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The 'Needle' and the damage done?


Viper

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I'm amazed there isn't already a thread about this case pending before the U.S. Supreme Court (my search for "American Needle" on these forums came up completely empty) - not only because of its potential to completely transform the "big four" leagues, but because the case originated with a company that once made NFL team-branded baseball caps.

Short version of the story: After losing its non-exclusive NFL license in favor of an exclusive deal with Reebok, American Needle Inc. sued the league, claiming that the NFL's exclusive licensing arrangements violated U.S. antitrust law. The company lost the original case and the appeal, as the courts ruled that the NFL could be considered a single entity for league-wide licensing purposes, thus making federal antitrust law irrelevant. The company then took their appeal to the Supreme Court - but instead of arguing for a dismissal, the NFL actually joined American Needle in asking SCOTUS to hear the case, which they ultimately agreed to do. Gabe Feldman at The Sports Law Blog explains why the NFL did this:

American Needle’s argument is simple—the Supreme Court should hear the case and reverse it because the Seventh Circuit’s holding conflicts with over 50 years of case law in other circuits. The NFL’s argument is more complex. Because it won the case before the Seventh Circuit, the NFL is seeking an expansion, not a reversal, of the decision. The NFL is thus arguing that professional sports leagues are single entities for all purposes, and thus should be completely exempt from [sherman Antitrust Act] Section 1 scrutiny. In the alternative, the NFL claims that professional sports leagues should be deemed single entities with respect to all of their “core venture functions.” Of course, the NFL will then claim that virtually every decision they make constitutes a “core venture function.”

A ruling in the NFL's favor would effectively extend antitrust exemption to all pro sports leagues operating in the U.S. (Ironically, it would do so in a way that renders MLB's specific exemption meaningless.) It would also effectively kill free agency as we know it. Needless to say, the players' unions in the "big four" leagues are scared $#|tless about this prospect, and are expected to file "friend-of-the-court" arguments against the NFL's position.

Interestingly, American Needle v. NFL will likely be one of the first cases heard by Sonia Sotomayor as a Supreme Court justice.

More on the case here.

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Good Thursday reference!!

Staring at the setting sun

No reason to come back again

The twilight world in blue and white

The needle and the damage done

Lol. It's an interesting court case. More interesting than my personal favorite, Marbury v. Madison (kidding).

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I'm amazed there isn't already a thread about this case pending before the U.S. Supreme Court (my search for "American Needle" on these forums came up completely empty) - not only because of its potential to completely transform the "big four" leagues, but because the case originated with a company that once made NFL team-branded baseball caps.

Short version of the story: After losing its non-exclusive NFL license in favor of an exclusive deal with Reebok, American Needle Inc. sued the league, claiming that the NFL's exclusive licensing arrangements violated U.S. antitrust law. The company lost the original case and the appeal, as the courts ruled that the NFL could be considered a single entity for league-wide licensing purposes, thus making federal antitrust law irrelevant. The company then took their appeal to the Supreme Court - but instead of arguing for a dismissal, the NFL actually joined American Needle in asking SCOTUS to hear the case, which they ultimately agreed to do. Gabe Feldman at The Sports Law Blog explains why the NFL did this:

American Needle?s argument is simple?the Supreme Court should hear the case and reverse it because the Seventh Circuit?s holding conflicts with over 50 years of case law in other circuits. The NFL?s argument is more complex. Because it won the case before the Seventh Circuit, the NFL is seeking an expansion, not a reversal, of the decision. The NFL is thus arguing that professional sports leagues are single entities for all purposes, and thus should be completely exempt from [sherman Antitrust Act] Section 1 scrutiny. In the alternative, the NFL claims that professional sports leagues should be deemed single entities with respect to all of their ?core venture functions.? Of course, the NFL will then claim that virtually every decision they make constitutes a ?core venture function.?

A ruling in the NFL's favor would effectively extend antitrust exemption to all pro sports leagues operating in the U.S. (Ironically, it would do so in a way that renders MLB's specific exemption meaningless.) It would also effectively kill free agency as we know it. Needless to say, the players' unions in the "big four" leagues are scared $#|tless about this prospect, and are expected to file "friend-of-the-court" arguments against the NFL's position.

Interestingly, American Needle v. NFL will likely be one of the first cases heard by Sonia Sotomayor as a Supreme Court justice.

More on the case here.

That's a leap of faith considering baseball has some of the most liberal free agency despite being the only one with an anti-trust exemption (The Curt Flood Act rolling back baseball's anti-trust exemption for labor came well after the MLBPA got its FA rights). The only league where this could come into play in a major fashion is the NBA as it looks like they are already heading towards a 05 NHL type lockout. The NFL and NHL basically already have the systems they want and may not want to go through a work stoppage for any additional gains.

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In my mind, Excluse Deal=Monopoly. Seeing one too many of the NFL teams' uniforms go from simple and classy to computer-made clown suits is enough for me. Most of this is because Reebok feels the need to make sure this generation of the NFL (and NHL) fans, players, etc. has their stamp on it.

American Needle has a point, but it seems as though the NFL is pushing for more control of its franchises. The single entity aspect of it spooks me, because in the case of the NBA, that may only solidify their ability to fix game outcomes, etc., or so the conspiracy theorist will tell you. That and leagues could have more, if not all, say on where teams would be located, meaning that, in many cases, a team that is fine where it is could be pushed out of its market if the league says so (somewhat similar to how the Montreal Expos were bought out by MLB and ran into the ground after being a contender in the early 1990s, dying a slow death in Montreal), or a team needing a relocation (i.e., Atlanta Thrashers, Memphis Grizzlies, Phoenix Coyotes, etc.) could be told to stay in its place, despite the lack of fan support. At least that's how it seems to me if the NFL wins the case.

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I haven't done much (well, any) research into this, but I fail to see how the NFL should not be allowed to issue exclusive licensing contracts. It is a single entity, it collectively bargains as such, and manages tv / radio rights as such. Saying it is a monopoly is foolish. They could just open up their own production plant, and make their own jerseys / caps / apparel, and not issue any licenses.

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Good Thursday reference!!
Staring at the setting sun

No reason to come back again

The twilight world in blue and white

The needle and the damage done

Actually I had Neil Young in mind (and evidently, so did Thursday).

I've seen the needle and the damage done

A little part of it in everyone

but every junkie's like a settin' sun

BTW, did the mods move this thread to the Sports Logos subforum? I thought I had posted it under Sports In General, which is where it really belongs, since the case has taken on ramifications way beyond product licensing.

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BTW, did the mods move this thread to Sports Logos? I thought I had posted it under Sports In General, which is where it really belongs, since the case has taken on ramifications way beyond product licensing.

Yes I did, while it may have taken on ramifications beyond product licensing it's roots are there and therefore belongs here.

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  • 5 months later...

I haven't done much (well, any) research into this, but I fail to see how the NFL should not be allowed to issue exclusive licensing contracts. It is a single entity, it collectively bargains as such, and manages tv / radio rights as such. Saying it is a monopoly is foolish. They could just open up their own production plant, and make their own jerseys / caps / apparel, and not issue any licenses.

I agree with you as far as merchandising is concerned. However, the NFL is attempting to use this case to make very, very bad law. If the NFL really is just one entity, then the correct response under American law is not for the Supreme Court to bless the monopoly. The correct response is for the NFL to be forcibly broken up into at least two, preferably three or more, smaller leagues with a special judicial or administrative overseer appointed to ensure they no longer collude with one another. I mean, all of the arguments advanced by the NFL in this case would apply equally well if, say, all the cell service providers got together and formed a National Telecom League and gave Motorola an exclusive contract to manufacture cell phones.

Hopefully, the Supreme Court will find a way to rule very narrowly in this case, such that it does not extend the lower court's ruling or make any new law antitrust law; this is the kind of case where any new law made will almost necessarily be bad law.

However, consider the consequences of a (very unlikely) Supreme Court ruling in American Needle's favor: Each team would be free to negotiate its own merchandising contracts. I can't see a way in which this would not be Very Good News from a uni buff's perspective. Recent history has shown that merchandising competition produces better uniform design than merchandising monopolies.

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Good Thursday reference!!

Staring at the setting sun

No reason to come back again

The twilight world in blue and white

The needle and the damage done

Lol. It's an interesting court case. More interesting than my personal favorite, Marbury v. Madison (kidding).

i knew i knew the lyrics from somewhere

FULL COLLAPSE RULES!!1!1

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I agree with you as far as merchandising is concerned. However, the NFL is attempting to use this case to make very, very bad law. If the NFL really is just one entity, then the correct response under American law is not for the Supreme Court to bless the monopoly.

Is it really a monopoly, or just a market leader in the industry, dominate its competitors such as the UFL, as well as Canadian and Arena football?

I presume there's a reason that the individual teams are called "franchises."

I think viewing the leagues as individual entities makes a lot of sense.

Very ironic that baseball, with its anti-trust exemption, is the only league without a salary cap. One thing I found incredibly amusing and pathetic - after the Yankees won the series and thankfully reminded people about what a joke competition is in major league baseball...some people argued against a salary cap because it's SOCIALISM! Horrors! I wonder if they derive entertainment from competition in business and industry, despite its inequities. Or maybe they celebrate if their favorite team turns a profit, following their teams books instead of the standings.

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I agree with you as far as merchandising is concerned. However, the NFL is attempting to use this case to make very, very bad law. If the NFL really is just one entity, then the correct response under American law is not for the Supreme Court to bless the monopoly.

Is it really a monopoly, or just a market leader in the industry, dominate its competitors such as the UFL, as well as Canadian and Arena football?

I presume there's a reason that the individual teams are called "franchises."

I think viewing the leagues as individual entities makes a lot of sense.

Very ironic that baseball, with its anti-trust exemption, is the only league without a salary cap. One thing I found incredibly amusing and pathetic - after the Yankees won the series and thankfully reminded people about what a joke competition is in major league baseball...some people argued against a salary cap because it's SOCIALISM! Horrors! I wonder if they derive entertainment from competition in business and industry, despite its inequities. Or maybe they celebrate if their favorite team turns a profit, following their teams books instead of the standings.

LOL at the socialism comparison. I'll take my company for example. There's a ton of departments that all have staffing needs. Each department gets a budget to spend on salaries (existing employees + new hires) that is based on the prior year's revenues. That determines if the department can go outside and hire a hot shot experienced person (at a high salary) or will have to look for a kid straight out of college (who they can pay next to nothing.) My department may generate more revenue for the company than any other one (for my example, at least) but we wouldn't be able to function if my department got all of the budget money and the other's didn't get much (if even anything.)

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One thing I found incredibly amusing and pathetic - after the Yankees won the series and thankfully reminded people about what a joke competition is in major league baseball...

Okay, I don't want to go too far off-topic, but we hear this complaint a lot, and it's absurd on its face. In the 2000s, there were eight separate World Champions. And six other teams won their pennants but fell short in the Classic. That's a pretty good spread.

Is baseball stacked in favor of big-money teams? Of course. But the one thing we ought to have learned in the last decade is that every team can have a shot at getting to the World Series.

Getting back to the case, I'm surprised that SCOTUS is even slightlysympathetic towards American Needle:

Gregg H. Levy, a lawyer for the league, ran into trouble when Justice Antonin Scalia asked just how far the teams ability to act collectively extends.

So does that mean they can agree to fix the price at which their franchises will be sold, by concerted agreement, because, after all, they are worthless apart from the N.F.L.? Justice Scalia asked.

Mr. Levy said yes.

Ooh, Justice Scalia responded, surprised. I thought I was reducing it to the absurd.

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