Bill seeks to end 'vulture practices' in kids sports: What it means

WASHINGTON — What's best for our kids? What’s best for our family?

Those should be the central questions, Sen. Chris Murphy (D-Connecticut) says, of youth sports.

“Instead, private equity owners ask,” Murphy said, “‘What can make me the most money?’”

Murphy was speaking Wednesday, May 13, at the U.S. Capitol as he and Rep. Chris Deluzio (D-Pennsylvania), introduced the Let Kids Play Act, a new federal bill that takes aim at private equity firms operating within youth sports.

The bill defines what the Congress members call “vulture practices,” such as requiring that families stay at specific hotels for kids sports tournaments, and adds momentum to a Congressional hearing in December that addressed what it called a “crisis” in the industry.

Lawmakers have stated such firms are profiting from families' fear of missing out with their sons’ and daughters’ athletics.

The youth sports industry generates more than $40 billion in annual revenue and is fueled by parents often paying thousands of dollars per kid to participate.

“I say this over and over again: Youth sports should not be a luxury item,” Deluzio told USA TODAY Sports. “In my part of the world, you ask people, no matter their politics, should kids just be able to play, no if matter their parents were rich or poor, they'd say, absolutely. So I think we have to do something, because this is going on, not just in Western Pennsylvania. “We're seeing this play out all over America.”

Here's what the bill means for young athletes and their parents:

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What is the Let Kids Play Act and what would it do?

The bill seeks to hold private equity companies accountable for their activity within youth sports. It would ban “vulture investors” within youth athletics. A “vulture practice,’’ according to the legislation, is “any practice, term, condition, tactic, instrument, method, or act that causes harm or creates long-term risk of harm to an acquired entity in order to extract profit, assets, or other value for the benefit of a covered firm or its affiliates.”

The literature gets into further details about what practices might look like.

Kids play at a sports complex in Pineville, Louisiana.

The bill also requires these investors to give full refunds to families for “junk fees collected through vulture practices," cancels “predatory contracts” and “wipes out any outstanding debts, interest, or late fees that were imposed by the private equity firms.”

It also holds the firms liable for debts and safety violations and establishes a “Youth Sports Fund” for penalties paid or money taken from private equity companies. According to the bill, the fund would be used to “provide scholarships, reduce costs for families, and keep local fields open for free community use.”

“The Let Kids Play Act is based on a really simple premise: Wall Street and private equity have no business in kids' sports,” said Rep. Pramila Jayapal (D-Washington), who co-led the legislation and has helped launch the Monopoly Busters Caucus in the House of Representatives.

What is private equity as it pertains to youth sports

Jay Adya, managing partner of Elysian Park Ventures, a platform that invests in and seeks opportunities for sports around the world, says private equity, as opposed to early-stage venture capital, is “much later stage investments in much more mature companies, and typically, but not always, kind of control our owned positions.”

“Where and how a capital is used, and for what purposes, to solve what problems is where we try to spend our time,” he said at last week’s Project Play Summit in Boston.

Katherine Van Dyck, a senior legal fellow with the American Economic Liberties Project, who has litigated against Varsity Brands, challenging its monopolization of cheerleading, sat next to him as part of a panel on private equity and youth sports.

“We hear a lot about these firms building ecosystems, and what those ecosystems are really just what we like to call in the antitrust world boats or walled gardens, and they're designed to keep innovators out and to keep families and kids trapped inside,” she said. “And that's how you end up with things like stay to play and having to pay an entry fee to watch your own kid play. It's why you have vertical integration and roll-ups so that by controlling an entire sport or an entire industry, your customers who in this case are families and children and have no choice but to use all of your products and services and platforms.

“It's what allows them to load the companies with debt and strip their assets. And none of those things are aimed at child development. They're aimed at extraction.”

Is the Let Kids Play Act a shot at travel sports?

Not necessarily. It’s aimed at large entities like Black Bear Sports, which consolidates ice rinks and hockey teams across the Northeast and Midwest and has leveraged that control to steer families into its own costly system of leagues, tournaments and fees.

“There are a bunch of them,” Deluzio told USA TODAY Sports. "Varsity Brands, which has had litigation and settlements, has really faced scrutiny correctly for what they've done, and I'm sure we could list a bunch of others, but we're going at the practices. We're going at the worst conduct here.”

Murphy, the Connecticut senator, says his 14-year-old plays in a youth hockey league that is controlled by Black Bear.

“I do admit that I'm one of those parents that's fallen victim to the allure of expensive travel sports,” he said. “I admit that I bear some of the responsibility for our fate. Not everything in the world needs to be run for profit.

“What happens when profit matters most? Well, first prices go up, and a lot of kids get priced out. High pressure travel leagues are prioritized over lower pressure local leagues, which often isn't good for kids. And youth sports starts to mirror professional sports, with individual achievement being prioritized over team achievement.

“We are not just applying this bill to entities based on the corporate structure. We are applying this bill based upon the practices that companies use.”

Murphy and Deluzio point specifically to stay-to-play tournaments, which require families to stay at specific (sometimes higher-priced) hotels and charge fees for the streaming of games instead of allowing parents to stream them themselves.

“I remember watching one of the kids' parents videotaping a game from the very corner of the arena, at a really bad angle, and I asked why, and the reason was they were afraid we were going to be docked points in the standings, if it was discovered that he was,” Murphy says.

The intended target of the bill, Deluzio suggested, isn’t for-profit travel organizations as much as firms engaging in “practices (that) have really hurt families” such as “take it or leave it terms” multiple season contracts, non-refundable tuition and mandatory tournaments that sometimes require travel.

“We see systems that also mine kids' data for profit, apps and websites or link registration, that any parent who has kids knows if you don't have the app, you don't even get the schedule," Deluzio said. "And those apps are mining data, physical metrics, financial data, you name it. All this adds up to locking families in, raising prices, and squeezing family.”

'IS IT WORTH IT?' Red flags to watch with youth sports programs

What are the long-term effects of the bill? Can it reduce the cost of youth sports?

The law would empower parents and state attorneys to sue companies that engage in “vulture practices.” But it has to pass first. It is backed by Democrats and will ultimately need to be signed by President Donald Trump.

However, like December’s hearing that described practices in youth sports as rising to a “crisis” level, the Let Kids Play Act, even if not passed, continues to raise awareness about the inequities in the industry.

As Van Dyck said at the Project Play Summit last month, it’s up to parents to get involved and push back against the system if they don’t like something about it.

“We're gonna fight to get this bill done, but the public relations effort here may have a shaming impact on the industry, which will help kids and families,” Deluzio says.

Borelli, aka Coach Steve, has been an editor and writer with USA TODAY since 1999. He spent 10 years coaching his two sons’ baseball and basketball teams. He and his wife, Colleen, are now sports parents for two high schoolers. His Coach Steve column is posted weekly. For his past columns, click here.

Got a question for Coach Steve you want answered in a column? Email him atsborelli@usatoday.com

This article originally appeared on USA TODAY: Bill seeks to end 'vulture practices' in youth sports; can it work?