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American Needle’s silver lining could help NFL in antitrust case

ProBowl2008

If the NFL and the players’ union can’t get a deal done by Friday, an avalanche of litigation will be launched.  The union will decertify, the league will challenge the validity of the decertification, and the union will sue to prevent the league from locking out non-union employees.  If successful, the league will invite an antitrust lawsuit by applying rules regarding the draft, free agency, and other devices regarding player acquisition and movement.

Last year, the American Needle case attracted plenty of attention, even though it confused plenty of football fans.  Sued by a small apparel manufacturer after the NFL entered into an exclusive contract with Reebok, the league argued that its 32 teams ultimately amount to one business.  If it’s one business, the league can’t be sued for antitrust violations.

That’s why the NFLPA made such a big deal about the American Needle case.  If the Supreme Court had found that the NFL is one business for antitrust purposes, the union would have lost the ability to decertify and file an antitrust lawsuit.

In the end, a typically divided Supreme Court agreed unanimously that the NFL isn’t a single entity for antitrust purposes.  But that doesn’t mean the league automatically would lose an antitrust case filed by the players.  Instead, it means only that the league couldn’t cut the litigation off quickly and cheaply by pointing to the outcome of the American Needle case and saying, “Sorry, we’re a single entity.”

At the tail end of the written ruling in American Needle resides language that would give the league a reasonable shot at winning an antitrust lawsuit on the merits.  “The fact that NFL teams share an interest in making the entire league successful and profitable, and that they must cooperate in the production and scheduling of games, provides a perfectly sensible justification for making a host of collective decisions,” the Supreme Court wrote.  “Other features of the NFL may also save agreements amongst the teams. We have recognized, for example,’that the interest in maintaining a competitive balance’ among ‘athletic teams is legitimate and important’ . . . .   While that same interest applies to the teams in the NFL, it does not justify treating them as a single entity . . . when it comes to the marketing of the teams’ individually owned intellectual property.  It is, however, unquestionably an interest that may well justify a variety of collective decisions made by the teams.”

In English, this means that the league may be able to successfully beat back an antitrust challenge by pointing to the competitive importance of having a draft, reasonable limits (via the franchise tag and restricted free agency) on player movement, and a cap on total salary coupled with a minimum spending threshold.  When the league last faced antitrust allegations from the players, the league was using a watered-down approach to free agency that exposed only a limited number of players whose contracts had expired to free agency (it was called “Plan B” free agency, with all other free agents bearing a price tag of two first-round draft picks).

Thus, even if an antitrust case plays out to the end, the NFL could win.  And the players would find themselves stuck with the rules implemented by the league.  Their only alternative to accepting those rules would be to reconstitute the union and strike.

It’s yet another reason for the parties to find a way to carve up a nearly eleven-figure pie.  There is plenty of uncertainty, and it probably would cost nine figures to get it all resolved.

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30 Responses to “American Needle’s silver lining could help NFL in antitrust case”
  1. hooterdawg says: Mar 5, 2011 9:27 PM

    At least one congressman has fired a shot across the NFL bow by reminding them that Congress can flex its own muscles outside of the judiciary. In particular, the NFL enjoys an antitrust exemption granted by Congress for the purpose of negotiating TV rights across all teams. Congress can revoke that right if it becomes annoyed enough with the NFL legal shinanigans that may conspire against the welfare of many direct and indirect employees that serve the NFL business. The NFL is mucking with its business model if it doesn’t resolve this matter within a week.

  2. jamie54 says: Mar 5, 2011 9:32 PM

    “The union will decertify, the league will challenge the validity of the decertification, and the union will sue to prevent the league from locking out non-union employees.” How? If the union is decertified how can it represent anyone? That’s one point I just have not seen fully explained in a decertification. If decertified what power, if any, does it have all, what power does D. Smith have? If the players all become basically independent of the union they then have no ‘leadership’ and who would then take up the players cause?

  3. iknowfootballandyoudont says: Mar 5, 2011 9:34 PM

    I don’t care if litigation armegedden breaks out.
    My money will not go towards any NFL owner. I refuse to let my money make the Greedy Booby Krafts and Shameless Jerry Jones and Dan Snyders of the world richer than they already are, and for them to make the overpaid, spoiled millionaire athletes any more spoiled and entitled than they already are.
    I will not buy jerseys, $8 beers, PSL’s, season tickets, parking fees, $4 hotdogs.
    I only wish more fans had the nerve to just say ENOUGH!
    As long as people keep paying always rising ticket prices, merchandise, parking ripoffs, and outragous food and beverage prices, of course the greedy league and owners will continue hijacking you all. If people just SHUT DOWN, like the players and owners are threatening to SHUT DOWN, I guarentee you the prices for tickets, merchandise, etc. will start dropping very fast.
    Fans are the heart of the leagues success.
    Sit out, sit home. Instead of giving the owners and league the thousands you spend each year on tickets, etc. Instead spend the cost of DirecTV Sunday Ticket.
    If everystadium was only half full this year, and merchandise sales dropped over 25% , I promise you the league and players would NEVER pull this crap again and you will be paying less for EVERYTHING the following season.

  4. raynman49 says: Mar 5, 2011 9:42 PM

    Whoa! Lawyerspeak. I’m feeling dumb. Must be time for bed.

  5. 8man says: Mar 5, 2011 9:48 PM

    Ah hah!

    This is an argument I made in previous posts. And if it truly does cost the NFL almost nine figures to get it resolved, don’t think for a minute the players will get what they have now.

    This may turn into quite the case study for the Harvard Law School. Of course, it’s not much in the way of labor law. I don’t think you can compare players to the likes of hard working union people like steelworkers, iron workser, plumbers and electricians.

    Players union? Really? I mean, really?

    On a side note, does Goodell like look he’s gained some serious weight?

  6. rabidbillsfan says: Mar 5, 2011 10:07 PM

    How old is that picture??? It looks like Peppers in Carolina, and is that Tarik Glenn at RT for the Colts???? Sorry… I accept any and all thumbs downs for this lame comment.

  7. rabidbillsfan says: Mar 5, 2011 10:09 PM

    Or maybe Ryan Diem?

  8. cooterificus says: Mar 5, 2011 10:24 PM

    Dear Iknowfootballandyoudont,

    You support the owners and the players just by watching football. Higher ratings enables the NFL to ask for more money. Unless you refuse to watch football, you support both. And your money helps to support them.

  9. skoobyfl says: Mar 5, 2011 10:52 PM

    Billionaires versus Millilaires, I wonder who makes more?

  10. 14fairways says: Mar 5, 2011 11:09 PM

    “How? If the union is decertified how can it represent anyone? That’s one point I just have not seen fully explained in a decertification.”
    **************

    officially, it will not be the union that sues the NFL, there will be a few NFL players who sue in a class action lawsuit, and “what was” the union will provide legal council and representation for that class action lawsuit.

  11. mediasloppy says: Mar 5, 2011 11:13 PM

    Pure Capitalism 101…

  12. erstwhiledoc says: Mar 5, 2011 11:25 PM

    iknowfootballandyoudont,

    Please don’t forget that the NFL and its owners get a percentage of your DirecTV subscription And that your watching games on TV allows Fox and CBS to pay billions to the NFL, as long as fans keep drinking the Bud Light and driving the Ford F-150s that are advertised during game coverage.

    So avoiding the PSLs, high ticket prices, $4 hotdogs, and parking fees keep some money out of Jerry’s hands, but the NFL’s reach is more pervasive than we might think.

  13. joyjoy69 says: Mar 5, 2011 11:32 PM

    So, maybe this is a dumb question. If the teams have a “perfectly sensible justification” for agreeing to things like drafts and limiting player movement, does that theory hold if teams are lying to each other about their profit margins? If there is a salary cap for all teams, don’t some teams stand to profit a great deal more if that cap makes their post-player salary profits a lot greater than other teams? Isn’t the only way to ensure the teams have a sensible justification for a salary cap to ensure that all teams are making roughly the same profits, or are aware of other team’s books enough to see whether such a system benefits or hurts them competitively?

  14. goldsteel says: Mar 6, 2011 1:08 AM

    In scenarios like this the only winners are the lawyers. Lot’s of fees regardless of the outcome. Plus there are also implied threats from a senator and the President that if it isn’t resolved quickly, he may step in eventually.

    The owners are looking like they’ve been bargaining in bad faith as it is with the judge’s ruling nullifying the owners financial lockout strategy. I’m more optimistic a deal will get done this week.

  15. patpatriotagain says: Mar 6, 2011 2:29 AM

    hooterdawg says: Mar 5, 2011 9:27 PM

    At least one congressman has fired a shot across the NFL bow by reminding them that Congress can flex its own muscles outside of the judiciary.
    ——————————————————
    Yeah, that’s just what we need – a government solution. We have Government motors, Government Electric, and now the Government Football League?
    fortunately conservatives won in the house, and they tend not to feel the need to regulate everything. (the senator who “shot across the bow” was a dem).

  16. stanklepoot says: Mar 6, 2011 5:07 AM

    Well, if the NFL is just one company, and not 32 companies colluding against vendors and their players, then they open themselves up to new problems. Given their absolute dominance of the football world and their stranglehold on tv contracts, the NFL must then be classified as a monopoly. Since unregulated monopolies are not allowed, the government would have to either create or select a pre-existing department to monitor and regulate the NFL. That, or they could break it up into say 32 separate companies…each with the authority to make it’s own merchandising and advertising deals, and perhaps sell their own local tv rights. I don’t think anyone wants to see either of those options take effect. Then again, the owners already can independently sell naming rights, and Jerry Jones managed to move some merchandising and advertising powers from the league to the teams. Also, not all revenue is shared amongst the teams. So, the NFL exists in some strange hybrid reality where they operate as both one company and 32 individual companies, whichever best suits their needs. It works because no one forces them to demonstrate any consistency in this area. If I were the NFL, I’d do whatever it took to keep things that way. Anything that limited them to one absolute or the other could only bring about restrictions that they don’t currently face.

  17. stanklepoot says: Mar 6, 2011 5:30 AM

    “In English, this means that the league may be able to successfully beat back an antitrust challenge by pointing to the competitive importance of having a draft, reasonable limits (via the franchise tag and restricted free agency) on player movement, and a cap on total salary coupled with a minimum spending threshold. ”
    ________________________
    Then again, if competitiveness were a huge enough issue that a company could restrict the rights of workers to choose who they do or don’t work for, indentured servitude would still be a recognized practice. While I personally view the draft (and how it’s set up) as an essential part of maintaining a competitive balance amongst the teams, there are other ways things could get done. One could argue that a salary cap alone could do the job. If each team has the same amount of money to pay its players, then it’s up to each team to spend that money wisely, just as it’s up to each team to draft wisely. The teams could still hold a combine and bring the players to their facilities for private workouts. Then, if they decided they were interested in their services, they could offer them a contract. Other teams would do the same things, and you’d essentially be left with a system similar to an auction draft in fantasy football. You have an equal shot at any player coming out of college, you just have to be willing to pay more than the other team. Spending too much on one player, however, would mean you have less for other players. Actually, in some ways, that gives teams a better chance to improve. They don’t have to just sit there and hope someone they believe to be an essential addition to their team falls to them. Consider the Cardinals, for instance. With Kurt Warner, they were highly competitive. When he retired, their offense fell apart. In fact, the team’s success in Warner’s last season hurt the team the following year, as it dropped them down the draft chart and kept them from drafting a suitable replacement. If an auction draft system were in place, they could have spent the majority of their rookie salary money on a QB like Bradford, and been much better off. The competitive advantage would simply go to the team with the best front office, which it tends to now anyway.

    To be clear, I’m not advocating this kind of change. I’m simply trying to point out that it’s quite easy to make a credible argument that neither the draft nor restricted free agency is essential, and that there’s more than one way to maintain competitiveness amongst the teams.

  18. nflpasux says: Mar 6, 2011 7:47 AM

    hooterdawg says: Mar 5, 2011 9:27 PM

    the NFL enjoys an antitrust exemption granted by Congress for the purpose of negotiating TV rights across all teams. Congress can revoke that right if it becomes annoyed enough with the NFL legal shinanigans ……

    ===================================================

    What planet have you been on ? The particular Congress which Demaurice Smith had hoped to use for NFL trust-busting purposes was eviscerated in the 2010 mid-term elections. While there will always be a few Jay Rockefellers running their mouths, the NFL owners are sufficiently savvy to know that this particular Congress may bark, but will have no anti-trust bite.

  19. chatham10 says: Mar 6, 2011 8:15 AM

    I agree with these posts above but keep in mind that if you purchase NFL Sunday Ticket (as I do) that money paid is going to the NFL as DirecTV paid the NFL big bucks for this.

  20. trimgod69 says: Mar 6, 2011 8:29 AM

    i agree with iknowfootball

  21. kotapug says: Mar 6, 2011 8:47 AM

    —–On a side note, does Goodell like look he’s gained some serious weight?—–

    Fat cats keep getting fatter !

  22. edgy says: Mar 6, 2011 9:21 AM

    jamie54 says: Mar 5, 2011 9:32 PM

    ********************

    How about those high priced lawyers that they have on their payroll….

  23. Kave Krew says: Mar 6, 2011 10:00 AM

    Re: The Commish weight……..crow is full of fat and has a high caloric count……..

  24. dryzzt23 says: Mar 6, 2011 10:58 AM

    So the players union can decertify, then they can reconstitute the union after this entire process is over.

    The liberal media is fully behind the players, yet they fail to state the obvious which is….

    if there were no NFL these players would play football where? Canada? The AFL? The LFL?

    If the players demand to see the books, the owners should demand heavy penalties for players who violate the drug/PED policy and more personal information from the players themselves. Such as “yes, player X did do drugs all during college and he used a masking agent just prior to the draft, so your assumptions were right”

  25. edgy says: Mar 6, 2011 11:19 AM

    dryzzt23 says:

    ***************

    Puhleeze and if you think that the owners would survive a background check on themselves, you’re delusional.

  26. bsizemore68 says: Mar 6, 2011 12:12 PM

    I feel for the team employees ( not the players ) who could get lay off next week. However I will be glad baseball is getting ready for another season, and I hope the greed will stop. Bill

  27. hooterdawg says: Mar 6, 2011 12:39 PM

    ” the NFL owners are sufficiently savvy to know that this particular Congress may bark, but will have no anti-trust bite.”

    @nflpasux: This blogsite offers you equal time for morons. One of the main functions of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights is to review antitrust exemptions. Exemptions are granted for the purpose of best serving the interests of the American people. If the NFL locks out players and shuts down the NFL enterprise, tens of thousands of normal Americans who depend upon the NFL for their employment in secondary businesses will be affected. There is no purpose to reward billionaires with an exemption when thousands of other Americans lose their jobs. You can take your tea party braggadocio and stuff it where the sun don’t shine.

  28. nickthebrain says: Mar 6, 2011 2:38 PM

    I agree whole-heartedly with “iknowfootballandyoudon’t”

    I say ENOUGH is ENOUGH with the NFL. By not going to the games, purchasing the jerseys, PSLs, $8.00 beers, $5.00 hotdogs, $60 parking passes, all the shirts, hats, gloves, “dog” jerseys (are u kidding), FATHEADs, car accessories, etc, Etc, ETC the NFL will certainly feel an effect, if just enough fans simply say ENOUGH.

    I’ve read the posts about the TV ratings and commercials, and on that note,…it’s simple…. If you drive a Ford F-150, you’re a tool, if you drink Bud Light, you have no taste in beer, and you’re a tool, if you wear Wrangler Jeans, WELL LET’S NOT EVEN GO THERE!

    SO WHAT, they either pay to advertise with the NFL or the MLB or Golf, so what, that’s not going to stop….. but what about ALL the FREE PRESS we give the NFL by wearing their “GEAR”, funny thing is, it’s better then FREE PRESS, because we are OVERCHARGED for their “material advertisements”! The fans are dumb, just look at it, they are fighting for our money, we have more control over this then some of the posters on this board recognize!

    It’s simple to implement,…. while your standing in line at Dick’s, with your gigantic hood sized NFL car magnet for $50,…. JUST THINK TWICE, think about the tank of gas that needs to go into the car before you parade around in traffic with your free NFL CAR ADS for them!

    MOST IMPORTANTLY,…Before you spend a dime on your new 2011 NFL catalog of needless items,… PLEASE REMEMBER that all of the Greedy Bastards, Owners and Players alike ARE LAUGHING AT YOUR DOG, and it’s ridiculous STEELERS jersey.

    I’m just saying……

  29. ontboltfan says: Mar 6, 2011 3:08 PM

    Not quite sure they could call the NFL a monopoly. Not only are there other leagues, NCAA, CFL, AFL etc, but they are part of a huge sports and entertainment industry with many other options available.

    I’m not sure about antitrust because they have settled most of the rules like free agency from the previous suit. To me it seems like they are similar to other franchiser/franchisee models. There is still some local marketing/merchandising but even that seems standard (ie sportswear, luxury booths, radio promotion)

  30. jamie54 says: Mar 6, 2011 3:20 PM

    Muchos Gracias senor 14fairways, that explains why Brees, Manning, Brady, et al, names were mentioned in the class action filing. Makes sense.

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