The Nine on American Needle v. NFL – Sexy Antitrust Talk

And no, I’m not referring to the fabled nine of the Supreme Court.  Instead, #9, Saints quarterback Drew Brees, penned an op-ed piece in yesterday’s Washington Post arguing that the Supreme Court should not find the NFL exempt from the antitrust laws.  He makes some good points (remembering, of course, that he is a member of the NFLPA executive committee):

The NFL originally won the case because the lower courts decided that, when it comes to marketing hats and gear, the 32 teams in the league act like one big company, a “single entity,” and such an entity can’t illegally conspire with itself to restrain trade. The NFL-Reebok deal is worth a lot of money, and fans pay for it: If you want to show support for your team by buying an official hat, it now costs $10 more than before the exclusive arrangement.

. . .

The notion that the teams function as a single entity is absurd; the 32 organizations composing the NFL and the business people who run them compete with unrelenting intensity for players, coaches and, most of all, the loyalty of fans.  . . .  I also know about it because in 2006, after five years with the San Diego Chargers, I became a free agent and witnessed firsthand the robust competition among teams for players. Thanks to free agency, I had the opportunity to sign a six-year contract with the New Orleans Saints . . . .  I could choose to sign a contract with the Saints because of a crucial player-led antitrust lawsuit in 1993 that secured players’ rights to sell our services as free agents. Until that case, team owners had acted together to control players and keep salaries low, while the popularity of the game and teams’ revenues grew exponentially. Today, if the Supreme Court agrees with the NFL’s argument that the teams act as a single entity rather than as 32 separate, vigorously competitive and extremely profitable entities, the absence of antitrust scrutiny would enable the owners to exert total control over this multibillion-dollar business.

The argument is scheduled to be heard on Wednesday (1/13/10).  For more background on the case, check out the briefs here.

My sense is that the Court will uphold the Seventh Circuit’s ruling that the NFL acts as a single entity when licensing its intellectual property (logos on hats, in this instance).  Originally I had read the news reports to say that individual teams at one time licensed their own logos/brands to individual sports merchandising companies — but as I read the Seventh Circuit opinion, I find this is wrong.  Since 1963, the NFL itself had licensed all of its teams’ logos/brands under the umbrella of NFL Properties.

Because sports leagues are impossible to define as either solely competitive or solely cooperative, there is some leeway for courts to permit competing firms (here, teams) to cooperate (deciding who will play who, and when, each week, for one small example) where other industries would be prohibited from such agreements by the antitrust laws.  I see the licensing and marketing of the league as one area where the league can properly cooperate.  I imagine that the Supreme Court will uphold this narrow ruling.

This brings me to my last point — and a short one b/c I have yet to read through the NFL, MLB, NBA, and NHL amicus brief (though those other leagues aren’t ‘in’ the case, they were permitted to let the Court hear their views on the subject because the ruling could affect them):  according to several news reports (and my favorite antitrust professor/QB, Drew Brees), the NFL is asking the court to overrule our old friend, Radovich v. NFL, and declare that the NFL has a blanket antitrust exemption.

Like I said, that’s my sense from the news reports.  When I finish reading the leagues’ brief, I’ll have a better idea of what they’re asking for.

[also -- sorry for the long layoff. No promises on heavily continued blogging, but I'll update a little more as things interest me.  After getting shut out by the league and NFLPA for news, I decided they could stuff it and I'd just passively follow -- we'll see.]

Filed under: antitrust, American Needle, Bill Radovich

PFT Discusses the American Needle Case

This has been on our radar, and it will continue to be, but I wanted to flag an article by Florio on how the American Needle antitrust case will affect the CBA negotiations.  Short versions: the league might be waiting for the Supreme Court decision before proceeding with the real CBA negotiations.

The case, involving a challenge to the league’s ability to enter into an exclusive headgear license with Reebok, turns on whether the NFL constitutes a single entityfor the purposes of the specific antitrust law at play in that case.

If the league isn’t a single entity, then the process of coming together and deciding to do business with only one company violates antitrust laws.

Munson fears that the league would then parlay a favorable ruling into an attempt to take the position that the league is completely immune from any and all antitrust claims under each and every antitrust law.  Most importantly, the league could take the position that the union would not be able to decertify and sue the league under antitrust law as an attack on various rules (such as the draft, free agency, and salary) that the league would then apply to all 32 franchises.

The problem is that such a position, in our view, would make it difficult for the league to avoid the argument in other legal contexts that players and coaches are employees only of the team, and not employees of the league itself.

We’re going to be breaking down the American Needle case in more detail soon.

Filed under: antitrust, American Needle, ProFootballTalk

Goodell Fines Jones for Breaking Gag Rules

There’s been a bunch of news on the CBA front since I’ve last posted, but I’ve been a little busy.  But in this quick post, I want to highlight a troubling development that I’m sure you’ve seen if you watched the games this weekend: the commissioner’s office is punishing those owners who speak to the media in way that it disapproves.

Without confirming a six-figure fine by the NFL, Dallas Cowboys owner Jerry Jones did confirm Sunday that commissioner Roger Goodell frowned upon Jones breaking the league’s gag order 10 days ago when he said the league’s revenue-sharing era is on life support.

Jones’ reaction to league’s reaction? “So be it.”

“The league and I won’t be confirming that [the fine] one way or the other,” Jones said. “My comments were to help out Minnesota in such a way to get some energy up there to possibly get some help on building a stadium. So, the fact that that type of subject matter can get over into the labor thing shows how they’re intertwined. So if I crossed the line, so be it.”

Before the Cowboys’ preseason finale at Minnesota on Sept. 4, Jones spoke to a Minneapolis reporter about the need for public support of a new stadium there and said, “Right now, we are subsidizing this market. It’s unthinkable to think that the market you’ve got here, with 3.5 million people, and have teams like Kansas City and Green Bay subsidizing this market. That will stop. That’s going to stop. That’s called revenue sharing. That’s on its way out

Owners and team executives are under a gag order from discussion pending labor issues. The league’s current Collective Bargaining Agreement expires in 2010, and revenue sharing is a contentious issue among owners.

You’ll note that no other owner who has spoken to the media about the CBA process or NFL business issues has been fined — it’s because they’ve been towing the party line.  I think those journalists with access should be chipping away at this fault line to get to the heart of the matter.

Also, this punishment clearly shows (as if it wasn’t already apparent), that decertification by the union could bring the league a major antitrust headache.

Filed under: antitrust, Roger Goodell

NFLPA: CBA Negotiations are a PR Show for Owners

Yahoo’s Jason Cole has an article up about the NFLPA’s views of the tone and tenor of the CBA negotiations.  There have been two meetings between the owners and the players union to date, but according to the NFLPA it’s merely a “pr show.”

“Every time we say, ‘OK, you don’t like this system, what do you want?’ we don’t get a straight answer,” one high-ranking union source said recently.

Said another source indirectly involved in the process: “The negotiations mean nothing right now. It’s a PR show by the owners to make it look like they’re trying and that somehow the players are the problem. … If you know the whole story, the owners aren’t doing anything for awhile.”

Cole notes that there are two big court decisions lurking in the background, that could swing the negotiation power into the hands of the owners: the American Needle antitrust case that will be heard by the US Supreme Court this year and a legal effort to remove a federal judge that the owners dislike from his jurisdiction over CBA disputes.  Both are important tests going forward.  We’ll have a write-up on the American Needle case as the argument date approaches.

Filed under: antitrust, American Needle, David Doty, Jason Cole, SCOTUS

Is the NFL’s Personal Conduct Policy Even Legal?

Photo Credit: dbking

That’s the question that sports law professor and practicing attorney, Marc Edelman, attempts to address in his law review article, “Are Commissioner Suspensions Really Any Different from Illegal Group Boycotts? Analyzing Whether the NFL Personal Conduct Policy Illegally Restrains Trade,” (July 1, 2009). Catholic University Law Review, Vol. 58, 2009.

I’d encourage you to download the article (it’s free!) as it is a great primer on the NFL personal conduct policy and the application of antitrust law to the issues we’re going to be discussing here.  I’ve been planning to cover some of the cases in later posts anyway.

The answer, according to Edelman, is probably not!, the NFL’s personal conduct policy is not different from an illegal group boycott.  Because the policy was unilaterally adopted by the owners and the NFL without the consent of the NFLPA, it is not covered under the collective bargaining agreement.   Because the policy, which is a an agreement by each of the competing clubs to not hire a player (or boycotting that player), is not covered by the CBA, it escapes the non-statutory labor exemption we discussed earlier and is ripe for an antitrust challenge.

Professor Edelman finds four different ways that such a policy could pass muster under the antitrust laws:

1. Each team could enforce a “morality clause” that it would include in each contract with each player. (This way, the teams would be acting independently, rather than colluding).
2. Asking Congress to statutorily regulate certain “eligibility standards” for professional athletes. (Could happen, but don’t hold your breath).
3. Lobby Congress to pass a legislative antitrust exemption for leagues to regulate player eligibility (Basically, ask Congress to kick the decisions to the leagues — best possible outcome for the league…still, don’t hold your breath).
4. Include this type of policy in the next form of the collective bargaining agreement. (By far the most commonsense and fair option).

I enjoyed this law review article and, if you have any interest in the subject, would encourage you to read it.

Follow Marc on Twitter: @MarcEdelman

Filed under: antitrust, personal conduct policy, Congress, Marc Edelman

2011: A Sports Odyssey

As you may know, the NFL isn’t the only league with labor issues on the horizon; NFL, MLB, NBA, and NHL all have labor contracts expiring in 2011.  Whoa, right?  The Sports Business Journal calls it “the equivalent of a full solar eclipse on the sports labor calendar.”

Head on over to the SBJ to read the whole thing, because it really breaks down the issues for each league and the awkward positioning of the leagues who instituted a salary cap, but now find it to be not of their liking.

Some quotes from the NFL folks:

And in the NFL, the salary cap system that began in 1993 is not working for owners anymore, said [Jeff] Pash [the NFL chief legal officer], who is leading negotiations for the owners. “It may have been perfectly sound in 1993 when it was entered into, but it has not evolved in a way that reflects the operations of the National Football League in 2009,” Pash said. Among other things, Pash said that system does not take into account owners increased costs, including more privately financed stadiums and debt service.

Another MAJOR issue?  Proskauer Rose, the New York law firm, has a seat at each one of the tables.  How about that? Not bad for the PPP (profits per partner) in this downturn.  It does suggest some questions, though.  Are the leagues working in cahoots?  Is there some sort of informal information sharing going on?  How tall are those chinese walls? How does one CBA agreement effect the others? The Sports Business Journal article mentions that there is typically not “pattern bargaining” like there might be in auto labor deal.

If the leagues can’t collude, can the unions?

[NBAPA Executive Director Billy] Hunter said the expiration of all four deals in the same year was something he discussed at length with Gene Upshaw, his good friend and the former NFLPA executive director, before Upshaw died unexpectedly last year.

“If it resulted in any one group being locked out, I think he sort of saw himself at the front because the NFLPA agreement is the first to expire.” Hunter said. He has not yet addressed this issue with Upshaw’s successor, Smith.

Upshaw, Hunter said, “thought it provided an opportunity that I guess we could all … unify if we all kind of took a universal position about the concerns of our players.”

Four League Strike or Lockout?  Can you imagine how dark our 2011 would be?

I have a lot to learn about this and about the NLRB rules. But needless to say, this will be a focus of the blog.

Update: Also, not sure this is particularly productive, but want to see if I can start a twitter meme: #savesports2011

Filed under: antitrust, labor law, NFLPA, salary cap, Billy Hunter, Gene Upshaw, Jeff Pash, MLB, NBA, NBAPA, NHL, Proskauer Rose, Sports Business Journal

Two NFL CBA Vets Draw Battle Lines

No, that’s not Mark Murphy & Doug Allen. But you get the idea. (copyright bret_libendorfer)

Sports Business Journal asked four veterans of the sports labor wars to share their thoughts on the state of labor relations in the NFL, NBA, and MLB.  For the NFL, Mark Murphy, president and CEO of the Green Bay Packers, lays out the owners’ and league’s case.  For the NFLPA, former assistant executive director of the NFLPA, Doug Allen sets the stage for the players’ positions.

Murphy’s arguments and issues (NFL):

• player salaries/costs are rising faster than revenues;
• NFLPA already has access to as much NFL financial data as needed to understand the business;
• owners need authority to recoup bonus money for suspended players;
• wants a rookie salary cap;
• ending NFLPA litigation against CBA-agreed anti-doping policy.

Allen’s points (former NFLPA):

• re-dedicate to growing the business of football together;
• owners need to work out revenue sharing; not cap salaries at the level a small market team can afford;
• players need to prepare to “decertify” the union and sue on antitrust grounds if owners attempt to restrict player movement.

My quick thoughts on this are: (1) Murphy’s pitch as a former NFLPA player rep to soothe the fears of the players is misplaced and a bit insulting–he’s switched sides; (2) the argument that salaries are rising faster than revenues is specious due to the salary cap and the probability that salaries are held lower than an open market would bear; (3) Allen is 20-year veteran of the NFLPA and likely has a bunker mentality from living through the previous negotiations; (4) that said, decertification is a real possibility (see NFLPA website).

There’s a lot more to be said about decertification and whether modern antitrust law would actually even be helpful to the union.  For another post.  But quickly, if the union “decertifies,” the league would no longer be protected by the non-statutory exemption to the antitrust laws, and thus would be subject to those laws.  Right now, the NFL is protected from an antitrust suit by the union because of the collective bargaining agreement it has entered into with the NFLPA, which was certified by the National Labor Relations Board.  The 1993 CBA gave the players the right to decertify and challenge the league’s salary cap, the draft, and free agency under the antitrust laws. More here.

Filed under: anti-doping policy, antitrust, NFL revenue, NFLPA, NFLPA Player Representatives, player contracts, restricted free agency, rookie salary cap, salary cap, Doug Allen, Green Bay Packers, Mark Murphy

Is Matt Nagy the New Bill Radovich?

It certainly sounds like it.

As we discussed earlier, Bill Radovich’s claim to fame (in addition to being the namesake of this blog) is his role as a plaintiff in the antitrust suit against the NFL, establishing that the league does not have the same antitrust exemption as baseball.  In that case, the league blacklisted Radovich for having the temerity to challenge the team’s absolute control over his career, even after his contract was up (free agency didn’t exist yet).

So, how is the Matt Nagy case like the Bill Radovich case?  From Jason La Canforna’s NFL.com blog (h/t TweetNFL):

[A]ccording to a league source, Nagy’s deal was negated because he already was under contract to an Arena Football League team. And even with the AFL, by various accounts folding/folded, it was a violation of league procedures. The Eagles could try to work out the situation and resubmit the contract, but the team now says it will go “in a different direction.”

So I guess this saga is over.

It’s not a perfect analogy.  Supposedly, Nagy is under contract with the arena league still (though the league has shut down), but we’ll see if this is really due to a legitimate non-compete type clause or whether this is a concerted action by the league to punish players for participating in a competing league.

Maybe this saga isn’t over.  And a shame, too.  How great would the Matt Nagy storyline have been?

Filed under: antitrust, player contracts, Bill Radovich, Matt Nagy

Who is Radovich and Why Would He Want Revenge?

I’ve named this blog Radovich’s Revenge mostly because I thought it sounded awesome — an alliteration, a Russian sounding name, “revenge” is a great motivator, etc.  That said, the Radovich I’m invoking is actually a real guy, Big Bill Radovich (not the tackle playing for the Vikings, Drew Radovich,  thought maybe they’re related).

Bill Radovich played his college days at USC and then 5 years at guard with the Detroit Lions (1938-1941, 1945). Then his story got interesting.  Here’s the wikipedia story:

The next year he asked to be traded to the Los Angeles Rams, or be better paid, as his father, who lived near that city, was seriously ill and he wanted to be able to spend more time with him. Lions’ owner Fred Madel Jr. refused, saying (according to Radovich) “I’d either play in Detroit or I wouldn’t play anywhere”. Since his contract had expired, he instead signed with the Los Angeles Dons of the rival All-America Football Conference (AAFC) and played with them for two seasons, despite Madel’s promise to put him on a blacklist for five seasons. In 1948 the San Francisco Clippers of the Pacific Coast League (PCL), a minor pro football league whose clubs had some affiliations with the NFL, offered him a position as a player and coach.  After learning that the NFL had indeed blacklisted Radovich due to his play in the AAFC and would punish any club that did hire him, however, the Clippers withdrew their offer.

So, like any good American, Radovich brought an antitrust suit against the NFL.  I’ll let you head over to the Wikipedia page to get the whole story, but long story short, he won.  Radovich v. National Football League stands for the principle that the NFL does not have the same antitrust exemption as Major League Baseball.

Why do I bring this story up today?  Because it sounds an AWFUL lot like the news out of the NFL yesterday.

Filed under: antitrust, player contracts, Bill Radovich, Matt Nagy

Jesse Jackson Gets in the Mix

Well, that took longer than expected.  With Michael Vick out of jail and ready to go (after his further suspension), no one has asked him to camp.  Collusion is typically the first word out of the NFLPA’s mouth, but they’ve been beaten to the punch by the formidable Jesse Louis Jackson, Sr.  According to the Washington Post (DC):

“I want to make it an issue,” the civil rights leader told the newspaper. “I want teams to explain why they have a quarterback who has less skills but is playing or at least is on the taxi squad, and a guy with more skills can’t get into training camp.”

He’s a man who can “make an issue” out of even the smallest thing.  Someone sign Vick, and quick!

Filed under: antitrust, Jesse Jackson, Michael Vick, Sr.