page 2215
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7 o{UPR today is Friday the thinker TAO*EPBT. Thirteenth not yet?
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10 MR. CARDOZO: Goer good morning, your Honor.
11 MR. KESSLER: Good morning, your Honor.
12 THE COURT: Good morning.
13 MR. CARDOZO: Your Honor, I hope you had a
14 chance to look at the letter I --
15 THE COURT: Barely. That's why I'm --
16 my first question is is this something that we have to do
17 before we resume with the jury?
18 MR. CARDOZO: Yes, your Honor.
19 , and I raise this point with great reluctance and
20 I have thought about it a lot before I did this. And I've
21 never done this before in my professional career.
22 I believe that Mr. Kessler must be this morning
23 before the jury publicly sanctioned because he committed
24 yesterday a blatant violation of what in Massachusetts is
25 Rule 3.4E of the Massachusetts rules of professional conduct
page 2216
1 with a parallel provision in New York.
2 Because that rule prohibits a lawyer from alluding
3 to any matter that will not be supported by admissible
4 evidence and from stating a personal opinion as to the
5 credibility of the witness.
6 If you turn to Page 2 of my letter, your Honor, and
7 the indented paragraph, which I'm sure you recall the
8 substance of, Mr. Kessler said to Mr. Gulati: "is it a lie
9 or is it true that they changed their names," referring to
10 the first division, the Premier League issue.
11 And he also said, as referred to on the bottom of
12 the page. Of my letter, "there were about 32 teams in
13 the first division. There was no changing of names, and so
14 on.
15 And then he made a factual assertion in the form of
16 a question:
17 "what happened was there was a First Division
18 League of 32 teams, 16 of them became a new league called
19 the Premier League, and the other 16 teams, which were
20 still first division, call themselves still the first first
21 division."
22 Your Honor, Mr. Kessler had absolutely, absolutely
23 no factual bay sis for making that assertion. It was an
24
25 absolute violation of the Massachusetts rule prohibiting an
page 2217
1 allusion to any matter that will not be supported by
2 admissible evidence.
3 Now, I understand that obviously when it comes to
4 be our turn, three or four or five weeks from now, I can
5 call a witness to establish that. But the damage has
6 already been done to Mr. Gulati's credibility.
7 We stayed up all night and we received about four
8 or 5 o'clock this morning an affidavit from the head of the
9
10 English football association, which is attached as exhibit
11 C, which PHA*EUBGS which makes the point crystal clear, and I believe under
12 the circumstances, your Honor, where Mr. Kessler
13 deliberately sought to call the witness a liar, to make a
14 factual assertion which he knew to be blatantly false, that
15 we cannot be prejudiced by waiting six weeks in order to
16 correct that.
17 What has to be done, I respectfully submit, your
18 Honor, is that Mr. Kessler has to be publicly admonished
19 before the jury; the correct facts, which Mr. Gulati recited
20 in response to my questions before Mr. Kessler started bee
21 raiding him yesterday with false assertions, the correct
22 facts have to be told to the jury this morning before the
23 witness resumes the cross-examination; and Mr. Kessler
24 should be admonished not to do this in the future.
25 THE COURT: Mr. Kessler.
page 2218
1 MR. KESSLER: You know, your Honor, I've been
2 practicing over 20 years. I have never before been accused
3 of a violation of any cat any efforts in any state or
4 federal court.
5 I am astounded that Mr. Cardozo would make that
6 allegations. I've known him a long time. He didn't pick up
7 the phone last night or say anything to me. He didn't ask
8 me what was my basis for the questions or anything else.
9 Instead, I walk in this morning, I get served with
10 this paper as we're coming in, not even the night before.
11 I'm not even in a position your Honor this morning since I
12 don't have the person here, Mr. Young, who gathered the
13 information for me about the Premier League, upon which I
14 based my questions, which he did from looking at Internet
15 sites and other sources and made phone calls to people at
16 the Premier League asking questions, all of which
17 information he gave me to give me a basis for asking the
18 question, a reasonable basis.
19 Now, I'm presented, sight unseen, with an affidavit
20 from a witness who I don't know, who I can't
21 cross-examination. I'm being accused, like it's the star
22 chamber, you know, right now, your Honor should decide I
23 committed an unethical violation and tell the jury what I'm
24 not even in a position to present to you the basis of my
25 questions, I'm not in a position to cross-examination this
page 2219
1 witness (when) it's unbelievable.
2 Now, your Honor, that is trial. If I made a
3 misstatement, okay, and, your Honor, in 20 years, it won't
4 be the first fact that I was proven wrong or right about,
5 okay, and I'm not representing to your Honor at this
6 moment -- he's presented an affidavit. This is the first
7 time I've heard before that witness about this changing the
8 name.
9 If this testimony is truthful, then he -- the
10 affidavit he presented, then he may be right and I may be
11 wrong and I'll prove it to the jury, as there are about
12 thousands of subfacts in this case, many of whom I expect to
13 prove Mr. Cardozo has been completely wrong. I'm not
14 accusing him of unethical violations, despite the fact that
15 I think he's wrong about many, many things.
16 So, your Honor, I think the idea that you would
17 consider some type of ethical thing without my being able to
18 present the basis or cross-examination this witness or
19 anything else is just beyond the pale.
20 Having said that, your Honor, having said that,
21 your Honor, okay, you know, he's presented this affidavit,
22 you know, with respect to the changing of the name. He
23 says -- and, you know, I have no problem -- in fact, I had
24 already told my colleagues when doing this that I was going
25 to indicate to the witness during my examination that I had
page 2220
1 been presented with some evidence suggesting that maybe the
2 league of the names was chosen and that I wanted to less the
3 witness know that, is that correct, and tell him if that's
4 wrong, I apologize to him.
5 But to come up and ask for an ethical violation
6 when he had bee sees and I believed it to be true in good
7 faith and Mr. Cardozo nose me better than that -- and I
8 don't know if it's true or not but I'm willing to give him
9 the benefit of the doubt and this afew yant that he wouldn't
10 give me with the basis that I had.
11 MR. CARDOZO: Your Honor to suggest that at
12 5 o'clock in the morning I should have called Mr. Kessler is
13 ridiculous.
14 THE COURT: Well, I --
15 THE COURT: It's a serious allegations or
16 charge or accusation, so I'm going to give him a chance to
17 respond to it. There are two issues. One is the ethical
18 issue. The other is it's simply an evidentiary issue and
19 putting aside the ethical question, there is still an
20 evidentiary problem when evidence is suggested that is --
21 for which there's no foundation, whether it's intentional al or or
22 accidental or good faith, whatever. There's still a problem
23 that the jury hears something for which there is no
24 admissible evidence sto support it.
25 MR. KESSLER: And, your Honor, I would propose
page 2221
1 to cure that in my questions.
2 MR. CARDOZO: Your Honor, I --
3 THE COURT: Well --
4 MR. CARDOZO: I believe -- I understand if you
5 want to reserve decision on --
6 THE COURT: Well, I think he's entitled to if,
7 as he says, he had a basis for believing that it was true,
8 then I think he ought to be entitled to say that and we'll
9 he evaluate that along with whatever you have here and that
10 goes to the more serious problem.
11 The evidentiary problem is one that perhaps, as
12 Mr.S can Kessler says, he has a way of curing. I don't
13 know.
14 But I don't think anything is going to happen irref
15 cabbly with the witness this morning that can't be added to,
16 supplemented, corrected, after an opportunity to hear
17 further from the witness.
18 (Counsel conferred.)
19 MR. CARDOZO: I respectfully suggest, your
20 Honor, the damage has already been done. I don't want to
21 wait until Mr. Kessler decides how he wants to elicit this
22 information.
23 I would respectfully suggest that the first order
24 of bus this morning (business this morning should be to
25 allow me to elicit from Mr. Gulati what he standards the
page 2222
1 facts to be because to let Mr. Kessler do this when he still
2 can't stand up and -- forget the ethical issue. He still
3 cannot represent to you he had any basis. I can't wait
4 three hours or four hours or '2 days.
5 THE COURT: I don't think the timing is that
6 critical. The jury is not -- the jury is hearing a lot of
7 stuff over weeks and weeks and weeks. An hour or two is not
8 going to make a difference.
9 MR. CARDOZO: Your Honor, I would respectfully
10 request that Mr. Gulati either be asked by you, if not not
11 me, what he understands the facts to be.
12 I think I am severely prejudiced if I simply have
13 to wait for Mr. Kessler --
14 THE COURT: Well, let me make -- no. I think
15 it may be appropriate for Mr. Kessler to do it, but maybe we
16
17 can suggest a Kessler that Mr. Kessler ought to ask, and
18 here is a suggestion, which would call for hearsay evidence
19 as to which Mr. Kessler might not press an objection.
20 That is, to ask the witness whether he has
21 information from the English leagues as to how it came
22 about. He could give that answer. I don't know. That's a
23 possibility. He could give the substance of --
24 MR. KESSLER: Your Honor, again, I don't know
25 whether it's even true or not but I'm willing to do that
page 2223
1 because I don't like being accused of these things, and I've
2 been presented with this for the first time this morning,
3
4 and I can tell your Honor I would never go into court and
5 ask any question that I didn't believe I had a basis for.
6 Sometimes I'm wrong. I assume Mr. Cardozo has
7 sometimes been wrong.
8 MR. ROBBINS: If I can just make a suggestion
9 your Honor. I think an appropriate way to do it in light of
10 yurch's indication is that the first question Mr. Kessler
11 asks of Mr. Gulati is at the close of the day we were
12 discussing the English Premier League, the change of names.
13 THE COURT: Right.
14 MR. ROBBINS: Is there something you'd like to
15 explain to the jury. I think that would be the fair way to
16 do it.
17 THE COURT: Right. Ask him whether he's made
18 inquiry about that overnight. That would technically be
19 hearsay but in the absence of an objection it could be
20 admitted.
21 MR. KESSLER: Your Honor, I don't have any
22 problem with doing that.
23 THE COURT: All right.
24 MR. CARDOZO: Your Honor, I would still
25 suggest that on Monday we deal with the more serious issues
page 2224
1 so that we --
2 THE COURT: Yes, we'll hear Mr. Kessler's
3 response. We'll deal with this.
4 MR. CARDOZO: One other thing, your Honor, I
5 did note yesterday that Mr. Kessler seemed again to be
6 straying significantly from the back of the podium. And I
7 would, as he was cross-examining the witness, and I would
8 request that he be told not to do so.
9 THE COURT: Okay. I think most of that was
10 unconscious but --
11 MR. KESSLER: I don't think I got past here,
12 your Honor, but, in any event, one other thing, my
13 colleagues are pointing out, Mr. Young who works with me --
14 THE COURT: Who is Mr. Young.
15 MR. KESSLER: Mr. young is not in the
16 courtroom.
17 THE COURT: Who is he.
18 MR. KESSLER: An associate at my firm who did
19 the work on this. He's currently gone for the funeral of
20 his friend. And given the seriousness of these allegations
21 and the lack of time pressure, I'd like, your Honor, until
22 Wednesday to be able to put on a paper, Tuesday we're off,
23 so that I believe properly gather the facts. We have also
24 obviously have other THRAO*EUL trial preparation work to do
25 for my expert on Monday. I don't see anier generalsy Monday
page 2225
1 versus Wednesday, especially given the seriousness of the
2 allegations that's been made.
3 MR. CARDOZO: Your Honor we stayed up all
4 night on this. I want this cleared up promptly before --
5 whether Mr. Gulati finishes today or not, I'm not sure, but
6 I want -- I want -- I don't want to wait until Wednesday.
7 This has been -- no matter what Mr. Gulati says in response
8 to the question, this has infected the minds of the jury and
9 we must -- I respectfully suggest we must deal with this on
10 Monday. There's a whole team of people at wile got shall
11 and Mr. Kessler should not be able to way five days to say
12 the basis he had for asking a question yesterday.
13 THE COURT: What's Mr. Young's situation?
14 MR. KESSLER: One of his best friend's father
15 just died. He left last night to go to the funeral in
16 Pennsylvania. That's where he currently is now. I assume
17 he'll come back some time over the weekend but I'm not even
18 in a position probably to talk to him until Saturday or
19 Sunday and I'm just saying, your Honor, we're in the middle
20 of preparation for Mr. Noll who is also Monday and geep I
21 just don't see why given this type of allegations, which was
22 made this way -- and I'm not even sure what the urgency is.
23 This is now going to my -- challenging me personally. I
24 take it quite seriously. But what it has to do with the
25 course of the trial versus Monday or Wednesday your Honor I
page 2226
1 don't see.
2 THE COURT: Okay. You can respond on
3 Wednesday.
4 (Whereupon, the jury entered the courtroom.)
5 THE COURT: Mr. Gulati.
6 {LC^P|WITNAME }, resumed tint
7 REDIRECT EXAMINATION
8
9 BY MR. KESSLER
10 THE CLERK: I'd like to remine the witness
11 that he is still under oath. Please be seat the.
12 MR. KESSLER: May I proceed, your Honor?
13 THE COURT: Please.
14 Q Good morning, Mr. Gulati?
15 A Good morning.
16 Q Mr. Gulati, there was a point yesterday that we
17 discussed in your examination which I'd like to give you a
18 chance to clear up because I want to make sure that I didn't
19 say something that I misspoke about something, and that has
20 to do with the naming of the Premier League.
21 Is there something you learned about that that
22 you'd like to tell the jury or explain?
23 A I learned that what I had said to Mr. Cardozo yesterday
24 was correct, that virtually all of your comments about how
25 the Premier League was formed and the number of teams and
page 2227
1 the renaming were all, in fact, absolutely incorrect.
2 Q Okay.
3 The Premier League did rechange its name? That's
4 what you learned?
5 A And that the first division had been previously the
6 second division and so on.
7 So everything I said to Mr. Cardozo was correct.
8 Q Okay?
9 A And all of the questions and issues that you raised at
10 the end of the day were, in fact, wrong.
11 Q Okay. Mr. Gulati if, that's true, I want to apologize
12 to you because we got a little sidetracked on the Premier
13 League and I want the jury to get every fact exactly
14 correct, okay?
15 Let's talk about the Premier League.
16 It is true that the Premier League and the first
17 division have teams that change each year. Some teams going
18 G. to the Premier League, some go to the first division,
19 correct?
20 A That's correct.
21 Q Okay.
22 And it is true that those two leagues, in effect,
23 as you've testified before, compete with each other for
24 players, correct?
25 A Some players, yes.
page 2228
1 Q And it is true that the first difficult vision is a
2 higher equalling soccer probably than Major League Soccer,
3 right?, in England?
4 A First division in England is higher quality than Major
5 League Soccer -- it's -- I would say it's comparable.
6 Q They pay higher salaries, don't they?
7 A A number of the players are paid higher salaries. On
8 average, I would say the salaries are higher.
9 Q Okay.
10 So their salaries are higher. They have higher
11 revenues than Major League Soccer, right?
12 A Yes.
13 Q Okay.
14 Q So it would be fair then -- I know you said the word
15 "major" isn't general use in the soccer community but if
16 you're looking as to whether or not these 2 leagues both
17 were of Major League Soccer quality, the Premier League and
18 the first division, they would both be of major league
19 quality, right, if you're of major league quality?
20 A The Bulgarian first division is major league quality in
21 bull gair I can't. That doesn't mean it compares to the
22 Premier League.
23 The Premier League is the top league. The first
24 division.
25 Q Right?
page 2229
1 A As it's constructed now is a good league. It's a com.
2 Is it comparable to the US league, yes. Does it
3 pay higher salaries, yes.
4 I don't use the term "major league" when I'm
5 talking about soccer league the.
6 Q You used the word major league when you named your
7 organization Major League Soccer, right?
8 A Correct.
9 Q Okay.
10 And the first division is comparable, we just said,
11 in quality, at least torques league to Major League Soccer,
12 right?
13 A That's correct.
14 Q So if we're defining some major league level, then both
15 Major League Soccer and the first division of England would
16 have to be in that major league level, right?
17 A If you're defining major league in that way, that would
18 be correct.
19 Q Right.
20 And the Premier League might be even a better
21 quality than that, right?
22 A The Premier League is the top division in England, yes.
23 Q So, for example, when the A*FL and NFL both existed if
24 football originally, the NFL might have been better than the
25 A*FL, but they were both competing major leagues, right?
page 2230
1 MR. CARDOZO: Objection.
2 A I don't know that they were both --
3 THE COURT: Wait a minute. Wait a minute.
4 MR. KESSLER: Sorry --
5 THE COURT:
6 MR. KESSLER: I'm sorry, did you sustain the
7 objection?
8 THE COURT: I'm thinking about it.
9 MR. KESSLER: I'm sorry.
10 THE COURT: Go ahead, you may answer.
11 MR. KESSLER: Thank you, your Honor.
12 A I don't know at what time we're talking about.
13 Certainly from the little I know, when the A*FL started,
14 they weren't considered a major league in that sense of the
15 word, and I don't know that in football they use major
16 league like that.
17 Q Okay.
18 Q Now, let's turn to another subject., and, again,
19 Mr. Gulati, on the naming issue I want to apologize to you,
20 okay?
21 A I accept your apology.
22 Q Thank you.
23 With respect to the issue of your board -- your your
24 Honor, may I just take out Mr. Gulati's board, if I could
25 approach?
page 2231
1 MR. KESSLER: In fact, I'm going to put it
2 where the jury can see it because they're more important
3 than us lawyers. Okay.
4 Q Can you see the Board, Mr. Gulati, as well?
5 A Yes, I can.
6 Q Okay.
7 MR. KESSLER: Your Honor, if I may, I'd like
8 to just come out to the board a little bit here.
9 THE COURT: Yes.
10 Q This board was designed, Mr. Gulati, to show the various
11 membership groups of the United States Soccer Federation,
12 correct?
13 A It's meant to show the affiliations and the building
14 blocks of the Soccer Federation, yes.
15 Q Okay.
16 And you pointed out that there was an amateur
17 division, a youth division and a Professional Division,
18 correct?
19 A That's correct.
20 Q Okay.
21 And you mentioned how there are eight year old
22 players in the youth division and how it all goes up to the
23 national council up top, correct?
24 A Players are part of teams which are part of clubs which
25 are part of districts or leagues which are part of states
page 2232
1 which are part of -- and so often, yes.
2 Q And you mentioned organizations like SAY was an
3 affiliated organization of the United States Soccer
4 Federation?
5 A That's correct.
6 Q What does SAY stand for?
7 A Soccer Association for Youth.
8 Q Okay.
9 Now, Mr. Gulati, we were -- you asked some
10 questions about Mr. Rothenberg's power or ability to
11 influence this group.
12 Do you recall those questions?
13 A Yes.
14 Q And I think you testified that you didn't believe
15 Mr. Rothenberg had the power or the ability to influence
16 such a big group; is that correct? Is that a fair
17 statement?
18 A In general terms, he couldn't -- he wasn't appointing
19 those people or hiring those people, no, that's correct.
20 Q Okay.
21 Now, in fact, Mr. Gulati, the plaintiffs in this
22 case --
23 MR. CARDOZO: Excuse me, your Honor, I --
24 MR. KESSLER: I'll move back, your Honor.
25 THE COURT: I don't know if there's room on
page 2233
1 the other side. All right.
2 MR. KESSLER: I just won't look at it for a
3 while. Your Honor, that's okay.
4 Q In fact, Mr. Gulati, the plaintiffs in this case w case weren't
5 the first people to state that Mr. Rothenberg had too much
6 power to influence this group, right?
7 A I stated previously that there were other people that
8 thought Mr. Rothenberg, as other previous presidents of the
9 Soccer Federation, had a lot of power, yes.
10 Q No, I'm not focusing on other previous people.
11 It's true, isn't it, that many of the people up and
12 down these groups, like SAY, like members of these various
13 organizations, publicly stated that Mr. Roth bettering was
14 exercising undue infliewns over the entire USSF like no
15 president before him or since; isn't that true?
16 A I wouldn't characterize it that way. There were people,
17 there were members of the organization that raised the
18 question of power, if you will, of Mr. Roth bettering.
19 I don't know about SAY specifically.
20 Q Okay.
21 You don't know about SAY specifically?
22 A They may have. I don't know specifically.
23 Q Okay.
24 Do you know of a man named Ed mason?
25 A I know who he is.
page 2234
1 Q Okay.
2 Mr. Ed mason was the representative of SAY?
3 A At some time, yes.
4 Q Okay.
5 Q And Mr. Mason was a member of the National Board of
6 Directors in 1993, correct?
7 A That's correct.
8 Q Okay.
9 Q And Mr. Mason expressed a concern expressed a concern
10 that there were serious concerns about the relationship
11 Mr. Rothenberg had with Major League Soccer, the WCOC and
12 the USSF, that there were serious anti-trust concerns he
13 had, and he asked for a special council to be hired in 1993
14
15 to investigate those concerns; is that true?
16 A That's possible, yes.
17 Q Okay.
18 And, in fact, despied the fact that Mr. Mason from
19 SAY said there were tie trust problems with picking one
20 league --
21 MR. CARDOZO: Objection, your Honor.
22 Objection, your Honor, he's about to get into the questions
23 that --
24 THE COURT: Well, no, go ahead. I don't know
25 how far we'll go but the fact that there was dissension or
page 2235
1 dissent is fair game.
2 Q You knew, didn't you, Mr. Gulati, that Mr. Mason wrote a
3 letter to the whole National Board of Directors in August of
4 1994, as a member of the board of directors, stating that
5 many members of the Board -- not just him -- had problems
6 with Mr. Rothenberg's power and thought there were
7 anti-trust problems in just picking one league; is that
8 correct?
9 MR. CARDOZO: I repeat my objection, your
10 Honor.
11 THE COURT: No, overruled. You may answer.
12 A I don't recall specifically him saying it at that time,
13 but some issues about Mr. Rothenberg's power had been
14 raised, absolutely.
15 Q But not just his power. The fact -- it was raised that
16 it was an antitR*UGS violation to pick only one league
17 instead of letting them both compete. That was openly
18 discussed among the board of directors, wasn't it?
19 MR. ROBBINS: Objection.
20 THE COURT: No, you may have the fact -- of
21 course the fact that someone thought that is not probative
22 of the issue here, but you may have that someone thought it,
23 correctly or incorrectly.
24 A I'm not sure. I don't know what you've read about
25 Mr. Mason's other thoughts. I don't recall it ever being
page 2236
1 discussed about the anti-trust issues being discussed alt a
2 board meeting (dash) but that's quite possible that it would
3 have been done in executive session.
4 I was not in those meetings.
5 Q Okay?
6 A So I don't know that.
7 Q Do you know that there was a request to get a special
8 council to issue report on these issues and that no such
9 report was ever issued?
10 A Well, I certainly don't know about the absence of a
11 report that was never issued, and I don't recall -- I don't
12 recall the Board asking for a special council. If the Board
13 had asked for a special council or the National Council had
14 asked for it, it would have happened.
15 Q Do you know about Mr. Pratt, who Mr. Pratt was?
16 A Yes.
17 Q Who was Mr. Pratt?
18 A Are in Pratt was a lawyer in a New York law firm.
19 Q Okay.
20 And was he hired as special counsel to give advice
21 as to whether there were antiproblems in picking only one
22 league?
23 MR. ROBBINS: Excuse me, your Honor, I just
24 want to object and caution or at least make known the fact
25 that we might be getting into a privilege issues here and
page 2237
1 there might be a caution to the witness on that.
2 THE COURT: Right. I don't think we're going
3 to go much farther with it. I'll permit that and there was
4 some discussion with B. the issue but we're not going to get
5 what Mr. Pratt thought or anybody else.
6 MR. KESSLER: All I'm going to establish your
7 Honor there was a request and I believe there was no
8 response. That's all I'm going to get into.
9 THE COURT: You may have that.
10 Q Was there such a request, do you know, Mr. Gulati?
11 A I don't know the request.
12 Q In any event, you've never seen any response, right (a
13 special counsel not council)
14 A I've not seen a report, no.
15 Q Okay.
16 Let me show you a copy of Plaintiffs' Exhibit 246?
17 MR. KESSLER: Your Honor, I move Plaintiffs'
18 Exhibit 246 into evidence.
19 MR. CARDOZO: I object, your Honor on hearsay
20 and Rule 403 grounds. This is not a letter from USSF or
21 MLS.
22 MR. KESSLER: Your Honor, just to point out,
23 it's signed by Mr. Mason. It was sent to all the board of
24 directors, and he signed it owed ward MF mason, NBOD,
25 National Board of Directors, representing SAY, which he was
page 2238
1 one of the board of directors so I believe it's clearly not
2 hearsay.
3 And I'm offering it --
4 MR. CARDOZO: Okay objection, your Honor.
5 THE COURT: Yes, let me --
6 (The Court read the document.)
7 MR. KESSLER: I'm sorry.
8 THE COURT: Let me see you at the side.
9 (SIDEBAR CONFERENCE AS FOLLOWS:
10 THE COURT: The letter does contain a number
11 of statements of historical fact, so that, if offered, it
12 would be offered -- well, I guess in a's the question.
13 I mean, I -- I don't think this is a central point
14 in the case, at any rate, but because of the -- the
15 relevance, it seems to me, is that it pertains to the issue
16 of Mr. Rothenberg's ability to control events. And if he's
17 able -- I don't know how strong the inference will be, but
18 if there's some effort to show that he was able to squelch
19 dissent in some way, that might possibly lead to the
20 inference.
21 MR. KESSLER: Your Honor that --
22 THE COURT: The underlying propositions,
23 whether there is a conflict of interest, whether there is a
24 violation of the anti-trust laws and so on and so TPO*FRT
25 are not relevant and, in fact, would probably aboutth in the in the
page 2239
1 403 area.
2 MR. KESSLER: Your Honor I'm not offering it
3 for the truth of obviously whether there is an anti-trust
4 problem or conflict of trvment what I'm offering it for is
5 both what your Honor stated which is that many members of
6 the Board raised this issue, okay, and it was discussed and
7 I believe the fact that no report was ever issued and that
8 the Board never got to discuss it further is evidence both
9 of Mr. Rothenberg's influence over the Board in the
10 proceedings and evidence of the USSF's failure to act as a
11 neutral -- in terms refuse viewing this.
12 MR. CARDOZO: This witness has no basis for
13 that.
14 Q I think that's true. I don't think you're going to get
15 most of that from him, and I think that you can have the
16 fact of the issue, which I think you already have, without
17 getting the hearsay letter in so I think it should be
18 excluded. But you have the fact that he made the protest?
19 MR. KESSLER: Your Honor, can I offer it with
20 a different witness who would be more knowledgeable about
21 this? Because it -- I don't think it would be hearsay.
22 He's a representative of the boortd.
23 MR. CARDOZO: He's --
24 MR. KESSLER: It's within the scope of his
25 duties your Honor.
page 2240
1 MR. ROBBINS: Wait a second. He's writing --
2 MR. CARDOZO: He's writing on the
3 letterhead --
4 MR. ROBBINS: He says --
5 THE COURT: Week defer on that.Off to make an
6 advanced rule whether it's admissible or not with somebody
7 else. I doubt it but I think woof's had enough with this
8 witness.
9 MR. KESSLER: Okay.
10 END OF SIDEBAR CONFERENCE.)
11 Q Mr. Gulati, did you ever talk to Mr. Mason about his
12 concerns about Mr. Rothenberg and anti-trust issues?
13 A I don't believe so.
14 Q Okay.
15 Q Who is the Illinois state soccer association?
16 A It's a member of the US Soccer Federation, as outlined
17 in that chart.
18 Q Okay.
19 Would it be in the amateur division or in the youth
20 division?
21 A It would be in the amateur division.
22 Q Okay.
23 So it would be in the amateur division, I believe.
24 Now, in 1994, February, the Illinois state soccer
25 association, one of your members of USSF, circulated a
page 2241
1 resolution to all the National Council members calling for a
2 return of the loan money from the WCOC to MLPS; asking
3 Mr. Rothenberg to give an accounting of the money; asking
4 that his conflict of interest be eliminated and stating that
5 he should have to choose between as many positions which to
6 continue in.
7 Is that true?
8 A I recall those being issues. Whether it was a letter
9 from the Illinois state association, I don't specifically
10 recall, but that's quite possible because their president
11 had made those views generally.
12 Q Do you recall such a res lotion was circulated among the
13 membership and that Mr. Rothenberg actually wrote a response
14 to it?
15 A I don't recall the specific letter or the response, but
16 it's quite possible that's the case.
17 Q Let me show you a copy of Plaintiffs' Exhibit 209.
18 Q Mr. Gulati, I ask you to look through this, and I'm
19 going to ask you if you recognize that this is a letter that
20 Mr. Rothenberg sent out to all the state association
21 presidents responding to the res luges that had been
22 circulated by the Illinois state soccer association which
23 basically calling for an accounting of the World Cup money,
24 stating that the money had been used to advance the interest
25 of Major League Soccer, a for-profit corporation, and
page 2242
1 otherwise demanding that action be taken on this matter?
2 A I don't recall all of these things. I can read this if
3 you want to wait a minute.
4 Q Why don't you review it and read through the resolution
5 as well, please.
6 (Witness read document.)
7 A Okay.
8 Q Mr. Gulati, having now read the resolution and
9 Mr. Rothenberg's response, do you remember this resolution?
10 A Again, as I said a couple of minutes ago, not
11 specifically the resolution but the president of the
12 Illinois association had raised these issues. I remember
13 that.
14 Q Okay.
15 And one of the issues he raised is notwithstanding
16 the USSF conflict of interest policy, there continues to be
17 an ongoing of interest, both real and apparent, with
18 officers and directors involves with the USSF, world sup US
19 and and Major League Soccer.
20 That was one of their claims, correct?
21 A That he what it says here.
22 Q And one of the things they asked for --
23 MR. CARDOZO: Objection, your Honor I think
24 we're trying to get a letter in evidence that's not in
25 evidence.
page 2243
1 THE COURT: Sustained.
2 MR. KESSLER: Your Honor, I move Plaintiffs'
3 Exhibit 209 in evidence.
4 MR. CARDOZO: I object. Relevance, hearsay,
5 lack of foundation.
6 THE COURT: Let me see it.
7 (The Court read the document.)
8 MR. KESSLER: Your Honor, it can't be hearsay
9 it's Mr. Rothenberg and hearsay was not raised in their
10 pretrial order your Honor.
11 MR. CARDOZO: Your Honor if we're going to
12 have argument about it, I'd like to approach. That was not
13 a correct statement.
14 THE COURT: No, we're no.
15 THE COURT: The objection's overruled. I'll
16 admit it.
17 MR. KESSLER: Thank you, your Honor.
18 THE CLERK: So mark and entered.
19 (Plaintiff's Exhibit No. {L^ } received in
20 evidence.)
21 Q If we could display that, please.
22 Mr. Gulati, I'm going to show you the front is a
23 memorandum from Mr. Rothenberg that he sent to the World Cup
24 USA directors, United States Soccer Federation directors,
25 and he's responding -- he's showing them the letter he sent
page 2244
1 to the youth and amateur state association presidents; is
2 that correct?
3 A As well as the act youations I think, yes, that's
4 correct.
5 Q
6 Q I'd like to go to the resolution for a second, page, if
7 you can go to Page 1?
8 MR. CARDOZO: Objection, your Honor. I
9 appreciate that the document is in evidence. The witness
10 has testified he doesn't recall having seen the resolution.
11 I think this is --
12 THE COURT: Yes.
13 MR. CARDOZO: Another example of a reading
14 exercise.
15 MR. KESSLER: I'd just like to ask a question
16 or two about it, your Honor. I think Mr. --
17 MR. CARDOZO: Your Honor, I think we had this
18 discussion a couple of times. Mr. Kessler objected to my
19 questions of Mr. Gulati when he was not established to --
20 THE COURT: Again, it's a question of degree.
21 Let's see what the questions are. We'll see how far we'll
22 go.
23 MR. KESSLER: Okay.
24 Q My question, Mr. Gulati, is, okay, you worked for World
25 Cup USA, correct -- I'm sorry. You worked -- yes, you
page 2245
1 worked for World Cup USA, correct?
2 A As are this memo, yes.
3 Q Okay.
4 And it's correct, isn't it, as stated in this
5 resolution, that World Cup USA is mandated by the charter to
6 TR*BT distribute its surplus funds to the USSF and not to
7 use any money for private business ventures?
8 MR. CARDOZO: Objection.
9 Q Is that correct?
10 THE COURT: Sustained.
11 MR. KESSLER: Okay.
12 THE COURT: We're not -- it is not relevant.
13 I did not admit the documents for purposes of proving that
14 any of these things are true but simply to prove that there
15 was a controversy about it. That's all. So I don't want to
16 go into the truth of \false\fallscy of the document.
17 MR. KESSLER: Did you participate in a
18 campaign with Mr. Rothenberg to try to keep this resolution
19 from being considered.
20 MR. CARDOZO: Objection. Your Honor in light
21 of this I don't think we should be simply using this as --
22 THE COURT: Yes, take it down.
23 MR. KESSLER: You don't want the jury to see
24 it now that's fine.
25 THE COURT: Take it down.
page 2246
1 You may have the question, go ahead. You want to
2 repeat the question, Mr. Kessler?
3 MR. KESSLER: Okay.
4 Q Did you participate in a calm pain with Mr. Rothenberg
5 to convince the National Council not to consider this
6 resolution?
7 A If this -- this resolution would have, for the National
8 Council, would have come six or seven months after
9 Mr. Rothenberg's letter, which would mean six or seven
10 months after it was written, I don't recall it. I don't
11 recall it being an issue or on the docket for the National
12 Council.
13 It may have been, but I don't recall that.
14 Q Well, then, why was Mr. Rothenberg writing a response to
15 it if it wasn't an smiewsh? Why was he writing to all the
16 president?
17 MR. CARDOZO: Objection.
18 MR. ROBBINS: Objection.
19 THE COURT: Sustained. Sustained.
20 Q Okay.
21 Let me ask you this, Mr. Gulati.
22 Do you recall that one of the critics of Mr. Roth
23 bettering having a conflict of interest and too much power
24 was Mr. des Bordes, right?
25 A Mr. des~Bordes, one of Mr. des Bordes campaign themes
page 2247
1 when he ran for president, that someone -- shun someone
2 should head the Federation. Swurn else should head Major
3 League Soccer and that it was his time and turn to head US
4 Soccer.
5 Q Mr. des Bordes's campaign was saying it's too much power
6 for one person, right?
7 A I don't know if he was saying it in so many words but he
8 believed that he should be -- well, most directly he
9 believed he should be president of the US Soccer Federation.
10 Q Blr Gulati, it's correct, isn't it, that the concern
11 that you heard expressed was running the World Cup and
12 running the Federation was too much for any one person and
13 running a professional soccer league and running the Soccer
14 Federation and at one time the World Cup was too much for
15 any one person.
16 Their concern was that the level of authority
17 influenced the power?
18 MR. CARDOZO: Objection, your Honor.
19 THE COURT: Sustained. I don't know what
20 you're reading from.
21 MR. KESSLER: Okay.
22 Q Is that correct, Mr. Gulati?
23 MR. CARDOZO: I object to the question.
24 MR. KESSLER: It's his prior testimony in
25 deposition your Honor.
page 2248
1 THE COURT: Well, there's a way of doing that.
2 MR. ROBBINS: It's his deposition.
3 THE COURT: There's a way of doing that.
4 Q Okay.
5 Mr. Gulati, do you recall testifying in this case?
6 MR. CARDOZO: Objection, your Honor now he's
7 trying to impeach the witness's credibility on something he
8 hasn't even testified to.
9 THE COURT: Let's go back to a simple
10 question.
11 MR. KESSLER: Okay.
12 Q Was one of the concerns expressed that there was too
13 much power being wielded by Mr. Rothenberg by holding all
14 these positions?
15 A People expressed that concern, yes.
16 Q Okay.
17 Q And the concern was no one person should have that much
18 authority and influence over the USSF?
19 A Those or two different questions.
20 Q I'm now asking the second that's possible. I don't
21 recall a specific instance of \of that\that have but it was
22 over, in general, having multiple roles, yes.
23 Q And Mr. Gulati in, fact, Mr. des Bordes took the
24 position that no loan money should have fwn given to MLPS
25 right? He voted against that? He was against that?
page 2249
1 A That's what I was told, yes.
2 Q Okay.
3 And Mr. des Bordes took the position that
4 Mr. Rothenberg never should have accepted the
5 $7 million plus bone flus from the World Cup; is that
6 correct?
7 A It's Mr. des Bordes. I understand he voted against
8 that, so I don't -- I don't -- I don't think he was voting
9 that Mr. Rothenberg shouldn't accept it. I think he was
10 voting that World Cup shouldn't offer it.
11 Q Didn't he publicly take the position that Mr. Rothenberg
12
13 had had said he was going to be a volunteer and he shufnt be
14 abler taking over $7 million from the surplus?
15 Didn't he state that?
16 A He may have. I don't recall that.
17 Q And another person who raised these power issues about
18 Mr. Rothenberg was Mr. Groff at times, right?
19 A Another candidate for the presidency, yes.
20 Q That's why you said Mr. Rothenberg didn't like Mr. Groff
21 very much, right?
22 MR. ROBBINS: Object to the form. It's not
23 what he said.
24 THE COURT: Sustained.
25 Q Do you recall testifying that there was a palpable
page 2250
1 animosity between Mr. Rothenberg and Mr. Groff?
2 A I said mutual disrespect. Not palpable animosity but,
3 yes, though didn't like each other.
4 Q I'm sorry, mutual -- they didn't like each other, okay,
5 I'm sorry. I don't want to misstate what you're saying.
6 They didn't like each other.
7 And the reason Mr. Rothenberg didn't like Mr. Groff
8 was because he was one of the people who was saying Alan
9 Rothenberg is exercising too much power over the entire
10 United States Soccer Federation, right?
11 A Mr. -- Mr. Rothenberg's dislike for Mr. Groff started
12 far before any of that was an issue.
13 Q And once it became an issue, it didn't make him like him
14 any more, right?
15 A He didn't like him -- his -- his levels of like and
16 dislike probably have had waves, but I would say during the
17 entire period of time that Mr. Rothenberg's presidency, he
18 hasn't liked him (during the entire period of time of
19 Mr. Rothenberg's)
20 Q Now, Mr. Gulati, you spoke about HO*U about how when
21 Mr. Rothenberg was first elected president back in 19990,
22 you attended that National Council meeting, right?
23 A Yes, I was at that meeting.
24 Q And, in fact, if we can take a look at Defendants'
25 Exhibit 1277 already in evidence.
page 2251
1 Q You recall testifying about this meeting with your
2 examination by Mr. Cardozo, right, that took place on
3 August 5, 1990?
4 A I was at that meeting, yes.
5 Q Okay.
6 It was in Orlando, Florida, a nice place to meet,
7 right?
8 A Not in August.
9 Q You're right. I apologize. It's too hot.
10 Q At that meeting, Mr. Rothenberg was elected president,
11 right?
12 A Yes, he was.
13 Q And at that meeting, a statement was made by a Mr. Paul
14 STAO*EL; is that correct? Do you recall that?
15 A Yes, in general terms, Paul STAO*EL made a statement at
16 that council meeting, yes.
17 Q Who was Paul STAO*EL?
18 A He was, at the time, treasurer of the US Soccer
19 Federation and candidate for the presidency.
20 Q Okay. Let's take a look at page ten of these minutes.
21 It's KNE01152, if we can look at the top.
22 It says, Paul, who is Mr. Steel, reiterated his
23 differences of opinions over the past two years with the
24 president but that, in his opinion, his actions were always
25 in the best interest of the Federation. Raivment the
page 2252
1 electoral process, he commented there were outside
2 influences. The election was not just between the president
3 and himself but there had been orchestrated for some
4 considerable time a very professional political campaign
5 outside the Federation (STIEHL)
6 Now, you heard Mr. STAO*EL make those comments,
7 right?
8 A Yes, I did, in general terms, yes.
9 Q Okay. And the professional political campaign he was
10 talking about outside the Federation was the campaign in
11 support of Mr. Rothenberg, correct?
12 A That's correct.
13 Q Okay.
14 And what Mr. Steel was saying when he was talking
15 about outside influences is that FIFA, he was accusing, had,
16 in eif he can, pressured the members of the National Council
17 to vote for Mr. Rothenberg; is that correct?
18 MR. CARDOZO: Object, your Honor. He's asking
19 the witness to interpret what Mr. STAO*EL was -- had in his
20 mind.
21 MR. KESSLER: I'm asking Mr. STAO*EL said that
22 your Honor.
23 THE COURT: You're asking independent of
24 document whether he has a recollection of the meeting?
25 MR. KESSLER: That's correct.
page 2253
1 THE COURT: Yes. Go ahead.
2 A Paul stood up at the National Council meeting and talked
3 about -- certainly talked about receiving a phone call from
4 a member of FIFA, a staff member of FIFA, yes.
5 Q Okay?
6 A Saying that we'd like you to work with -- pretty much
7 what it says, in general terms, I recall that.
8 We had a meeting that morning after we had the
9 phone call, the "we" being Werner Fricker, Paul STAO*EL,
10 Richard Groff, myself. There may have been others. Two of
11 us were campaign managers for Werner, and Paul, in general
12 terms, came to us and said he had had this call, that he
13 wasn't going to withdraw from the race.
14 Q FIFA was asking him to withdraw, in effect?
15 A I don't know if he specifically did that. They wanted
16 him to support Alan. So if it was that and he wasn't
17 elected and there was nobody with 50 percent to withdraw, to
18 support Alan, I don't know that specifically.
19 Q And he told you, didn't he, in that meeting that you had
20 with him that the outside influence campaign he was talking
21 about was being orchestrated, he thought, by FIFA and
22 Mr. Rothenberg, right? That's what he told you?
23 A That I don't recall, no.
24 Q You don't recall that part of it. Okay.
25 Q Let me ask you this. let's talk about FIFA.
page 2254
1 You testified that you thought that the authority
2 to regulate professional soccer in the United States came
3 from something called the Amateur Sports Act. Is that what
4 you said?
5 A An act of Congress, the Amateur Sports Act, yes.
6 Q Okay.
7 Now, Major League Soccer is not an amateur game, is
8 it? It's not an amateur league?
9 A No, it's not.
10 Q And, in fact, the Amateur Sports Act -- have you ever
11 read it?
12 A Not all of it, no.
13 Q Okay.
14 But you testified to the jury about it, so I assume
15 you think you're knowledgeable enough to say what you think
16 it means right?
17 MR. CARDOZO: Objection your Honor.
18 THE COURT: Sustained.
19 Q Okay.
20 The Amateur Sports Act says nothing about the
21 regularration of certifying professional leagues, does it,
22 not a word?
23 A Not that I know of, no.
24 Q Okay.
25 So there's nothing in there.
page 2255
1 In fact, the Olympic committee who you mentioned
2 says nothing about the authority to certify professional
3 leagues, right?
4 MR. CARDOZO: Object to the form.
5 THE COURT: Sustained.
6 Q Well, you mentioned on direct with Mr. Cardozo that the
7 Olympic committee is who recognizes you, right? Recognizes
8 USSF?
9 A As the national governing body for this sport in the
10 United States, yes.
11 Q Okay.
12 And there's nothing in any of the documents from
13 the Olympic committee that says anything about USSF doing
14 anything for professional leagues, right?
15 MR. CARDOZO: Objection.
16 THE COURT: Sustained.
17 Q TKAO*UPB.
18 Q TKPWAO*UPB.
19 Q Do you know if it says anything about that?
20 A I haven't read the documents.
21 Q Okay.
22 Now, in fact, it's true, isn't it, that USSF takes
23 the position, and Major League Soccer takes the position,
24 that it gets its authority to regulate professional soccer
25 from FIFA, not from any national sports act or the Olympic
page 2256
1 committee or anybody else?
2 MR. ROBBINS: Objection.
3 THE COURT: Sustained.
4 Q Isn't that the position of Major League Soccer?
5 MR. CARDOZO: Objection.
6 THE COURT: Sustained.
7 MR. KESSLER: Your Honor --
8 Q Take a look at Plaintiffs' Exhibit ten. It's already in
9 evidence. I'm going to direct crore attention --
10 This is the business plan that Major League Soccer
11 submitted to United States Soccer Federation, correct?
12 We covered this before?
13 A That's the cover page, yes.
14 Q Bear with me for one second, Mr. Gulati.
15 (Pause in proceedings.)
16 MR. KESSLER: I apologize.
17 MR. KESSLER: I'm sorry, I have the wrong
18 document. I need the 1995 plan, please.
19 Q It's the wrong exhibit, Mr. Gulati, I apologize.
20 (Pause in proceedings.) blnch.
21 MR. KESSLER: It's Plaintiffs' Exhibit 34
22 already in evidence your Honor I'm sorry I apologize to the
23 witness and to the jury.
24 Q Plaintiffs' Exhibit 34 is the Offering Memorandum that
25 you testified about with me dated November 1, 1995; do you
page 2257
1 recall that?
2 A Yes.
3 Q
4 Q Okay.
5 and if we take a look, please, at Page 36?
6 MR. KESSLER: Thirty-six on the bottom, that's
7 30. Thank you. If we can blow up under litigation, the
8 second paragraph.
9 Q Major League Soccer wrote, FIFA has conferred upon the
10 USSF the authority to recognize professional soccer leagues
11 in the United States.
12 Does that refresh your recollection, Mr. Gulati
13 that it was the position of Major League Soccer to all of
14 its investors that it thought that the USSF had the
15 authority to recognize professional soccer leagues because
16 FIFA gave it to them, not some act of Congress or the owe
17 limp pick committee?
18 A Well, two, things.
19 First, I never said that he got it from only one or
20 other. And, secondly, that sentence is what you said, yes.
21 Q It's a true sentence, right?
22 A The sentence says what it says. I don't --
23 Q Does the sentence say that? That he what it says, yes.
24 Q I'm asking a very different question now, Mr. Gulati.
25 In your understanding of the USSF, you've worked
page 2258
1 there many, many years --
2 A Volunteered there many years, yes.
3 Q And you've read many documents, and you have a deep
4 understanding.
5 Is that a true statement, to your knowledge, that
6 first sentence that's underscored?
7 MR. CARDOZO: Objection. The third time this
8 question has been asked, your Honor.
9 THE COURT: Go ahead. You may answer it.
10 A I believe it's accurate, yes.
11 Q Okay.
12 And FIFA is not a governmental body, right?
13 A It's a governing body by governmental meaning?
14 Q Like a government, elected by the people of a country or
15 anything like that?
16 A No, it's not a government.
17 Q No. It's a private organization, right?
18 A With tens of millions of members, yes.
19 Q Okay.
20 So it's correct, isn't it.
21 Q It's correct isn't it the role that the USSF claims to
22 be able to recognize professional soccer leagues in its
23 view, in your view, comes from another private body who no
24 one ever elected or appointed, right?
25 A No, they are elected officials.
page 2259
1 Q Not of any government. Of a private organization,
2 elections process?
3 A Again, with millions of members, yes.
4 Q Okay.
5 So you you know it's almost like a trade
6 association. If you got together a group of milk companies,
7 they have their private group, they might elect who's going
8 to be the leader of it. That doesn't make at that
9 government body, right?
10 A I said FIFA wasn't a government body.
11 Q Okay.
12 Q Now, back to the subject of Mr. Rothenberg and his
13 power.
14 Q As president of the United States Soccer Federation,
15 Mr. Rothenberg had to nominate every member of any committee
16 of USSF, right?
17 A Formally, I think that's correct.
18 Q Okay. It's in the rules, correct? We don't have to
19 look at it. That's the rules, you know that?
20 A I think that's right.
21 Q Okay.
22 So if any member of the National Board of Directors
23 ever wanted to be on a committee, they relight upon
24 Mr. Rothenberg to nominate them while he was president,
25 right, or else they don't get to be on the committee?
page 2260
1 A No, other board members could indicate to Mr. Rothenberg
2 or to the general secretary that we should nominate a
3 particular person.
4 Q Under the USSF rules, no one had the authority to
5 nominate except Mr. Rothenberg as president, right?
6 A I didn't say they did. I said they could talk to
7 Mr. Rothenberg or talk to the general secretary about
8 putting them on the list, about nominating them formally.
9 Q Right. And he had the power.
10 And so if he wanted to say, sorry, you're not going
11 to be able to be on the credentials committee, the budget
12 committee, the rules committee, the competition committee,
13 any of those committees, he could just say, no right?
14 That was his authority?
15 A And the Board could continually turn down his
16 nominations, yes, that's possible.
17 Q Object. Okay.
18 And you'd agree with me that members of the NBOD D
19 generally want to be on some committees, right?
20 They want to be involved in the functioning of the
21 organization, right snnchts well, this area involved in the
22 functioning of the organization. Some like to serve on
23 committees. Others do not. Some like to be on a specif specific
24 committee. It's possible, sure.
25 Q The committees are where the power is, right?
page 2261
1 Like in Congress, you get on a good committee, you
2 get a good position to influence things, like setting the
3 budget?
4 MR. CARDOZO: Objection.
5 THE COURT: Sustained.
6 Q In the USSF, to your knowledge, is the committee where
7 the power is to set the agendas?
8 MR. CARDOZO: Objection.
9 THE COURT: You may answer that.
10 A No, it's not the case for most committees.
11 Q Okay.
12 Who has to propose a budget for the USSF?
13 A The way it's done is that the staff of the soccer
14 federation propose a budget. It's reviewed by the budget
15 committee.
16 Q Right.
17 And the budget committee then proposes it to the
18 National Board of Directors and then to the National
19 Council?
20 A Almost based exclusively on what they're given by the
21 staff.
22 Q Okay.
23 Who does the staff work for? The president, right?
24 A For the department heads to report to Mr. Stein
25 breferber at the time or the general secretary.
page 2262
1 Q Who report to Mr. Rothenberg?
2 A And the Board, yes.
3 Q Okay.
4 Q And there's something called a credentials committee,
5 right?
6 A Yes.
7 Q And the credentials committee decides who gets to vote
8 on anything, right, whether you have the right votes, you're
9 the right person or not?
10 A They certify that you're a member, yes.
11 Q
12 Q And frequently in elections, like in the election of
13 Mr. Rothenberg, the credential committee had to decide who
14 got to vote and who didn't get to vote, who had the right right
15 credentials. That happened in meetings in 1994, right?
16 A It happens at every National Council disbleeght right.
17 And the votes for Mr. Rothenberg in 1994 was
18 extremely close. There had to be a runoff, right.
19 A Yes.
20 Q And there were some disputes over the credentials of
21 some of the people in the '94 meeting, right?
22 A I don't recall. There may have been. And it would be
23 reflected in the minutes if there were.
24 Q Okay.
25 Who had nominated all of the members of the
page 2263
1 credentials committee who decide who had could vote?
2 A Mr. Rothenberg or it could be Mr. Fricker if some of
3 them just stayed on the committee.
4 Q Now, it's also true, isn't it, Mr. Gulati -- I don't
5 want to go over old grouped with Plaintiffs' Exhibit ten,
6 but you recall in the plan that was submitted to the
7 National Board of Directors there was a proposal there that that
8 said that the plan was to give jobs to people from the USSF
9 and the WCOC if Major League Soccer got the designation; do
10 you recall that?
11 MR. CARDOZO: Objection beyond the --
12 THE COURT: Sustained.
13 Q Let's take a look at Plaintiffs' Exhibit ten?
14 MR. KESSLER: Page 365, if we can.
15 MR. CARDOZO: Your Honor, just to save some
16 time. I'm going to object to this. It's beyond the scope
17 of cross. We already covered this.
18 THE COURT: I think it's been covered.
19 MR. KESSLER: You think it's adequately
20 covered your Honor? Okay.
21 THE COURT: Sustained.
22 Q Do you recall that part of your plan in addition --
23 we'll put aside the jobs for a moment -- was plan to pay a
24 sum of money to United States Soccer Federation in exchange
25 for promoting on their behalf?
page 2264
1 MR. CARDOZO: Objection.
2 THE COURT: Sustained.
3 Q Well, Mr. Gulati when, you spoke -- when you testified
4 about the ability of Mr. Rothenberg to influence or not
5 influence the members of the NBOD, did you take into account
6 the fact that Major League Soccer was promising to pay
7 millions of dollars to the United States Soccer Federation
8 as part of its proposal to be the Division I league?
9 MR. CARDOZO: Objection disbleancht. Let's
10 move to something else this. is cumulative and
11 argumentative.
12 MR. KESSLER: Okay.
13 Q Mr. Gulati, you do recall, don't you, that before the
14 committee in December of 1993, Mr. Roth bettering wrote to
15 you, Mr. Abbott and Mr. Sage, on a plan to try to influence
16 all of the NBOD members?
17 MR. CARDOZO: Objection.
18 THE COURT: Go ahead. You may answer that.
19 A Mr. Rothenberg had this document a few days ago, yes, he
20 wanted us to talk to some of the people that were going to
21 be voting at the board to outline the MLS plan. It was a
22 campaign of sorts. We had a presentation to make, and we
23 wanted people to understand our plan (Mr. Rothenberg -- you
24 had)
25 Q And Mr. Gulati we don't have to be a predictor of the
page 2265
1 future to TPHO*EB if Mr. Rothenberg was able to persuade the
2 NBOD to follow his desires, right?
3 We know what happened, right?
4 A Yes, I think we do.
5 Q Right?
6 And what happened is Mr. Rothenberg wanted there to
7 be only one division one league, right?
8 A That's correct.
9 Q Mr. Rothenberg said if there was more than one, he was
10 going to not go forward, right?
11 A Mr. Rothenberg said no leagues were going to be
12 successful so he would not go forward, that's correct.
13 Q Right.
14 And Mr. Rothenberg said the only one should be his
15 league, not the APSL or the other leagues, right?
16 A Mr. Rothenberg said, yes, MLS had, by far, the best
17 plan.
18 Q And Mr. Rothenberg was very successful about because
19 that's what was decided by theNBOD, right?
20 A I think the sport of soccer was successful by that
21 decision, yes.
22 Q Okay.
23 Q And you would agree with me, by the way, Mr. Gulati,
24 that as an organization, the USSF makes decisions and
25 operates based on the decisions of its officers and
page 2266
1 directors, right?
2 A Its officers and its directors. The USSF is the
3 policymaking group of the USSF is the Board of the National
4 Council (dash)
5 Q I'm trying to go to how an organize acts like USSF. Let
6 me try to help with this.
7 If you have a big company, like Firestone tire, you
8 had shaiferldz who vote for the board of directors, right,
9 and you have the board of directors who get nominated by the
10 CEO, and then they get approved and then there are offices,
11 like the CEO and others, and those decision-making processes
12 make decisions which are decisions of the whole
13 organization, right (officers or offices)
14 MR. CARDOZO: Objection.
15 THE COURT: Sustained.
16 Q
17 Q Okay.
18 Well,, in the USSF, make it more direct, in the
19 USSF, okay, if Mr. Rothenberg makes a decision as CEO and he
20 has authority to do so, that binds USSF, right? That's the
21 decision of USSF?
22 MR. CARDOZO: Objection your Honor we're going
23 awfully far --
24 THE COURT: Yes. Sustained. I think this is
25 all adequately --
page 2267
1 MR. KESSLER: Okay practice.
2 I have one final point about this. When those
3 concerns were expressed by Mr. Rothenberg where we spoke
4 about his powers, influence, conflict of interest, did
5 anyone raise concerns that he had given another one of his
6 family members the exclusive rights to make statutes at the
7 World Cup games torques make artistic objects?
8 A The issue of (statute)
9 A The issue of Mrs. Rothenberg having a license from World
10 Cup had been raised, yes.
11 Q Okay.
12 She was given the exclusive license from World Cup
13 to make sculptures, artist pins and trophies?
14 A She was given an exclusive license for statute, I think.
15 Certainly not for pins and all those other things you
16 mentioned, and I don't know that it was exclusive.
17 Q Okay.
18 And did many members of the USSF say they thought
19 that was another evidence of the conflict of interest here?
20 A I don't know about many members. I knew the issue had
21 been raised, yes.
22 Q Okay.
23 Did she make a lot of money from that, do you know?
24 A I have absolutely no idea.
25 Q Okay.
page 2268
1 Finally, Mr. Gulati, under -- and I'm going to move
2 on to another subject -- you testified that it was routine
3 practice to destroy the ballots at NBOD meetings.
4 Is that your testimony? I just want it to make
5 sure I got it right?
6 A You didn't get it right. I said it was routine practice
7 to destroy ballots when there had been a secret vote which
8 for the most part was done at National Council meetings of
9 elections.
10 There weren't numerous secret ballot voadz at the
11 NBOD.
12 Q Okay. That's what I wanted to ask about.
13 When you were testifying, you don't really know
14 what the standard practice was of the NBOD, do you?
15 A I know the standard practice for any vote that I know of
16 that's been a secret ballot has been to destroy the ballots
17 and all other elections at National Council meetings that
18 the ballots are destroyed yes.
19 Q I didn't ask you about council meetings.
20 Isn't there something in the USSF rules in 1993
21 that said that if someone called for an all-call vote, it
22 had to be reflected in the minutes of the National Board of
23 Directors? It couldn't be secret?
24 A That's possible. I don't know.
25 Q You don't know?
page 2269
1 MR. KESSLER: Let's take a look at this
2 exhibit. It's the 1993 '94 book. I don't have an Exhibit
3 number, I'm sorry.
4 MR. KESSLER: It's 150, I believe, your Honor,
5 already in evidence. May I approach? Glory.
6 Q You recognize this, Mr. Gulati, right, as the rules of
7 the US Soccer Federation that were in effect in 1993 and
8 1994?
9 A Yes, I do.
10 Q Okay.
11 If you could take a look with me, please, at
12 Page 31 under (B), if we could blow that up (small B)
13 Q It says an NBOD member may request a roll call vote on
14 any valid motion before or after a voice TPHO*ET vote is
15 recorded as patting or failing. The name of all of the NBOD
16 members and their vote will be recorded as part of the
17 official minutes of the NBOD meeting.
18
19 Now, Mr. Gulati, there wasn't a voice vote to
20 choose MLS as the exclusive Division I member, was there?
21 It was a roll call vote, wasn't it?
22 A It was a secret ballot.
23 Q My question was was it a roll call because it was
24 recorded 18 to five. It wasn't a voice vote, was it?
25 MR. CARDOZO: I object, the witness.
page 2270
1 THE COURT: Sustained.
2 Q
3 Q Okay. Isn't it correct,, Mr. Gulati, that under these
4 rules, once it was not a voice vote, once it was not a simple pass or fail, the rules of the
5 USSF required that the names of the members and their vote
6 be
7 reported as part of the minutes?
8 MR. ROBBINS: Objection, your Honor that's not
9 what it says at all.
10 THE COURT: Sustained. Sustained.
11 Q Okay.
12 Mr. Gulati, if Mr. Steinbrecher were to have
13 testified it was not standard practice --
14 MR. CARDOZO: Objection, your Honor.
15 THE COURT: Yes, sustained. Ask you can
16 Mr. Steinbrecher jeer okay. We'll have Mr. Steinbrecher.
17 THE COURT: I think we'll take a short morning
18 recess.
19 MR. KESSLER: Actually your Honor I didn't
20 know what time but I thought this might be a good one.
21 THE CLERK: All rise.
22 (Whereupon, the jury left the courtroom.)
23 (Recess.)
24 Start second half. Is this a nice new ribbons? ()()(yes,
25 this is a nice new ribbon.
page 2271
1
2 MR. KESSLER: May I proceed, your Honor?
3 Q Mr. Gulati, during your examination by Mr. Cardozo, you
4 testified, I believe, that that the reason there is no
5 mention plan for the players in the MLS is because you had
6 no union to negotiate with; is that your testimony?
7 A We had anticipated there would be a union and thought we
8 would do that with the union, yes.
9 Q Now, you know, Mr. Gulati, from your experience, don't
10 you, in the business world and others, that there are
11 thousands of companies that have no unions that provide
12 pension plans or 401K plans or other type of post career
13 plans for their employees, right?
14 A Companies do that, but we had anticipated, like the
15 other sports, having a union to do it with.
16 Q And, in fact, Mr. Gulati, Major League Soccer gives its
17 executives a 401K plan with no union, right?
18 A It does, yes.
19 Q Okay.
20 And all the employees, the staff of Major League
21 Soccer, the secretaries, they had a 401K plan, right,
22 without any union?
23 A Some time after the startup of MLS, they did.
24 Q Okay.
25 So the only people in the league, is it fair to
page 2272
1 say, who don't have any pension or 401K plan at all are the
2 players?
3 A That are generally organized and set up as a union to
4 work it out with the league.
5 Q But there was nothing to stop you from providing that if
6 the league wanted to do so, right?
7 A Could we have done it? We could have done it. We were
8 anticipating doing it with a union.
9 Q Okay.
10 Now, Mr. Gulati, you also testified several times
11 about this $250 million in alleged losses; do you recall
12 that?
13 A I didn't say they were alleged loss, I couldn't, yes,
14 $250 million.
15 Q Okay.
16 And you've roked E. looked at the books and records
17 of MLS to derive this figure?
18 A I've seen the losses for various years and the teams and
19 have used that as an estimate, yes.
20 Q Okay.
21 And the numbers you're using are what's referred to
22 in the books and records of MLS as operating losss? is
23 that correct?
24 A I think that's the term.
25 Q Okay.
page 2273
1 And by operating losses, does it, for example,
2 count as revenue when MLS sells a franchise as they did to
3 Miami, right?
4 A I'm in the sure if that goes in the operating revenues
5 or not. In may well. I'm not sure of that.
6 Q If it doesn't then --
7 How much was the Miami team sold for, the Miami
8 expansion team?
9 A $20 million.
10 Q $20 million. And that's not counted as a revenue in the
11 books of MLS against their operating losses, right?
12 MR. CARDOZO: Objection. He just said he
13 didn't know.
14 MR. KESSLER: He offered the testimony as to
15 what they were, your Honor.
16 THE COURT: Well, no, I think he said he
17 didn't know whether that was operating revenue or not.
18 Q Would you agree with me Mr. Gulati that expansion fees
19 are refuel new to the league?
20 A In some form yes.
21 Q So if we wanted to calculate losses we would want to
22 subtract nine expansion fees received, right?
23 MR. CARDOZO: I object. The witness just said
24 he didn't know whether it was included or not.
25 THE COURT: Well, this is a different revenue
page 2274
1 item, I guess. You may ask that.
2 Q It's a revenue item, expansion fee, it's revenue?
3 A Money that comes to the league.
4 Q Okay. Yes.
5 And operate hg revenues also take out something
6 called a.m. more \at this\{^ity}ization costs, right?
7 Do you know what amortization costs was are?
8 A Generally yes.
9 Q It's not real money, right? It's a paper, accounting?
10 A It's real money at some pointier point.
11 Q Okay.
12 Let's understand amortization costs.
13 When you're calculating your losses you claim, what
14 it is is like you have your player contracts, you take an
15 amortization loss on, right?
16 A Yes, some of them.
17 Q Okay. Let the jury understand that.
18 You pay a transfer fee to a foreign league, let's
19 say a million dollars. Then what you do is over the life of
20 that player contract, you write that off as a loss, right,
21 the million dollars, gradually?
22 That's called amortization?
23 A Let's be very clear what we do. If we pay a thousand
24 dollars or a million dollars in one year.
25 Q Right?
page 2275
1 A For accounting purposes, that may be shown as
2 $250,000 in each of four years. It's still money that comes
3 out of someone's pocket.
4 It's not just a paper loss.
5 Q Let me ask you something. Let me show you a copy of
6 Plaintiffs' Exhibit 88?
7 MR. KESSLER: May I approach the witness, your
8 Honor?
9 THE COURT: All right.
10 THE COURT: I don't believe your Honor there's
11 any objection to Plaintiffs' Exhibit 88, audited financial
12 statements.
13 MR. CARDOZO: No objection. Whether the
14 witness has knowledge of this, I don't know, your Honor.
15 THE COURT: All right. The exhibit may be
16 admitted.
17 THE CLERK: Parked and entered.
18 (Plaintiff's Exhibit No. {L^ } received in
19 evidence.)
20 Q Mr. Gulati, are these the types of financial documents
21 you said you saw before telling the jury what you thought
22 the losses were?
23 A I saw, at some point, a summary of the five or six years
24 and so it wasn't -- it wasn't balance KHAO*ETS sheets for
25 the league on a yearly basis. It was a summary.
page 2276
1 Q These are the audit the financial statements, right,
2 that an independent accountant looks at?
3 A Yes, that's right.
4 Q And this was the one for the first two years of the
5 league, right, the year ending December 31, 1996, and
6 whatever happened in '95 before then?
7 A That's correct.
8 Q Okay.
9 Q Let's take a look, if I can direct you to Page MLS
10 304104.
11 And just so we're clear, Mr. Gulati, the team, the
12 investor/operators, have their own financial statements.
13 This is just the one for the league, right?
14 A That's correct.
15 MR. CARDOZO: Your Honor, we have no
16 hesitation going into this. I think this witness just
17 testified he had not seen this document. I really think
18 that this is not the way to do this.
19 THE COURT: Okay. This is not the way to
20 examine the financial condition of the league through this
21 witness. I agree with that. There may be something he can
22 testify about.
23 Q They put him on and elicited these alleged losses. I
24 think I have to cross-examine him on it, what his basis is
25 for it.
page 2277
1 Now, player costs are all borne by the league, not
2 the teams, right?
3 A That's correct.
4 Q Okay.
5 So these are all the player costs in the league in
6 1996, 13,378,064 1, right?
7 MR. CARDOZO: Objection.
8 THE COURT: Sustained. Without a found
9 dation, I'm not going to have him explain the report. There
10 probably is a witness who can do that if there comes the
11 point.
12 Q Don't you recall testifying on direct with Mr. Cardozo
13 that approximately $13 million in player costs were spent in
14 1996 (?
15 A No, I think we said we had a budget that was well above
16 that and we, in fact, spent much more than that.
17 Q So you believe this is incorrect?
18 MR. CARDOZO: Objection.
19 THE COURT: Sustained.
20 Q Who puts together -- who works on this, Mr. Abbott?
21 A An independent A*UT auditor p put this together.
22 Q At the league office, who would be the person
23 responsible, Mr. Abbott, the chief financial officer?
24 A He's not the chief financial officer of MLS.
25 Q Okay.
page 2278
1 Does Mr. Abbott have any role in putting this
2 together?
3 A He oversees the operations of MLS as the chief operating
4 officer, so he would have some role in it.
5 Q Mr. Gulati, do you know what -- you'll see MLS had
6 $87 million in expenses.
7 Do you know what all these other expenses were?
8 MR. CARDOZO: Objection.
9 THE COURT: Sustained. No.
10 Q Mu STKPWHR* Mr. Gulati, you testified that if player
11 salaries got risen, that you would have more losses.
12 Why couldn't MLS decrease its other expenses?
13 A We had a budget. We went and looked at various parts of
14 that budget, and obviously, if you increase -- what you're
15 saying is if you increase something else and decrease
16 something else does one Number stay the same? Mathematics
17 tells us that.
18 We had a budget in the player department area and
19 if we increase that obviously without changing other things,
20 losses would go up.
21 Q Okay.
22 So if you paid less less for selling general
23 administrative expenses, 25 million, less of operating
24 expenses, then you could pay more for player salaries and
25 not have any greater loss, right?
page 2279
1 A If I paid -- we spent more money -- spent less money on
2 another item that was within our control, then if you had a
3 dollar expenditure more somewhere else would the loss be the
4 same? Quite possibly.
5 Q And player costs were just -- they were just one line
6 item for the league, and they are no more than what, 13,
7 14 million out of 87 million? That's all, right? Less than
8 25 percent? (selling, general and administrative expenses)
9 I believe the player -- the way I look at player
10 costs and the costs of getting players, you need to look at
11 another line on there, that line of $7 million, some \of
12 that\that have.
13 Q And do you recognize the 7 million? Where is it?
14 A Amortization depreciation. I don't know if there's
15 player costs included in that, the amortization of player
16 contracts.
17 MR. CARDOZO: Your Honor I'm going to renew my
18 objection.
19 THE COURT: Yes, I don't want to go into
20 detail with this report with this witness.
21 MR. KESSLER: Okay.
22 Q Do you know what depreciation is?
23 MR. CARDOZO: Objection sustained.
24 Q Okay. Let me ask you this, what is the management fee
25 that's paid?
page 2280
1 MR. CARDOZO: Objection.
2 THE COURT: Sustained.
3 MR. KESSLER: Well apart from these financials
4 your Honor.
5 Q Do you know what the management fee is?
6 MR. KESSLER: Not this management fee. Let's
7 take this down.
8 Q What's the management fee?
9 A In general or are we talking about in the context of the
10 way MLS operates?
11 Q The way in which MLS operates?
12 A Our investor operators have agreements to manage certain
13 teams and they therefore have to turn over certain revenues
14 to the league and are paired back some of those revenues for
15 managing the operation.
16 Q Okay.
17 So when the management fee -- if you put that back
18 up, please?
19 MR. CARDOZO: I object to putting it back up.
20 THE COURT: Sustained.
21 Q Okay.
22 If a management fee is deducted to show a loss for
23 Major League Soccer and then that management fee is is paid
24 over to the operators of the team, do you think that's a
25 loss?
page 2281
1 A If you give me $10 and I give you five of it back, I
2 still have $5. I don't have ten.
3 That's what that is.
4 Q If.
5 Q If you're looking at Major League Soccer as a whole, the
6 league and the teams, if you're transfer money from the
7 league to the teams, you think that's a loss to somebody
8 when you transfer money within the operation?
9 A Let's not confusion people, Mr. Kessler.
10 When I use the Number 250 million, we're talking
11 about the losses of all entities.
12 So if there's a greater loss in one, there would be
13 lesser in another so the number is the total of those
14 entities.
15 Q Right. Okay.
16 You look at a document that showed the loss of how
17 much the teams lost, too, right?
18 A In summary form, yes.
19 Q And, in fact, the document you looked at showed that in
20 1996, the teams, the teams only lost a total of about
21 10 million, but in 1999, they lost over 24 bhil I don't
22 know, right?
23 MR. CARDOZO: Objection.
24 THE COURT: No, you may have it, but if you're
25 going to refer to a particular document, I think he should
page 2282
1 see it.
2 Q Is the document you looked at the document prepared by
3 Professor Klein?
4 A I have no idea.
5 Q Do you know what you looked at?
6 A It was a summary of some financials. I don't know who
7 prepare the document.
8 Q Who gave it to you?
9 A Someone from the league office. I don't know if it was
10 at a board meeting or if I was sent it in the course of my
11 responsibilities with Kraft Soccer.
12 Q Okay. And that's all you know about it, and you feel
13 comfortable telling this jury what's in that document just
14 based on that?
15 MR. CARDOZO: Objection.
16 THE COURT: Sustained.
17 Q Well, let me ask you this:
18 It's true, isn't it, that the losses of the teams
19 have gone up dramatically in the last five years?
20 MR. CARDOZO: Objection.
21 THE COURT: Sustained.
22 MR. KESSLER: Your Honor, --
23 Q In the documents you looked at, did the losses of the
24 teams go up dramatically in the last five years?
25 MR. CARDOZO: Objection.
page 2283
1 THE COURT: Sustained.
2 MR. KESSLER: We have to approach, your Honor,
3 I'm sorry.
4 THE COURT: No, I think we have to go to
5 something else is what we have to do.
6 Q Mr. Gulati, the teams don't pay any player salaries,
7 right?
8 A No, they're not allowed to do that.
9 Q So if the documents show that the losses of the tepees
10 went up that could have nothing to do with player salaries?
11 MR. CARDOZO: Objection your Honor.
12 THE COURT: Sustained. Let's move to
13 something else, Mr. Kessler.
14 Q Mr. Gulati, when you first proposed doing this, the plan
15 planned for losses the first four years right?
16 A I think it was the first three years is what I've
17 stated.
18 Q And that's because it's normal with a startup business
19 to expect losses, right?
20 A Sure.
21 Q Okay. You're making an investment, initially, and
22 you're hoping to get your investment back from rising value
23 and increased revenues down the road, right?
24 A You hope to be profitable in the future, yes.
25 Q PRAO*EUT right.
page 2284
1 And in Major League Soccer, the losses increase not
2 because of any increase in player salaries, right? You met
3 your budgets on player salaries over the five-year period,
4 right?
5 A Player salaries have gone up every year.
6 Q Okay.
7 You met -- you projected in the beginning they were
8 going to go up by a certificate percentage right?
9 A I think it was five perfect originally yes.
10 Q And then you revised it to ten?
11 A Yes. The salaries may have gone up so we may have
12 resRAO*EUS advised the budget, yes.
13 Q Okay.
14 But the point is, you can't blame your increased
15 losses on any comparable increase in player salaries, right?
16 You know that?
17 MR. CARDOZO: Objection.
18 THE COURT: No, E. you may answer that.
19 A I don't have all of the numbers here in front of me. We
20 could look at that.
21 Q Okay.
22
23 Q How would I find the document that you look at?
24 A I'd have to ask someone from the league.
25 Q Something that shows $250 million of losses?
page 2285
1 A Something that shows if you add up the annual losses of
2 the teams, the first four years as well as the league itself
3 and make an estimate for the last year, then, yes, you'll
4 get a number that's very close to $250 million.
5 Q We'll see if the league can find that document.
6 A I'm sure you will.
7 Q O.
8 Q Now, Mr. Gulati, you were very familiar with how much
9 player costs were when you were deputy commissioner, right?
10 A In general terms, yes.
11 Q And you know based on your extensive knowledge of player
12 costs that player costs did not remotely go up at the same
13 rate as your losses went up, right?
14 A Remotely go up. I don't -- again, look at the numbers.
15 We can talk about the rate of increase in player costs
16 versus the rate of increase in losses.
17 Q Yes.
18 The losses increased by multiples, and the player
19 costs increased five or 10 percent a year, right?
20 A It's also multiple. They're both multiples.
21 Q I understand.
22 Okay. But if something is going up 400 percent and
23 something is going up 10 percent, you'd agree that the
24 10 percent increase can't be responsible for the 400 percent
25 increase of losses, right?
page 2286
1 A No, the way you've outlined it, if something is
2 10 percent -- is going up by 10 percent is a small part of
3 your overall operations, then, then, yes.
4 Q Do you know what -- do you know if MLS makes payments to
5 what's called "related parties"?
6 A I've seen the term, but I don't know the substance of
7 it.
8 Q Well, relate the parties, would be, for example,
9 entities owned by investor/operators who might own a stadium
10
11 or television station or something like that who do business
12 with MLS?
13 A I said I know the term yes.
14 Q Do you know how much of the losses of MLS are payments
15 related to these related parties?
16 MR. CARDOZO: Objection your Honor, I think
17 with this witness --
18 THE COURT: Yes, sustained.
19 MR. KESSLER: Your Honor, I'd next like to
20 move into evidence Plaintiffs' Exhibit 38. I believe
21 there's no objection.
22 MR. CARDOZO: No objection.
23 THE CLERK: Marked and entered.
24 (Plaintiff's Exhibit No. {L^ } received in
25 evidence.)
page 2287
1 Q Mr. Gulati, while you were deputy commissioner, you were
2
3 deputy commissioner in 1997 -- I'm sorry, in --
4 MR. CARDOZO: I apoll scries for sprupting,
5 your Honor, but until there's -- the document is in
6 evidence, I understand. There's no indication in this
7 document that Mr. Gulati ever saw it --
8 THE COURT: Let's get to the foundation.
9 MR. KESSLER: Okay.
10 Q Mr. Gulati, when you were -- you were deputy
11 commissioner in 1997, right?
12 A That's correct.
13 Q Were you familiar with the fact that there were
14 proposals by Alan Rothenberg at that time to biep the
15 operating rights to the San Jos team?
16 A To make an investment in league and operate San Jos,
17 yes.
18 Q Okay.
19 And that was a subject discussed at management
20 committee meetings, right?
21 A At some of them, yes.
22 Q And you attended some of those meetings where it was
23 discussed?
24 A Yes, and some of them I was excused from.
25 Q Okay.
page 2288
1 and who was Mr. Phil Lynn?
2 A Mr. Lynn is a -- is an analyst or a financial advisor
3 for Mr. Is a bat nick.
4 Q And Mr. Is a bat nick is one of the investor/operators
5 in Major League Soccer?
6 A He's part of the investment group of one of of of our
7 teams, yes.
8 Q And who is Sylvia cees will?
9 A She has a number of roles in the same company that
10 Mr. Is a bat nick H*ETS heads up. She's -- I don't know by
11 Title but she's a close advisor of his.
12 Q Okay.
13 And during the meetings that you attended with the
14 discussion of Mr. Rothenberg buying the investor interest in
15 San Jos, you recall that representatives of the MetroStars,
16 or Mr. Is a bat nick's group, took the position that all of
17 MLS was worth at least $240 million in 1997?
18 A I don't recall that specifically but it's possible.
19 Q Okay. Did you ever see this document?
20 A I don't believe so.
21 Q Okay.
22 Does looking at it refresh your recollection that
23 they took the position it was worth at least $240 million in
24 11997.
25 (Witness read document.)
page 2289
1 A Well, I've definitely not seen this document.
2 Q Well, read the first paragraph on MLS valuation.
3 (Witness read document.)
4 Q O*BG?
5 A Okay.
6 Q Okay.
7 Does that refresh your recollection that it was the
8 position of the MetroStars that MLS was worth at least
9 240 million in 1997?
10 A The MetroStars had no position. Mr. PA* is a bat nick
11 may or may not have thought this was the valuation. What
12 this says is in a -- this is a letter from an analyst at
13 Kluge & Company or Metromedia to someone else. I don't know
14 that Mr. Is a bat nick took this view at the board or not.
15 Q
16 Q Okay.
17 Now, in 1997, MLS was in a loss position, right?
18 A Yes.
19 Q Okay.
20 And it was generally agreed among the management
21 committee at that time -- that even though you were losing
22 millions of dollars, the league was worth at least
23 240 million?
24 That was the consensus on the management committee,
25 wasn't it?
page 2290
1 A I don't think there was a consensus about the valuation
2 of the management committee.
3 Q Isn't it true the manier committee took the position
4 that they wouldn't sell the San Jos team to Mr. Rothenberg
5 unless he paid at least $20 million for those operating
6 interests?
7 A I don't know if they took that at any point, but that
8 wasn't their final position, certainly.
9 Q Mr. Gulati, is it your testimony to the jury that MLS
10 wasn't worth at least 240 plil I don't know at this time?
11 Do you know?
12 MR. CARDOZO: Objection.
13 THE COURT: Sustained.
14 Q Now, the reason, Mr. Gulati, a league could be worth
15 hundreds of millions of dollars with losses is because the
16 investors believe it's going to make money in the future,
17 right?
18 A That the expectation, yes.
19 Q Right.
20 Because what someone is willing to pay for a team
21 would be worth not just on its past but predictions \how\you
22 who well it's going to do, right?
23 A That's part of it, sure.
24 Q Okay.
25 So if investors were willing to pay $20 million for
page 2291
1 the right to have the team in MLS, that would be a
2 projection that that investor who paid the money thought
3 that's what the team was going to be worth, right?
4 A We're looking for some of those folks now, about you
5 that's accurate, yes.
6 Q Okay.
7 You found one when you sold Miami, right?
8 A Haven't found one since.
9 Q Okay.
10 Q When San Jos -- when Los Angeles was finally sold, it
11 was sold for over $20 million, right?
12 A No, I believe that's incorrect.
13 Q That's not correct?
14 A I don't believe so.
15 Q Okay.
16 Now, the initial commitment from MLS investors to
17 get the right to operate a team was $5 million, right?
18 A Yes.
19 Q Okay.
20 So between the $5 million in 1995 and 1997 when
21 Miami was sold for $20 million, that was an increase, right,
22 5 million to $20 million, 400 percent increase?
23 A That's correct.
24 Q And that was even though the league was losing money at
25 the time?
page 2292
1 A The league was losing money at the time, yes.
2 Q Now, I want to ask you, Mr. Gulati, some questions about
3 your chart again. You remember your chart where you check
4 off the players in the foreign leagues, et cetera?
5 A Yes.
6 Q Okay.
7 Now, it's true, isn't it, that in that register you
8 looked at, there were about 416 players when you looked at
9 the number of players listed in the register for the first
10 three years of the league?
11 A I didn't count, but if -- I assume you have, so that's
12 correct.
13 Q Okay.
14 And so it's true, isn't it, that certainly about
15
16 300 players in that register never played overseas at all?
17 A I don't know how many players we had on the Board
18 yesterday. I'm sure you can tell me that.
19 Q But you'd agree with me based on your knowledge of all
20 of this and your detailed memory about players that there
21 are hundreds and hundreds of players in MLS who have never
22 played oversAO*ES seas, right?
23 A Yes, that's correct.
24 Q Okay?
25 A About.
page 2293
1 A But have played in MLS at one time or another,
2 cumulative there are hundreds, yes.
3 Q Yes.
4 In fact, almost 400. Would that be true, through
5 the year 2000?
6 A I -- I don't know that but that's possibly, yes.
7 Q
8 Q More than 350?
9 A If we've just done the subtraction for '98 and it's 416,
10 as you said, minus the number we talked about yesterday, it
11 could be nor than 350, yes.
12 Q Now, let's talk about the players did you talk to.
13 A number of the players you mentioned as having
14 played abroad where you checked off the box for never played
15 Division I overseas, right?
16 A That wasn't -- that wasn't what we were checking off
17 yesterday so this's --
18 Q Oh?
19 A Well, since I checked off boxes that in some cases were
20 not Division I, that would seem to be a correct statement.
21 Q Okay.
22 Q Okay.
23 So some of the players played in minor leagues
24
25 overseas?
page 2294
1 MR. CARDOZO: Objection, your Honor we've had
2 this argument before.
3 THE COURT: Sustained.
4 Q Okay.
5 Like, for example, Mr. Jeffrey RIF aambiguous,
6 the first one you mentioned --
7 MR. ROBBINS: Agoose.
8 MR. KESSLER: Agoose. I'm going to get all
9 these names rong so you'll have to correct me Mr. Robbins
10 and Mr. Gulati.
11 Q Mr. agoose, you never played in Division I overseas,
12 right?
13 A Mr. agoose did not play in any overseas first division,
14 that's correct.
15 Q Mr. bent, Mr. Watson and are ial low never played in
16 Division I overseas right?
17 A I said yesterday when I was putting those up where they
18 played and what division so we can go through all all of
19 them. That's fine.
20 Mr. bent did not --
21 Q Mr. Watson?
22 A Did not.
23 Q Mr.al low?
24 A Mr.al may have played in -- we won't go into this in
25 detail -- may have played in what is now known as the
page 2295
1 Premier League before it was the Premier League.
2 Q Was it Division I then when it wasn't known as the
3 Premier League?
4 A You're going to end up apologizing again.
5 (Laughter.)
6 Q I'm just asking. Just asking. Was it Division I. It
7 was called Division I before it it was the Premier League.
8 Q I know?
9 A Well, I'm glad you know. That's a start.
10 Q Okay.
11 How about Mr. Ecal EMENALO, he never played
12 Division I overseas right?
13 A Y may have in Nigeria but remember yesterday we were
14 doing the ones we were quite sure about.
15 Q You weren't sure about that.
16 How about Mr. AUNGER?
17 A These are your clients. Mr. Aunger.
18 Q Yes. He didn't play Division I?
19 A Helping with you the names.
20 Q Thank you?
21 A He didn't play Division I.
22 Q Did he play Division I O*EF seas in no.
23 Mr. bliss? I got that one right.
24 A Mr. bliss fleyed the germ II division.
25 Q Right. I'm just asking, none of these people played
page 2296
1 Division I oversA*ES and they were all op your chart, right?
2 A Well --
3 Q You can give me a yes or no on that?
4 A I think a yes is sufficient under the circumstances.
5 A Yes.
6 Q Okay.
7 Mr. low san know, Mr. McBride, Mr. May owe la,
8 Mr. Owe Ma foe, all those people, they never played
9 Division I overseas but they were on your chart, right?
10 A I'm not sure what your last -- the last name was.
11 Q I'm not ear. ONALFO, owal foe?
12 A Oweal foe.
13 Q Right. None of those are Division I?
14 A He didn't play in a Division I league.
15 Q Okay.
16 Same for Mr. Ambiguity Ray -- ambiguity res?
17 A Due tear res.
18 Q Yes, gy tear res, no Division I?
19 A Which Mr. Gy trair res are we talking about.
20 Q Henry or ony, I don't know. I think it's Henry?
21 A Henry Gutierrez, Mr. Kessler?
22 Q Henry?
23 (Laughter.)
24 A Ony Gutierrez, yes.
25 Q Okay. No Division I, right?
page 2297
1 A Well, ony Gutierrez may have played somewhere in
2 Division I by Henry gullet tearist res didn't.
3 Q It's also true that to go through another group of the
4 players that you mentioned, who you checked off those boxes
5 with, were only players who played overseas before MLS was
6 formed and who have never played in MLS since it's been
7 formed, right?
8 A They played in MLS before it was --
9 Q Bad question.
10 They only played overseas before MLS was formed and
11 once MLS started playing in '96, they never played overseas
12 again, right?
13 A It's possible that some player or players played outside
14
15 of MLS before, came to MLS.
16 Q Right?
17 A And were on that chart, yes.
18 Q Yes.
19 Because that's possible, you know it to be true?
20 A Yes.
21 Q Yes, okay.
22 And because, as you testified before, there were a
23 number of American players, for example, overseas who wanted
24 to come play Division I, right, in the US?
25 A Yes.
page 2298
1 Q So before there was MLS or Division I, they couldn't
2 play Division I in the US, right?
3 A Before there was MLS they couldn't play Division I in
4 the US, yes.
5 Q Right.
6 And then they came and played in Division I in the
7 theUS and they never went overseas again?
8 A Some of them did that and some of them went back.
9 Q Let's go to the ones on your chart who never went back,
10 okay, people like Mr. Tab Ramos, right?
11 A Mr. tab Ramos did, in fact, as you say, go back. He
12 signed a contract coming back from pain and then went and
13 played in New Mexico.
14 Q He played with you, though, right?
15 A He made in Mexico.
16 Q He was under contract with you?
17 A I'm sorry.
18 Q He was under contract with you?
19 A And played in Mexico on loan.
20 Q So you loafnd him but he was still in the contract with
21 you?
22 A Contract was suspended while he was gone.
23 Q Okay.
24 So you loaned him and got paid some money for that?
25 A No, we did not.
page 2299
1 A We got paid the money and it was all given to Mr. Ram
2 mows disblk.
3 Q Okay.
4 How about Mr. Brad Wilson, he never went back
5 overseas, right?
6 A I don't -- I don't believe so.
7 Q Mr. winnal da never went back overseas, right?
8 A He did.
9 Q Okay.
10 How did he go back overseas? Where did he play?
11 A He went and played in Mexico.
12 Q You loaned him again?
13 A Yes, we allowed him to make more money than MLS was
14 playing him for some period of time, yes.
15 Q But he was always under contract to MLS the whole
16 period?
17 A For another ten weeks, yes.
18 Q Okay. Okay.
19 Q Mr. cosher, SORBER. I know it's not sore bay.
20 (Laughter.)
21 A I'm just surprised you don't thinks it sore bay.
22 Mr. cosher I don't believe went back and played
23 after he came from Mexico.
24 Q Mr. Pittman?
25 A Yes, he did, in fact, go back and play. Not on loan.
page 2300
1 Q Okay.
2 He went back and played. You're sure about that.
3 When did he go back?
4 A After he played in MLS for a year or two.
5 Q Where, what league?
6 A In Scotland.
7 Q In Scotland, okay. STKPWHRO*EB STKPWHRO*EB.
8 Q How about Mr. Joe-Max Moore?
9 A He came back, played in MLS and then went back again.
10 Q When did he go back?
11 A Last year.
12 Q Now, let me ask you this:
13 Players who have not played overs*ES seas since the
14 end of 1995 on your list, Mr. Watt son?
15 A Excuse me, players who have not --
16 Q Who have not played overseas since the end of 1995?
17 A So players who have played exclusively in MLS?
18 Q Yes, but who were overseas on your list before MLS. I
19 may have been looking at a wrong list before with you. I
20 have another list.
21 A Oh. I'm --
22 Q I'll miss pronounce the names equally poorly though?
23 MR. CARDOZO: I don't understand the question.
24 I've had problems with this question before.
25 Q All right. Let me get the question clear.
page 2301
1 These are players who -- players who you put up on
2 the board as being foreign players who I believe have never
3 played overseas since 1995, the end of 1995, right?
4 A I object to the question. You said foreign players.
5 You're asking -- just so we don't have to go through this
6 twice, what are we asking?
7 Q These are players that he listed, whether they're
8 foreign or American, who came over to MLS who never went
9 overseas again, okay?
10 Q Okay?
11 Mr. EKEME, Mr. Eke am I, he can am I?
12 A Sam well.
13 A Yes Sam well W. well he can cem may.
14 Q Yes.
15 A I don't know if he's gone overseas or not.
16 Q Mr. Watson, mark Watson?
17 A He has.
18 Q Has what?
19 A I think he's gone to England to play.
20 Q When did he do that?
21 A Last year, I believe.
22 Q Have you looked at Mr. Klein's charts, your expert's
23 charts?
24 A At some point, yes.
25 Q Do you think they're accurate?
page 2302
1 A Based on -- based on the information that was provided
2 to him, yes.
3 Q So if Mr. Klein had indicated Mr. Watson didn't go
4 overseas, that would be -- you think accurate, do you think?
5 A That's not necessarily the case.
6 Q So your expert could have wrong information on his
7 charts?
8 A If Mr. Bees.
9 A If Mr. Beesly went to poa lan, as he did last week, or
10 will this week, it's possible that Mr. Klein's chart is not
11 contain that information.
12 Q I don't WA*PBTD want to fight with you, Mr. Gulati?
13 A We don't want to fight for sure.
14 Q Would you give me out of the players you went through
15 there are somewhere between 25 and 30 who never played
16 overseas again after they came to MLS that you put up on
17 that board?
18 A I'll give if you we come up with certain TRAO*EU
19 criteria for certain players doing something and and
20 increase that criteria and \add\{^ed}a hair color to it and
21
22 left footed players that list is going to be a smaller
23 group, yes, I accept that.
24 Q You can't answer my question yes or no?
25 A Twenty-five to 30/can't without going through the
page 2303
1 register.
2 Q Okay.
3 I don't want to take the time to do that.
4 Q Let me ask you this:
5 When you were negotiating with players at, none of
6 them were ever able to present to you a competing offer from
7 a Division I league in the United States, right?
8 MR. ROBBINS: That's asked and answered 15
9 times.
10 THE COURT: Yes, I -- sustained. This is
11 redirect and I think it's been explored adequately by both
12 sides.
13 Q Let me ask you this question.
14 Mr. Gulati, you testified yesterday about the
15 acquisition costs of certain players to MLS.
16 For example, you said Mr. Brad Friedel, the
17 acquisition costs were 700,000; do you recall that?
18 A What I said was between acquisition costs and salary,
19 what it took to put him on the field, so to speak, in
20 the first year was $700,000.
21 Q Seven hundred thousand.
22 And do you recall how much Mr. Friedel made from
23 MLS that year when it cost you 700,000?
24 A I don't know specifically. He was under contract for
25 about half the year to us, so it was --
page 2304
1 Q How about 70,000 --
2 MR. CARDOZO: Objection. Objection. The
3 witness had not finished his answer.
4 A I was going to say it was about 80 or $90 now.
5 Q If his tax records sees 70,151, you wouldn't disagree
6 with that, right?
7 A I wouldn't disagree that his tax records says that, no.
8 Q When I mean the tax records -- I can show it to you, if
9 you like. The tax records of MLS, do you know he was paid
10 only about $70,000 out of the 700,000?
11 A No, I don't know that. It's quite possible that the
12 club gave him part of the money that they received in a
13 transfer fee.
14 Q Okay.
15 And that would be in the MLS tax records if he got
16 paid by MLS, right?
17 A The club in Turkey that he came from, that would not be
18 in the MLS tax records.
19 Q Oh, you're speculating that you -- you paid the money to
20 the club in Turkey?
21 Do you know if the club in Turkey gave him any
22 money?
23 A I just said it was mob.
24 Q Okay.
25 Well, let's agree what's knowable. What's knowable
page 2305
1 was that MLS paid him 0*7 thousand out of 700,000 that year,
2 right?
3 A During the course of that year for (70) for being under
4 contract for five or six months, yes.
5 Q All right.
6 And the rest was a transfer fee paid to the Turkish
7 club?
8 A A big part of it would have been a transfer fee paid to
9 the Turk irk club yes.
10 Q Mr. winnal da was 900,000 right?
11 A That's about right.
12 Q And MLS paid him 165,000 out of that, right?
13 A If that's what the tax record says for that year, it's
14 possible that he would have gotten additional monies for
15 signing his contract that were over the term, yes.
16 Q But if he got paid that year, he would have gotten it on
17 his tax records right?
18 A Right and if he got a hundred thousand bonus payable on
19 January first the following year that would be on his
20 following year tax records.
21 Q And the next year Mr. Winal da only made 194,000 right?
22 A If that's what his tax record says.
23 Q So he didn't get any hundred thousand bonus, did he?
24 A In that case, he did not.
25 Q Okay.
page 2306
1 How about Mr. Etcheverry. You said Mr. Etcheverry
2 you made $2 million to put him on the field, right?
3 A Between his salary and signing bonus and so on.
4 Q And he ohm got four #- 62,000 out of $2 million, right?
5 (462,000)
6 A He only got $462,000 on his tax records.
7 Q Out of $2 million?
8 A Bad year for Mr. Etcheverry for $462,000.
9 Q Well, if you were worth something and you only got
10 25 percent of the value, do you think that's good or bad?
11 A If I had signed a contract to perform services and was
12 released from that contract, you have to work out an
13 agreement both with me and the person I had sign the
14 contract with.
15 Mr. Etcheverry signed a new contract where he made
16 $462,000.
17 Q Right.
18 Now, the reason you paid $2 million, you paid a
19 million and a half to the foreign club, is because you
20 thought Mr. Etcheverry was worth this to MLS, right? You
21 wouldn't pay more than 2 million if you TK*EU didn't think
22 that, right?
23 A That's what we had to pay to get him to MLS, yes.
24 Q Right. Okay. Okay.
25 But he only got 462,000 of it, right?
page 2307
1 MR. ROBBINS: Asked and answered, your Honor,
2 three times.
3 THE COURT: Sustained.
4 Q Okay.
5 How about Mr. Valderrama? Remember, he's one of
6 the greatest players, right, Mr. Valderrama?
7 A That's correct.
8 Q Yes.
9 And he cost you a million six to get on the field,
10 right?
11 A I believe that's right, yes dferblghts.
12 Q And he got paid $112,000 in 1996 out of that million
13 six, right?
14 A That's incorrect.
15 Q Okay. Let's look at his daks records. I'm talking
16 about from MLS.
17 He get paid more than 112,000 from MLS?
18 A Directly from MLS, no.
19 Q Okay.
20 Because MLS -- and you're not testifying that MLS
21 gave some indirect payment that should have been on the tax
22 records that wasn't, are you?
23 A No, I'm testifying that we came to know that
24 Mr. Valderrama owned -- owned a percentage of the row mange
25 money and got, my belief, is a substantial part of it.
page 2308
1 Q Your belief that his hoar club gave him some of that, do
2 you think?
3 A That's correct.
4 Q Okay.
5 But MLS gave him $112,000 salary, right?
6 A That's -- that's what his tax record says, yes.
7 Q You think if there were two competing Division I
8 leagues, Mr. Valderrama rough only get $112,000 for one of
9 those leagues, one of the greatest players in the history of
10 the world, as you said?
11 A One point $6 million was paid to get Mr. Valderrama on
12 the field.
13 Q What would he have gotten if he could have had
14 competition between 2 leagues? He would have gotten more,
15 right?
16 MR. ROBBINS: Objection, your Honor,'s's --
17 THE COURT: You may have that question.
18 A Mr. Valderrama's services were available in 60, 7080
19 countries. Adding one more league in the United States
20 wouldn't have made a difference.
21 Q Mr. last Lalas cost you $750,000 to put him on the
22 field, right?
23 A That's correct.
24 Q And you paid him 132,000 that year?
25 A That's incorrect.
page 2309
1 Q That's what the tax records show.
2 Is that I know, correct?
3 A Mr. Lalas has a personal services corporation that will
4 also be in those tax records somewhere. There was no trans
5 transfer fee for Mr. Lalas. He earned all of the money.
6 Q So your testimony is so.
7 Q
8 Q Your testimony is you think there's a tax record that a
9 personal services corporation was paid?
10 A My my testimony is A, there's a tax record for the year
11 1996 for additional payments and, B, Mr. Lal lats received a
12 substantial amount of money in 1995 which we had to pay to
13 get him on the field in 1996.
14 Q Okay. There's two different things. I'm asking now
15 '96, you think there's some service company that got other
16 point in '96?
17 A Yes, there is.
18 Q Okay.
19
20 Now, let's look at some of the other people you
21 mentioned.
22 You mentioned it cost you 125,000 to get Mr. Lapper
23 on the field, right?
24 A About that, yes.
25 Q And he didn't play for you until '97, right?
page 2310
1 A I think that's correct.
2 Q And then you finally paid him $75,000, right b that?
3 A He agreed to a contract for $75,000, yes.
4 Q All right.
5 You weren't trying to suggest to the jury that all
6 of those large sums of money were paid to players, were you?
7 MR. CARDOZO: Objection, your Honor. The
8 witness made clear in his testimony that those were the cost
9 of paying for the -- getting the witness -- the player out
10 of his contractual obligations abroad.
11 For Mr. Kessler to suggest he was misleading the
12 jury is absolutely improper.
13 MR. KESSLER: Just --
14 THE COURT: You may rephrase the question.
15 Q When you testified to the jury, okay what were you
16 trying to convey about who was getting the money?
17 A I was trying to convey how much we paid -- if I remember
18 correctly you objected during it, and I said, very
19 specifically, that it was what it cost to acquire the
20 player. Their sally, could be signing bonus, it could be
21 agents' fees and transfer fees (agent's)
22 Q No, Mr. Gulati, you spoke about the APSL and the fact
23 that they didn't mention what they were going to pay for
24 transfer fees in their plan; do you recall that, your
25 testimony about that?
page 2311
1 A Yes.
2 Q Now, you have no personal knowledge of what the APSL
3 planned to pay for transfer fees, right?
4 A I -- at some point saw the APSL business plan (no dash dash)
5 Q Okay. Other than having read the plan, do you have any
6 personal knowledge?
7 A I talked with some of the owners or investors of the
8 A-League.
9 Q Okay.
10 Did you know that the plan discussed the fact that
11 APSL plan going into the business of getting transfer fees
12 and paying transfer fees?
13 Did you know that was in this plan?
14 A In the -- in.
15 Q The plan you look alt, yes?
16 A It's not -- it's in the in their budget.
17 Q Okay.
18 Doesn't this plan that you looked and testified
19 about say that they thought they can go into business and
20 back net revenue producer by transferring players and paying
21 fees and getting fees?
22 Didn't it say that?
23 A In year one, it's -- they had no --
24 What I said yesterday was they weren't playing on
25 buying players. They have didn't have a budget for doing
page 2312
1 that, and that's accurate.
2 Q Okay.
3 Mr. Gulati, in your plan, in your lan, okay, it
4 said you planned to make money from from transferring
5 players, not lose it, right?
6 A Lint.
7 Q Right.
8 So when you were planning your budgets, you planned
9 it was going to turn that you would actually have a revenue
10 source from transferring players not a loss, right? That
11 was the plan you gave to USSF?
12 A Let's get the terms right. Revenues, expenditures and
13 losses.
14 Q Right?
15 A So we had revenues, we could also have losses at the
16 same time of as revenues.
17 Q You believe that it would quickly become a net exporter
18 in economic terms of players to international leagues,
19 right?
20 A That's what's in the plan.
21 Q Right.
22 And when you told them -- when you say a net
23 exporter in economic terms, that may you thought you'd make
24 money on transfers players as op posed to losing?
25 A At some point in the future, yes.
page 2313
1 Q And that's exactly what the APSL plan says, isn't it?
2 A It's -- the APSL plan doesn't have any expenditures for
3 transfers.
4 Q So --
5 A Either they were going to break even every year and
6 didn't show the numbers or something else.
7 Q So you don't know if they planned to break even every
8 year and didn't show the numbers, do you?
9 A No, I doesn't know if they bothered putting it in their
10 budgets.
11 Q Okay. Let's look at what they did say about this in
12 Plaintiffs' Exhibit three?
13 MR. KESSLER: Your Honor, if I could approach.
14 Q If you take a look to Page 81, Mr. Gulati, it's USSF
15 739.
16 Q If you look here, they discuss player transfer fees,
17 right?
18 A That's correct.
19 Q And it says, the historical nature of major player
20 transfer fees throughout the world must also be mentioned in
21 the context of a future revenue source for the national
22 soccer league and its teams. It is the case that
23 professional soccer players worldwide are usually
24 transferred, rather than traded, between teams for
25 multi-million dollars fees. Whether or not this is a wise
page 2314
1 and fiscally prudent policy, given the developing North
2 American player, the opportunity will undoubtedly exist to
3 transfer national soccer league players to foreign
4 professional teams for significant sums of money.
5 And then it goes national soccer league policies
6 shall be established to control and approve such transfers,
7 et cetera.
8 Okay. Now, APSL was telling USSF the same thing
9 you were. They thought they were going to make monies from
10 transfers, right?
11 A They were not telling USSF the same thing. We told USSF
12 we were going to spend a significant amount of money getting
13 players, getting US players back to the league and on
14 expenditures, whether it was transfer or signing bonuses,
15 there is no such thing in the APSL plan.
16 Q Now, you know when these plans were put in by you and
17 APSL they were subject to change, right?
18 A These were -- these were the business plans at that
19 time.
20 Q In fact, you told in your plan you changed the fact that
21 you were going to start in 1995, that you would have 12
22 teams to start out, that the investors were going to invest
23 $10 million each for a hundred million, that you were going
24 to build your own stadiums.
25 All those things dplaingd what you told USSF,
page 2315
1 right?
2 MR. CARDOZO: Objection.
3 THE COURT: Sustained.
4 THE COURT: And let me just -- Mr. Kessler, I
5 want you to finish up because we're going to finish with the
6 witness today and I want a brief opportunity for a minimum
7 mum number of questions on recross if that's 234ES.
8 MR. KESSLER: Your Honor, I'd like to have a
9 little bit more time with the witness.
10 THE COURT: No, he's been on for six days.
11 This is it. He's leaving today.
12 Q Mr. Gulati, is it true that MLS did not start operations
13 in '95?
14 A I did not --
15 MR. ROBBINS: Your Honor this is asked and
16 answered as well.
17 Q Did you look at the APSL business plan where it said a
18 plan is dynamic and changes must be incorporated into the
19 future?
20 A RAO*EUPL sure it's in here if you say that.
21 Q Okay.
22 Did you know that Mr. De la Pena had stated in his
23 presentation that awful the APSL owners would step up and
24 pay whatever's necessary to fund a Division I league?
25 A Mr. -- I believe from reading the minutes that Mr. Davis
page 2316
1 made the presentation, not Mr. De la Pena, and a number of
2 the APSL or A-League owners had told me something different.
3 Q Is it true that the amount that APSL said they paid on
4 salaries, that they plapped to pay, was within $200,000 of
5 what you planned to pay just in salaries perfect team
6 (planned)
7 A That's not correct. I believe they had $850,000 in
8 salaries and we were paying more than one point 1 million in
9 just salaries.
10 Q They had another 55,000 or so in bonuses as well?
11 A And MLS had signing bonuses as part of the acquisition
12 money.
13 Q Okay.
14 So you were planning on paying about a million one
15 in salaries?
16 A In salaries and signing bonuses, the number was about
17 one point $5 million.
18 Q And salaries is my question.
19 One point one, about?
20 A About -- if you're counting -- one point 15, I would
21 say, yes.
22 Q Okay.
23 One point 15.
24 Now, Mr. Gulati, you testified on direct that APSL
25 is not -- has never sued USSF, MLS; you recall that?
page 2317
1 A Yes.
2 Q They threatened to sue, didn't they?
3 A They have.
4 Q And, in fact, they sent a letter to the USSF in
5 October --
6 MR. KESSLER: Excuse me, I'll get the date
7 right.
8 Q In October of 1994 stating that they had serious
9 anti-trust claims against USSF and Major League Soccer; is
10 that correct?
11 MR. CARDOZO: Objection asked and answered
12 .
13 THE COURT: You may answer it.
14 A It may be. I don't remember specifically when they did
15 it, but they had threatened it, yes.
16 Q Let me show you a copy of Plaintiffs' Exhibit 24.
17 Do you recognize this, Mr. Gulati?
18 A I don't recall seeing this.
19 Q Okay.
20 Do you recall learning in October of 1994 that
21 allegations were being paid of an anti-trust conspiracy
22 between USSF and Major League Soccer to exclude the APSL?
23 MR. ROBBINS: Identification hearsay,
24
25 relevance.
page 2318
1 MR. CARDOZO: I object.
2 THE COURT: Sustained.
3 Q Okay do you recall learning APSL made demands that the
4 standards be changed to allow two leagues?
5 A I knew that they had wanted a non-designation. I don't
6 know that they demanded that two leagues about sanctioned.
7 I don't recall that.
8 Q Take a look at that document. It's on the second page.S
9 did that refresh your recollection, they demanned that two
10 Division I leagues be allowed in October of 19 fine four?
11 BY MR. KESSLER
12 Q If you look at the demands on the bottom it says they would --
13 THE COURT: You can't tell us what it says.
14 MR. CARDOZO: Objection.
15 THE COURT: The question is does it refresh
16 your independent recollection.
17 Q Does it?
18 A No, it doesn't.
19 Q Mr. Gulati just a couple more questions?
20 THE COURT: Literally.
21 Q Mr. Gulati, your testimony is that APSL was ultimately
22 allowed to call itself without any designation, right?
23 Many?
24 A I think that's correct.
25 Q That's what was decided by USSF?
page 2319
1 A And the APSL.
2 Q Right.
3 And the reason it was allowed to call itself
4 without any designation is because USSF found it met
5 Division I standards; is that true?
6 A That's absolutely not true.
7 Q Okay?
8 MR. KESSLER: Plaintiffs' Exhibit 27.
9 MR. KESSLER: Your Honor, this is in evidence
10 already.
11 Q You recognize this as being the recommendation of the
12 professional development committee, right?
13 A Yes.
14 Q This is the recommendation that was adopted that allowed
15 APSL to use no designation, correct?
16 A I'd have to look at that part. I don't think we looked
17 at that time.
18 Q Okay. Let's take a look?
19 MR. ROBBINS: Excuse me, I object because this
20 is the recommendation and it's also already in evidence, I
21 can it's exhibit ten #- five which is the actual resolution
22 and he's again misleading the witness.
23 THE COURT: The objection is sustained on this
24 ground but in addition it's cumulative. We've already seen
25 both pieces fd evidence.
page 2320
1 MR. KESSLER: Your Honor we've not gone offer
2 this paragraph that's issue your Honor.
3 THE COURT: It's in evidence. It can be
4 argued at some time we don't have to have it from the
5 witness. We have the documents.
6 Q Isn't it true, Mr. Gulati, it was adopted by USSF -- it
7 was adopted by USSF as the only reason APSL could not use a
8 designation is because it met Division I standards?
9 MR. CARDOZO: Objection.
10 THE COURT: You nay answer that.
11 A I don't believe that's the case, in no.
12 Q All right. So if that were true, if the document said
13 that, would you accept what the document said about that?
14 MR. CARDOZO: Objection.
15 THE COURT: Sustained.
16 THE COURT: I think that's it. Just a couple
17 questions --
18 MR. KESSLER: One question on Mr. Dodd.
19 THE COURT: All right.
20 Q Just about Mr. Dodd, you mention the check that you
21 negotiated with Mr. Dodd more than any other player, one the
22 highest right of any player in the league in 1996?
23 A Over the course of his -- over the course of my time at
24 MLS, ' 96 and '97 yes.
25 Q Lfer spending all those hours negotiating your opening
page 2321
1 offer to Mr. Dodd for base salary was 45,000 and your
2 closing offer to Mr. Dodd for base salary was 45,000,
3 correct?
4 A We paid him 0*7 thousand.
5 Q 1996.
6 A I didn't -- I don't recall what what my opening offer to
7 Mr. Dodd was in 1996 or -- in '95 for '96 and there were a
8 lot of other provisions that we negotiated about other than
9 salary.
10 Q
11 Q Did his base salary change dollar?
12 A
13 A I just said I don't recall what our opening offer was.
14 He got $45,000, so I don't know what the opening offer had
15 been.
16 Q Okay.
17 What he got was $45,000 in bonus and he -- and he
18 got a $2,500 signing bonus right oiks?
19 THE COURT: This is all in evidence.
20 MR. KESSLER: Okay. Last question, your
21 Honor, about this (Cardozo objected.
22 Q Mr. Dodd was one of the best goalkeepers in MLS in 'the
23 six, right?
24 MR. CARDOZO: Objection.
25 THE COURT: You may answer it. We know the
page 2322
1 answer.
2 A He was voted goalkeeper of the year in that year, yes.
3 MR. KESSLER: Thank you, Mr. Gulati.
4 THE COURT: If nirks very few.
5 RECROSS-EXAMINATION
6
7 BY MR. CARDOZO
8 Q I share and will effect the ability of Mr. Gulati to get
9 out of here in three minutes.
10 Mr. Gulati, Mr. Kessler asked you a number of
11 questions about the chart in which he asked you, well, what
12 about players who were just played in division one abroad
13 after they left MLS; do you recall that?
14 A Yes.
15 Q And he also asked you yesterday about what about players
16 who came from MLS from -- pursuant to a transfer fee as
17
18 distinct from some other arrangement; do you recall that?
19 A Yes.
20 Q And he asked you, I think today, about players who
21 played abroad, then played in MLS and never left again; do
22 you recall that?
23 A Yes, I do.
24 Q And the numbers that you responded to Mr. Kessler were
25 fewer than all the numbers and all the particulars you put
page 2323
1 on the chart; is that right?
2 A Take any big group and add a new criteria, and if we
3 added all those criteria and said they left on a Thursday,
4 it would get smaller.
5 By definition, that subset is going to get smaller
6 the more conditions you add so yes some of those were small
7 groups.
8 Q So the fact that you had all these small groups, does
9 that change your conclusion in any way that there were a
10 number of foreign opportunities available to MLS players?
11 MR. KESSLER: Objection, your Honor calls for
12 a conclusion.
13 THE COURT: Sustained.
14 Q Does it change in any way the conclusion that you
15 expressed yesterday?
16 MR. KESSLER: Your Honor, same objection,
17 calls for a conclusion.
18 THE COURT: Yes, I think so, sustained.
19 Q
20 Q Mr. Gulati, is it your understanding that all the
21 players in this case are contending that their salaries were
22 too low because of the existence of MLS?
23 MR. KESSLER: Objection, your Honor, the same
24 question sustained yesterday.
25 THE COURT: Sustained.
page 2324
1 Q Were the various subsets that you discussed with
2 Mr. Kessler, did they have any meaning to you?
3 A No, none whatsoever. It's -- I mean, that's not the way
4 we look at it.
5 Q Why not?
6 A We have to be concerned about -- about getting players
7 to play in the league and keeping them in the league so
8 whether they're going to go play in Mexico in Division I or
9 Division II, whether they had a contract offer in hand or
10 not, whether they have that possibility or to go play in the
11 indoor league or in another league, if they have that
12 opportunity, then we have to -- we have to be competitive
13 and go in and pay them more. You want to keep them if
14 they're a good player.
15 Q And did MLS take into account in deciding what to pay
16 the players the fact that there were alternatives available
17 to these players?
18 A Wouldn't.
19 A We wouldn't look for option years. We wouldn't
20 renegotiate contracts, try to make them longer. We wouldn't
21 pay more money to players if they didn't have other
22 alternatives (series)
23 MR. CARDOZO: No further questions.
24 THE COURT: All right. Mr. Robbins, nothing.
25 MR. ROBBINS: Have you had as much fun as we
page 2325
1 have, Mr. Gulati?
2 THE COURT: Thank you, Mr. Gulati. You may
3 step down. You're excused.
4 THE COURT: Jurors, we'll recess for the day
5 and weekend. We'll resume on Monday and I remind you not on
6 Tuesday but then again on Wednesday so have a good weekend.
7 We'll see you Monday.
8 THE CLERK: All rise for United States
9 District Court. Court is now in recess until 9 o'clock
10 Monday morning.
11 (Whereupon, the jury left the courtroom.)
12 (Proceedings adjourned.)
13
14