Earlier this year, as oral arguments approached in the American Needle case, some fretted that a decision in favor of the NFL would dramatically change the landscape of professional sports.
With the decision rejecting the league’s position that the 32 NFL teams are a single entity for the purposes of apparel deals, it turns out that the decision could dramatically change the landscape of professional sports.
Though limited only to the context of transactions involving the licensing of logos and other “intellectual property,” the U.S. Supreme Court’s conclusion that an effort by the 32 franchises to come together and do business jointly potentially violates antitrust law could fuel a finding that the teams of no professional sports league may come together and make collective decisions regarding key business matters like the hiring of employees, the compensation paid to players, and rules regarding free agency and the draft.
And the parties filing such lawsuits may not only be spurned apparel companies or decertified sports unions but, say, an owner of a team who wants to move the team wherever he damn well pleases, or an owner who wants to sell the team to whomever he damn well pleases.
Or an owner who wants to hire a hotshot rookie without regard to the fact that someone else has “drafted” him, or an owner who wants to sign a kid right out of high school.
The possible contours of the eventual rules are unknown, and the final answer will be subject to the precise extent of litigation that any interested parties choose to file.
That said, the Supreme Court has acknowledged generally that limits apply; the only problem is that the Supreme Court has not endeavored to identify them. “Football teams that need to cooperate are not trapped by antitrust law,” Justice John Paul Stevens wrote. “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.”
Justice Stevens pointed out that the Supreme Court previously has recognized “‘that the interest in maintaining a competitive balance’ among ‘athletic teams is legitimate and important.’” Though that interest does not allow the NFL teams to make a group deal for the purposes of marketing team logos for apparel, it “may well justify a variety of collective decisions made by the teams.”
In other words, the question of whether the NFL may combine to enter into agreements must be determined on a case-by-case basis, with specific consideration of the individual rules that are under attack. When it comes to ensuring competitive balance via the draft and free agency, the final outcome to litigation that reaches the Supreme Court could be that the league may operate collectively. When it comes to restricting teams from moving without the approval of 24 total owners, the final outcome to litigation that reaches the Supreme Court could be that the league can’t tell owners where to put their teams.
Every potential application of the concept is subject to further litigation. The fact that the league lost so convincingly, via a 9-0 decision, will embolden others to seize upon the American Needle precedent in the hopes of applying it in other contexts, in the same way that many fear the NFL and other sports leagues would have done if the American Needle case had gone the other way.
For the fans, the end result isn’t clear. To the extent that more time and attention and money are devoted to resolving lawsuits, it’s not a good thing. To the extent that the law ultimately is applied in a manner that truly ensures the achievement of competitive balance among the 32 franchises, it’s not a bad thing.
Time will tell. And it will take a lot of time before there’s a full spectrum of clarity in this regard.