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NFL loses Supreme Court antitrust case

Discussion in 'PatsFans.com - Patriots Fan Forum' started by TrueBeliever, May 24, 2010.

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  1. TrueBeliever

    TrueBeliever Rookie

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  2. Gwedd

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    Good. This is exactly the right outcome. The 32-team league is no different, in effect, than the 50 state "United States". We have a Federal Government to do those things which the individual states cannot do, but each state is still free to run their state as each sees fit.
  3. spacecrime

    spacecrime Rookie

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    It's always cool to gratuitously bring politics into a football discussion, because then you can give a political opinion about states' rights being strong when actually the federal government micro-manages the states tightly, well byond "doing what they cannot do themselves," and illegally uses withholding of funding to force the states to do things they don't want to do, but other than noting that as an aside, I have no opinion because I try to stick to football topics. :coffee:
  4. jmt57

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    Hopefully this does not result in each franchise making its own license and apparel agreements, and keeping all of that profit for themselves - but it sounds like that is exactly what will happen.

    Part of the beauty of the NFL in comparison to a sport like baseball is that the combination of sharing of revenues, along with a limit on spending (salary cap), that makes it extremely difficult for a franchise to 'buy' a championship - while at the same time small market teams are on equal footing and can be very competitive. Over time teams like Dallas will soon have a distinct advantage, while teams like Jacksonville and Buffalo will find it more and more difficult to compete.

    Next question is this: how does it affect television contracts? Would a network be able to sue that they are being shut out? Would each team be able to negotiate its own TV contracts?


    EDIT: If I'm not mistaken, the NFL has a limited antitrust exemption - limited to only their television contract. I would have thought they would have attempted to use that as a reason to make the apparel and licensing contract too since that is revenue sharing, but I guess the court thought that exemption applied strictly to television.
    Last edited: May 24, 2010
  5. ctpatsfan77

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  6. jmt57

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    Here's a decent Q&A on the MLB antitrust exemption, even though it's several years old. Seems as if the courts realize it shouldn't be there but for whatever reason haven't struck it down.

    ESPN.com - Baseball's antitrust exemption: Q & A
  7. Mike the Brit

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    Well, selling hats and t-shirts is profitable, but it's nowhere near as important to the league as its monopoly (actually, technically, monopsony) power in the labour market -- that is, its power to limit free agency through the draft and the salary cap.

    If that goes everything changes (see the experience of European soccer).
  8. Gwedd

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    No Jersey Selected

    Not politics at all. Just one good analogy that fits very well for illustrative purposes. Seems to me that you are the one adding the political spin to this.

    Respects,
  9. PatsFanSince74

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    In this case, it helps that the Exemption has been around now for 88 years; both Congress and the Court are slow to overturn arrangements with that kind of precedent.

    I do note, though, that the Exemption hasn't been tested in the Supreme Court since 1972, when the Court threw it back to Congress if it is to be changed. Since it's almost 40 years since the last time the Exemption went to the SC, it would be interesting to see what would happen were it to be challenged again in the context of today's ruling.
  10. MassPats38

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    The Supreme Court decision alludes to a concurring decision written by now Justice Sotomayor in Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290 (2d Cir. 2008). Under the Supreme Court's rationale today, that practice does not look much different than the NFL's licensing practice held not to avoid antitrust laws.
  11. PATSNUTme

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    #75 Jersey

    So what does this mean in the big picture. Right now the owners are arguing about revenue sharing and that is one roadblock to a new CBA?

    I'm certainly not a legal scholar, or any scholar fort that matter, but I'd like an opinion on how this effects revenue sharing, if at all.
  12. TrueBeliever

    TrueBeliever Rookie

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    Thanks for the link, but I'll have to read it some other time. That's way too much for a Monday night... :eek:
  13. ausbacker

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    #51 Jersey

    Why are you called the United States of America then? If each state runs their own business separately, then it's more a collection of sovereign states that come together under one roof when it suits I would have thought?

    Yes.. I know I'm stirring the pot of your great nation ;).
    Last edited: May 24, 2010
  14. Mike the Brit

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    Oliver Wendell Holmes, way back when, thought that baseball was not "interstate commerce" and, since the Federal Government only has the constitutional power to regulate "interstate commerce", Federal Anti-trust Laws couldn't apply to it. Which seems pretty bizarre for then and is an obvious absurdity today.

    The big question is whether you see sports as single businesses with individual franchises -- in competition with other sports but not with themselves -- or as cartels made up of individual businesses that ought to be competing with one another. If it's the first, then they're competing in their own way; if the second, then they're limiting competition. That's the kind of question -- impossible to answer from rational principles but possible to argue about indefinitely -- that keeps lawyers rich.
  15. SteveKiner

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    Without turning this into a big political discussion, can anyone answer how this might effect the CBA and what this Supreme Court decision might mean for NFL going forward? Does this decision help the owners? the players association? IMO the NFL is the best of all the major sports due in large part to the current (expired)CBA and salary cap. What effect will this decision have on the future of the CBA/salary cap? What will be the effect on the haves? (NE Pats) and the have nots? (Bills) Any thoughts?
    Last edited: May 25, 2010
  16. DaBruinz

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    #50 Jersey

    First off, the Current CBA has not expired. What expired was the Salary Cap as its not in use in the final year of an NFL CBA.

    I think that this could have huge ramifications on a lot of different levels depending on what Anti-Trust exemptions the league DOES still have. Here is where I see issues..

    1) TV Revenue. This may have voided the contract with DirecTV over it's Proprietary "NFL Sunday Ticket" . (DirecTV has the copyright to the name). DirecTV provides something like 20% of the leagues TV revenue.

    2) Games - This should void the exclusivity contract that EA Sports has with the Madden Franchise. It also could produce a lawsuit against the league for having locked out the other game franchises.

    3) Cross Market Advertising - One of the issues that I see here is that it basically opens up for teams to advertise their products in other markets, whereas they weren't allowed to before. Imagine the Patriots doing a marketing campaign in Southern California for the Pats/Chargers games.. the kind of chaos that would bring...

    4) Back to TV - This could open up the potential for "ALA CARTE" ordering of games. Where as games can't be shown in other areas due to how the league has the country divided up, they should now be able to.. This could cause a nightmare for teams/league if they have multiple unaffiliated stations at games.

    5) Negotiating with the Player's Union for a new CBA
  17. alamo

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    No. Or at least not for a good while.

    THE NFL DID NOT LOSE THEIR CASE against American Needle.

    A lower court ruled against American Needle. The Supreme Court just overturned that ruling. But they did NOT decide the case. Instead, they disallowed certain aspects of the original ruling and sent the case back to the original court to be decided based on its merits.

    But that does not mean that without antitrust exemption the NFL can not still do all the things it now does, including exclusive contracts. Again, no court has yet said the NFL can't give out exclusive contracts. They've just said they need to conform to antitrust law if they do so.

    If the NFL had won, then there would have been big ramifications, including on the labor front. That didn't happen. Now, the NFL will likely continue what it was doing, but being careful to do so in a way that will still pass court challenges. So there will be an effect but nowhere near what some people are saying in the near future. The American Needle case was filed in 2004, it's not going to get wrapped up tomorrow.

    Also... many of the points such as "games will no longer be exclusive" ignore facts such as, even if other games makers could license team logs, they would still need to license the word "NFL" and the NFL logos, which clearly aren't covered by the ruling.
  18. TrueBeliever

    TrueBeliever Rookie

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    alamo - +1. Thanks for clarifying that.
  19. jmt57

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    It will be interesting how this plays out. The Sports Broadcasting Act of 1961 essentially ruled the opposite of this Supreme Court case, as they said the NFL (and other pro sports leagues) could indeed act as a single entity in negotiations. I'll be curious to see how this case proceeds. On one hand I suppose they could say the NFL can be a single entity for television, but not for other negotiations - but that doesn't make a whole lot of sense.

    What if the NFL says, 'okay we will negotiate with multiple apparel firms, but still share revenues.' What then happens if just one owner (e.g., Jerry Jones or Dan Snyder) says I don't want to share those revenues; can or would he sue the NFL to allow for that to happen?

    Google "Sports Broadcasting Act of 1961" and there are some interesting columns on the subject.
    Last edited: May 25, 2010
  20. Mike the Brit

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    I have to think that Alamo must be right, if only because, if it were really true that this case had called all of the NFL's collusive practices into question, the owners would be locked in emergency closed session and not worrying about trivialities like where to host their end-of-season party.

    At the end of the day I think this is bound to be a political question -- and rightly so. On the one hand, it's clear that one of the reasons that the NFL has been so enormously successful is that it has been able to regulate competition by the draft, the salary cap and revenue sharing. On the other hand, the kind of "restraint of trade" placed on players -- sign with the club that drafts you or don't sign at all -- would never hold up in a European court.

    I guess the secret for the league is to argue that these restrictions have worked for the benefit of its employees (the players) and the general public and it seems to me that they have a pretty good case.

    As far as the players go, it seems very plausible to argue that the overall pot of money going to player salaries would be less in a free-for-all, with just a very few rich franchises and a less interesting, competitive league. And as for the second, I have to admire how the NFL has taken a long-term view and kept all of the broadcasting networks involved and that a very high proportion of the games are available on basic broadcasting channels (unlike the greedy idiots who run European football who have thrown themselves at Sky Sports). They may not be maximising revenue in the short term, but they are keeping the game in the forefront of people's awareness and not letting the average fan feel that he is being held to ransom.
  21. efin98

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  22. Mike the Brit

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    Thanks for the reference, but it's worth saying that ESPN's "legal analyst" is Gregg Easterbrook and the article is an opinionated and somewhat incoherent ramble through the terrain (surprise!)

    I certainly wouldn't bet on his legal analysis. His main claim to fame in this area seems to be that he has a brother who really is an expert. Still, there are some interesting nuggets and a reference to an 80-page law review article that addresses the ins and outs of treating sports leagues as single entities.

    http://hosted.law.wisc.edu/lawreview/issues/2009_4/feldman.pdf

    Not for me today!
  23. DaBruinz

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    #50 Jersey

    Well, Easterbrook starts off by flopping. American Needle was the one who took this to the Supreme Court. Not the NFL...

    Next, he mentions the NFL and Comcast going head to head over NFL Network. He claims that the NFL lost that. I'm not sure how the NFL lost there. Especially when it was clear that COMCAST did more lobbying than the NFL. Hell, it's well known they had Arlen Specter in their pocket, which garnered no mention here.

    Another error is that Easterbrook claims that American Needle is a "small, family owned business".. Umm, American Needle is a publicly traded company under the call letters ANI..

    To me, this article is a direct attack by ESPN at the NFL and the NFL Network with ESPN saying, you aren't as precious as you pretend to be. One has to wonder whether this article got the approval of the talking heads at ABC before it was published..

    As for the actual political ramifications, I think Easterbrook is talking out his bung hole.
    Last edited: May 26, 2010
  24. DaBruinz

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    #50 Jersey

    Something I was thinking about is this....

    Every Patriots cap I own has the Pats logo and the NFL logo on it.

    I looked at the shirts I own and this is the case also.

    And some of my stuff goes back 15 years. I don't have the stuff from when I was a kid anymore.

    If the NFL requires that any merchandise that has a TEAM logo have the NFL logo as well because of the team's affiliation, then I don't see how the Supreme Court made it's decision unless it's saying that the NFL can't make this requirement. And if that is the case, then isn't the Supreme Court actually telling the NFL what it can and can't do with it's intellectual property (the NFL Logo)??

    From one perspective, it makes sense to have more than one vendor with the ability to meet the demand for the products you are selling in case the primary isn't able to meet that demand. From another, it introduces the potential for inferior products to be on the market and the primary vendor to receive blame for said inferior products if they were produced by another vendor. Not to mention that the NFL would also take a hit for allowing inferior products to be on the market in its name.

    From a business perspective, I just don't see how the Supreme Court made it's decision because I can guarantee that large corporations go to a single vendor to get items with corporate logos made for it's various divisions. And the various divisions, many times, are considered independent business units. So, I don't understand how it's any different. But then, I'm not a lawyer and I do know that what makes sense and what is "the law" are many times, not the same.


    From the FAN perspective, I don't see how the Supreme Court thinks that teams are competing for my loyalty through their apparel. Maybe some people like a team because of the team colors, but my guess is that for a majority of fans (75+%), you like a team for the team and buying the productS comes second..
    Last edited: May 26, 2010
  25. jmt57

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    Consider the source.

    Long before spygate he had also written about antitrust and the NFL Network - as far as i know he was the only person taking that angle. Soon after the spygate story broke, Easterbrook kept pounding that news more than any other writer; he was also the leader in bringing up the name of Matt Walsh. And after spygate he was essentially a mouthpiece for Comcast and Arlen Specter, again talking about antitrust and the NFLN - and was the first and foremost to take that approach.

    If you take the time to go back and look at Easterbrook's comments over the years about the NFL, NFL Network, cable and antitrust it becomes very clear that he has long been firmly entrenched in Comcast's corner against the NFL. He is not nor has ever been an impartial observer in this debate. I wouldn't doubt that some of Easterbrook's articles back then were actually written by Comcast employees; at the very least he appears to be on their payroll.

    I realize this ruling doesn't involve Comcast, but the NFL losing antitrust decisions benefits them greatly. Comcast covets the Sunday Ticket, and wants to be able to sell single games as pay-per-view events. They see certain parallels: ANI losing a bid to Reebok but being able to get back in through the courts is not all that dissimilar to Comcast losing a bid to DirecTV but using the courts and antitrust to be able to sell those NFL games to their subscribers.
  26. Synovia

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  27. Synovia

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    This doesn't affect broadcasting.

    "On one hand I suppose they could say the NFL can be a single entity for television, but not for other negotiations - but that doesn't make a whole lot of sense."

    Thats exactly what this ruling does, and it does make sense.
  28. Synovia

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    I disagree that they're similar at all. The NFL doesn't have a partial anti-trust exemption with regards to uniforms/merchandise/attire. It DOES have one with regards to broadcasting.
  29. DaBruinz

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    #50 Jersey

    I am still waiting for it to be explained how the NFL Franchises compete against one another for the revenue from the Uniforms/Merchandise/attire. This is the whole crux of the matter. For them to be competing against one another, one has to prove that FANS don't purchase the Uniforms/Merchandise/Attire based on the team they root for, but based on the idea of what looks good or who made it. To me, that is utter BS. Fans don't by the products of other teams just because it might be stylish or made by Reebok instead of Nike..
  30. PatsFaninAZ

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    The term "antitrust exemption" gets thrown around rather casually, but that's not really what the NFL was seeking. The plaintiff sued under section 1 of the Sherman Act, which prohibits a "conspiracy" to restrain trade. The NFL argued that it, and NFL Properties, couldn't conspire with anyone, because they were just one entity. The were trying to take advantage of prior precedent that says, for example, when the President and the Vice President of a single company talk to each other about restraining trade, they don't commit a Sherman Act violation, because they are consituents of the same entity.

    That was the NFL's argument: Don't treat us like 32 teams, treat us like the President and Vice President of the same entity. The Supreme Court's analysis was not complicated. It was that each team has its own profit motive, mission, and goals. And while they may have pooled licensing and revenue sharing to NFLP, they have enough independence to trigger precisely the danger that the Sherman Act is attempting to remedy: potential competitors banding to form a joint venture.

    Put more simply, the Court held that the justifications offered by the NFL -- strengthening the brand, promoting competition, etc. -- are not relevant to the question whether they are a single entity for Sherman Act purposes. They are, instead, relevant to whether the restraint on trade passes the test of reasonableness.

    To those saying the NFL didn't "lose" this case because there still will be consideration whether Reebok's exclusivity passes the rule of reason, that sounds like NFL PR to me. The league now has a ruling that even when it forms a separate, distinct entity (NFLP) to license its IP jointly and revenue share its joint decisions are subject to rule of reason analysis. That's a big deal. A very big deal. And it will have an effect on everything the league attempts to do, except for the rare areas where it is permitted by statute to act unitarily (broadcasting).
    Last edited: May 27, 2010
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