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Speaker 1: You're listening to the Weekend Sport podcast with Jason Vine

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Speaker 1: from Newstalk ZB.

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Speaker 2: And assess, among other things, the potential reputational damage to

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Speaker 2: New Zealand Basketball and to the National Basketball League from this.

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Speaker 2: Henry Moore heads up the sports law practice at leading

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Speaker 2: New Zealand law firm Taverndale and Partners. He joins us now. Henry,

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Speaker 2: first of all, in terms of liability for what's played

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Speaker 2: out here, does the New Zealand Basketball League run by

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Speaker 2: New Zealand Basketball have any liability in this situation?

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Speaker 3: From a legal standpoint, the league itself, obviously run under

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Speaker 3: the umbrella of b and ZED generally wouldn't be automatically

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Speaker 3: liable for these types of things just because the team

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Speaker 3: it's admitted into the competition has failed. However, if it

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Speaker 3: can be shown that the league acted negligently and allowing

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Speaker 3: the Panthers to come in to the competition, for example,

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Speaker 3: if they if they failed to do reasonable due diligence

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Speaker 3: and there were red flags but they weren't they weren't

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Speaker 3: picked up at the time, then in theory there's probably

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Speaker 3: a risk of liability. The key question is is where

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Speaker 3: they own a duty of care to their stakeholders, players, sponsors, fans, others.

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Speaker 4: They've breached that duty.

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Speaker 5: But I think more realistically, the consequence is probably more

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Speaker 5: reputational on governance based, not the legal aspect of it.

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Speaker 5: The league's credibility is obviously now under question. That's one

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Speaker 5: of the biggest challenges for the sport.

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Speaker 4: I think how.

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Speaker 2: Much reputational damage could this do? Has this already done

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Speaker 2: to the New Zealand National Basketball League and the attractedness

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Speaker 2: of the competition for overseas players for example, You.

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Speaker 3: Know, I think the NBL's swift response has really helped.

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Speaker 3: It is usually how you respond in situations like this

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Speaker 3: that will actually enhance the reputation of the.

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Speaker 4: Sport domestically and globally. There's always going to be some

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Speaker 4: reputational risk.

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Speaker 3: I understand that there can be up to three overseas

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Speaker 3: players for each franchise twelve teams, so up to thirty

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Speaker 3: six overseas players.

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Speaker 4: That's that's that's that's.

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Speaker 3: A big number in the scheme of things and domestic

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Speaker 3: competitions in New Zealand. I understand there's there's ten or

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Speaker 3: so agents that work in this space that that that

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Speaker 3: send overseas players into our competitions. Obviously, eleven of the

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Speaker 3: franchises are really strong.

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Speaker 4: It's a it's a good competition.

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Speaker 3: So I think depending on how things play out from here,

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Speaker 3: the fact that the NBA has responded so swiftly, there

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Speaker 3: there is that that reputation as a good competition I

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Speaker 3: think will be will be retained, and as long as

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Speaker 3: things are handled appropriately from here on in, I don't

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Speaker 3: think there'll be too much of a risk. There's obviously

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Speaker 3: the commercial the commercial risk domestically too, not just the

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Speaker 3: overseas players, but for the competition itself. But again, in

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Speaker 3: my view of the NBL continues to respond on the

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Speaker 3: way it is doing now and responds appropriately, then they

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Speaker 3: can do all they can to enhance or to at

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Speaker 3: least retain their reputation.

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Speaker 2: The phrase that you used before is one we've heard

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Speaker 2: a lot, and that's due diligence. Whenever you invite somebody

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Speaker 2: new into your competition and you said they are reasonable

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Speaker 2: due diligence, what does reasonable due diligence look like?

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Speaker 3: Reasonable due diligence would be looking at, you know, the financials,

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Speaker 3: the ownership structures, the ability to comply with the league rules,

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Speaker 3: the operational.

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Speaker 4: Capabilities, those types of things.

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Speaker 3: Uh, And and when an overseas team is coming into

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Speaker 3: a domestic competition, you'd expect the due diligence would be

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Speaker 3: a lot more comprehensive than it might otherwise be, you know,

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Speaker 3: and there also might be you know, financial guarantees and

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Speaker 3: things like that that that that might be conditions placed

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Speaker 3: on on on those.

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Speaker 4: That are that are provided a license.

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Speaker 3: So it's not it's not necessarily just checking all the

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Speaker 3: paperwork and and.

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Speaker 4: Those types of things.

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Speaker 3: It's actually really understanding who's behind the team and whether

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Speaker 3: they can deliver what they need to sustainably and in

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Speaker 3: a way that will and will won't compromise the reputation

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Speaker 3: of the of the competition. So I imagine the NBL

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Speaker 3: here would have done a lot of due diligence.

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Speaker 4: This is quite an innovative.

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Speaker 3: Mode from the MBL to get exposure for their competition

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Speaker 3: and for basketball around the world, and so it was

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Speaker 3: an exciting opportunity for the sport. So I imagine it

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Speaker 3: would have required significant due diligence to ensure it worked.

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Speaker 2: Is it possible? And I guess that's probably a silly

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Speaker 2: question because it's happened in this case. Is it possible

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Speaker 2: that even if you do a substantial, more than reasonable

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Speaker 2: amount of due diligence, that things can still go wrong.

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Speaker 4: Good question.

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Speaker 3: Absolutely you can. You can check everything in advance, you

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Speaker 3: and do as much as possible. Bank accounts, check business plans,

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Speaker 3: do all the background checks. But all it's you see

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Speaker 3: this not only in sport, but in the commercial world generally.

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Speaker 3: I mean, all it takes is disputes between the owners

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Speaker 3: of businesses, cashtrow problems, internal dysfunction, you know, all those types.

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Speaker 4: Of things can put a business at risk.

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Speaker 3: So doing as much due diligence upfront is really important.

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Speaker 3: But really due diligence is just trying to mitigate that risk.

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Speaker 3: You're never ever going to be able to eliminate it.

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Speaker 3: And that's always the problem. And that would have been

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Speaker 3: the risk that the NBL would have balanced and on

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Speaker 3: balance made the decision that this is the right thing

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Speaker 3: for the competition, and everyone assumed it would be.

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Speaker 2: Yeah, I think you're right, and there's absolutely no issue

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Speaker 2: with the innovation here, and I think you know, news

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Speaker 2: on Basketball and the NBL should be applauded for innovation.

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Speaker 2: But you're right. They've quickly come in and said, hey,

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Speaker 2: we haven't got this one right. And here's the steps

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Speaker 2: we're taking as far as the players are concerned, Henry,

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Speaker 2: they will presumably have signed contracts with the Panthers. What

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Speaker 2: recourse do they have of those contracts aren't on it?

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Speaker 3: Yes, I'm not sure if they're they're employment agreements or contracts.

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Speaker 3: I'd probably I'd assume, I'd assume their contracts. But if

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Speaker 3: if they are employment agreements, then like any other employee,

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Speaker 3: that have the right the employment rights that we would have,

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Speaker 3: which is being able to bring a personal agreements, those

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Speaker 3: types of things, the fact that their employer hasn't acted

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Speaker 3: in good faith, they'll be remedies.

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Speaker 4: Remedies for that.

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Speaker 3: In terms of contract, it would be standard things like

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Speaker 3: breach of breach of contract, misrepresentation, those types of things.

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Speaker 3: But I think the problem here is enforcement, right, It

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Speaker 3: depends on the Panther's financial position and legal structure.

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Speaker 4: Are they even in a position to be able to.

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Speaker 3: Pay these players or even meet these remedies laid down

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Speaker 3: the track if these breaches continue, And that's always one

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Speaker 3: of one of the challenges. I'm not sure whether the NBL,

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Speaker 3: I'm not across it, but whether the NBL is a

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Speaker 3: party to any of those employment agreements or contracts, whether

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Speaker 3: there are any indemnities there from the NBA.

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Speaker 4: To cover those costs.

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Speaker 3: The NBA might choose to do that anyway, but from

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Speaker 3: an employment law perspective, there are some protections and hopefully

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Speaker 3: those will.

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Speaker 4: Be available for the players if they do remain out

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Speaker 4: of pocket.

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Speaker 2: Would it be common for a governing body like New

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Speaker 2: Zealand Basketball to of a cost like those Would that

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Speaker 2: be a common thing to happen.

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Speaker 4: No, it wouldn't be.

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Speaker 3: I mean in in environments where there are collective agreements,

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Speaker 3: then use the governing body would be party to those agreements,

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Speaker 3: but it would it would be uncommon in this type

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Speaker 3: of structure for the n b L to be responsible

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Speaker 3: for any of those payments.

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Speaker 4: They they provide the.

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Speaker 3: License, the twelve licenses to each franchise, so the relationship

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Speaker 3: with that the NBO has with is primarily with that franchise.

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Speaker 3: It's the franchise that contracts with contracts with players and

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Speaker 3: takes on those those liabilities.

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Speaker 4: So it would be uncommon.

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Speaker 3: But the NBL, from a reputational perspective, might take certain

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Speaker 3: steps to man the impact that this this incident could

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Speaker 3: have on its competition and therefore do what's what's reasonably

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Speaker 3: expected of them to remedy at as best they can.

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Speaker 2: And they often say in sport, you win or you learn.

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Speaker 2: Clearly there are some lessons to be learned here. Do

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Speaker 2: you think that the National Basketball League will be overly

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Speaker 2: cautious now about future innovation of this type? It would

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Speaker 2: be a shame if they didn't continue to innovate. But

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Speaker 2: do you think this will will make them a lot

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Speaker 2: more reticent in the future to do a similar sort

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Speaker 2: of thing.

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Speaker 4: I think yeah.

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Speaker 3: I think you're right that they've The steps that I've

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Speaker 3: taken to add this type of innovation into the competition

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Speaker 3: is really impressive, and you know, New Zealand's sport needs

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Speaker 3: to do more of it because.

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Speaker 4: Of where we are in the world and time zones,

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Speaker 4: et cetera.

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Speaker 3: To get that international exposure. So I do applaud them

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Speaker 3: for taking the steps they have to try something different.

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Speaker 3: I hope it doesn't put them or any other domestic

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Speaker 3: competition off from doing something like this again. I think

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Speaker 3: there was always going to be or any business decision

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Speaker 3: like this is always going to.

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Speaker 4: Be some risk.

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Speaker 3: I think everyone involved in this situation would I hope

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Speaker 3: that this was never going to be a possibility. The

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Speaker 3: fact that we are where we are will everyone involved

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Speaker 3: will do what it can to remedy it as quickly

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Speaker 3: as possible. But I hope it doesn't put the likes

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Speaker 3: of MBL off from doing it again. It might be

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Speaker 3: just some further questions asked in more comprehensive due diligence

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Speaker 3: potentially for the next time around. But if it's not

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Speaker 3: the Panther playing in next year's NBL, I presume there

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Speaker 3: will still be a license available And you'd hope that

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Speaker 3: whether it's a New Zealand team or an overseas team,

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Speaker 3: that the competition continues to liver like it is and

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Speaker 3: continues to grow and you know, and retains its fan base,

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Speaker 3: which I'm sure it.

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Speaker 2: Will indeed, one hundred percent. You've provided this really interesting

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Speaker 2: available insight, Henry. Thanks so much for your.

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Speaker 4: Time, mate, pleasure anytime.

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Speaker 2: No thanks for joining us. Henry more there. He heads

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Speaker 2: up the sports law practice at leading New Zealand law

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Speaker 2: firm Taverndale and partners.

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Speaker 1: For more from Weekend Sport with Jason Fine. Listen live

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