IrishTex
05-24-2010, 03:24 PM
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Huge news out of DC this morning, as the Supreme Court overturned a ruling that would have given the NFL an effective antitrust exemption. Let's look at what this means for the sporting landscape.
In 2002, the NFL signed a deal with Reebok, giving them the exclusive right to make NFL-licensed apparel. American Needle, which had produced NFL merchandise for more than 50 years, sued the league, claiming that it was a violation of antitrust laws.
Their argument was that all 32 teams acted together to monopolize the licensing of merchandise. The NFL's argument was that the league doesn't consist of 32 separate teams, but rather a single organization.
A district court had sided with the NFL, throwing out American Needle's case. They appealed to the highest court, and, in an unusual move, the NFL also asked for a Supreme Court ruling. It was clear they wanted a more sweeping ruling that would give them what amounted to an antitrust exemption. They didn't get it.
Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned," Justice Stevens wrote.
In a 9-0 decision, the Court overturned the district court ruling. Here's what it means for everyone involved.
American Needle doesn't actually score a victory here, at least, not yet. The case merely returns to district court, where it will be reconsidered under what's called the "Rule of Reason." A doctrine dating back to Standard Oil, it states that monopolies aren't inherently illegal, only if they "unreasonably" restrain trade. That's still up for debate with the NFL's licensing deals, and the Supreme Court gave no indication on that one way or another.
The NFLPA wins big. They had been terrified of a league with unchecked power to act unilaterally in labor issues, especially with an expiring CBA. Not that the player's union is particularly powerful as is, but at least the league won't be able to dictate salaries, free agency conditions and age restrictions without getting into the CBA first. If the NFL had won this case, those would all have been very real possibilities.
The NFL doesn't so much lose as they fail to win. The league had been hoping for that antitrust exemption, which would have been a hammer to bring down in myriad smaller cases against the league. It would have given them sweeping powers enjoyed by no other business other than Major League Baseball. Now, those other cases proceed on their own merits.
Other sports leagues are not happy right now. Both the NBA and NHL filed amicus briefs in support of the NFL, hoping the precedent would give them more powers. With the NHL recently having to bail out a handful of teams, and a labor stoppage looming for the NBA, it could have been big. NASCAR, MLS, and most chillingly, the NCAA also publicly supported the NFL.
Baseball, on the other hand, still enjoys the country's only antitrust exemption, dating back to a 1922 ruling that's considered curious today. There's no indication the High Court would revisit that ruling, but should it be challenged there's certainly a precedent for it now. A limited one, however; American Needle v. NFL appears to apply specifically to merchandising.
Reebok, and, yes, the Madden series of video games, along with every company that has exclusive licensing deals with the league, could be the biggest losers. The NFL is a money factory, and even given the huge payments for exclusive rights, everyone selling NFL products are making out like bandits. Should the district court find the league in violation of antitrust laws, the field would be open again for other manufacturers. Any final decision is still a ways off, but NFL 2K12 is now a distinct possibility.
Huge news out of DC this morning, as the Supreme Court overturned a ruling that would have given the NFL an effective antitrust exemption. Let's look at what this means for the sporting landscape.
In 2002, the NFL signed a deal with Reebok, giving them the exclusive right to make NFL-licensed apparel. American Needle, which had produced NFL merchandise for more than 50 years, sued the league, claiming that it was a violation of antitrust laws.
Their argument was that all 32 teams acted together to monopolize the licensing of merchandise. The NFL's argument was that the league doesn't consist of 32 separate teams, but rather a single organization.
A district court had sided with the NFL, throwing out American Needle's case. They appealed to the highest court, and, in an unusual move, the NFL also asked for a Supreme Court ruling. It was clear they wanted a more sweeping ruling that would give them what amounted to an antitrust exemption. They didn't get it.
Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned," Justice Stevens wrote.
In a 9-0 decision, the Court overturned the district court ruling. Here's what it means for everyone involved.
American Needle doesn't actually score a victory here, at least, not yet. The case merely returns to district court, where it will be reconsidered under what's called the "Rule of Reason." A doctrine dating back to Standard Oil, it states that monopolies aren't inherently illegal, only if they "unreasonably" restrain trade. That's still up for debate with the NFL's licensing deals, and the Supreme Court gave no indication on that one way or another.
The NFLPA wins big. They had been terrified of a league with unchecked power to act unilaterally in labor issues, especially with an expiring CBA. Not that the player's union is particularly powerful as is, but at least the league won't be able to dictate salaries, free agency conditions and age restrictions without getting into the CBA first. If the NFL had won this case, those would all have been very real possibilities.
The NFL doesn't so much lose as they fail to win. The league had been hoping for that antitrust exemption, which would have been a hammer to bring down in myriad smaller cases against the league. It would have given them sweeping powers enjoyed by no other business other than Major League Baseball. Now, those other cases proceed on their own merits.
Other sports leagues are not happy right now. Both the NBA and NHL filed amicus briefs in support of the NFL, hoping the precedent would give them more powers. With the NHL recently having to bail out a handful of teams, and a labor stoppage looming for the NBA, it could have been big. NASCAR, MLS, and most chillingly, the NCAA also publicly supported the NFL.
Baseball, on the other hand, still enjoys the country's only antitrust exemption, dating back to a 1922 ruling that's considered curious today. There's no indication the High Court would revisit that ruling, but should it be challenged there's certainly a precedent for it now. A limited one, however; American Needle v. NFL appears to apply specifically to merchandising.
Reebok, and, yes, the Madden series of video games, along with every company that has exclusive licensing deals with the league, could be the biggest losers. The NFL is a money factory, and even given the huge payments for exclusive rights, everyone selling NFL products are making out like bandits. Should the district court find the league in violation of antitrust laws, the field would be open again for other manufacturers. Any final decision is still a ways off, but NFL 2K12 is now a distinct possibility.