Supreme Court "seemed skeptical" of NFL’s "single entity" argument

At Wednesday morning’s hearing before the U.S. Supreme Court in the much-hyped American Needle case, the nine justices who’ll decide the controversy “seemed skeptical” (per the Associated Press) of the NFL’s argument that it is a “single entity” that is immune from one of the primary antitrust laws relating to the actions of separate business that come together to restrain trade (by, for example, fixing prices).

But little can be gleaned from the questions asked by individual justices to the lawyers who present the various sides of the case.  At the end of the day, it takes only five of the nine robe-wearing government employees to control the outcome.

We’ve reviewed some of the many briefs submitted on the issue, and we saw nothing in the NFL’s paperwork suggesting that the league currently hopes to obtain a finding that it is one business for player-acquisition purposes.  Still, the NFL apparently has raised that argument in past antitrust litigation filed after the union decertified and sued the league 20-some years ago, arguing that efforts by 32 distinct businesses to set joint rules regarding salaries, free agency, and the draft violate the same law at issue in the American Needle case, which arises from the league’s decision to give an exclusive 32-team hat and apparel contract to Reebok.

The NFL and the NFLPA have taken very different approaches in the days leading up to Wednesday’s oral arguments.  The league has opted not to discuss the matter beyond the confines of the court proceedings; the union has decided to launch a P.R. campaign, which included an op-ed item “written” by Saints quarterback Drew Brees.

The gloom-and-doomers think that the ultimate decision could dramatically reshape American sports.  And they’re right — it “could”.  But even a right-tilting Supreme Court has its limits when it comes to favoring business interests.  The notion that the Court would conclude that the 32 NFL franchises do not compete with each other for the services of players and coaches is ludicrous, and such a ruling would represent a gross miscarriage of justice.

So what is the union’s strategy?  We think that the players are trying to establish traction with the American public regarding the quest to be perceived as the “good guys” in the looming labor battle.  Moreover, with the union regarding an attack on the NFL’s antitrust exemption for broadcast purposes as the nuclear option (which could trigger mutually-assured destruction) in the ongoing CBA negotiations, the NFLPA likely thinks that any related topic represents a prime opportunity fire a shot across the NFL’s bow as to the one significant area of antitrust law in which Congress already has given pro football a pass.

UPDATE:  David G. Savage of the AP provides a more detailed assessment of the argument, which indicates that “most” of the justices were skeptical of the “single entity” theory, which means not only that a broad ruling is highly unlikely, but also that the dismissed claims of American Needle could be reinstated.

15 responses to “Supreme Court "seemed skeptical" of NFL’s "single entity" argument

  1. Yes, but I’m more interested to hear Ruth Ginsburg’s opinion on the constitutionality of instant replay.

  2. I could be wrong but Im guessing American Needle lost a ton a AMERICAN JOBS because of this.
    Where as Rebock probably does their sewing oversees.
    I love the fact that the NFL folks keep tweeting that article from the Wall St Journal saying that it is completely unbiased.
    It reads like a pro business commentary – Plus the Wall St Journal is part of the right wing…
    Robe-wearing government employees – Good one

  3. Ugh! If this breaks down and each team has the right to negotiate its own merchandise deals, the smaller markets will really lose out after the big boys (i.e. Cowboys, Giants, Pats, Steelers) milk Reebok and Nike for everything they’ve got.
    All we’ll hear about is (1) players complaining about salaries, (2) coaches complaining about salaries, and (3) teams compaining about revenue sharing. Sure these things happen today, but this would compound it. At least today Joe Fan is shielded from the dirty side of the merchandise talks.
    The solution here may be to have the NFL split out merchandising while still controlling it, like how games can be viewed on multiple networks (Fox, CBS, ESPN and NFLN). Using this strategy, the NFL opens itself to other partnerships.

  4. Any chance my dirtbag cable company gets an opportunity to take more of my money with Sunday Ticket as a result of the potential ruling?

  5. I’m with Dirt. Anything that results in my being able to get Sunday ticket from my cable-company is a win for me. I’m so sick of the suck that is DirecTV.

  6. @ Marty
    “Plus the Wall St Journal is part of the right wing…”
    This might be one of the dumbest comments I have ever read, and it shows that you are just another uneducated jackass.

  7. I don’t get it, how can the NFL NOT be a single entity? If the teams were truly independant competitive entities, there would never be a salary cap, never be revenue sharing, never ownership approval by existing owners (read Limbaugh). Ask yourself, would Coke and Pepsi do these things? McDonalds and Burger King? Never. This business setup is much more akin to McDonalds franchisees than McDonalds and Burger King.

  8. Not only will the league try to get an overly broad ruling here, they’ll get it. The overly beholden stooges who make up the supreme court and the league will congratulate themselves. And – this is the fun part – it will blow up in their faces.

  9. NFL runs itself like a Monopoly but doesnt follow any monopoly rules because of the anti trust excemption.
    American Needle should win this lawsuit. I am almost hoping it does not win this – because all heck could break loose with the new CBA and revenue sharing.

  10. If the NFL is denied status as a “single entity” in this ruling, can the elimination of revenue sharing, salary caps and a single TV contract be far behind. Both the NFL and the NFLPA will win short-term battles, but lose in the long run.

  11. Actually, with 52 players and 52 contracts times 32 teams, there sure sounds like there are a lot of “companies” involved in the league.
    I would tend to think if Nike or Reebok want my name on their clothes, then they should talk to me or my agent, not the team owner or league. If Nike wants to endorse say the Pats then that’s a deal between the two. If my name is to be put on that jersey then it’s a deal between me and Nike.
    At season’s end then I believe the league would get paid by individual teams based on a percentage of their gross revenues to be working under the NFL logo.
    If the NFL is one entity then all players in a given position should be paid the same. Much like myself, I’m an electrician for a company, then we’re all paid the same.

  12. @tacious …
    I believe he’s referring to the fact that the Wall Street Journal, once a respected newspaper, is owned by the folks who bring us Fox News. That’s why, when you watch a Fox roundtable discussion, the commentators are usually from the Wall Street Journal, the Weekly Standard, Dow Jones, the New York Post … all owned by the same Rupert Murdock’s News Corporation and all espousing the same far right editorial view.
    Speaking of uneducated jackasses …
    @Dan …
    Well said.

  13. Considering that new Associate Justice Sonia Sotomayor has already become (in)famous for grilling both sides of any argument brought before her on the bench like so much blackened redfish, I find the AP’s blanket en masse characterization that all the Justices “seemed skeptical” questionable at best.
    I’m not saying that the NFL is going to prevail in a cakewalk, but I wouldn’t put too much stock in the AP’s characterization either.

  14. strife says: January 13, 2010 1:54 PM
    I don’t get it, how can the NFL NOT be a single entity?
    The teams agree on a set of rules, standards, and policies in an attempt to create a fair playing field. Much like you play Monopoly and you all agree to start with $1500 bucks, collect $200 when you pass go. You still compete with each other, you and your wife are not a single entity. You buy the property you can afford. You improve it as best you can to generate as much revenue as you can.
    Don’t tell me teams do not compete with each other. They compete for fans, for players, for coaches.
    Trying to say that the NFL is one business that competes against the NBA, MLB, NHL is BS. 66% of NFL revenue comes from TV.

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