Objections to Stay and Play

July 25, 2009
Los Angeles, California

Craig:

Thank you for allowing me the opportunity to speak to the fencing community. As many of you know, I am vehemently opposed to the USFA’s proposed “Stay and Play” plan. I would like to detail the major reasons for my opposition and would request, on behalf of many in the membership, that this program be halted at this time.

It is important to remember that Stay and Play is not conceived as an optional program. The USFA program states that competitors must stay in THS-provided housing or be excluded from the competition. Waivers will be available for limited reasons, however, will be subject to bureaucratic process and discretionary approval by the USFA. Absent a waiver, each competitor will be required to book their rooms through THS in all other circumstances.

{sidebar id=1}While I understand that the USFA is in serious need of money, I believe that “Stay and Play” is the wrong program, at the wrong time, and with the wrong supplier. Furthermore, I believe the program represents the first step in a slippery slope that could have the USFA intrude even further into your personal lives and travel plans by requiring use of certain travel partners and facilities, intrusion that is unwarranted and unreasonable. The Stay and Play program already contains many of these features and is fundamentally flawed in both conception and execution.

Authority

Stay and Play is outside of the charter of the USFA. Nothing in Article II of the USFA bylaws suggests that the purpose of the USFA is to arrange travel for the membership. The only relevant purpose is found in Section 10 of that article, which states in relevant part: “To establish and promote a nationwide program of fencing competitions.” I believe that this program goes beyond that purpose.

Furthermore, the bylaws clearly set forth the rights of the Membership (Article IV, Section 2). Under that section, “All individual members in good standing, except Associate Members, shall be entitled to participate in any competition held under the auspices of the USFA, subject to the limitations of these Bylaws and to such regulations and limitations as the Board of Directors may from time to time lay down with respect to particular categories or classes of members or competitions.”

Stay and Play is impacted by this provision in several ways. First, it is unclear what effect not staying in a THS-sponsored hotel would have on either (a) the category or class of membership, or (b) the category or class of competition – the two areas where the Board of Directors may create regulations and limitations. It is generally understood (supported by both the Operations Manual and Athlete’s Handbook) that, in the case of membership, categories refer to Senior, Junior and Veteran, and classes refer to ratings and geographic location. Similarly, categories of competition refer to gender, age and weapons, while classes refer to Sectional and Divisional qualifiers (where the geographic location of the competitor is located), and the Division 1, 1A, II, III competitions, where the rating of individual fencers are considered.

It is not clear how a category or class of a competition could be altered to take into consideration THS-sponsored lodging. Furthermore, the category or class of membership cannot logically be altered by staying in a THS-sponsored hotel. These are the only two areas where the board has discretion to set rules to restrict member participation.

Thus, I would assert that the implementation of the program would require a bylaw amendment. Bylaw amendments may only take effect after the annual meeting or a special membership meeting and have several other procedural steps that must occur prior to effectiveness. However, even if the definition of “class or category of membership or competition” could be stretched to cover this situation (and I believe it cannot) an action modifying the features of classes or categories of memberships or competitions clearly requires a decision of the Board of Directors. This cannot be done by the Executive Director under the current bylaws.

“But USA Volleyball has this program!”

Put simply, the USA Volleyball bylaws require the member organizations (membership is regionalized) to require their members to: “…comply with the Corporation’s Participant Code of Conduct, the Corporation’s Substance Abuse and Drug Testing Policy and all other applicable policies and requirements of the Corporation;” (USA Volleyball Bylaws, 4.01.A.9 (2009). There is no similar statement in the US Fencing bylaws. Instead, our members in good standing have an explicit right to fence at USFA competitions.

Legality

I believe that the program is illegal under the restraint-of-trade laws existing in most jurisdictions. Put simply, the Stay and Play plan ties together a service that the USFA has monopoly power over – entry into sanctioned fencing competitions – with a wholly unrelated, unnecessary service – the utilization of THS for accommodations. Colorado case law has stated found that per se illegal tying has the following characteristics “(1) the exploitation by a seller of the seller’s market superiority of the tying product to coerce or force the purchase of the tied product by buyers who might not purchase the latter if permitted to exercise independent and unfettered marketplace judgment, and (2) a resulting restraint upon a not insubstantial portion of the market for the tied produce.” (692 P.2d 1055 (1984)).

In this instance, the USFA has absolute market power regarding the entry into sanctioned fencing tournaments. It is seeking to force the use of unrelated THS services, services that many members have made the choice not to use in recent use. The rules set forth by the Stay and Play plan create a substantial impediment to use of alternative services, including on-line services like Priceline and Hotwire.

These types of cases are considered state law business crimes, and a complaint may be filed with the district attorney or attorney general by each aggrieved party in each state in which a violation occurs. Since these are business crimes, potentially felonies, the attorney general or local district attorney may commence action and prosecute it as he or she would any other crime. This factor highly increases the likelihood of lawsuits against the USFA – potentially a swarm of criminal complaints accompanying each national event. In appreciable numbers (and each person forced to use THS is a potential complainant), these claims could create legal problems for the USFA for years to come. These are not the sort of problems that this organization needs now or in the future.

“But they’ll price match!”

That is not the issue here. It is choice. The Microsoft anti-trust case (which was settled with individual state Attorneys General) was based upon the provision of Internet Explorer for free with Windows. Microsoft was deemed to have effective monopoly power over operating systems, and providing Internet Explorer, without option, effectively shut competitors (like Opera, Mozilla, etc.) out of the marketplace. Price isn’t the issue here, choice in the marketplace is.

“But THS must know the program is legal!”

No, that is not true. THS would not be the primarily liable party in any action based upon restraint of trade, the USFA would be. Furthermore, THS’s lawyers are in the business of advising THS, not the USFA.

In addition, it is unlikely that travel suppliers such as United, Hertz or a large hotel chain would, themselves, enter into such a program. Why? Because anti-trust law does apply to parties that collude with the bad actor – and these companies have shareholders, public reputations and deep pockets to protect. THS does not.

Legal Risks presented by Stay and Play

Should the Stay and Play program stay in place, these suits could come from any fencer attending any NAC. This program represents` a clear and present danger to our financial stability and viability as an organization. It is simply too dangerous to the reputation and goodwill that this organization fights hard to maintain.

One person also pointed out that the program raises privacy concerns, particularly regarding minor children. Currently, the USFA lists participants in events through the confirmed entry list, but does not have information regarding the lodging location of individuals at events. What standards of privacy will the USFA maintain with regard to such information? What about THS? Will the USFA be liable for disclosures? Will it police hotels? Difficult rivalries are not unusual in sport. In my section, we have had one recent lawsuit (dismissed) that was based upon the “evil eye.” We all remember the Nancy Kerrigan/Tonya Harding matter. Many of us are aware of the recent claim that Italian fencer Baldini’s water was “spiked.” This program creates opportunities for out-of-venue actions against competitors, actions that are not policed by referees, monitored by bout committees or subject to USFA discipline. Some people choose lodging for privacy purposes – to be away from the venue hotel, not to be in it. This program compromises privacy.

Opinion of Counsel

When reviewing such an obviously controversial and potentially illegal program, board members and executive committees usually seek a formal opinion of corporation counsel. This is proper due diligence and can protect the board and executive committee (EC) from certain claims regarding the performance of their duties. There is no evidence that opinion of counsel was either sought or obtained by the board. Thus, the board should demand that this be completed prior to the implementation of any aspect of this program. Otherwise, the board may face action for failure to meet its fiduciary obligations to its members.

Membership Desires

It is clear by the persistent “buzz” that a vocal percentage of the membership has no desire to utilize THS. This is further supported by their overall reduction in room commitments. One of the justifications used by Volleyball organizations in adopting Stay and Play is that “room blocks have diminished over the past three years.” (see http://www.midwestvolleyball.com/nlj/nlq/stayandplay09.htm)

Furthermore, THS trumpets a 92% customer satisfaction rate. It has not, to my knowledge, presented the board with any substantiation of that number. I suspect that what they’re reporting is an 8% unresolved complaint rate (which for summer nationals, translates to over 480 room nights). It is poor customer service practice to assume that those who don’t complain vociferously are “satisfied.” Some may be, but it is inaccurate to assume that all are.

Certainly, THS customer service snafus are legendary. It is difficult to understand how an unpopular vendor should be the recipient of monopoly power over the membership. By instituting this program, it appears as if member considerations were not taken seriously by the Executive Director (ED), even though we have been provided with “lip service.” Had they been taken seriously, other vendors and alternatives would have been issued an RFP, reviewed by a board committee, and presented to the membership at large. That was not done.

Soft Launch and Rooming Commitments

This program is being presented to the fencing community as a “soft launch.” However, the verbiage around it implies that it is a “pilot program.” There is a significant difference between the two. A “soft launch” means that the program is happening and is being rolled out in phases. A “pilot program” means that the program is being tried, but there is no commitment or reliance upon it continuing into the future.

Interestingly, timing itself may be the reason for the so-called “soft launch.” With room commitments in place for most of the 2009-10 season, requiring THS to acquire and manage all rooming may be impossible. Thus, instead of doing the immediate “hard launch,” a “soft launch” was likely necessary from THS’s perspective – not because of any concerns regarding membership feedback.

When the ED, Associate ED and EC suggest that this program is not a “done deal” in their minds, they are misleading the membership. There are several indicia of this.

First, under this program, THS is acting as an agent of the USFA. Bid packages for events are generally released 9-18 months prior to the event (Summer Nationals, with larger requirements, would likely have a longer bid cycle). The bid package “Request for Proposal” contains rooming estimates and other material features of the program.

While the organization reserves the right to change the RFP prior to commitment, significant changes to material features, like room counts, can materially and adversely alter the bid. The USFA’s own information, provided by Kurt, shows that we are going to Atlanta with a rooming commitment of approximately 6,100 rooms, up from 4,400 rooms under the prior scheme.

Once the bid package is accepted and agreed upon, the USFA will likely be responsible to fill 6,100 rooms. If it does not, it may be liable for any shortfall – and will also suffer significant reputational damage that will affect future bids.

By going to the marketplace with these numbers, it is clear that the ED, Associate ED and EC intend that this program be in place. Turning back six months in would prove too costly in both reputation and actual dollars. This clearly indicates the executive’s intent.

Furthermore, baking these numbers into the budget, the executives are making a clear statement that they intend this program to go forward – without regard to the opinion of the membership.

There is an old saying – “actions speak launder than words.” In this case, the actions of our executives are inconsistent with their words – their actions indicate an intent to make this program happen without regard to the concerns of the membership. I find this frightening.

Who Will Bear the Costs?

We all know that fencing is expensive. We have members that come from families with substantial means, and others that come from families with modest means. We have individual competitors that are successful in business and the professions, and others that are just starting out, are in lower-paying professions or otherwise find that fencing consumes a significant portion of their resources.

Fencers (and families) of more modest means are those most likely to look for the lowest-cost lodging alternatives, using aggregators, tour companies, on-line services, and the like. The cost for these fencers and families will, without question, increase under Stay and Play as their options for low-cost services are foreclosed.

While I understand that the association needs money, taking it solely from those least able to afford it is an affront to our membership and only reinforces the unfortunate message that we’re a sport for the economically elite. It is the wrong message for our membership.

Room Prices

THS promises to offer a variety of room prices. However, if the great majority of fencers request the low-price option, and there are no more low-price options within the THS block, what happens? If I have requested the $79 hotel, but those are full and they assign me to the $129 hotel, am I required to pay an additional $50/night? Neither THS nor the ED/Associate ED has addressed this question.

Furthermore, a fencer should not be required to go through THS “hoops” if this is the case. If a room doesn’t exist at the price point, there can be no commitment to have THS be party to the problem.

First come, first serve doesn’t work in this environment, either. Many events require qualification – and qualifiers happen at different times in each division and section. It would be a bad result to penalize fencers from divisions or sections with late qualifiers by forcing them into more expensive rooms.

The problem has occurred in Volleyball. In that case, families were forced into more expensive accommodations. Such a result is unacceptable. The USFA office has not provided information as to what will happen in this instance.

Program Questions

Even if the program can overcome the challenges set forth above, many unanswered questions remain.

First, the waiver is intrusive. You are asked to provide the address of where you’re staying – and the USFA retains an audit right to ensure that you are staying there. This is intrusive at best. Can you imagine the USFA or THS visiting or calling upon your friends to see if you’re really there? This is an inappropriate intrusion into the private lives of its fencers that has no connection with the sport of fencing.

Second, there is little faith in the waiver process that has been described. The USFA is already understaffed and overworked – and the waiver process will add to the workload during registration and events. Furthermore, the USFA will loose money for each waiver granted – a significant disincentive to grant them and process them promptly.

Third, there is no explanation as to how the waiver process will work when it comes to low-cost online services like Priceline and Hotwire. Many fencing families use these services to secure low-cost accommodations. However, they require payment at the time of bidding, so there is no way to insert THS into the mix. Will the program preclude the use of these services? If so, it will de facto raise the price of accommodations for those people using it.

Conclusion

This partial list of concerns and issues must be addressed by the board, the Executive Committee, the Executive Director and the Associate Executive Director before any aspect of this program is put into place. Furthermore, it must be vetted by the membership – a membership that has already seen $1.1 million of its dollars disappear into the abyss. Failing to take these steps is, frankly, an affront to the membership at large, and the families that support them.

In conclusion, the Stay and Play program (a) violates clear prescriptions in the USFA bylaws, (b) is potentially a crime in each state in which it is perpetuated, (c) forces the membership to use a service provider that many of us have turned away from due to poor service, poor pricing and poor choice, (d) is being presented to the membership inaccurately, (e) removes choice from the membership; (f) acts as a “regressive tax” upon the fencers and families least able to afford it, (g) will remove price certainty from the membership, and (h) will be impossible to administer without additional staff resources and the goodwill of the membership.

In discussing this program, my wife has asked me “is there anything good about it?” In my mind, and in the mind of many that I’ve spoken to, the answer is a clear, resounding “no.”

Thank you, again, for the opportunity to address the membership.

Sincerely,

Gary M. Zeiss, Esq.
Chair, Pacific Coast Section, United States Fencing Association