The recent lawsuit filed by the New York Knicks against a former employee, the Toronto Raptors’ parent organization, and the Raptors’ head coach, could be a harbinger of a rise in employment and trade secret litigation in sports. Such an increase will likely stem in part from teams’ reliance on analytics— and franchise’s efforts to shield those models from the eyes of competitors.
By way of background, the Knicks filed a complaint in the Southern District of New York in August against a former employee for, amongst other things, violating the Computer Fraud and Abuse Act, the Defend Trade Secrets Act, as well as various common law claims related to trade secrets, tortious interference and breach of contract. The employee served as a Director of Video/Analytics/Player Development Assistant for the Knicks, who then left the team to serve in the same position with the Toronto Raptors— an Eastern Conference competitor. The Knicks also asserted many of these claims against the Raptors organization itself, its new head coach, and its player development director as part of the conspiracy to steal proprietary information central to the Knicks’ scouting programs. While some of these claims sound like ordinary issues related to an employee’s breach of his duty of loyalty and confidentiality, they suggest a deeper focus in sports today as scouting, game/matchup preparation, talent evaluation, and myriad facets of strategy shift to analytical models heavily guarded by the teams crafting them.
Popularized in Michael Lewis’ 2004 book and then academy award winning movie of the same name, “Moneyball,” strategy in the sports world has increasingly moved beyond the gut feeling of seasoned managers and coaches to cold hard numbers produced through data analysis far removed from the field and hardwood. Names of general managers like Billy Beane and Daryl Morey have become more synonymous with success than the managers and coaches working for them. The MIT Sloan Group sponsors a sold out conference every year to bring together “the leading figures in sports analytics, business and technology.” As referenced in the complaint, a recent survey of in-house counsel for the four major American Sports leagues showed 90% of the respondents agreeing that they would assert trade secret protection over scouting reports.
This past summer, three-time Cy Young winner Justin Verlander allegedly lamented that in his brief tenure on the Mets that the team’s analytics department did not compare to that of his former (now current) team and two-time world champion Houston Astros. A frontline starter like Verlander twenty years ago wouldn’t think twice about ending his career in the biggest and wealthiest city in the world. Now, big market teams like the Mets and Yankees cannot just use their deep pockets to land the biggest players in the game— they have to first build their analytics department for player development and scouting.
The Knicks are using this lawsuit to protect its own data against possible theft by an Eastern Conference competitor. The complaint attempts to frame the actions taken by the Raptors as the brain-child of a neophyte[1] head coach allegedly in over his head during his first year. The Knicks make the heavy accusation that their former employee was hired by the Raptors and then proceeded to access and steal proprietary information, including, but not limited to, the following:
- An advanced scouting report of the Indiana Pacers players with team and player statistics, key play and play frequency data, specific player tendencies and scouting, strategy analyses with offensive/defensive notes, play breakdowns, opposition play research, and transition tendencies;
- Comprehensive diagrams of over 250 Pacers’ plays, a spreadsheet containing pay frequency statistics; and
- A spreadsheet containing the Pacers’ play calls for a specific game broken down by game time.
The complaint goes on to address other issues including confiscation of play frequency reports, opposition research, opposing player tendencies, lists of opponents’ key plays, diagrams of key plays, and the Knicks’ prep book. Needless to say, Pat Riley wasn’t reviewing these defensive schemes with Charles Oakley back in 1993.
This explosion of detail utilized in franchises’ front offices and team huddles opens the doors to more conflicts going forward as to whether an employee should have access to that information, and if they do, what terms should govern their employment agreement to prevent that information from walking out the door. Whatever may happen with this lawsuit, as the Raptors just filed a motion to dismiss under the NBA’s arbitration agreement, one can expect an increase in litigation as the fight for a competitive edge for analytics becomes more prevalent.
[1] The loquacious Walt “Clyde” Frazier did not draft the complaint.
