 2008, the Professional
League Standards were not revised. Because the Professional League Standards had not been
revised in more than 12 years, the USSF determined it was time to take a look at whether
changes to the 1996 standards made sense. Around this same time, I asked Burton Haimes, a
Board member elected by the Youth Council, who chaired the task force which developed the
initial standards, to form a PLS Task Force to revisit the standards.
83. The PLS Task Force recommended only modest changes to the standards which
had been in place since 1996, including a change in the “time zone requirement.” The 1996
standards required a Division I men’s league to have teams in at least 3 time zones and a
Division II league to have teams in at least 2 time zones. The 2008 proposed revisions to the
standards suggested that the time zone requirement be modified to require that the Division I and
II men’s leagues have teams in 3 and 2 time zones, respectively, “in the continental United
States.”
84. Under FIFA and CONCACAF rules, leagues were not allowed to have teams
from outside of their country because of a desire for each member of FIFA to develop the sport
of soccer in its country. FIFA would allow a team to play “cross-border” only so long as the
country in which the team was located did not have a league in the applicable division and both
23
the member association where the team was located and the applicable regional confederation
consented to the team playing in a cross-border league.
85. Although some of the previously existing lower division professional leagues
had teams from Canada, when MLS was originally formed it did not. In 2007, however, MLS
added a team in Toronto. In light of this addition and, more importantly, the USSF’s mission
which is to grow the sport at all levels in the United States, not in Canada or elsewhere, the time
zone requirement had become more important. From USSF’s perspective, the purpose of the
time zone requirement was to ensure that teams in Division I and II leagues were geographically
dispersed throughout the United States. As a result, since it was apparent that Canadian teams
would be playing in United States domestic leagues sanctioned by the USSF, at least until the
Canadian soccer landscape was sufficiently developed and the Canadian Soccer Association
believed the country could support its own professional league(s), it was important to preserve
USSF’s mission and, therefore, to make clear that the dispersion requirement was domestically
based.
86. Pursuant to the practice outlined above, the revisions to the standards proposed
by the PLS Task Force were submitted to the existing professional leagues at the time for
comment. Few substantive comments were received. The proposed revisions were then
submitted to the USSF Board for consideration, and the revisions were approved on a telephonic
conference call on September 24, 2008. I did not participate in the vote on the revised standards,
and Board members affiliated with the professional leagues also abstained. A true copy of the
2008 Professional League Standards are attached hereto as Exhibit 60.
87. Contrary to the suggestion of the NASL, the revision in the time zone
requirement was not designed to protect MLS or Women’s Professional Soccer (a then-new
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outdoor women’s professional League), it was designed to attempt to fulfill the mission of the
USSF by ensuring that the sport of soccer grows in the United States. Indeed, at the time of the
2008 revisions to the Professional League Standards, the NASL was not in existence and there
were no leagues in existence (other than MLS) which had professed a desire to be sanctioned as
a Division I league.
F. The 2010 Revisions to the Division II Professional League Standards
88. As discussed in more detail at Paragraphs 113-120 below, in the Fall of 2009,
the USSF had two applications for membership as a Division II men’s outdoor league, one from
the USL-1, a division of the United Soccer Leagues (“USL”), and another from the NASL which
consisted of teams which had recently “broken away” from USL-1. After investigation by the
Professional League Task Force (a different task force from the PLS Task Force as described in
Paragraphs 109-111 below), it was determined that neither league met the then-existing Division
II standards and neither had presented a viable financial, strategic or operational plan for getting
there.
89. Notwithstanding the acrimony between the USL-1 and the NASL and after
denying each of the USL-1’s and the NASL’s Division II membership applications, the USSF
was eventually able to negotiate an arrangement (really a “truce”) between the two leagues such
that each of them contributed six teams to a two-division “temporary” Division II league to be
run by the USSF for the coming 2010 season (as described in more detail below).
90. I appointed a task force to revisit the Division II standards in light of the issues
created by the NASL and the USL-1 with specific emphasis on financial viability, and selected
the following individuals, none of whom were USSF Board members or who had any then-
current association with any of the professional leagues, to serve on the PLS Task Force:
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• Alan I. Rothenberg -- an influential administrative figure in the history of North
American soccer. Mr. Rothenberg was President of the USSF from 1990 to1998,
a former owner of the LA Aztecs, a team in the Original NASL, Commissioner of
Soccer for the 1984 Olympic Games, President of the California State Bar
Association and one of the principal architects of MLS. In 2007, Mr. Rothenberg
was inducted into the National Soccer Hall of Fame in recognition of his
contribution as a "Builder" of the sport in the United States.
• Timothy Pinto -- a clinical assistant professor in the University of Michigan Law
School's Legal Practice Program. Prior to joining the Law School faculty, Prof.
Pinto clerked for one year for the Honorable Roderick R. McKelvie of the U.S.
District Court for the District of Delaware; spent four years as a litigation
associate at Winston & Strawn in Chicago; and spent four years as a staff attorney
for and four years as general counsel of the USSF.
• John A. Koskinen -- the former Non-Executive Chairman of Freddie Mac from
September, 2008 to December, 2011 (who would later become Commissioner of
the Internal Revenue Service).
• Scott Parks LeTellier -- the Chief Executive Officer, Big League Dreams USA,
LLC and Former Managing Director, World Cup USA 1994.
The members of the PLS Task Force were approved by the Board.
91. In August 2010, the PLS Task Force recommended that the Division II
standards be revised to require that each team post a $750,000 performance bond, with a league
maximum of $15 million, to be used to cover the cost of a team’s operations for the balance of a
season if the team defaulted on its obligations mid-season. The PLS Task Force also
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recommended that the individual team bond be reduced to $500,000 and the league maximum to
$10 million, if all teams agreed to make the bonds joint and several so that the bonds of each
team could be used to run the operations of any team that defaulted in the event that the
defaulting team’s bond was insufficient to cover the team’s obligations.
92. Indeed, the failure of NASL teams, and the need to enhance the financial
protection for mid-season defaults had become a particular sore point when the owner of the
Baltimore team defaulted on its obligations, requiring the NASL and USSF to utilize the team’s
and league’s performance bond to pay the team’s debts and operate the team for the balance of
the season.
93. The USSF Board of Directors approved of the proposed revision to the Division
II standards. I did not participate in the vote on the revised Division II standards, and Board
members affiliated with the professional leagues also abstained. A true copy of the 2010
Professional League Standards are attached hereto as Exhibit 61.
G. The 2014 Revisions to the Professional League Standards
94. In late 2012, the USSF determined it was time for a comprehensive review of all
of the Professional League Standards. Accordingly, the PLS Task Force was re-constituted, to
conduct a complete re-assessment of the standards.
95. The PLS Task Force included the same individuals mentioned in Paragraph 90
above.
96. The PLS Task Force proposed a re-organization of the standards. And, while
the PLS Task Force made a number of recommended changes, the proposed changes of
significance with respect to the NASL’s claims included the following:
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• Minimum Number of Teams – requiring (a) Division I men’s leagues to have a
minimum of 12 teams at inception and 14 teams by year three and (b) Division II
leagues to have a minimum of 8 teams at inception and 12 teams by year six.
• Time Zones – requiring (a) Division I leagues to have teams in at least the
Eastern, Central and Pacific time zones in the continental United States at
inception and (b) Division II leagues to have teams in at least two time zones at
inception and, by year six, to have teams in at least the Eastern, Central and
Pacific time zones in the continental United States. As the proposed revisions
stated, the Eastern, Central and Pacific were specifically designated “because the
majority of the large population centers are located in these time zones.”
• A Financial Viability Standard – requiring that each team ownership group
demonstrate “the financial capacity to operate the team for five years.”
97. USSF circulated the PLS Task Force’s proposed changes to the standards in
November 2013 to all professional leagues for their review and comment. Attached hereto as
Exhibit 9 is a true and correct copy of a memorandum dated November 18, 2013 from USSF to
“All Professional Leagues” along with the draft of the revised Professional League Standards.
98. Each of MLS, the NASL and the USL (then a Division III league) submitted
comments on the standards. The response from the NASL was submitted by its then-
Commissioner, Bill Peterson. In his letter to the USSF dated November 27, 2013, Mr. Peterson
focused primarily on the revisions to the Division II standards adopted in August 2010, and
requested that the performance bond requirement for NASL teams be reduced from the
recommended amount of $750,000 to $500,000 and the maximum amount of the bonds for the
league as a whole be reduced from $15 million to $10 million without regard to joint and several
28
liability. Mr. Peterson did not raise any questions about the change in the minimum number of
teams or the time zone requirement. A true copy of Mr. Peterson’s November 27, 2013 letter to
the USSF is attached hereto as Exhibit 10. And, although Mr. Peterson reserved “the right to
submit further comments after our NASL club owners have had the opportunity to fully
review. . .,” no further comments were submitted by the NASL or any of its teams.
99. The proposed revisions were then submitted to the USSF Board for
consideration and were approved on February 28, 2014. A true copy of the 2014 Professional
League Standards is attached hereto as Exhibit 11. I did not participate in the vote on the revised
standards and, the Board members affiliated with any of the professional leagues also abstained.
H. The Proposed 2015 Revisions to the Professional League Standards
100. Even though the Professional League Standards had been revised in February
2014, the USSF believed that there was still room for improvement. Further, and as discussed
below in Paragraphs 129-132, each of the men’s professional leagues regularly sought waivers
from the applicable Professional League Standards when, as required, they applied for a sanction
each fall for the following season. To have standards while constantly granting league requests
for waivers from compliance, particularly when the waivers requested were often the same from
year-to-year, seemingly without any real effort by the leagues to meet the standards, suggested to
me that it was necessary to reconsider the sanctioning process.
101. At the December 7, 2014 Board meeting, after the divisional sanctioning
requests had been approved for the 2015 season, with a number of the leagues (the NWSL,
NASL and USL) being granted multiple waivers from the standards, I expressed my concern and
specifically noted that the USSF needed to move towards the elimination of waivers if the
standards were to have any meaning. I reiterated my concerns at the February 13, 2015 Board
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of Directors meeting in San Francisco, the day before the USSF’s Annual General Meeting
(“AGM”) of its members, and also advised the Board that I was going to ask the PLS Task Force
to once again look at strengthening the standards.
102. The PLS Task Force included several different participants because neither Mr.
Rothenberg nor Mr. Koskinen (then IRS Commissioner) was available to serve. Thus, in
addition to Mr. Pinto and Mr. LeTellier, the PLS Task Force included
• Alex Phillips – Head of Stakeholder Affairs at UEFA. Previously, he was
Manager of UEFA’s Pro Football Division and, before that, worked for Deloitte
as a sports analysis and consultant.
• Paul Burke – a shareholder, director and general counsel for Utah-Based law firm
of Ray Quinney & Nebeker. Mr. Burke was Chairperson of the USSF’s Rules
Committee, a Past-President of the Utah Youth Soccer Association and was
named the Utah Bar Association’s Pro Bono Attorney of the Year in 2012.
103. On June 24, 2015, the USSF sent a memorandum to “All Professional Leagues”
seeking comments on the proposed revisions to the Professional League Standards. A true copy
of the memorandum and the proposed revisions circulated to the professional leagues on June 24,
2015, is attached hereto as Exhibit 12.
104. While the PLS Task Force recommended a number of proposed changes, the
proposed changes of significance with respect to the NASL’s claims in this lawsuit included the
following:
• Minimum Number of Teams – increasing the minimum number of teams that both
a Division I and II league would need at inception from 12 and 8 teams,
respectively, to 16 and 12 teams.
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• Time Zones – requiring that both Division I and II leagues have teams in three
time zones in the continental United States, but eliminating the requirement that
each league must have teams in the Eastern, Central and Pacific time zones.
• Market Size – increasing the market size for Division I teams from 1 million to 2
million and for Division II leagues from 750,000 to 1 million.
• Financial Viability – increasing the required minimum net worth of all owners of
a Division I team from $70 million to $80 million and adding a minimum net
worth requirement for owners of a Division II team.
105. These revised standards were never submitted to the USSF Board of Directors at
the insistence of the NASL and it outside counsel (as discussed below).
I. Evolution of the Changes to the PLS
106. Attached hereto as Exhibit 62 are two charts which summarize the evolution
from 1995 through 2014 of those elements of the PLS about which NASL complains in its
Complaint.
VI. PROFESSIONAL LEAGUE SANCTIONING
A. The Professional League Sanctioning Process -- Generally
107. Every professional league which seeks to become a member of the USSF must
submit an application demonstrating that it and its teams meet the Professional League Standards
applicable to the Division for which the league seeks a sanction. If the league is not in full
compliance, it may seek a temporary waiver from compliance with the applicable standards
provided the request is in writing, explains the reason for the waiver and identifies the steps the
league intends to take to come into full compliance with the divisional standards.
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108. At all times since the NASL first sought to become a member of the USSF,
existing leagues have been required to apply to the USSF every year for a sanction in the
division in which they seek to play the following year. As part of this process, existing leagues
are required to submit to the USSF an annual report. Among other things, the annual report is
required to provide, in reasonable detail, “the status of its compliance with these [Professional
League] Standards.” And, in the event the league is not in compliance with the divisional
standards for which it seeks a sanction, it may seek a temporary waiver, again provided the
request is in writing, that explains the reason for the waiver and the steps the league intends to
take to come into full compliance with the divisional standards.
109. The annual reports and requests for waivers are provided to the USSF league
office. They are then turned over to the Professional League Task Force (not to be confused with
the PLS Task Force). The Professional League Task Force is appointed by the USSF President
and approved by the Board of Directors and is made up of members of the USSF Board of
Directors who have no affiliation with any of the professional leagues.
110. The Professional League Task Force considers the information provided by each
league and any requested waivers. As necessary, they may follow-up with the individual leagues
seeking clarification on issues and any requested waivers. The task force also has access to the
USSF league office staff for assistance in the evaluation of the league reports.
111. After the Professional League Task Force finishes its assessment of each
league’s annual report and sanctioning request, the task force makes a recommendation to the
USSF Board of Directors whether to approve or deny each league’s sanctioning request for the
following year.
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B. History of the NASL and Its Sanctioning Requests: 2009 through 2014
112. The suggestion that the USSF has mistreated the NASL is unfair and ignores the
fact that the USSF has repeatedly stepped-in to assist the NASL in an attempt to help it succeed.
113. The United Soccer Leagues, a predecessor to the current USL Pro (the “USL”),
was a successor to several prior professional leagues which existed in the 1990s. By 2009, the
United Soccer Leagues consisted of two divisions, the USL Second Division known as USL-2
and the USL First Division known as USL-1. USL-2 was sanctioned as a Division III
professional league and USL-1 was sanctioned as a Division II league.
114. In the fall of 2009, Nike, which owned a large stake in the United Soccer
Leagues, sold its interest to a group then-called NuRock Soccer Holdings, rather than to an
existing group of United Soccer Leagues team owners. In November 2009, six former USL-1
clubs along with a St. Louis ownership group applied for membership in the USSF as a new
Division II league – the NASL – for the 2010 season. Shortly thereafter, two other former USL-
1 teams sought to join the NASL. At or about the same time, the USL-1 also sought to be
sanctioned as a USSF Division II league for the 2010 season.
115. The defections from USL-1 to the NASL and the competing applications for
Division II status led to threats of various lawsuits between and among the new owners of the
USL and the teams which left to form the NASL – legal proceedings which also had the potential
to involve the USSF.
116. After assessing the two applications, the Professional League Task Force
determined that neither league had presented a viable and sustainable operational plan for the
coming 2010 season in that, among other things, neither the NASL nor the USL-1 were able
meet the minimum requirement of 8 viable teams. Both leagues, however, were given time to try
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and work out their differences to see if there was a way to combine the two deficient leagues into
one potentially viable Division II professional league.
117. Eventually, with assistance from the USSF’s CEO, Dan Flynn, and me, a “truce”
was negotiated between the warring factions from the NASL and USL-1. The result of this truce
was that the two leagues would combine their teams into a two division, six teams per division,
Division II league for the 2010 season, with the USSF league office running this “temporary”
league. USSF ran this league, at significant cost and diversion of staff time, to give both the
NASL and the USL-1 the opportunity to reach a permanent resolution of their differences and/or
to continue to develop their leagues separately to a point where one or both might be viable and
sanctionable as a Division II league.
118. In the Fall of 2010, the NASL again applied for membership in the USSF as a
Division II men’s outdoor professional league. The NASL’s application was deficient and failed
to comply with many of the Professional League Division II Standards. The Professional League
Task Force reviewed the NASL’s renewed application and, notwithstanding the NASL’s failure
to satisfy many of the Division II standards, suggested a “provisional” grant of membership as a
Division II league to give the NASL a little bit of a “runway” to come into full compliance with
the standards. The USSF Board of Directors voted to grant the NASL a “provisional
membership” in the USSF and a “provisional sanction” as a Division II outdoor league at its
meeting on November 21, 2010.
119. At this same meeting, USL Pro, the successor to USL-1 and USL-2, combined
all of its teams into a single league and sought and was granted membership in the USSF as a
Division III men’s outdoor league.
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120. The NASL’s provisional membership did not last long. Between the November
21, 2010 meeting and mid-January 2011 the financial viability of several of the NASL teams
and, therefore, the league as a whole was called into serious question. Based on this information,
the NASL’s provisional sanction and membership in the USSF was revoked by the Board of
Directors on January 19, 2011.
121. After the membership revocation, rather than asserting that there was some sort
of antitrust violation, the NASL’s CEO, Aaron Davidson, was quoted as follows:
. . . the federation is exercising its role as the governing body of the sport in
North America. They are demanding that we live up to those standards. Part of the
reason they’re being so strict is because of the instability of where we come from.
106 teams have played in division two or three since 1996 and of those 84 folded.
Fans don’t want to follow a team who’s in a league with those sort of stats and
that much turnover.
A true copy of this statement is attached hereto as Exhibit 13. At the same time, the NASL also
emphasized on its website that it “intends to work closely with the USSF to resolve the USSF’s
concerns” and acknowledged that “the Board’s decision was based on its conclusion that the
league fails to comply with . . . Division II professional standards.” This statement may be found
at https://web.archive.org/web/20110206130300/http://nasl.com/article/nasl-committed-to-
securing-ussf-sanctioning-for-2011.
122. After having its membership revoked a month earlier, in February 2011, shortly
before the USSF Annual General Meeting, the NASL submitted yet another application for
membership in the USSF as a Division II professional league. A true and correct copy of this
NASL Membership application is attached as Exhibit 14. In its application, the NASL identified
its “Long-Term Objectives” as including, among others, the following: (a) a “focus on expanding
into metropolitan markets . . . consistent with League goals and the Standards,” (b) to grow its
35
membership to 16 Teams by 2015; and (c) “prepare for the transition of a certain percentage of
top-market Teams to MLS and focus on replacing such Teams.”
123. Notwithstanding the NASL’s claim that “[t]he League complies with all of the
USSF Professional League Standards for a Division II Men’s Outdoor League,” the application,
on its face, made clear that this was not the case. While the NASL’s application consisted of the
minimum required number of teams (8), two of the teams were in Canada and another team was
based in Puerto Rico (though a United States territory, Puerto Rico was not under the USSF’s
jurisdiction). In other words, three of the eight NASL teams were not located in the United
States. The league also failed to meet many of the other then-existing Professional League
Standards. Among other things, the stadia of several teams did not meet the field size
requirements, and several other teams did not meet the ownership requirements. The league also
did not have a league-office infrastructure but promised it would hire the required personnel if its
membership application was accepted.
124. As will become important later, Traffic Sports USA, Inc., a subsidiary of the
Traffic Group, a sports (primarily soccer) marketing company based in Brazil, had a substantial
ownership interest in the league as well as a financial interest in several NASL teams. Traffic
USA also contracted with the NASL to provide the media sales, sponsorship and marketing for
the league. And, the Chairman of the NASL’s Board of Directors was Aaron Davidson, an
executive with Traffic USA.
125. Notwithstanding the NASL’s failure to fully comply with the Division II
standards, on February 11, 2011 the USSF Board of Directors, voted, once again, to grant the
NASL a “provisional” membership as a Division II professional league for the upcoming 2011
36
season with the expectation that it would come closer to full compliance with the Professional
League Standards in time for the 2012 season.
126. In the fall of 2011, the NASL submitted its application for full membership in
the USSF – to change its “provisional” status to full membership. Again the league applied with
the minimum number of 8 teams and still failed to satisfy all of the Division II standards.
Nevertheless, the Professional League Task Force, chaired by then-USSF Vice President Mike
Edwards, recommended approval of the NASL as member of the USSF and as a Division II
league with various waivers from the Division II standards. The Board voted to approve the
recommendation on November 20, 2011. At this same meeting, MLS was re-sanctioned as a
Division I league and the USL was re-sanctioned as a Division III league, each without the need
for any waivers.
127. The NASL’s application to join the USSF as a member was presented at the
March 3, 2012 USSF AGM and was formally approved.
128. In the fall of 2012, each of MLS, the NASL and the USL submitted their
applications for sanctioning as a Division I, II and II league, respectively, for 2013. Again, the
NASL failed to satisfy all of the Division II standards.
129. Based on the recommendation of the Professional League Task Force, the USSF
Board again approved the NASL’s application and granted a number of requested waivers from
the Division II standards on December 1, 2012 including a waiver due to the NASL’s failure to
have the minimum number of teams required of a Division II league. At this same meeting MLS
was re-sanctioned as a Division I league with a single waiver and the USL was re-sanctioned as a
Division III league without the need for any waivers.
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130. A similar process was followed in each of 2013 and 2014, for the following
year, with each of MLS, the NASL and the USL submitting their applications for sanctioning as
a Division I, II and III league, respectively, in the fall for the following season.
131. At the December 8, 2013 USSF Board meeting, the NASL was re-sanctioned as
a Division II league and, for the first and only time, without the need for any waivers from the
standards. MLS was re-sanctioned as a Division I league and the USL was re-sanctioned as a
Division III league, each with the need for several team waivers.
132. At the December 7, 2014 USSF Board meeting, MLS was re-sanctioned as a
Division I league without the need for any waivers, and the NASL was re-sanctioned as a
Division II league and the USL was re-sanctioned as a Division III league, each with the need for
several team waivers.
C. The NASL Changes Direction and Expresses the Desire to Be Considered a
Division I League – 2015 to early 2016
133. Contrary to its application for membership submitted in 2011, in early 2015 the
Commissioner of the NASL, Bill Peterson, mentioned to me at the February 2015 AGM that the
NASL was interested in competing at the “highest level.”
134. Several days after the AGM, Mr. Peterson sent me a letter dated February 23,
2015, a true copy of which is attached hereto as Exhibit 15, indicating the “desire and intention
of NASL to compete at the highest level of professional soccer in the United States.” In
addition, Mr. Peterson complained that MLS was seeking to expand into the Atlanta and
Minneapolis markets where the NASL already had teams.
135. On February 24, 2015, I responded to Mr. Peterson’s letter, a true copy of which
is attached hereto as Exhibit 16. In my response I applauded “the desire of the NASL to compete
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at the highest level” while reaffirming what we had discussed in San Francisco at the AGM, that
the USSF would be upgrading and becoming more rigorous in requiring compliance with the
Professional League Standards “for the benefit of the sport.” With respect to his concerns about
competition from MLS, I explained that the USSF had no control over specific markets in which
leagues choose to play. Finally, I noted the desire of the USSF “to continue its support for the
growth and success of the NASL.”
136. At or about the same time, the USSF was notified by the USL’s representatives
that the USL intended to apply for Division II status.
137. On May 31, 2015 the NASL submitted an application for certification as a
Division I league, a true copy of which is attached hereto as Exhibit 17. In this application, the
NASL, among other things
• Suggested that it was the USSF which “classified [the NASL] as a Division II
Men’s Professional Outdoor Soccer League”, ignoring the fact that in the NASL
application for membership in the USSF specifically requested the Division II
designation (p. 6);
• For the first time, suggested that the Division II label “unnecessarily restricts
NASL’s potential” (p. 6), “places an unnatural barrier to grow [the NASL’s]
business” (p. 16), and was causing the NASL “difficulty in attracting a true
national television partner” (p. 17).
138. Later in the application, the NASL suggested that there should not be any league
classifications (p. 50). The NASL further suggested that, in any event, the league and its teams
complied with “all USSF requirements for Division I” except for those standards that, in its
view, “are not a legitimate basis to exclude a league from Division I.” Id. The application went
39
on to note that the Jacksonville team was playing on field that was non-compliant with any of the
standards and that it failed to meet the Division I time zone requirements and stadium capacity
requirement (minimum capacity of 15,000) for many of its teams – standards which the NASL
claimed were “arbitrary in nature and have no meaningful value in determining whether a league
merits the Division I classification.” Id.
139. Based on a review of this application, it seemed reasonably clear that the NASL
was posturing towards litigation to challenge the USSF’s right to classify the professional
leagues by division and the right to require compliance with the Professional League Standards.
140. As noted above, on June 11, 2015, the USSF circulated to the professional
leagues the PLS Task Force’s proposed revisions to the Professional League Standards for their
review and comment. While each of MLS and the USL provided comments, the NASL
responded with something very different.
141. On July 23, 2015, Jeffery Kessler of the law firm of Winston & Strawn LLP sent
the USSF a 13 page letter on behalf of the NASL. A true copy of this letter is attached hereto as
Exhibit 18. Among other things, in the letter Mr. Kessler and the NASL alleged that
• USSF had unfairly sought to protect MLS by virtue of certain governance
mechanisms and its economic relationship with SUM;
• the proposed improvements in the Professional League Standards were designed
to hinder competition with MLS;
• there should be “no separate divisions;” and
• a number of the Professional League Standards including the minimum stadium
size (15,000) and time zone requirements had no procompetitive justification.
40
The letter from Mr. Kessler and the NASL in large part mirrors the Complaint filed in this
action. Indeed, much of the language in the Complaint appears to be lifted verbatim from this
letter sent more than two years ago.
142. The USSF responded, in part to Mr. Kessler’s letter on July 27, 2015
disagreeing with his assessment and denying any violation of the law. Nevertheless, the USSF
offered to meet and discuss the issues with the NASL. A true copy of this letter is attached
hereto as Exhibit 19.
143. USSF representatives and legal counsel for USSF met with Mr. Kessler and
representatives of the NASL on September 30, 2015 at the O’Hare Hilton. Mr. Kessler and the
NASL reiterated the positions articulated in the July 23, 2015 letter. In response, the USSF
noted, among other things, that:
• The concept of professional league standards was designed to mitigate league and
team failures which had historically occurred in the United States and which had
proven extremely detrimental to the growth and development of the sport;
• more than 80% of the teams that had played in the men’s Division II or III
outdoor leagues since 1996 had gone out of business or returned to the amateur
ranks;
• when the NASL sought a Division II sanction from the USSF in 2011, its
Chairman agreed with the need to rigorously apply the Professional League
Standards to eliminate instability;
• contrary to the NASL’s allegations, the changes to the Professional League
Standards since 1995 had been very modest and the standard about which the
41
NASL was complaining most vocally, the Division I stadium capacity standard,
had never changed;
• the procompetitive reasons for Professional League Standards; and
• in 2015, the NASL did not satisfy the 1995, 2008 or 2014 Professional League
Standards for admission as a Division I league.
144. Near the end of the meeting, the USSF raised another issue of great importance.
As noted above in Paragraph 124, the NASL was heavily tied to a company called Traffic Sports
USA and its Chairman, Aaron Davidson. At the end of May 2015, just days before the NASL
submitted its application for Division I status, Traffic USA, its parent company, Traffic Sports
International, Mr. Davidson and Jose Hawilla, the founder and owner of Traffic, were indicted
by the United States Department of Justice in the Eastern District of New York for racketeering,
conspiracy, money laundering and fraud. True copies of the indictment against Mr. Davidson
and the information against the Traffic entities are attached hereto as Exhibits 20 and 21. A
superseding indictment was filed by the Department of Justice against Mr. Davidson on
November 25, 2015. The close ties of both Mr. Davidson and Traffic USA to the NASL were
prominently featured in both criminal charges.
145. Accordingly, the USSF expressed its concerns about (a) the relationships
between the NASL and the Traffic companies and Mr. Davidson given the then recently revealed
criminal charges, (b) the impact of the association of the alleged criminal enterprise on the
NASL and the sport of soccer and (c) the impact of these charges on the viability of the league
and its team in North Carolina given the close financial ties of those indicted to both. At the
meeting, the NASL representatives specifically said they were addressing the issues and they
42
would be resolved within 30 days. As it turned out, however, it actually took the NASL more
than a year to end its association with Traffic.
146. Unbeknownst to the USSF at the time, Mr. Hawilla, Traffic Sports International
and Traffic Sports USA had already pleaded guilty to multiple felony counts prior to the
unsealing of the indictment and information, and that the Traffic entities had agreed to forfeit
more than $151 million. In October 2016, Mr. Davidson also entered a guilty plea to the federal
charges.
147. The USSF’s concerns about the relationship between the NASL and the Traffic
entities and Mr. Davidson were reiterated to the NASL in a letter dated October 29, 2015, a true
copy of which is attached hereto as Exhibit 22.
148. On October 30, 2015, the NASL sent a letter to the USSF addressing the Traffic-
related issues, a true copy of which is attached hereto as Exhibit 23. Although the NASL
indicated that (a) Mr. Davidson was removed as Chairperson, (b) Traffic’s interest in the North
Carolina team had been sold and (c) the league’s marketing agreement had been resolved, the
league acknowledged Traffic retained an interest in the NASL: “the only remaining interest
Traffic has in the NASL is an economic interest.”
149. That same day, October 30, 2015, the NASL sent a second letter to the USSF
demanding a Division I sanction even though it admittedly did not even come close to complying
with the existing Division I standards while reiterating its position that the Professional League
Standards “violate U.S. antitrust laws.” A true copy of this letter is attached hereto as Exhibit 24.
150. On November 6, 2015, the USSF responded to each of the NASL’s October 30,
2015 communications. A true copy of this response is attached hereto as Exhibit 25. The USSF
advised the NASL that it would consider the letter requesting a Division I sanction as a request
43
for waivers from the existing Division I standards. With respect to the remaining issues with
Traffic, the USSF wrote: “Finally, we are likewise in receipt of your letter also dated October 30,
2015 concerning the involvement of Traffic in the NASL. While we appreciate your update,
given the indictments and guilty pleas, it is imperative that the NASL’s relationship with Traffic
be completely resolved post haste. Towards that end, please provide a timeline with respect to
your stated objective of ‘restructuring the investment to include a complete parting of ways with
Traffic.’”
151. On November 10, 2015, the NASL sent a letter to the USSF seeking to further
address the Traffic-related issues, a true copy of which is attached hereto as Exhibit 26. In this
letter, Mr. Peterson said, among other things, that the league was “working towards a resolution”
but “cannot affirm a definitive timeline.”
152. On November 11, 2015, the USSF responded to Mr. Peterson’s November 10
letter by email, a true copy of which is attached hereto as Exhibit 27, reaffirming the USSF
concerns with the NASL and Traffic continuing relationship and urging that the NASL promptly
extricate itself.
153. On November 15, 2015, Rishi Sehgal, the NASL’s General Counsel, sent an
email to the USSF regarding Traffic, stating that “Our goal is to conclude a restructuring,
including the complete parting of ways with Traffic, by the end of the year. We will keep you
updated accordingly.” A true copy of this email is attached hereto as Exhibit 28.
154. Consistent with past practice, each of the professional leagues, including the
NASL, were required to submit their league annual reports to the USSF for consideration by the
Professional League Task Force in connection with the divisional sanctioning decision for the
following year, 2016. The NASL provided its Annual Report on November 20, 2015. A true
44
copy of the 2015 Annual Report (excluding confidential team financial information) is attached
hereto as Exhibit 29. Although the NASL continued to seek a Division I sanction for 2016, in
connection with its status as a Division II league, the NASL requested several waivers from the
Division II standards relating to the dimensions of field playing surfaces and the ownership
criteria for one of its new teams.
155. On November 23, 2015, the NASL requested the opportunity for it and its
counsel to make a presentation to the Professional League Task Force and the Board of Directors
with respect to its request for a Division I sanction and why they believed the divisional criteria
which the league did not satisfy were not legitimate. A true copy of this email is attached hereto
as Exhibit 30.
156. Because the NASL and its counsel had been threatening the USSF with
litigation over the Professional League Standards and their application to the league, the USSF
agreed to allow the NASL and its counsel to make a presentation to the Professional League
Task Force in December subject to certain conditions. Those conditions were outlined in a letter
dated November 24, 2015, a true copy of which is attached hereto as Exhibit 31. Mr. Peterson
confirmed the NASL’s agreement to the conditions in an email dated November 27, 2015 subject
to certain additional terms, to which the USSF agreed on December 1, 2015. True copies of the
November 27 and December 1, 2015 emails are attached hereto as Exhibits 32 and 33.
157. I understand that on December 5, 2015, the USSF Professional League Task
Force consisting of then-independent director (now USSF Vice President) Carlos Cordeiro,
director Mike Edwards and USSF CEO Dan Flynn met to consider the 2016 sanctioning
applications for the professional leagues. I further understand that the NASL and its counsel
were permitted to make a presentation with respect to the request for a Division I sanction.
45
158. On December 6, 2015, the USSF Board voted to grant a Division II sanction to
the NASL for 2016 and to approve the request for waivers from the Division II standards
contained in the November 19, 2015 letter from the NASL. I did not participate in the vote, and
no Board member who had a then-current affiliation with any of the professional leagues
participated in the deliberations or the vote on NASL’s sanctioning application. After the
sanctioning requests were granted, there was significant discussion, once again, about the need to
eliminate requests for waivers by all professional leagues and to rigorously apply the standards.
159. On December 8, 2015, the USSF Professional League Task Force sent a memo
to the NASL, following up on the December 5 meeting putting in writing, as requested by the
NASL and its counsel, questions raised at the December 5 meeting. I received a copy of this
memo, a true copy of which is attached hereto as Exhibit 34. As set forth in the memo, the
USSF addressed the NASL’s continuing relationship with Traffic and the concerns it was
causing, requested further information about the Traffic relationship and requested information
about stadia capacity for three new teams the NASL said it would be adding in 2016.
160. On December 21, 2015, the NASL’s counsel sent a letter responding to some,
but not all, of the questions posed in the December 8 memo regarding Traffic. A true copy of
this letter is attached hereto as Exhibit 35. In addition to partially addressing the issues with
Traffic, the NASL demanded that its application for Division I status be addressed at the next
USSF Board of Directors meeting.
161. The following day, December 22, 2015, the NASL announced that one of its
team, the San Antonio Scorpions, would not be returning to play in 2016.
162. On January 5, 2016, the USSF, through counsel, responded to the December 21,
2015 letter from the NASL. A true copy of this response is attached hereto as Exhibit 36. In this
46
letter, the USSF requested additional information regarding Traffic and categorically rejected the
NASL’s continuing claim that its association with an admitted criminal enterprise did not have
“any legitimate” place in the USSF’s consideration of the NASL’s membership status. The
USSF also noted that the NASL had failed to provide the stadium-related information requested
by the Professional League Task Force for the three new teams on December 8. Finally, the
USSF agreed to submit the NASL’s request for Division I status to the USSF Board of Directors
and invited the NASL to make a presentation to the Board at its meeting on January 13, 2016.
163. On January 13, 2016 the NASL and its counsel made a presentation to the USSF
Board concerning the request for Division I status. During the presentation, the NASL and its
representatives restated what they had stated many times before, namely that NASL meets all of
the Division I criteria except for criteria which it believed were not appropriate (stadium size,
time zone, etc.). At the suggestion of Mr. Kessler, the NASL’s lawyer, the Board requested an
opportunity to review the prior materials that the NASL and its counsel had submitted and to get
additional input from the USSF and its counsel before making a decision on the NASL’s request.
164. The USSF confirmed the Board’s decision in this regard to the NASL on
January 15, 2016 and asked whether there was any additional information the NASL wished to
submit.
165. On January 21, 2016, the NASL responded, demanding prompt action on the
Division I request, asserting the delay in acting was causing the NASL harm and that a failure to
grant the NASL Division I status would be “unlawful.” A true and correct copy of this email
exchange is attached hereto as Exhibit 37.
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166. The NASL was informed on January 25, 2016 that the next USSF Board
meeting would be held in March and that the NASL’s demand for Division I status would be
addressed at that time.
167. Shortly prior to that Board meeting, the NASL sent a letter to USSF Vice
President Carlos Cordeiro dated March 3, 2016. A copy of this letter, a true copy of which is
attached hereto as Exhibit 38, was forwarded to me. Among other things, the NASL stated that
“The NASL is asking that the Federation cease the practice of classifying the professional
leagues into different hierarchical divisions . . . We hope you will use your new position and
status to, at the least, insist that the NBOD ceases its policy of classifying Professional League
Members into different divisions at its March 8 meeting.”
168. The USSF responded to the March 3 letter on March 9, 2016. A true copy of
that response is attached hereto as Exhibit 39.
169. On March 8, 2016 the USSF Board of Directors met to consider, among other
things, the NASL’s request for Division I status. The Board determined that the NASL did not
satisfy many of the Division I standards and, therefore, rejected the NASL’s request to be
granted Division I status. Again, I did not participate in the vote, and no Board member who had
a then-current affiliation with any of the professional leagues participated in the deliberations or
the vote on the NASL’s request to be granted Division I status for 2016.
170. On March 10, 2016, the USSF notified the NASL of the Board’s decision. A
true copy of the email to Mr. Peterson is attached hereto as Exhibit 40. As set forth in this notice,
the USSF stated that
The NASL does not currently meet multiple portions of U.S. Soccer’s Division I
standards, including the stadia size requirement (which has been in place since at least
1995) and the requirement (also in place for over 20 years) that Division I leagues have
U.S. teams that play in at least three time zones. The non-recused members of the Board
48
considered whether a waiver could be granted, but concluded that since the
overwhelming majority of the NASL’s teams play in stadia that seat far less than 15,000
people, doing so was not warranted. As U.S. Soccer publicly announced in 1995—and
recently reiterated to the NASL—U.S. Soccer remains committed to sanctioning leagues
that satisfy its objective divisional criteria, including multiple leagues in the same
division should multiple leagues satisfy the divisional standards.
As U.S. Soccer previously indicated, U.S. Soccer remains willing to discuss and
assist the NASL in developing a path forward towards attaining its recently stated goal of
receiving a Division I sanction – possibly even providing a “provisional” Division I
sanction once most NASL teams meet the Division I standards with a defined and
achievable timetable for compliance with the standards in a reasonable time thereafter.
U.S. Soccer looks forward to working with the NASL to continue to grow the sport of
soccer in the United States.
D. The NASL Continues to Deteriorate in 2016 and Is Only Granted a
“Provisional” Division II Sanction for 2017
171. By mid-summer 2016, the NASL had still not advised the USSF about the status
of its efforts to end its then-current relationship with Traffic. Accordingly, on July 8, 2016, the
USSF sent an email to the NASL asking for the status. On July 13, 2016, the NASL responded,
stating that “[w]e are still in the process of negotiating the complete separation of Traffic's
indirect investment in NASL. As we previously mentioned, we will provide USSF with an
update once we have achieved a full separation.” A true copy of this email exchange is attached
172. The NASL did not respond to the denial of Division I status, presumably
because the NASL was suffering from serious internal issues including, among others, the loss of
several teams due to financial losses as discussed below.
173. Contrary to the intimation in the Complaint that the USSF was looking to
destroy the NASL, I expended a lot of time and energy over the balance of 2016 in an effort to
save the NASL -- which was beginning to fall apart.
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174. During the summer of 2016 I had several discussion with Bill Peterson, the
NASL’s Commissioner, during which he sought to engage, not on the elimination of professional
league classifications or the denial of Division I status, but rather on developing a path for the
NASL to come into compliance with the existing Division I standards. On September 8, 2016,
Mr. Peterson confirmed the context of our several discussions in an email to USSF Vice
President Carlos Cordeiro and Board member John Motta, a new member of the Professional
League Task Force, and sought to engage with the task force to discuss a path forward. A true
copy of this email, on which I am copied, is attached hereto as Exhibit 42. Mr. Peterson also
requested the opportunity to have a discussion with the Professional League Task Force in
connection with the USSF Board meeting scheduled for September 23.
175. That same day Mr. Cordeiro responded that the agenda surrounding the Board
meeting was very full and did not leave time for another meeting. Mr. Cordeiro did, however,
note that “if you believe you’ve made progress toward meeting the standards please submit to us
an update of your plans and a timeline for compliance.” Mr. Peterson forwarded Mr. Cordeiro’s
response to me and rather abruptly stated “So, dialogue is not an option for NASL and soccer
progression in usa, clearly pass/ fail?” I then responded to Mr. Peterson as follows:
Bill, frankly given the multiple in person discussions that we’ve had over the last few
months I’m more than a bit miffed by the “dialogue is not an option for NASL”
comment. On top of that, following our last meeting in Jacksonville, I’ve organized a
meeting in two weeks’ time for all three pro leagues (none of the other league have asked
for such a meeting).
In the last two meetings, we’ve had [,] you had mentioned that you were going to follow
up with Dan, but then I see the note to Carlos earlier today. I read his response as (i) for
scheduling reasons, a meeting around the BOD meeting may not be possible and (ii)
please provide a status update so a decision can be made as to whether a meeting in the
near future makes sense. I certainly don’t see how his note can be read in a way that
justifies your response to me. In any case, such correspondence should be directed to
Dan.
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When we met in NY, you also mentioned that you would follow up with Dan on
commercial issues and let me know some specifics on how US Soccer might be able to
help in other areas. Neither of those has happened.
A true copy of this email exchange, on which I am copied, is attached hereto as Exhibit 43.
176. On September 21, 2016, I personally met with representatives from MLS, the
NASL and the USL to discuss a variety of issues and disagreements between and among them.
Shortly after the meeting ended, two more teams (Tampa and Ottawa) publicly announced they
were leaving the NASL. They were not folding, but, instead, had chosen to join the USL, a
Division III league that had applied for Division II status for 2017.
177. The following morning, the Chairman of the NASL and principal owner of its
Jacksonville team, emailed me and asked if I could meet with NASL owners the following
Monday, September 26 in New York. He did not include then-Commissioner Peterson on the
email. I promptly responded that I would be happy to meet and would even do so over the
weekend if needed. A true copy of this email exchange is attached hereto as Exhibit 44.
178. The USSF Board of Directors met on September 23, 2016. Among the topics
discussed was the USL’s application for Division II status for 2017. The Professional League
Task Force recommended that no action be taken on the application because of the need to
conduct compliance reviews on a number of the USL teams.
179. That evening, Mr. Peterson, then Commissioner of the NASL, wrote to me as
follows: “I believe this group of NASL owners will deliver what you’re looking for. We’re a
long way removed from the breakaway and Aaron Davidson days. Let’s stay close and use our
collective experience to see this through to a logical end and best result for USSF, NASL, and
soccer in the USA.” I responded, “Thanks Bill. Hopefully we can figure out a sensible way
through the current situation.” A true copy of this email exchange is attached hereto as
Exhibit 45.
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180. In late September 2016, the disarray within the NASL became even more public.
It was reported in Soccer America not only that Tampa and Ottawa were leaving the NASL to
join the USL, but that one of the brand new NASL teams, Rayo OKC (Oklahoma) and the Fort
Lauderdale team were in serious difficulty. In other words, the league that was threatening
litigation over Division I status just a few months ago and which had 12 teams was now looking
more like an eight (8) team league for 2017. Then, in November 2016, the viability of the NASL
was called further called into question when it was reported that, the NASL’s flagship team, the
New York Cosmos, was on the verge of extinction.
181. Teams were exiting the NASL for a variety of reasons. Indeed, some of the
NASL teams departed for the USL, a Division III league seeking Division II status. Other teams
simply stopped operating due to financial losses – losses which would likely have increased, at
least during the initial seasons, if they would have been in Division I.
182. For much of the balance of the year, and into January 2017, I and other USSF
representatives invested a lot of time and energy trying to save the NASL – not destroy it as the
NASL would now have the Court believe. We helped the NASL explore a merger possibility
with the USL, and when that option failed to materialize, I discussed with Mr. Commisso the
possible transfer of ownership of the New York Cosmos – which, if it had not occurred, would
have almost assuredly led to the demise of the NASL. I will address this in more detail below.
183. For example, during November and early December 2016:
• I met with a group of NASL owners on November 2 to discuss league difficulties
and issues.
• I participated in a call with NASL owners on November 23 to discuss expansion
(new team) possibilities.
52
• I met with representatives from both the NASL and USL on November 30 to
look for a way to salvage the NASL by way of some form of collaboration with
the USL – much like was done in 2009-2010 – and suggested a follow-up
meeting that weekend. Unfortunately, the USL declined to participate, but not
for my lack of trying.
• Notwithstanding the USL’s position, on December 4, 2016, the USL sent me a
term sheet for a potential arrangement between the USL and the NASL which I
forwarded to NASL owners and offered to help in any way. A true copy of this
email exchange is attached hereto as Exhibit 46. I then helped facilitate a follow-
up meeting between representatives from the USL and NASL on December 5.
184. In the meantime, and consistent with past practice, each of the professional
leagues, including the NASL, submitted their league annual reports to the USSF for
consideration by the Professional League Task Force in connection with the divisional
sanctioning decision for the following year, 2017. The NASL provided its Annual Report in
November 2016. A true copy of the NASL’s 2016 Annual Report is attached hereto as
Exhibit 47.
185. The NASL did not request Division I status but instead was asking for a
Division II sanction for 2017. In the report, the NASL acknowledged that a number of teams
which played in 2016 would not be participating in the NASL in 2017; the NASL application
also acknowledged the financial issues with one of its remaining teams, Ft. Lauderdale. The
NASL did not, however, mention the issues which had been publicly disclosed concerning the
New York Cosmos. The NASL did acknowledge that they were applying with 9 teams
(including the troubled New York Cosmos and Ft. Lauderdale teams), when the Division II
53
standards required 12 teams, and that the NASL did not have a team in the Central time zone as
required.
186. On December 5, 2016 the Professional League Task Force met to consider the
annual reports of each of the professional leagues and their requests for divisional sanctions for
2017. Although the USL indicated its intention to seek Division II status, they withdrew the
Division II request during that meeting. The NASL application raised lots of questions
concerning what teams were truly committed to participating in 2017; in addition, there were
questions regarding whether the teams had posted or were prepared to post the required
performance bonds required to guarantee their participation. The task force determined to
recommend that the Board of Directors hold the NASL application in abeyance until additional
information was provided.
187. On December 6, 2016, the USSF Board of Directors met to address a number of
issues including the status of the professional leagues for 2017. At that meeting, the NASL
representatives requested that the Board delay a determination on its divisional status, if any, for
2017, and the Board agreed to do so. The USL’s application was also tabled.
188. On December 14, 2016, the USSF sent a letter to the NASL requesting that they
provide the following information to the Professional League Task Force by December 19: (a)
“A list of teams committed to participating in NASL’s 2017 season;” and (b) "Confirmation (and
documentation) that each team so committed has met the performance bond requirements as set
forth in the Professional League Standards. A true copy of the cover letter is attached hereto as
Exhibit 48.
189. On December 18, 2016, the NASL responded to the request for additional
information in a letter from Commissioner Peterson. A true copy of the letter is attached hereto
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as Exhibit 49. In this letter, the NASL admitted that “[w]e currently have six clubs from the
2016 competition that can move forward immediately.” The NASL also noted that three other
clubs were engaged in ownership or investor changes and, therefore, they might have as many as
nine teams “ready to proceed.” The NASL also claimed to be in advanced discussions with
“over six outside groups about joining NASL. Most of those discussions are centered on 2018
launches.” The NASL asked for an extension of the December 19 deadline to actually confirm
team commitments and to satisfy the performance bond requirement for those committed teams.
The USSF agreed to the requested extension and asked for the information by December 28,
2016.
190. On December 28, 2016, I had a text exchange with Mr. Helmick, President of
the San Francisco Delta’s, a team that had only recently joined the NASL. In addition to telling
me that the USSF would be getting more information from the NASL about a path forward for
an eight (8) team league, he also suggested the need for collaboration and likely a combined
schedule with the USL. A true copy of this text exchange is attached hereto as Exhibit 50.
191. Later that day, on December 28, 2016, the NASL formally responded to the
Professional League Task Force’s request for additional information. A true copy of that
response is attached hereto as Exhibit 51 The NASL response indicated that it would be an “8-
team league in 2017,” counting among its members the Jacksonville team which the NASL said
would now “be a league-owned team” and the troubled New York Cosmos. In addition, the
NASL asked for numerous waivers from the existing Professional League Standards including a
waiver for (a) the minimum number of teams (8 versus the required 12), (b) no team in the
Central time zone and (c) the proposed league-owned team. Further demonstrating the issues
55
within the NASL, the following day there were news reports suggesting that Mr. Peterson was
likely to be removed as Commissioner.
192. On December 29, 2016, the Professional League Task Force conducted a
conference call to discuss the impact of the just-received information from the NASL. I listened-
in but did not participate. At the conclusion of the call, the task force tentatively decided not to
recommend the NASL for Division II status for 2017. Later than same day, the USSF received a
revised Division II application from the USL purporting to address many of the issues raised in
connection with its prior application.
193. On December 30, 2016, the Professional League Task Force conducted another
conference call, this time to discuss the updated information received from the USL. I listened-in
but did not participate. At the conclusion of the call, the task force tentatively decided not to
recommend the USL for Division II status for 2017. The Professional League Task Force also
decided to reach out to each of the NASL and USL to give them an opportunity to discuss their
respective situations and to address task force questions on a conference call the following day,
December 31, 2016.
194. On December 31, 2016, the Professional League Task Force conducted separate
lengthy calls with representatives from each of the USL and NASL. I listened-in but did not
participate.
195. On January 1, 2017, the Professional League Task Force had another conference
call which I listened in on. The purpose of the call was to continue the discussion on the USL
and NASL Division II applications. After further discussion, the task force decided to
recommend rejection of both the USL and NASL applications for Division II status since neither
met, or came reasonably close to meeting, the requisite standards.
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196. Later that day, I sent a notice to the USSF Board of Directors, scheduling a
telephonic meeting for January 6, 2017. The following day, January 2, 2017, I notified the
Board members who were not then currently affiliated with any of the professional leagues that
the purpose of the January 6 meeting was to address the USL and NASL Division II applications.
I also noted in my email that Dan Flynn, the USSF’s CEO, and I would continue to “work on a
path forward that is acceptable to the leagues . . .” A true copy of this notification is attached
197. Both the USL and NASL were informed of the Professional League Task
Force’s recommendations to the Board. I then tried to arrange a meeting with representatives of
both the USL and NASL for January 3rd or 4th to discuss a path forward. The USL initially
refused to participate, but representatives of the NASL agreed to meet in New York City on
January 4, 2017. Eventually, the head of the USL, Alec Papadakis, agreed to meet on January 5.
198. On January 3, 2017, I received a text message from the owner of the NASL’s
Miami team who thanked me for all of my efforts on behalf of the NASL. That same day, after
more than 18 months of inquiries, the NASL finally confirmed that it had fully extricated itself
from its relationship with Traffic. A true copy of the email dated January 3, 2017 is attached
199. On January 4, 2017, I met in New York with a number of the NASL team
owners, while others joined by conference call. The NASL owners acknowledged that the
league did not satisfy the standards for Division II status, and that with teams leaving, teams
folding and questions about the league’s leadership the NASL certainly appeared to be in a state
of disorder. Nevertheless, the NASL owners focused their energies on trying to convince me
that, absent a Division II sanction, the league would disappear which would be bad for the sport.
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200. I have known Rocco Commisso for a number of years as a consequence of our
respective associations with Columbia University. After he had signed a letter of intent to
acquire the New York Cosmos, I had several conversations with him about his potential
ownership of the team and the future of the NASL. Mr. Commisso confirmed the published
reports that the New York Cosmos had laid off all of its staff, had terminated player contracts
and did not have a venue in which to play for 2017. And, while cautioning Mr. Commisso to
look carefully at the NASL’s and its teams’ finances, I was a supporter of his getting involved.
When we discussed the status of the NASL sanctioning for the 2017 season, I was very clear that
this was an issue for the Professional League Task Force and the USSF Board to decide, but, as I
understood it, under the circumstances it was very unclear whether a Division II sanction would
be granted.
201. On January 6, 2017 the USSF Board of Directors met by telephone conference
call specifically to discuss the USL and NASL Division II applications. The meeting began with
USSF Vice President Carlos Cordeiro, and member of the Professional League Task force, who
briefly reviewed each of the applications and the multiple ways in which both leagues failed to
satisfy the Division II standards. He then reaffirmed the task force’s recommendation that neither
league be granted Division II status for 2017.
202. After additional discussion among the Board members and pursuant to a prior
arrangement, NASL representatives were invited to join the call. The NASL was represented by
Mr. Commisso (New York Cosmos), Brian Helmick (San Francisco Deltas), Steve Malik (North
Carolina FC), Ricardo Silva (Miami FC) and several others. Mr. Helmick began the presentation
by personally thanking me for my efforts, stating that I had gone “above and beyond the call of
duty” in trying to help salvage the NASL. He then reviewed a variety of issues which had
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affected the NASL in 2016, including the “cloud” over the league based on its relationship with
Traffic and team instability caused by insufficient due diligence of owners and team movement.
He then proceeded to discuss the strength of the “new owners.” Several other NASL owners
also addressed the Board including Mr. Commisso who stated that he would not join the NASL
without a Division II sanction. After further discussion and questions from the Board, Mr. Malik
closed the NASL presentation by thanking the USSF for its support and expressly stating that the
NASL was not interested in litigation. The USL representatives then joined the call and
discussed why they believed the USL should be granted Division II status.
203. After the USL presentation and discussion with the Board concluded, the Board
engaged in a lengthy discussion of the merits of each league’s Division II application. Against
the initial recommendation of the Professional League Task Force, the Board then voted to grant
both the NASL and USL a “provisional sanction” as a Division II league for 2017 subject to each
league agreeing to the following: (a) the league must satisfy all Division II standards for 2018,
unless agreed to by the USSF, in its sole discretion, and even then only with an agreed upon
timeline for compliance which, if not met would result in an automatic demotion to Division III
and (b) subject to such other conditions as may be determined by an informal working group
consisting of me, Mr. Cordeiro and Mr. Flynn. I did not participate in the vote, and no Board
member who had a then-current affiliation with any of the professional leagues participated in
the deliberations or the vote on the NASL’s and USL’s request to be granted Division II status
for 2017.
204. The need for the NASL to come into compliance with the Division II standards
for 2018 by the USSF Board of Directors for the “provisional” grant of Division II status, along
with additional conditions, were communicated to Rishi Sehgal of the NASL on Friday January
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13, 2017 and confirmed in a letter to Mr. Sehgal of the NASL on January 18, 2017. A true copy
of this letter on which I was copied is attached hereto as Exhibit 54.
205. So to summarize, heading into the 2017 season, the NASL had only 8 teams and
none in the Central time zone. The USSF’s grant of a provisional sanction to the NASL as a
Division II league for 2017 required that it have at least 12 teams for 2018 and at least one team
in each of the Eastern, Central and Pacific time zones or, at a minimum, have made significant
progress towards meeting these standards along with a plan, including a timetable, for coming
into complete compliance with all Division II standards if it wished to be granted Division II
status for 2018.
E. The NASL’s Failure to Make Improvements
206. As both the NASL and USL were advised when they were notified of the
provisional nature of their sanction for 2017, the USSF would monitor each league’s progress
towards compliance with the Division II standards on an ongoing basis and make a decision on
their 2018 status in fall. To assist in the monitoring process, the USSF engaged a consultant, Jeff
L’Hote 7, to engage with each of the leagues and their teams in an attempt to verify information
related to their compliance with the Division II standards.
207. In August 2017, each of the USL and the NASL were requested to submit their
applications to the Professional League Task Force for their 2018 divisional status. The NASL’s
submission dated August 15, 2017 is attached hereto as Exhibit 55.
208. In its application, the NASL noted that 2 of its then-existing 8 teams, Edmonton
and San Francisco, “have not committed to return to the NASL for 2018.” The NASL claimed
that those two teams would be replaced with two new teams from Orange County and San Diego
7
Mr. L’Hote is the principal and founder of LFC International, a soccer-focused consulting firm.
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California. No information on either of those team’s conformance to the Professional League
Standards was provided. The NASL also indicated it was “in discussions with a number of other
groups, including those in Atlanta and Detroit, to finalize their admission into the League for
2018” but no other detail was provided. Of course, this is precisely the same representation the
NASL made in its letter dated December 18, 2016, Exhibit 49, supra. But here we were, eight
months later, and the allegedly “advanced discussions” the NASL mentioned in December 2016
had not “advanced” any further. In addition, while the NASL only noted that two of its then-
existing teams had not committed to play in the NASL in 2018, upon more careful examination
of the bond submitted by the North Carolina team, it appeared that team was committing to play
in 2018 but not necessarily in the NASL.
209. In essence, only 5 NASL teams that were playing in the 2017 season, had
definitively committed to return to play in the NASL for 2018, 2 new teams were supposed to
join and the NASL was allegedly in discussions with others as they had claimed before. Given
the large amount of turnover in the NASL since its founding and the lack of specific information
provided, it was difficult to conclude that the NASL would have even 8 teams for 2018 -- the
same number of teams as in 2017, still 4 teams short of the Division II minimum of 12 teams,
and still with no team proposed for the Central time zone. In other words, at best the NASL had
made no progress towards compliance with the Division II standards and, at worst, it had taken a
significant step backwards by losing 2 or 3 teams while proposing 2 replacement teams with
relatively little information. And, the standards the NASL failed to meet were fundamental – the
minimum number of teams and geographic coverage sufficient to warrant the moniker of a
national league. Finally, the NASL application did not contain a detailed plan and timetable for
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coming into compliance. Of course, the NASL application described its intention to comply, but
promises and platitudes are not a plan.
210. The USL also submitted its application for Division II status. Like January, the
USL requested waivers for a number of the Division II standards, but each of the waiver requests
was team specific; no waivers were requested from the fundamental requirements for a national
league. Indeed, the USL has 30 teams spread across the United States. Even if it dropped the
teams needing waivers, it would still have more than enough teams to satisfy all Division II
standards.
211. The USL’s 30 teams include 10 teams with some affiliation with MLS. A
number of those teams do not currently play in stadia that satisfy the minimum Division II
seating capacity requirement in large part because these are development teams, operated to
develop players for the affiliated MLS team. The commercial success of these teams is not their
number one priority. Several other USL teams had minor issues with field size due to their
stadium configuration and two teams owned by non-profits did not meet the technical ownership
net worth requirements. But, unlike the NASL which had not made any progress towards
compliance with certain fundamental league standards, the USL had made substantial progress
towards full compliance with the standards, had no league-specific waiver requests and had
substantially reduced its team-specific waiver requests.
212. On August 24, 2017, I and a member of the USSF’s staff were able to
successfully mediate a dispute between the NASL and two of its former teams (the Ottawa Fury
and Tampa Bay Rowdies) which had left the NASL to join the USL. If the USSF was intent on
destroying the NASL, I would not have engaged in this process or sought to put an end this this
long simmering legal dispute.
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213. A USSF Board of Directors meeting was scheduled for September 1, 2017 to
address various matters including the applications of the NASL and USL for Division II status
for 2018. On August 31, 2017, the day before the Board meeting, the USSF was informed by
NASL representatives that they had “spoken with” some unnamed investor group from Detroit
who “might be interested” in joining the NASL.
214. At the September 1st Board meeting, and prior to a decision on the pending
applications for Division status, each of the NASL and USL was invited to address the non-
recused members of the Board. The NASL agreed to do so, but due to family commitments, the
USL leadership could not attend. All Board members currently-affiliated with one of the
professional leagues left the room.
215. The NASL presentation was made by Interim Commissioner Rishi Sehgal, Mr.
Commisso of the New York Cosmos and Robert Palmer, the new owner of the Jacksonville
Armada FC. Although each of the presenters was passionate about the NASL, and both Mr.
Commisso and Mr. Palmer were quite enthusiastic about their teams, Mr. Sehgal confirmed that
Edmonton would not be participating in 2018 and that the team from San Francisco “are likely
going to leave.” Mr. Sehgal also said they had the two new teams from Orange County and San
Diego, California bringing their confirmed number of teams for 2018 back to 8 – completely
ignoring the tenuous situation with the North Carolina team. With respect to a ninth team in
Detroit, Mr. Sehgal said “what we hope to accomplish in September is bringing in Detroit FC
into the league.” He reiterated the challenges the league faced from its prior association with
Traffic and then proceeded to thank me and our General Counsel for assisting the league in
resolving a legal dispute with two former teams resulting from the Traffic association – hardly
something I would have done if I was out to “destroy” the NASL as is alleged in the Complaint.
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216. Mr. Sehgal went on to state “we know we don’t meet the standards . . . what we
would like is three years to comply with standard . . . .” Mr. Palmer reiterated the request for a
“three-year window.”
217. When Mr. Commisso spoke, he acknowledged that he first got involved in
considering the NASL on December 15, 2016, when he went to a meeting and was told that the
New York Cosmos was going to shut down. He said he agreed to buy the team but only if it was
granted Division II status for 2017. Mr. Commisso then said “And through Sunil’s efforts, for
which I thank you . . . but thanks to Sunil and the Board, you granted us II, Division II, and we
proceeded.” He also noted that, in January 2017, after the provisional grant of Division II status
to the NASL, the New York Cosmos “had no shirts, no field, no stadium, no team” but he
managed to make it work. Like Mr. Sehgal and Mr. Palmer, Mr. Commisso also said the NASL
needed a three-year Division II sanction.
218. Board member John Motta and USSF CEO Dan Flynn specifically asked the
NASL representatives to describe the pathway for the three-year commitment the NASL was
requesting. In response, Mr. Sehgal said the league was “in the process of reformulating a
strategic plan that’s focused on growth and development.” In other words, the NASL was
working on a plan, but did not yet have one even though that was one of the conditions of the
provisional Division II grant in January.
219. I then noted that while the NASL was asking for a three-year commitment from
USSF, the league was not getting a similar financial commitment from its teams because
whenever any of them had run into financial or other difficulties, the teams simply left the
league.
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220. Mr. Commisso raised an issue of inter-league poaching (the USL recruiting
teams from the NASL). In requesting the USSF’s assistance, and in direct contradiction to the
NASL’s claims now, Mr. Commisso stated “We think you have the authority to change how
each league operates, okay.”
221. The Board voted not to grant the NASL Division II status for 2018. With
respect to the USL, the Board held the decision in abeyance, to give the USL 30 days to respond
to certain questions and provide a detailed plan and time line for addressing the waivers
requested from the Division II standards and coming into full compliance. I did not participate in
the vote, and no Board member who had a then-current affiliation with any of the professional
leagues participated in the deliberations or the vote on the NASL’s and USL’s request to be
granted Division II status for 2018.
222. The decisions were communicated to both leagues that evening and were
confirmed in writing on Sunday September 3, 2017. The USSF gave each league thirty (30) days
to respond. True copies of the letters to the NASL and USL confirming the Board’s action on
the Division II applications are attached hereto as Exhibits 56 and 57. The NASL never
responded to the letter as requested but, instead, filed the instant lawsuit.
VII. OTHER ISSUES
A. The USSF’s Relationship with MLS
223. In the Complaint, the NASL makes much about the USSF’s good relationship
with MLS. Of course, the USSF tries to maintain a good relationship with each of our
professional leagues, as well as all of our member organizations. When I am quoted about the
relationship in the Complaint, for example at Paragraphs 112 and 119, it is always in a situation
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where the discussion is specifically focused on MLS rather than a general discussion about the
membership at large.
224. Nevertheless, the importance of MLS and its owners, and what they have done
for the growth and development of soccer in the United States, cannot be understated. MLS and
its ownership group have invested billions of dollars in developing the league, developing
players, developing soccer-specific stadiums and developing the sport as a whole.
225. That said, while I have been President, neither I nor anyone at the Federation, to
my knowledge, has ever done anything to hinder the growth and development of any other
professional league or sought to prevent any other league from seeking to compete with MLS.
As the sport has become more popular, however, we have taken steps to try to minimize the
damage that can befall the sport by instability in the professional ranks by continuously
evaluating and upgrading the Professional League Standards – not to protect MLS, but to protect
the sport at all levels.
226. Further, it is absurd for the NASL to suggest that USSF and I have sought to
injure the NASL. As discussed at length above in Paragraphs 116-126 and 177-204, we twice
saved them from extinction, once in 2009-2010 and again at the beginning of this year.
B. The USSF’s Relationship with SUM
227. Soccer United Marketing (“SUM”) is the marketing affiliate of MLS, much like
the role that NFL Properties, NBA Properties and MLB Properties each serve for the NFL, NBA
and MLB, respectively. SUM represents a variety of soccer properties, in addition to MLS and
the USSF including, for example, the promotional and marketing rights to Mexican National
Team games played in the United States.
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228. Prior to 2004, IMG served as the marketing agency for the USSF. In 2004, IMG
indicated that it was no longer interested in serving the USSF in that capacity. In addition, IMG
had not been able to generate significant sponsorships for the USSF.
229. SUM proposed an arrangement to the USSF that would guarantee a substantial
annual minimum amount of marketing revenue with additional upside if SUM exceeded certain
revenue generation milestones. The guaranteed component was particularly attractive to the
USSF because it provided a measure of financial certainty and security which would allow the
USSF to better plan for the future growth and development of the sport knowing that it had a
guaranteed stream of revenue for the life of the agreement. The negotiations with SUM were
conducted at arms-length, were lengthy and occasionally testy. In the end, we were able to
negotiate an agreement granting SUM the rights to market the USSF’s intellectual property
including sponsorship rights and the broadcast rights for Men’s and Women’s National Team
games over which the USSF has control 8 in return for the guaranteed payments and upside
discussed above.
230. When the USSF first contracted with SUM, soccer was still a “step child” in the
sponsorship and broadcast worlds as compared to other sports. There was not much demand
and, accordingly, sponsors were not beating a path to the USSF’s door and broadcasters were not
interested in paying substantial fees for the associated broadcast rights. In an effort to create
value for potential sponsors and broadcast partners, SUM was able to “bundle” the MLS rights
with the USSF sponsorship and national team broadcast rights to create a package of rights
which proved to be much more attractive than the rights of either the USSF or MLS standing
alone. As a consequence, SUM was able to negotiate sponsorship and broadcast deals which
8
The USSF does not own or control the rights to games in which one of its national team plays
in official FIFA and/or CONCACAF tournaments.
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generated more money for both MLS and the USSF than either had previously been able to
negotiate.
231. The USSF extended its agreement with SUM in 2015 for another eight-year
term, again after extended arm’s length negotiating process. The USSF negotiated a significant
increase in the annual minimum guarantee and potential upside if SUM is able to exceed certain
annual targets. Again, the nature and structure of this agreement with SUM are very beneficial
to the USSF for planning and financial security purposes.
232. The revenues generated from USSF’s relationship with SUM benefit all
stakeholders in the sport of soccer in that it allows the USSF to devote additional resources for,
among other things, player, coach and referee development, safety education and the
development of training centers.
233. Finally, and notwithstanding the allegations in the Complaint, the USSF’s
relationship with SUM has never played any role in how the USSF manages the professional
league division sanctioning process. The only Board members affiliated with MLS have
consistently recused themselves from professional league sanctioning discussions.
C. Claims About Promotion and Relegation
234. The Complaint frequently references the concept of “promotion and relegation”
in various professional soccer leagues around the world, observes that this concept is not applied
to the professional league members of USSF, and suggests that, by not requiring promotion and
relegation, the USSF is somehow in violation of FIFA regulations. This is simply not correct.
235. The FIFA regulations to which the NASL refers is Article 9 of FIFA’s
“Regulations Governing the Application of the Statutes” which was enacted by the FIFA
Congress in 2008. Article 9 provides, in relevant part, as follows:
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1. A club’s entitlement to take part in a domestic league championship shall

depend principally on sporting merit. A club shall qualify for a domestic league
championship by remaining in a certain division or by being promoted or relegated to
another at the end of a season.
2. In addition to qualification on sporting merit, a club’s participation in a

domestic league championship may be subject to other criteria within the scope of the
licensing procedure, whereby the emphasis is on sporting, infrastructural, administrative,
legal and financial considerations. Licensing decisions must be able to be examined by
the member association’s body of appeal.
Contrary to the NASL’s suggestion, Article 9, on its face, does not require the automatic
application of a system of promotion and relegation to all domestic professional club leagues,
much less those in the United States. There are other countries, including Canada and Australia,
where promotion and relegation is not practiced.
236. Article 9 was not intended to apply to countries where the promotion and
relegation system was not already employed. Indeed, public statements made by FIFA, before,
at the time and after the passage of Article 9 of the FIFA Regulations make clear that the purpose
of those regulations was not to extend promotion and relegation to professional club leagues
where these principles were not then being applied. Rather, the regulations were intended to
prevent manipulation by artificial means of existing promotion and relegation systems in “open”
leagues, as had then-recently occurred in Spain with the Granada and Murcia clubs. For
example, a March 12, 2008 statement by FIFA, available on FIFA’s public web-site, reads as
follows:
Protecting the promotion and relegation system for clubs
• Concept: Results on the pitch decide whether a club goes up or down a level in
every championship around the world except in the United States and Australia, where
there are “closed” leagues. Recently it has been possible to achieve promotion artificially
by buying or moving a club. FIFA wishes to make sure that this cannot happen again.
****
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• Example: In Spain, the president of fourth division club Granada bought second-
flight Murcia then moved the club near to Granada, allowing Granada 74 to move up
artificially into the second tier.
12 March 2008 Public Statement by FIFA, “FIFA to tackle areas of concern”
http://www.fifa.com/governance/news/y=2008/m=3/news=fifa-tackle-areas-concern-
709098.html. A true copy of this statement is attached hereto as Exhibit 58.
237. This statement, among others, makes clear the intention of the drafters of
Article 9. First, the use of the word “protecting,” rather than “implementing” or “mandating,”
suggests an action to preserve the integrity of existing promotion and relegation systems, not
require new ones. Second, the statement explicitly recognizes the United States’ and Australia’s
“closed” leagues, and does not go on to state that they must be changed or that the new
regulation is intended to apply to such leagues. They are literally and effectively
excepted. Third, FIFA references and subsequently describes a specific example of the problem
that the regulation is intended to combat, and states that FIFA’s intent is to “make sure that this
[what occurred in the “open” leagues in Spain] cannot happen again.”
238. In summary, the suggestion that the USSF is somehow violating FIFA
regulations is a red-herring and inaccurate.
VIII. NASL’S CLAIM OF IRREPARABLE INJURY
A. The USL Flourished as a Division III League
239. In the Complaint and in Mr. Commisso’s Declaration, the NASL claims that it
will suffer irreparable injury if the Court does not order that the USSF grant the NASL Division
II status while this litigation is pending. What the NASL argues, in essence, is that the league
cannot survive if it must operate as a Division III league – the divisional classification for which
the NASL actually satisfies the Professional League Standards. Simply put, USL’s recent
experience belies the claims of Mr. Commisso and the NASL.
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240. As discussed above in Paragraphs 114-118 above, the immediate predecessor to
the USL was USL-1, which operated as a Division II league under the USSF umbrella. In 2010,
the USL, along with the NASL, operated as a temporary Division II league under the
management of the USSF as both the USL and NASL sought to stabilize and grow their
respective leagues.
241. In 2011 the USL “dropped down” to Division III and remained as a Division III
league for six full seasons, through 2016, until it applied for and was granted “provisional”
Division II status for the 2017 season. During this 6 year period, the USL grew from 12 teams in
2011 to 29 teams in 2016. The USL did not contract or wither and die. To the contrary, the USL
expanded dramatically with multiple teams in all four time zones in the continental United
States.
242. In 2013, the USL entered into an arrangement whereby MLS teams could loan
players for development purposes to an affiliated USL team, a relationship not dissimilar to the
agreement between Major League Baseball and the National Association of Professional
Baseball Leagues, now known as Minor League Baseball. Beginning in 2014, a number of MLS
teams took the next step, formally joined the USL and entered their reserve teams as official
members. By 2016, there were 11 MLS reserve teams playing in the USL. But, even setting
aside the addition of the MLS reserve teams to the league, the USL grew from 12 teams in 2011
to 18 teams in 2016, a 50% increase in the number of teams. All 18 of those teams played in
stadia with a seating capacity well in excess of the 5,000-seat Division II minimum.
243. In addition, in 2016, the USL and leading sports broadcast and distribution
channel ESPN announced a partnership to bring USL games to a national audience on both
television and digital platforms.
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244. In short, in an the 6 year period, from 2011 through 2016, the USL was able to
stabilize and grow to a Division III league with 29 teams all across the country, 18 of which were
USL, not MLS reserve, teams and then was able to elevate to Division II in 2017. In light of this
experience, it seems difficult to argue that the Division III label is a “death sentence” or amounts
to irreparable harm.
B. The USSF Will Be Seriously Harmed if it is Ordered to Grant the NASL
Division II Status
245. In over three decades with the USSF – including more than eleven years as
President – I have learned that the USSF’s credibility and reputation are critical in dealing with
FIFA, CONCACAF, soccer federations representing other countries, the U.S. professional soccer
leagues and all USSF members.
246. Since the enactment of the Professional League Standards in 1995, the USSF
has sought to enforce those standards to ensure that leagues achieve the stability, size, and
geographic dispersion required to attract the largest possible fan base. It is always easier for a
league falling short of the Professional League Standards not to undertake the effort and
investment needed to achieve full compliance. Without a credible threat to deny non-compliant
leagues a sanction for a particular division, the USSF would have almost no leverage to enforce
its standards.
247. As explained above, the USSF has worked with the NASL, and historically
given it waivers from the standards on assurance of its taking credible steps toward compliance.
This year, however, the NASL failed to take any steps toward complying with the Professional
League Standards, despite the USSF’s warning in January 2017 that failure to take such steps
could result in no Division II sanction for the 2018 season. The independent members of the
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USSF’s Board of Directors, therefore, voted to deny the NASL Division II status for next year’s
season. Indeed, it was and still is unclear whether the NASL would have even eight (8) viable
teams for 2018 (it should be twelve (12)) even if it were granted Division II status.
248. If the NASL were to obtain a preliminary injunction granting it Division II
status notwithstanding its repeated shortcomings and failure to improve, however, it would
undermine – if not eliminate – the USSF’s credibility, industry standing, and hence ability to
enforce the Professional League Standards going forward. Any U.S. professional soccer league
that failed to satisfy the Professional League Standards or submit a credible plan for ultimately
complying with those standards could follow the NASL’s lead in going to court. That outcome
would eviscerate the USSF’s ability to enforce the Professional League Standards, which have
served the sport of soccer and consumers well.
249. The USSF would also be seriously harmed because, while the NASL makes
broad pronouncements in its motion for a preliminary injunction about the number of teams it
“might have” if this Court orders the USSF to confer Division II status on the NASL for 2018,
the NASL provides no information about these “additional teams” and, therefore, no way for the
Court or the USSF to determine whether these alleged “additional teams” satisfy the numerous
other requirements for Division II status.
250. As noted above, when the NASL sought approval for its request for Division II
status for 2018, the NASL claimed to have 8 teams confirmed, even though the Division II
standards required that the league have 12 committed teams. But, at the time I was aware that
the North Carolina team was not fully committed to play in the NASL in 2018. This possible
defection brings the “committed” number of teams down to seven which is below the minimum
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number of teams required of a brand new league, nevertheless a league which has been around
for seven years and is supposed to be stable and growing with a minimum of twelve teams.
251. Further, the NASL provides no information about the “six additional clubs”
allegedly poised to join the league. In addition to having an appropriate number of teams, each
team in the NASL must satisfy certain minimum criteria, some applicable to all professional
league teams, and some specifically applicable to teams desiring to play in Division II. For
example, each of these allegedly interested teams must meet the following criteria, all as
specified in the existing Professional League Standards:
• Team Organization – a team must have a variety of specified full-time
administrators and coaching staff, and the head coach must have an “A” coaching
license or its equivalent.
• Stadium – a team must play in a stadium with a minimum seating capacity of
5,000 and the field must be at least 70 x 110 yards with a FIFA approved surface.
• Team Ownership – a team must demonstrate that it is not owned or controlled by
another owner in the league, and the team ownership group must designate a
“principal owner” who controls at least 35% of the team and has the authority to
bind the team.
• Financial Viability – (i) the designated principal owner must have a minimum net
worth of $20 million (exclusive of his/her ownership of the team and the value of
his/her primary residence), (ii) the team ownership must demonstrate to the USSF
that it has the financial capacity to operate the team for three years by providing a
detailed financial history and (iii) the team must post a performance bond of
$750,000.
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252. But, the NASL has provided none of this information, not to the USSF and not to
the Court. The NASL has not identified the owner or proposed ownership groups, the make-up
and financial wherewithal of the proposed owners/ownership group or the proposed cities and
stadia in which they intend to play or provided any information. In other words, there is simply
no way to evaluate the NASL’s claim that there are six new teams, or any new team for that
matter, ready to join its ranks or the viability of the alleged new clubs.
253. I have a very significant concern that if a preliminary injunction is granted, the
NASL may populate the league with a number of teams that do not satisfy these requirements,
thereby further undermining the integrity of the Professional League Standards and the stability
of professional soccer which the USSF has worked so hard to achieve.
C. The NASL has Refused to Discuss the Reconsideration of Its Division II
Application Unless in the Context of an Overall Litigation Settlement
254. Although the NASL claims in its application for a preliminary injunction that
interim relief is needed, that it has more than eight (8) financially qualified teams to participate
as a Division II league in 2018 and a plan to grow and expand over the next several years, when
the USSF recently offered to consider this new information and reconsider the NASL’s
application for Division II status for 2018, the NASL refused to even engage in such a dialogue
unless it was in the context of settlement negotiations.
255. On Friday October 6, 2017, I sent an email to Mr. Commisso, Chairman of the
NASL, and Rishi Sehgal, the NASL’s Interim Commissioner,
Rocco, Rishi
US Soccer has no desire to impair the NASL’s ability to operate as a Division II league in
2018, if it can genuinely do so, but you didn’t have a plan at the Board meeting, and since
then, Board hasn’t heard from you – we’ve heard from your lawyers.
75
Assuming the NASL is serious about the desire to play as a Division II league for the
2018 season, I will go back to the US Soccer Board of Directors and ask them to
reconsider their decision, if
• the NASL can demonstrate by October 20 that it has 8 economically viable and
separately-owned teams committed to play in 2018 (obviously they will have to execute
the bond) which according to what Rocco has stated in his declaration should not be
difficult and
• the NASL will agree to provide a detailed plan and strategy by November
20 how NASL plans to become a fully-functioning league with 12 economically viable,
separately-owned teams for the 2020 season.
If you are interested in discussing this please give me a call over the weekend. If a
meeting is appropriate, I would be willing to meet and would be joined by another
member of our Board or staff.
256. On Sunday, October 8, 2017, Mr. Commisso responded on behalf of the NASL,
essentially refusing to engage unless the discussions were part of an overall settlement
discussion. I responded later that same day as follows:
I do not agree this is covered by Rule 408. I’m not trying to settle litigation, I am trying
to find a soccer solution – to address the NASL’s claimed need to be granted Division II
status lest it suffer dire consequences. I am willing to meet this week to do so
(Wednesday PM or later as I will be in Trinidad with the National Team until
then). That’s still a long time before the October 31 date, so not sure how any issue of
delay comes into the matter (your legal team won’t stop working).
If you’d rather send me another email drafted by your lawyers, that’s up to you. If on the
other hand, you want to see if two guys who love Columbia and the sport can address the
NASL’s current needs, then I’m willing.
A true copy of the email exchange between me and the NASL between Friday October 6 and
Sunday October 8, 2017, is attached hereto as Exhibit 59.
257. Mr. Commisso responded on Monday morning, October 9, 2017, again refusing
to discuss the future of the NASL unless it was in the context of a protected settlement
communication.
76
IX. CONCLUSION
258. In conclusion, there is not and never was any agreement between the USSF, on
the one hand, and MLS, the USL or anyone else, on the other hand, to deny the NASL the grant
of Division II status for 2018 or Division I status. The decision to deny the NASL's request for
Division II status for next year was made by the non-recused members of the USSF Board of
Directors based solely on the merits of the NASL's application.
Executed this 16th day of October 2017 at New York, New York.
....
Sunil K. Gulati
77

Declaration of Sunil Gulati in Support of USSF Opposition To NASL Injunction

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Case 1:17-cv-05495-MKB-ST Document 26-1 Filed 10/16/17 Page 1 of 78 PageID #: 744

UNITED STATES DISTRICT COURT

NORTH AMERICAN SOCCER LEAGUE, LLC,

v. Civil Action No. 1:17-cv-05495-MKB-ST

UNITED STATES SOCCER FEDERATION, INC.,

DECLARATION OF SUNIL K. GULATI

DECLARATION OF SUNIL K. GULATI

State of New York, do declare as follows:

1. I am submitting this declaration in connection with the opposition of the

and would testify competently to these facts.

2. I graduated magna cum laude with a B.A. in economics from Bucknell

3. I served on the Columbia University economics faculty full-time from 1986

capacities for more than thirty (30) years, all as a volunteer.

Contiguglia (1998-2006) to serve on and sometimes chair a number of different USSF

to host the 1994 FIFA World Cup.

elected officer of the USSF.

as President in 2010 and again in 2014.

originally been scheduled to take place).

9. I have been a member of the CONCACAF (defined below) Executive

Committee and have served as the chair of several CONCACAF committees.

the FIFA Council, I have served on various FIFA committees.

B. Formation of the United States Soccer Federation

of professional teams and leagues.

Fédération Internationale de Football Association (“FIFA”), the international sports federation

governing soccer (known as football in other countries) among its members.

in the original Articles of Incorporation was “supreme control . . . of Association Football” (a

for the Sport

the international federation governing the sport of soccer.

II. ORGANIZATION OF INTERNATIONAL SOCCER

17. FIFA’s members consist of National Associations, each of which represents a

different country or independent state. Each National Association member, as a condition of

Professionalism, a true copy of which is attached hereto as Exhibit 3. 1

own structure.” Id. (emphasis added).

affairs are not influenced by any third parties . . .”

on which Association Football is played. CONCACAF is the regional confederation of FIFA

26. CONCACAF organizes competitions, offers training courses in technical and

Amended, Effective May 1, 2017) is attached hereto as Exhibit 6.

A. The National Council

National Council consists of delegates selected by the USSF members.

categories or administrative councils: a Youth Council, which includes members whose

of their constituencies on issues affecting their respective members.

B. The Professional Council

C. The Athlete’s Council

affecting the professional leagues.

attached hereto as Exhibit 7.

D. The Board of Directors

43. The USSF’s Board of Directors consists of 15 directors, constituted as follows:

 The USSF President

 The USSF Vice President

 The Immediate Past President (non-voting)

 The Chairperson of the Professional Council and 1 other Professional

 3 athletes (elected by the Athlete’s Council)

 1 “at large” representative (elected by other USSF members)

 3 Independent Directors elected by the National Council (or selected by

were/are affiliated with MLS at the time of their Board service:

Year Athlete Council MLS

Cindy Cone (partial No

direct or control the USSF.

NASL ceased operations in 1984.

development of a sustainable first division outdoor professional men’s soccer league.

the new league.

B. The United States Soccer Foundation

soccer in the United States with a special emphasis on underserved communities.