Forbes: LeBron Can Purchase Part of Knicks

[BubbaTee]

That's like saying if Microsoft was about to merge with Apple, which would result in increased value of MS stock, that Steve Jobs couldn't be charged with insider trading if he used his knowledge of the merger to load up on MS stock before the merger was announced. After all, Jobs doesn't work for MS.

Steve Jobs would only know about a merger because he was an insider. Would be aware of the talk between the two companies.

So Jobs is an insider based on his material, non-public knowledge of the likelihood of a MS-Apple merger, an event which could increase the value of MS stock. Even though Jobs at the time is not an employee of MS.

Now consider that Lebron has material, non-public knowledge of the likelihood of Lebron signing with the Knicks, an event which could increase the value of Knicks/MSG stock. Even though at the time Lebron is not an employee of MSG.

Lebron is not an insider but Jobs is based on what? Lebron signing with the Knicks is basically a merger, or at least a partnership, of his brand with the Knicks brand.

Problem is not anyone has come up with an example where someone has been charged with insider trading in a similar situation. Where the person was not part of the company at all.

I can't come up with an example of someone being charged for murder after killing someone by pushing them into a volcano either. It doesn't mean you're allowed to kill people by pushing them into volcanoes.

[radrmd216]

Panthermark and towelie thanks for clearing this up. People are debating whether or not this is legal so it would seem best to not do it at all. Also the debate in this thread is not even what the article is about.

[KL78192020]

Looks like the NBA won't allow this as per the WT.

[CoolD]

http://www.newsday.com/sports/basketbal ... -1.1929237

"Ownership of shares in MSG in a situation such as this would constitute Salary Cap circumvention."

Quote above is from a NBA spokesman


It seem like it is circumvention, if this is true.

Knicks chances have dropped to one percent of landing Bron
They had to think, how to get around the rules, not by the merits of actually being a place where LeBron can actually compete for titles.

Favorites to land Bron.
Cavs, Bulls, Heat.

[Magilla_Gorilla]

LOL... Looks like the only people who have mattered have spoken.


But, I'm sure truth serum could convince the NBA they are wrong.

[panthermark]

I wonder what the MSG stock did today? (oustide of the other slides that were going on)...


Well...who knows what will happen with Bron....

[BubbaTee]

Knicks chances have dropped to one percent of landing Bron
They had to think, how to get around the rules, not by the merits of actually being a place where LeBron can actually compete for titles.

Plan B: get Lebron drunk on firewater, convince him to play for some shiny beads.

[AKfanatic]

http://www.newsday.com/sports/basketball/knicks/the-knicks-fix-1.812055/nba-slam-dunks-msg-stock-plan-for-lebron-1.1929237

"Ownership of shares in MSG in a situation such as this would constitute Salary Cap circumvention."

Quote above is from a NBA spokesman


It seem like it is circumvention, if this is true.

Knicks chances have dropped to one percent of landing Bron
They had to think, how to get around the rules, not by the merits of actually being a place where LeBron can actually compete for titles.

Favorites to land Bron.
Cavs, Bulls, Heat.

Just another example of everyone hating on the Knicks. Why does Stern hate the Knicks so much? I guess LBJ will have to become a billion dollar athlete the old fashioned way and learn how to play golf.

[BubbaTee]

Just another example of everyone hating on the Knicks. Why does Stern hate the Knicks so much? I guess LBJ will have to become a billion dollar athlete the old fashioned way and sell hamburger grills.

[AKfanatic]

nice edit, much better than the original

[Dantares]

I can't see how this wouldn't be legal. If Lebron does buy shares of MSG and this goes to arbitration the NBA would not win. They have no argument, it's a publically traded company.

[yaaar]

I can't see how this wouldn't be legal. If Lebron does buy shares of MSG and this goes to arbitration the NBA would not win. They have no argument, it's a publically traded company.

How could you possibly know the NBA would not win? LeBron has to abide by whatever rules the NBA puts out. It's like the people that always complain about freedom of speech or whatever. Sure you're free to say whatever you want, but then your company is free to fine you whatever they want based on their own rules. If the league decides it's circumvention, then it's circumvention and he can't do it, end of story. The loophole in the rules is more likely there specifically for a case where say a mega-corporation owns a portion of a team. So buying stocks in viacomm may not be considered circumvention because whatever happens with the team is not likely to affect the stock value.

[Dantares]

Here is the rule

Section 8. Limitation on Player Ownership.

During the term of this Agreement, no NBA player may acquire or hold a direct or indirect interest in the ownership of any NBA Team; provided, however, that any player may own shares of any publicly-traded company that directly or indirectly owns an NBA Team.

this sounds pretty clear to me. It's actually allowed in the CBA. So the NBA would be arguing that this specific situation is circumvention.


There has to be a distinction made for public and non-public companies for a reason. And I am willing to bet that reason is that it's probably unlawful to ban an employee from buying publically traded stocks. I don't think this is within the NBA's rights to do such thing. I have never ever heard of an employee not being able to buy stocks in the publically traded company he works for, I know there are rules and restrictions though. The NBA would be setting a new precedent and I'm sure the SEC wouldn't take kindly.


I see no incentive or extra pay that would be offfered to Lebron by the Knicks. Just Lebron buying a publically traded stock. Even if the NBA argues that Lebron can make more money than other players then Lebron will have the argument that he can lose money in principal with his investment as well, just as he can if he bought any other stock. There isn't anymore benefit or drawback from Lebron owning MSG stock compared to any other companies stock.

[kodo]

I have never ever heard of an employee not being able to buy stocks in the publically traded company he works for

Do you know of any other companies that force their employees to play 1 year of NCAA basketball? The NBA has a ton of restrictions and rules for their players that are not found in other US businesses.

[panthermark]

Here is the rule

Section 8. Limitation on Player Ownership.

During the term of this Agreement, no NBA player may acquire or hold a direct or indirect interest in the ownership of any NBA Team; provided, however, that any player may own shares of any publicly-traded company that directly or indirectly owns an NBA Team.

this sounds pretty clear to me. It's actually allowed in the CBA. So the NBA would be arguing that this specific situation is circumvention.


There has to be a distinction made for public and non-public companies for a reason. And I am willing to bet that reason is that it's probably unlawful to ban an employee from buying publically traded stocks. I don't think this is within the NBA's rights to do such thing. I have never ever heard of an employee not being able to buy stocks in the publically traded company he works for, I know there are rules and restrictions though. The NBA would be setting a new precedent and I'm sure the SEC wouldn't take kindly.


I see no incentive or extra pay that would be offfered to Lebron by the Knicks. Just Lebron buying a publically traded stock. Even if the NBA argues that Lebron can make more money than other players then Lebron will have the argument that he can lose money in principal with his investment as well, just as he can if he bought any other stock. There isn't anymore benefit or drawback from Lebron owning MSG stock compared to any other companies stock.

You are being obtuse....just stop...it is unbecoming of you. Players are not allowed to own teams (or parts of teams), the Knicks tried to make a loophole with MSG going public...the NBA said NO. End of story.

[OooSplendiforous]

Obviously the NBA made a knee-jerk reaction based comment because they realize their loophole was exploited. They did not take the time to view what the Knicks actually did, and how it actually is legally permissible based on the current CBA. The NBA is correct in saying LeBron can't own a share of the KNICKS; however, the CBA clearly states (and this is backed up by Larry Coon) that a player can own shares of a PARENT COMPANY THAT OWNS THE TEAM. This is exactly what the Knicks did. They didn't spin the "Knicks" themselves off into a publicly traded entity, the spun MSG, which consist of the Knicks, Rangers, Liberty, Madison Square Garden itself, and some minor league team into a publicly traded stock. So yes, LeBron can legally do it, the NBA just happens to be unhappy about it and are scared. If the case was ever taken to arbitration, they'd lose... It's clearly stated in the CBA whether the league wants to accept it or not... David Stern is a little prick, he agreed to these rules in 1999, the Knicks simply took the time to fully understand the CBA, and made use of something Stern obviously felt was negligible at the time. It's savvy... This league is so poorly run, with Sterns fines for everything, deep down inside he's just a power hungry dork posing as a dictator.

[darth_federer]

Obviously the NBA made a knee-jerk reaction based comment because they realize their loophole was exploited. They did not take the time to view what the Knicks actually did, and how it actually is legally permissible based on the current CBA. The NBA is correct in saying LeBron can't own a share of the KNICKS; however, the CBA clearly states (and this is backed up by Larry Coon) that a player can own shares of a PARENT COMPANY THAT OWNS THE TEAM. This is exactly what the Knicks did. They didn't spin the "Knicks" themselves off into a publicly traded entity, the spun MSG, which consist of the Knicks, Rangers, Liberty, Madison Square Garden itself, and some minor league team into a publicly traded stock. So yes, LeBron can legally do it, the NBA just happens to be unhappy about it and are scared. If the case was ever taken to arbitration, they'd lose... It's clearly stated in the CBA whether the league wants to accept it or not... David Stern is a little prick, he agreed to these rules in 1999, the Knicks simply took the time to fully understand the CBA, and made use of something Stern obviously felt was negligible at the time. It's savvy... This league is so poorly run, with Sterns fines for everything, deep down inside he's just a power hungry dork posing as a dictator.

Idk man it seems like a conflict of interest and I dont think it would fly with most teams and the league.

[panthermark]

Obviously the NBA made a knee-jerk reaction based comment because they realize their loophole was exploited. They did not take the time to view what the Knicks actually did, and how it actually is legally permissible based on the current CBA. The NBA is correct in saying LeBron can't own a share of the KNICKS; however, the CBA clearly states (and this is backed up by Larry Coon) that a player can own shares of a PARENT COMPANY THAT OWNS THE TEAM. This is exactly what the Knicks did. They didn't spin the "Knicks" themselves off into a publicly traded entity, the spun MSG, which consist of the Knicks, Rangers, Liberty, Madison Square Garden itself, and some minor league team into a publicly traded stock. So yes, LeBron can legally do it, the NBA just happens to be unhappy about it and are scared. If the case was ever taken to arbitration, they'd lose... It's clearly stated in the CBA whether the league wants to accept it or not... David Stern is a little prick, he agreed to these rules in 1999, the Knicks simply took the time to fully understand the CBA, and made use of something Stern obviously felt was negligible at the time. It's savvy... This league is so poorly run, with Sterns fines for everything, deep down inside he's just a power hungry dork posing as a dictator.

The Knicks tried to cheat and exploit a loophole, and the league said No. End of story...
Actually, it is probably best that it ended there....because as Coon had mentioned....no one is exactly sure how the SEC would feel about such a move.

[Niko23]

Yeah LeBron's image would be great after this. Leave your hometown city after you quit on them, to go whore yourself out to multiple suitors, only to sign with a basement team that allows you to make a ton of money in a very suspicious and potentially illegal way. Right.