H.R. 8788: Let Kids Play Act

This bill, known as the Let Kids Play Act, aims to stop certain investment firms, particularly private equity funds, from participating in youth sports. The bill defines "vulture investors" as firms that have a history of negative practices, such as exploiting businesses for profit, leading to negative consequences for the entities they invest in. Here’s a detailed summary of the main provisions of the bill:

Definitions

The bill defines key terms such as:

• Covered Firm: A private equity fund or a company controlled by such a fund.
• Vulture Investor: A covered firm that engages in practices harmful to an acquired entity or has caused multiple entities to become insolvent shortly after acquisition.
• Youth Sports: Any organized athletic activities for individuals under the age of 18, including leagues, clubs, facilities, and technology related to these sports.

Prohibition of Vulture Investment

The bill makes it illegal for vulture investors to invest in youth sports entities. It outlines specific actions that are prohibited, which include:

• Consolidating control over multiple youth sports entities.
• Creating networks that force participation in services or products owned by the investor.
• Conditioning participation on the use of specific services, which may impose additional costs or fees.
• Imposing hidden fees or unfair charges related to youth sports participation.
• Engaging in practices that limit competition, such as exclusivity clauses or restricting participation in other events.
• Claiming ownership of intellectual property related to youth sports.

Vulture Investor Designation

Firms that are invested in youth sports entities at the time the bill is enacted will automatically be considered vulture investors unless they prove otherwise under strict conditions, notably demonstrating that they have not engaged in harmful practices.

Divestiture and Remedies

Vulture investors must divest their interests in youth sports entities within two years of being designated as such. This includes:

• Divesting ownership stakes and control over youth sports entities.
• Returning or compensating for any assets or profits gained through harmful practices.
• Removing individuals placed in management positions by the vulture investor from any youth sports entity.

If a vulture investor fails to comply, penalties will be imposed, including the transfer of a percentage of revenue to escrow or the Youth Sports Fund, which is established to support youth sports initiatives in the affected communities.

Enforcement and Legal Actions

The bill grants the Federal Trade Commission (FTC) and the Assistant Attorney General authority to enforce these provisions. Furthermore, state attorneys general can bring civil actions if local interests are harmed by violations of this law, and individuals or groups may sue firms that violate the act.

Youth Sports Fund

A fund will be created to support youth sports activities with any funds recovered from vulture investors. This fund will be used for:

• Reducing participation costs.
• Funding community access to sports facilities.
• Supporting scholarships and financial aid for youth sports.

Administrative Authority

The Bill empowers the FTC to issue necessary rules and guidance to implement the Act, ensuring compliance without being bound by particular procedural norms.

Preemption and Evasion

The bill states that it does not limit state and local laws that provide greater protection against harmful practices. Additionally, it prohibits any actions aimed at circumventing the requirements of the Act.

Relevant Companies

• None found