NFL loses chance at Antitrust Exemption Status

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NFL fans, please bare with me through this next article. Unless you’re a lawyer, and in that case you’ll likely find this next topic riveting. If you’re an MBA like I am, you might find this case moderately fascinating in ac couple ways.

Everyone else will find the Supreme Court ruling in the NFL vs. American Needle, about as exciting as watching the Wisconsin Badgers run their half-court offense. But again bare with me, this is important. VERY IMPORTANT TOWARDS HAVING A 2011 SEASON.

By Paul M. Banks

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According to the AP story

In one of the year’s most-anticipated cases, the Supreme Court on Monday unanimously rejected rulings by two lower courts that the National Football League is immune from antitrust laws, a status the league has long sought.

The 9-0 ruling means the NFL will now have to defend itself against a lawsuit brought by a hat manufacturer alleging that the league violated antitrust laws by granting exclusive merchandising rights to a single company, Reebok.

The Buffalo Grove, IL hat company, American Needle Inc., argued that the league’s 32 teams should be able to individually negotiate apparel contracts with different companies.

The case, known as American Needle Inc. v. NFL, was thrown out at both the district and appellate court level with both courts ruling that the NFL was a single entity — not a collection of 32 individual teams — and therefore could not violate antitrust laws.

So what does this mean? We just a giant step in the right direction towards saving the 2011 season. A year without NFL football- we don’t want that! The highest court in the land has previously ruled the NFL is subject to antitrust laws; Major League Baseball is the only exempt professional sports league.

League owners bloviate that the 9-0 ruling will not affect labor talks with the NFL Players Association. Right, and there was once an episode of “Lost” where the main character, Dr. Jack Shepard didn’t end up breathing extremely heavily. The NFLPA it is a strong strike against the owners interests. For more insight checkout this post from SB Nation Green Bay Packers blog Acme Packing Company:

“Because, if the NFL wins it, they can really go for the jugular. They can control salaries, and control the system more,” Clayton said. “If they lose the case, there may be more of a effort to try and get a [new CBA] deal done.”

Andrew Brandt hopes this will “jump start” labor negotiations. The NFL had been making crazy offers like asking the players to take an 18% pay cut (as if the players’ union would ever agree to that). Hopefully the crazy goes away and the two sides can get back to negotiating a reasonable deal that won’t force a lockout of the 2011 season.

From a business standpoint, I find this ruling riveting. The league was found in violation of vertical monopolistic practices. The NFL blatantly wishes to continue exploiting the supply chain by incorporating just a single partner of production for a key piece of merchandise. As an economics guy, I love this ruling, and it’s effect on the concept of pure competition. The NFL has certainly not been a “free market” for quite some time.

Kudos to you American Needle, for standing up to America’s most popular league. And Kudos to Justice John Paul Stevens and company!

Comments

  1. I really like it when folks get together and
    share opinions. Great blog, continue the good work!

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