It will be interesting to see what the implications of this are:
The Supreme Court said on Monday that the N.F.L. is an “unincorporated association of 32 separately owned professional football teams,” not a single business, for the purposes of selling branded jerseys and caps.
The unanimous ruling in American Needle Inc. v. National Football League was a reversal of a controversial lower-court ruling and amounted to a defeat for the league, which had sought protection from challenges to its business on antitrust grounds, legal experts said. In effect, the court said N.F.L. was still open to antitrust scrutiny, as it has been for years.
The case was brought by American Needle, an apparel maker from Illinois that lost its contract with the league when the N.F.L. entered into an exclusive 10-year, $250 million deal with Reebok in late 2000 to produce hats, jerseys and other league-branded merchandise.
American Needle argued that the league’s deal with Reebok violated antitrust statues because the N.F.L. was a collection of individually owned teams that compete with one another, not a single entity able to negotiate contracts on behalf of its teams. By striking a deal with Reebok, the league effectively conspired to stifle competition, the company argued.
American Needle appealed to the Supreme Court after it lost a federal court ruling that favored the N.F.L.
“Directly relevant to this case, the teams compete in the market for intellectual property,” Judge John Paul Stevens wrote on behalf of the court. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks.”
Does anyone know how this is going to impact salary cap issues, because it isn’t as cut and dried as one would think. Small market teams like the Packers and the Steelers have major nationwide fanbases who are exceptionally loyal, and this could mean a lot of money for them if I am interpreting this correctly, because they would be able to choose the contracts of their pleasing.
Vlad
Shouldn’t have an effect on the salary cap, as long as players are unionized. The salary cap is collectively bargained between the teams and the NFLPA, and there is an exception to the antitrust laws for matters that are collectively bargained.
Dork
Also, USSC just caused Rush Limbaugh’s head to explode
Activist Scalia!
David in NY
Vlad, above, is probably right, but even if not, the above quote from the opinion suggests that under the “Rule of Reason,” a flexible application of antitrust rules, the salary cap could survive.
Punchy
Am I reading this right? It took 10 years to adjudicate this? I know the courts are slow, and appeals and stuff, but….damn.
El Cruzado
Sounds like it might affect football video games, since right now EA owns the exclusive NFL license and by extension the license to every team and everyone in every team, but this ruling is likely to allow individual teams (maybe even players) to license their image for games.
Not that it’s a genre I am interested in, but there sure is big money in it.
Brien Jackson
The salary cap is part of the collective bargaining agreement, so it’s ok legally.
MikeJ
@Punchy: Exxon Valdez took twice that.
Zifnab
@Dork:
That seems like a reversal of Scalia’s opinion on the Ledbetter ruling. Similar logic was employed in both cases – the initial infraction occurred outside the statute of limitations, but the plantiff argued that further identical infractions occurred each time (in Ledbetter’s case) the employee was paid or (in the firefighter’s case) a test was issued.
In the Ledbetter case, it was ruled that Lily Ledbetter filed too late and that succeeding infractions weren’t illegal. I wonder what caused Scalia to change his mind.
And Why Not
And what about the statutory exemption from the federal anti-trust laws currently enjoyed by MLB? Isn’t it time for that to go?
Mike Kay
Meanwhile, Shrub bankrupted the Texas Rangers.
http://wonkette.com/415594/george-w-bush-probably-responsible-for-texas-rangers-bankruptcy-too
It’s a historic first, no baseball team has ever gone bankrupt.
So much for the first MBA prezdit.
Comrade Jake
Well, now we know how Tunch feels.
MikeJ
@Dork: Scalia wants a big lawsuit against Chicago, or, as the GOP calls it, Mordor.
robertdsc
How strange it is to read the most successful franchise in league history, the Steelers, described as a small market team. They’re so high-profile. Weird.
Persia
@Vlad: This. Also, hooray for the SCOTUS, at least today.
robertdsc
@Mike Kay:
I wouldn’t expressly blame Dubya for that. Tom Hicks has been an exceptionally profligate spender. His deal with Alex Rodgriuez for $252 million was light-years beyond what other teams were offering.
gwangung
Not so much A-fraud, but the other players he signed, like Chan Ho Park, who didn’t give nearly the production that he was being paid for…
PeakVT
I wonder if Hicks will be able to keep Shrub on as his pool boy.
arguingwithsignposts
G-dub didn’t bankrupt the Rangers. Hicks gets the nod on that one. And a unanimous SCOTUS ruling against the NFL. That is so full of win.
Crusty Dem
Woot! This case was started by a relative of mine, so for him to see this through (and win) is just awesome. I don’t think this will alter the current structure of the NFL, but it does keep them from become an all-powerful entity (which is what they wanted, and why they actually tried to push it up the court system, even after winning the basic suit in the lower courts).
PTirebiter
This might enable the Cowboys to finally build an adequately sized stadium. Hell, we might even get one of those Jumbo-tron screens for stadium replays and such.
Brandon
@robertdsc: Tom Hicks is also currently in the process of bankrupting Liverpool FC. Much to the anger of many Scouse football fans. He’s one of the most hated Americans in England, right next to W and Malcolm Glazer (owner of the Tampa Bay Bucs and Manchester United).
Cacti
Maybe next they’ll slap down the Under-20 draft rule as an unlawful restraint on trade.
That one’s long overdue.
Mike Kay
@Brandon: so which americans does England like?
Jim C
@Mike Kay:
Rich Hall seems to be doing pretty well over there.
Brandon
Back on topic, while I think many have pointed out how this will not affect the salary cap, this could be an issue for collective bargaining of television rights. Perhaps the Cowboys can, like Notre Dame, broker their own individual TV deal with NBC. That would absolutely destroy real small market teams with little to no national appeal, like the Cardinals, Bucs, Jags, Panthers, Broncos and Seahawks.
jimdandy
A good summary:
Cacti
@Brandon:
Nah
At least one of them would move to LA.
PaulW
This could hurt television contracts, which the NFL does negotiate as a single entity. You might have the Dallas Cowboys thinking “Hey, we can start our own cable channel like the Yankees do” and they can break off from FOX’s contractual control of broadcasting most NFC games. Or have the Chicago Bears sign a separate tv deal with NBC just like Notre Dame does. Shared television revenue – the financial structure that aids small market teams like the Packers and Jaguars – could disappear once the existing tv contracts end.
Alex K
@Brandon:
I think that’s bad news, if it comes to pass. The NFL’s success lies in part due to its parity and its, yes, wealth-spreading. There aren’t intra-league financial barriers to success. Color me crazy, but I think leagues function best as “leagues”, you know, making sure that fights for financial supremacy don’t end up destroying the competitive balance that made the league fun to watch in the first place.
jfxgillis
John:
John Clayton was just on ESPN saying it had no direct effect on the labor issue, but that he was hearing it would have a strong indirect effect–the owners don’t want to lose another fight like this.
And HA!!! If memory serves, the NFL actually helped press this appeal despite winning at the lower level because they wanted their winning position entrenched.
zzyzx
@PaulW: What happens if the Bears have an exclusive deal with NBC and the Cowboys make one with CBS and they meet in the playoffs?
Dino
Sports is where I like socialism. Not the “the taxpayers should build me a stadium or I leave” type, but where a relative parity exists economically. This ruling, while it is probably doing justice for the little guy in this particular case, could ruin the competitive balance. I don’t want it to become like Major League Baseball or Premier League with huge disparities in income and on the field.
But I could live with the above if sports leagues adopted true socialism: the local community owns the team like the Packers.
danimal
Ha ha. That was funny…the Bears and the Cowboys in the playoffs.
zzyzx
It doesn’t matter anyway… apparently there is a Congressional antitrust exception granted to the NFL re TV rights.
Mike Kay
I’m surprised Cole didn’t use a snappier title: SCOTUS Sacks NFL.
PaulW
@Brandon:
Oooh, I see ya had beaten me to the punch on TV contracts. But I would like to point out that the Cards, Broncos, Bucs and Seahawks do not play in small-market metros…
http://en.wikipedia.org/wiki/Table_of_United_States_Metropolitan_Statistical_Areas
The Phoenix metro is 12th on the metro list, with Seattle next at 15th, Tampa at 19th and Denver at 21st. They’re all bigger than Indy sitting at 34th on the list (and indeed there’d been buzz that the Colts would move – again – next to L.A. without that new stadium deal they got a few years back). Green Bay – the very definition of small market – sits at 152nd on the Metro list.
Phoenix is at 4.3 million residents, which puts them close to Boston’s (10th largest) metro at 4.5 million. If Boston is defined as a big market team, so too should Phoenix.
Sorry if I sound like nitpicking. But being from a mid-sized metro market like Tampa Bay (Go RAYS) I tend to get touchy on the subject. :-)
One last thing: some small market teams do have nation-wide (and even international) appeal to where they could qualify for a sizable TV contract on their own. Green Bay obviously and also the Colts (maybe even New Orleans, sitting at 46th on the list). Problem is they won’t get as good a deal they could get with a collective bargain with all 32 teams, plus the guaranteed national audience of the Monday Night Football games.
Face
@zzyzx: They’ll show it on TNT.
MikeJ
@Mike Kay: Landon Donovan. By his last game for Everton, fans were chanting “USA! USA” For real.
someguy
@Brien Jackson:
Two points. First, what makes you think it’s valid as to the unincorporated association of owners? The status of unincorporated associations is often ambiguous when they are sued. So the NFL may have signed but if the “league” is treated as an unincorporated association, any court hearing a claim about the validity of the CBA is first going to have to deal with the League’s defense that they can’t be sued. So the NFLPA may be in a situation where they are trying to enforce the CBA against 32 separate teams.
Second, this is irrelevant. Armageddon – that is The Day of the Next Big NFL Lockout – is upon us within the next year. DeMaurice Smith is a big friend of the AG and the POTUS so you can expect he’ll have the angels on his side but he’s going to be leading the fight of millionaires against the billionaires. The current collective bargaining agreement is irrelevant, and many teams are treating this upcoming year as salary cap-free anyhow.
Mike The Dealer
The NFL pushed for this because they wanted to control labor. Once they were declared 1 company and not 32 rivals, they could collude and drive down the contracts of all the players. MLB, NHL, and the NBA all submitted petitions to the court in favor of the NFL since they knew if this worked for the NFL, it would work for them to.
peach flavored shampoo
@Brandon: What salary cap?
Jager
Jerry Jones has wanted out of the merchandise deal for years, going back to when the Pokes were “America’s Team” that was just before they became “South America’s Team”, ole Jerry must be happy as hell this morning!
Walker
Isn’t this a major surprise. I thought I read stuff a while back that said the only reason this had gotten this far was because the NFL was sure they were going to win this one.
justinslot
@robertdsc: Doesn’t the “most successful NFL franchise” tag have to belong to the Packers? You can only give it to the Steelers if you ignore the pre-merger era, and there’s no reason to ignore decades of history just because the current NFL likes to ignore them.
RareSanity
@Cacti:
I sure hope this never happens…the lack of an “age-limit” in the NBA has rendered 75% of the league unwatchable. It is my theory that being drafted out of high school is what allows LeBron James to be so (clears throat) cavalier about losing playoff games. Everything has come easy and he didn’t learn how to battle through adversity, like trying to take a starting position from an upperclassman, or getting benched for poor play and having to earn his way back on to the court.
Not to even mention that out of the minuscule percentage of athletes that make it to the NFL, the percentage of them that would be physically prepared to absorb the beating at age 18 could approach 0.
It’s different for football, the body of an 18 year old is just not mature enough to absorb trying to tackle Adrian Petersen, getting hit by Ray Lewis or trying to block Albert Haynesworth.
It could be argued that there is an actual physical danger to early entry in the NFL.
robertdsc
@justinslot:
I was speaking of the 6 Super Bowls the Stillers have won, but you’re right. The Pack has the most total championships.
PTirebiter
@PaulW: Unlike Notre Dame, the Cowboys don’t control their schedule. They can sell their hats without an opponent, but their games require the NFL’s cooperation.
Ash Can
@PaulW: Also, when you consider the fact that the “local market” for the Pack isn’t just Green Bay, it’s pretty much the entire state of Wisconsin, that particular “small market” isn’t looking too small anymore.
someguy
So wait a second. Some of you who are normally arguing for more regulation are now arguing for an unrestricted free market approach w/r/t NFL players? What?
Sticking it to the notion of a league as a single business entity and going every-man-for-himself in a near-future league arrangement sounds great as long as you’re cool with getting beat by the Snyderskins twice a year (with their $210mil/year salary, at least ’til the money runs out), and as long as you’re cool with the less financially successful teams – probably a third of the league – going under because they can’t secure TV or ad revenue. I’m fine with that but you people in KC, St. Louis, Seattle, Arizona, Buffalo northern FL and Pittsburgh are going to be mightily bummed out if the S.Ct. just unleashed the Awesome Prosperity of Teh Marketz on the league.
Fans of the Toronto Bills, however, will no doubt be thrilled by this development…
Dave
This sounds to me like it’s going to cripple small-interest teams, not small-market. Each team should, in theory, be able to sell their games to the highest bidder. This will be good for teams like the Steelers, Patriots, Cowboys, Packers Giants etc. Not so good for the Falcons, Seahawks, Bills etc.
A similar situation exists in Spanish football in La Liga, where each team controls their rights. Over there, it has created a big two of Real Madrid and Barcelona, while the other teams fight for third place more often than not. That shouldn’t happen here b/c the salary cap will stay in place and teams can’t buy players off of other teams. But big-money teams can now have the best stadiums, best scouts and best coaching staffs, which will skew the competition over time.
paradise50
The salary cap is an agreement all the owners made in order to be competative with each other. Remember, it started as a response to 49ers of the ’80’s and 90’s…when there was no cap and the 9rs simply bought all the talent. They won five Superbowls in fairly quick succession because they had third stringers warming their bench that would have been starters any where else.
And, now there is no collective bargaining. THAT is much more of an issue, after SCOTUS rulling. So, things could be bleak in terms of small teams vs. big teams regarding competativeness in the future.
arguingwithsignposts
@Dave:
Which has already happened in the NFL, regardless of the SCOTUS ruling about caps and t-shirts. Read Field of Schemes, particularly the Colts’ Lucas Oil field saga, to get a flavor.
burnspbesq
@robertdsc:
I don’t care very much about the Texas Rangers, but Hicks also screwed up the finances of Liverpool Football Club, and for that he should burn in hell.
Vlad
Maurice Clarett tried this a few years ago, arguing that the Under-20 rule should be subject to antitrust attack because it wasn’t an appropriate subject of collective bargaining (and thus not entitled to protection under the labor exemption). He won in the trial court, lost on appeal, and the Supreme Court declined to hear the case. So I wouldn’t hold my breath.
Kobie
It won’t affect the salary cap, but it will affect revenue sharing. And since teams pay the signing bonuses (the only guaranteed part of an NFL contract) up front, this will give the bigger-market teams more cash to pay bigger bonuses. So it could affect competitive balance somewhat.
MattR
One of the interesting, but little mentioned, aspects of this case was that the NFL actually appealed their appeals court victory to the Supreme Court in the hopes of broadening their protections from antitrust law. Whoopsie.
Resident Firebagger
That strikes me as kind of a crazy ruling, saying that the NFL isn’t a single entity. But I’m sure that that plastic-faced buffoon Jerry Jones is quite happy today.
But the bigger story is the owners, even though they compete (cough, cough) against one another, banding together to shut down the league in 2011 so they can crush the players union…
gbear
I make a little over $50K a year. Everyone associated with the NFL can just fucking bite me.
fucen tarmal
the nfl is officially organized as a tax exempt trade organization. they can control some of the trademarks, but not all of them. the owners are screwed if the big money owners cause a schism from the small market, small following teams…which will affect their leverage in the labor negotiation…
beyond that, i’m sure the nfl can figure out a way to market a local or team owned non nfl trademark, and one that is negotiated as a league….the owners can agree or not agree to share that pool of money…if they agree to share it, the local or team owned trademarks and jersey styles will go into the pool which would disincentivise individual owners from pushing them. thus making them less attractive to companies who want to compete with the reebok nfl licensed exclusive products….
if the owners don’t agree to share, each team will possibly take a different stance.
Bill Murray
@Mike Kay: That’s not true, even if one only considers major league teams. The Federal League’s KC Packers went bankrupt in 1915. Further a whole bunch of 19th century major league teams went bankrupt eg 1898 St. Louis Browns (soon to be the present day Cardinals). Also more recently the Cubs filed for Chapter 11 protection last year and the Orioles were sold in a 1993 bankruptcy auction by their owner.
Resident Firebagger
Look at it this way: Do Applebee’s chain restaurants compete against one another? Fuck no. It’s one business, and each individual restaurant gets essentially what every other Applebee’s gets: the same employee training, the same stupid uniforms, the same bland menus, the same access to corporate information, the same friggin salad bars, etc.
I like seeing the corporate behemoths get dumped on as much as anyone else, but this is just a numb-nutz ruling…
SoINeedAName
From today’s ScotusBlog:
Source:
http://www.scotusblog.com/2010/05/analysis-no-antitrust-trojan-horse/
Zach
Will this apply to broadcasting agreements?
The NFL overleverages its monopoly far more than other leagues… profit sharing to the point that every team is profitable almost every year. This could be a useful corrective.