Ex-NFLPA’s DeMaurice Smith on Fighting for Change in the NFL

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0:42Hi, everyone. Welcome back to The Deal. I'm your host, Jason Kelly, alongside my partner, Alex Rodriguez. All right, man. Welcome back. You're 50. You had a big birthday. You had a nice vacation. How are you feeling? I feel old. Oh, come on. There's something about the 5-0 that kind of like the 5-handle versus the 4-handle, but I'll get over it. No, you're looking great. Seems like you had a great time. You're surrounded by your family. Beautiful vistas. Well celebrated by all accounts. It was really very special to see. So congratulations. Thank you. Happy to be back. So one thing that happened while you were gone, Stanford, where you do some teaching and you're obviously very familiar with the institution, named a new athletic director, former CEO of Nike, John Donahoe.

1:24I could have knocked you over with a feather on that one. That's a really big news because it tells you that it's a blue stamp on the narrative, how big college sports has gotten. And even more importantly, how complex it is. I mean, this is a big job, which I think can change the whole idea of how these universities look at, OK, how high can we think? There's no one that's too big or too high. Someone's run a humongous, you know, Fortune 500 company. And now he's coming to Stanford. I think you'll see other moves that will follow Stanford. I have to think you're right. I mean, I would imagine that every college president saw that news, immediately started in their mind going through who's our most prominent alum who we can tap and sort of appeal to his or her be true to your school, all their nostalgia, and really tap them in.

2:13You're seeing just big business people come in and say, we know sports. We've got a lot of people who know a lot about sports, but we really need to up our business game. So interesting to see what happens and how John Donahoe does there. Meanwhile, you got back from your birthday. I was back in New York and we found ourselves because we were texting over the weekend. You were watching the Yankees play in Miami. I was watching the AAA Yankees, the Scranton-Wilkes-Barre Rail Riders play. And so, first of all, some nice family time for each of us watching baseball games. But I got to tell you, I was blown away by this Scranton team.

2:49A, really good team, and a tribute to the Yankees organization. And I asked you, and you told me it was true. You did rehab there at some point, right? I did. And I believe, Jason, if I'm not, you may want to fact check me here, but I think they bought that franchise from the Phillies. And then they poured a bunch of money into it. Yes. And it looks beautiful. I'm sure you had an incredible time. is a great baseball market. Tons of Yankee fans down there. And I got to tell you, one thing about the Yankees, and this goes back to George Steinbrenner, they do everything first class, and Scranton is no exception.

3:21Yeah, it was a really cool experience, and so it just feels great. And you saw the Yankees play down in your hometown. Yeah, talking about, you know, feeling great, it was such a nice experience this weekend. On Sunday, I went to watch the 1 o 'clock game, Yankees against the Marlins. Marlins swept us, which was painful to watch. But my daughters were like, this is such a cool experience, Dad. We've done this our whole life. Come watch you play. And now we're going in, like no special parking, no security. And yeah, we sat there for about seven, eight innings, watched the game and had a great time.

3:51Well, I will tell you, and I texted you a picture of this. As we were walking in to PNC Park where the Rail Riders played, there was a kid in front of me. Couldn't have been more than nine or ten years old. A-Rod, number 13, wearing the T-shirt. So you've got to love it. Very cool, very cool. You're still big in Scranton, dude. I love it. Big somewhere. Yeah. All right. So coming up on the show, we have Demora Smith. He's the former executive director of the NFL Players Association. And also, while you were gone, a lot of controversy happening with the NFLPA. The successor to D, a guy named Lloyd Howell, actually resigned under some amount of pressure.

4:31some controversy over a job that he continued to have at the Carlisle Group, which is an investor or potential investor in the NFL. They did name this week an interim executive director, a guy named David White, who by all accounts was the runner up when Lloyd Hall got the job a few years ago. I think all we really need to say about this is it is a reminder how critical the PAs are, and you know that from multiple angles. Oh, yeah. I mean, I come from the history of Major League Baseball and Marvin Miller, who started the Players Union that forever has been known as the strongest union in sports.

5:07Then he handed the baton to Don Feer. Then Michael Wiener. Unfortunately, Michael Wiener passed from cancer. And then the baton has been passed to Tony Clark, my former teammate. But these jobs are so vital, Jason. And if you think about the NFL, the most powerful league in the world with the largest amount of revenue is you have an opt-out with the media contract coming up. So this person is the person that deals with, you know, Roger Goodell and the 32 owners, the 32 partners, and someone that can be a great leader for all the players. So this is a humongous opportunity and a very important job for not only the players, but I would say the state of the NFL.

5:45Totally. And you're seeing it now as an owner in the NBA and the WNBA, how critical they have to be as partners as you're building the value of the franchises, as you're building your fan base, as you say, negotiating media contracts. I mean, you're seeing how important they are from a different perspective. I will say, so as all this was going on with Lloyd Howell, and this is, as people will hear in a few minutes when Dee comes onto the show, this is classic Dee. So I text him and basically say, you know, obviously this has happened since we taped with you. Anything you want to say? And he said, because we're talking about his book, Turf Wars, on the show, he says, if you want the real story of what's going on at the NFLPA, the history and its future, get Turf Wars.

6:29So he's always selling. And I will say there are some incredible stories in this book. You're going to hear in just a few minutes some incredible stories that he has. One of the things that I really took away from this conversation and really echoes something you just said a minute ago is these jobs are important and they're really, really hard. I mean, that came through loud and clear in this conversation with D. Yeah, and he talked about it. I mean, he said that it probably took some years away from his life, some of the most stressful times. I mean, he said sometimes he couldn't sleep without his phone going off, especially through labor negotiations.

7:03James, I got a little pitch for you. My pitch for you is I thought about a decade ago or so you had this incredible book that really kind of dissected and unpacked the private equity world. And I loved it. I loved your book. The new Tycoon's available wherever you get your books. Go ahead. It's so good. Shameless plug. But I think there's an opportunity for you to do the same for ownership around sports. Because if you think about the Jerry Joneses, the Jerry Reinsdorffes, going back to George Steinbrenners, there's such a change between the old Titans to a lot of these new younger owners. That could be really interesting.

7:38And there's such a large appetite for it. I think fan base can't get enough of this kind of stuff. Just an idea. All right. So I love the idea. So I'll pitch you back. Do you think the new owners of the Minnesota Timberwolves and the Minnesota Lynx would be willing to cooperate on such a book and give me key interviews? Of course. Of course. Great. Yeah. All right. Good. All right. Coming up on the show, Demora Smith, the former executive director of the NFLPA and the author of the new book, Turf Wars.

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8:48Welcome back to The Deal. We are so excited to have with us. You can hear him laughing in the background already. Demora Smith, he's the former executive director of the National Football League Players Association. He's also the author of a new book, Turf Wars, The Fight for the Soul of America's Game. We're so happy to have you here with us. Welcome to The Deal. Man, it is a pleasure to be with you guys. Good to see you, Jason. Always great to see you, Alex. We have so much to talk about. We want to talk about football. We want to talk about the book. Let's start with the book. You tell it like it is, and I would imagine that was the approach you took to the book, too.

9:23What inspired you to do this, and how did you go about it? Well, first of all, it's great to be here. Thanks for saying what I think most people hate, that I just tell it like it is. But, you know, I only knew one way to do the job, and that was just simply take it on for what it is. You know, there's no mystery that there's management and labor. There's no mystery that the 31 owners of the National Football League are just, you know, warm, fuzzy, huggy people who get along with everybody. That's a joke. And so, you know, I wanted to write a book that was not only a real story of the 15 years or nearly 15 years that I had the job, but also this story of even though you have those kind of battles on both sides of the aisle, there is room for business.

10:07There is room for compromise. But sometimes those compromises, as somebody like Alex knows, your first year in the league was the strike. Right. And so you end up resolving or coming to some sort of compromise on these business deals. But I think every now and then people forget that sometimes there's a preceding war and it's full of personalities. It's full of intricate business decisions, but also this idea that a group of people on one side can have a good war with the people on the other side. And sometimes good things come out of it. So, Dee, I'm so interested about your career. You've been an incredibly successful lawyer in your career.

10:49You work for one of some of the top law firms in the country. You work for the U.S. government, representing all of us as Americans. But I'm interested, how does someone end up getting that job, which is the ultimate missionary job? Oh, yeah. Well, it might be a missionary job. It might be an L.C.D. job where you just ride out one way and you never make it back. But, yeah, you know, interesting story. I was headed back to government. I mean, really, the only job I really wanted after I moved into private practice was to go back to the U.S. attorney's office and be the U.S. attorney for the District of Columbia.

11:23And I was lucky enough to sort of get tapped on. That was the way that the road was going to take me. I was working on the transition team for then-Senator Obama, President-elect Obama, working for the Justice Department. And Alex, dead story. I got a call one night on my phone from a search firm that said, would you be interested in being a candidate for the executive director job? And I ignored the call for almost three weeks because I thought I've already got a plan. And then literally they finally caught me one day in the office and I talked to the person and he said, look, you know, you've identified you as a potential candidate.

12:01The players are going to go through this lockout. They're looking for sort of a guy who can combine wartime theory with business strategy, with sort of legal plays. And I said, this has got to be the dumbest idea I've ever heard of in my life. Well, you know, I mean, you grew up in this world and you know it in many ways better than I. You know, I was never an agent. I never represented a team, never worked for a team. I wasn't really a labor lawyer. I wasn't a sports lawyer. To much of my law school professor's chagrin, I didn't even take sports law in law school. But it just didn't seem like a fit until I sat down with the players.

12:40And once I sat down with that executive committee, and by the way, a group of killers. Yeah, who was on that? That year, the president was Kevin Mouai, you know, a great president, but also had the distinction of, I think he climbed to the top three dirtiest players in the National Football League. I'm pretty sure that's true. But Brian Dawkins, Drew Brees, Tony Richardson, Jeff Saturday, Mike Vrabel, Kevin Carter. You know, all those guys were and I think, Alex, you get this sometimes in a locker room, you just have old souls. And those guys were just old, mature souls who, for good or for bad, woke up one day and Gene Upshaw had gone into the hospital on a Wednesday and Gene died on a Sunday.

13:27Wow. And I think that moment sort of led them to take on sort of an air of more responsibility and maturity than perhaps they would have otherwise done. And so, Dee, you talked about how that was not your background. I wonder, and you obviously know the answer to this, in the association's mind, was that a feature, not a bug? That you didn't have the background where you might have some of the biases of an agent or from working for a team or working for the league? Like, was the fact that you had been successful essentially in something that was very relevant but not direct experience, did that actually make you a better candidate and better at the job?

14:10100 percent. You know, I remember my first second meeting with the executive committee, believe it or not, was on the day of Obama's inauguration. And I nearly didn't take the trip, honestly, because I, you know, that was one of those places where you just had to be. But I thought better of it or just in pure honesty, my wife thought better of it and made me go. But in that meeting, I was just blunt with them about game strategy. And it didn't appear to me that they had a sufficient congressional strategy. They really didn't have a sufficient public relations strategy. They had two hundred million dollars in the bank.

14:46The league had$4 billion in order to lock the players out. And so, you know, initially, Jason, it was really the same type of work I had done for clients like Ford and Halliburton and Shell and other people over the years. How do you come up with a comprehensive game strategy for the situation that you're facing? Right. And sometimes that's asymmetrical. Right. Say more about that. What do you mean sometimes it's asymmetrical? Sometimes it's asymmetrical, you know, in the sense that, you know, a lot of business deals are linear in the sense that, you know, I did the first business deal for Fanatics, the first sports deal.

15:22Michael Rubin's on the other side of the table. He has a vision for growing the sports apparel in Fanatics. I'm on the other side of the table. If you want to do a deal that has the names of the players on the back, you have to pass. You know, in some respects, that's a linear deal. You know, the upside for me, what's the upside for him? there's a joint win-win and you figure out just the details of the of the win-win an asymmetrical deal is one where like the lockout you know the owners want the players to give back their pensions they want the players to give back 20 of their salary and they want the players to to play you know two extra games 18 games for free and they have a war chest of four billion you have war chest of 200 million.

16:06If you play a linear deal, you're going to lose. So instead it was, well, look, I mean, the league had not done a great job looking after players with respect to concussions. So the first strategy that my boss, Tom Boggs, kind of came up with was we should take the league up on Capitol Hill and have a hearing about concussions. and if we can figure out a legal strategy to nullify their four billion dollars you know that helps us win so we did we convinced a judge that the league's use of the tv money ultimately harmed the players and then the last thing you know which i know you guys know we purchased a secret insurance policy and so that you know the game strategy for us was that the owners think the players will capitulate after week, whatever, four or five or six.

16:57They've certainly told the bankers who hold the notes on their stadiums that football will come back by week seven at the latest. What the secret insurance policy gave us and we played it at the last minute was this thing's going to go on for an entire year. So by an asymmetrical strategy, you've now turned the negotiation into a linear strategy of if we don't get a deal done, this thing's going to last a whole year and there's just as much pain on you as there is on me. And so sometimes, you know, deal strategy, you have to be sort of ruthlessly asymmetrical. So speaking about that, you mentioned the fanatics.

17:35We have a mutual friend in Michael Rubin, who's one of the great deal makers of his generation, right? Aggressive, visionary, see around corners. Relentless. Relentless. Everything. You name it. You name it, he is, and then some. We love him, but man, he's a pill. He is tough and he is relentless and he's a great. So you've done deals like Whoop, EA Sports, trading card deals. But I want to hone in on the Fanatics deal because in many ways you're synonymous with being ahead of the curve and a risk taker. But a calculated risk taker. Walk us through a conversation how you were the first not only to get a deal done but to say I'm in.

18:16But instead of cash, you took equity. Walk us through that a little bit. I'll never forget it. Michael and I met for the first time at the Palm restaurant in Washington, D.C. You know, my side had briefed me on this idea of his. But, you know, in a nutshell, you know, we had already had a deal with Nike and that was a linear relationship that was good, but not great for us, just to be dead honest. Nike would always do a deal with the league first to do the front of the jerseys, and then they would come and do a deal with us for the players' names on the back of the jersey second. And the problem with that structure is in the winner-loser department, the person who does the first deal always makes out better than the person who does the second, right?

18:59So I met with Michael after both sides had briefed with this idea that we were going to talk about this new venture. I sit down with him and first thing out of my mouth is, OK, what's Fanatics? I mean, it's a small company based out of Philadelphia. Certainly learned everything I knew about Michael, about how he had transitioned from selling part of his company to eBay, buying part of that company back, creating Fanatics along with a couple of other companies. But the thing that had me at literally the tagline, you had me at hello, was he said, I'm going to do a deal with the players first because I believe in the value of their IP.

19:38And to be dead honest, whether it was a deal with EA Sports or a deal with any of the other people, Panini or Topps at the time, almost no one had approached us with this idea of capitalizing the value of player group licensing rights. And so the idea was we would do this deal with him first for the player side of the deal. And then he would do the deal with the league for the front of the jersey. And the other idea was, hey, if this works, the equity position was really important to us. So we did a cash plus equity deal. And the idea was pretty simple. You know, at that point, it's a linear deal of if this vision works, this is truly a win-win for everybody.

20:21And Michael is a visionary. I would be lying to say that he was an easy negotiation. You know, we are really, really good friends. But every now and then, those deal points go literally to the death. But I appreciated his vision about doing something that broke the paradigm. And literally, that idea leads to whatever it is, 10 years later, this idea to create one team partners. We would have never been there but for this concept that there was an underappreciated value in group player rights. And look, you know, Alex, all due credit, you know, first of all, it goes to Michael for that idea. But man, if I had to go back and thank a person who meant a lot to me and you, Marvin Miller.

21:09Marvin did the first trading card deal. And I had the pleasure or sometimes not the pleasure of learning from Marvin over a period of kind of the last year of his life. He really got my head on straight about how to be a union leader. But Marvin, I think, has to be credited with that idea that players have a value both on and off the field. And this idea that your IP, you know, your group licensing rights, has an independent value separate and apart from league value. And when those two parties come together, great things happen. Yeah. Marvin Miller, of course, the legendary former head of the Major League Baseball Players Association, correct?

21:51Yeah. Yeah. And so, Alex, pick up there because, you know, I do think this is this is one of those moments where I'm going to lean in hard to your expertise, having, you know, been. I was going to say on the other side, but not on the other side, on the side of D in terms of being a player, because you're uniquely positioned to sort of talk about what it feels like to be, you know, one of the flock as it was and to have someone like D as your leader. What was your experience there? Yeah. I mean, look, I've always said that our present is shaped by our past. And, you know, Dee mentioned 1994. I was an 18-year-old rookie playing for Lou Piniella and in front of King Griffey Jr., I mean, one of my great mentors and great friends to this day.

22:33And August 12th, we walked off the field and I was 18 years old and I called my mom. I said, what do I do now? Right. And then I called Don Feer and the great Gene Orza, who who were both they followed Marvin Miller for 26 years. as leaders, and they're great role models of mine. And the reasons why I'm where I am today, a lot of it is because Marvin Miller, Don Feer, and Gene Orja, because they devoted their life, their adult life, to players like me. And it was so stressful in 1994 when I saw teammates who had mortgages and houses, who maybe had one too many cars, and said, when is my next paycheck going to be?

23:11And it was a scary time. And I'll tell you, you never think about leadership until So you need leadership. And in 1994, that started me thinking, boy, I better have a plan for life after baseball, especially when the average career is five and a half years and you make 90 percent of your money income from age 20 to 30 and less than five percent of us have a college degree. So that's when people like Dee Smith are giants because they really impact your entire life. Do you feel the weight of that, Dee, when you take that job? Because like you're a very successful lawyer and also a public servant up until that point.

23:50But this is a different assignment. I mean, you have like men's lives in your hands, their families, the potential, as Alex knows, for either abject failure or generational wealth ahead of them. So how do you approach that? What's the mentality that you take to sort of take that on? Yeah. You know, look, I was never a great athlete, but, you know, I ran track in college. And for me, it was the most important thing about preparing for a meet or an individual race was everything you did before it started. And, you know, to a certain extent, you know, everything that happens after the gun fires is for the most part, the cards have already been dealt.

24:32Right. And so for me, it was all about engaging in this kind of relentless game strategy. But to your point, what comes from it is the gravity of it. And I'll be the first person to admit, I think I handled the stress, you know, 30 percent in a good way, probably 70 percent in a not so great way. But these jobs take a lot out of you. And I think they should, if that makes sense. I think that if you don't approach these jobs in light of a young 18-year-old who has a short window of earning capacity, and if you don't appreciate the level of pressure that that young person is under each and every day just to stay on the team.

25:16I mean, forget the forget the at bats, right, or the snaps or whether you catch the first down. The relentless life of a professional athlete is so stressful just to stay on the team. And I think one of their strengths is the power of singular thought. And so that just simply means that when it comes to, you know, a collective bargaining agreement that, you know, for us, I did two 10-year deals, you know, those deals are$200 billion deals. And they impact the health care of young men. They impact the pensions of young men. I mean, a quick story. When the league locked us out in March of 2011, you know, yes, they cut off the salaries, but they also cut off the health care.