NFL Loses (some?) antitrust protection.

[gueman]

So does this mean that all 32 teams will make there own deals from now on?

NFL loses bid for antitrust protection

Associated Press

WASHINGTON -- The Supreme Court rejected the National Football League's request for broad antitrust law protection Monday, saying that it must be considered 32 separate teams -- not one big business -- when selling branded items like jerseys and caps.

"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," said the retiring Justice John Paul Stevens, writing for a unanimous court.

The high court reversed a lower court ruling throwing out an antitrust suit brought against the league by one of its former hat makers, who was upset that it lost its contract for making official NFL hats to Reebok International Ltd.

?

Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that 'deprive the marketplace of independent centers of decisionmaking ... and therefore of actual or potential competition.'

? -- Supreme Court Justice

John Paul Stevens

American Needle, Inc. sued, claiming the league violated antitrust law because all 32 teams worked together to freeze it out of the NFL-licensed hatmaking business and gave Reebok an exclusive 10-year license.

The company lost and appealed to the Supreme Court but the NFL did as well, hoping to get broader protection from antitrust lawsuits.

Major League Baseball is the only professional sports league with broad antitrust protection. The National Basketball Association, the National Hockey League, the NCAA, NASCAR, professional tennis and Major League Soccer supported the NFL in this case, hoping the high court would expand broad antitrust exemption to other sports.

But Stevens said NFL teams directly compete on many levels. Citing the two teams in this year's Super Bowl, the New Orleans Saints and the Indianapolis Colts, Stevens said that teams compete against each other "to attract fans, for gate receipts and for contracts with managerial and playing personnel."

"Directly relevant to this case, the teams compete in the market for intellectual property," Stevens said. "To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks."

American Needle was one of many companies that made NFL headgear until the league awarded an exclusive contract to Reebok. Lower courts threw out American Needle's lawsuit, holding that nothing in antitrust law prohibits NFL teams from cooperating on apparel licensing so the league can compete against other forms of entertainment.

But the high court turned away that theory and sent American Needle's antitrust lawsuit back to the lower court.

"Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that 'deprive the marketplace of independent centers of decisionmaking ... and therefore of actual or potential competition,' " Stevens said.

Just because NFL teams have a single organization, the National Football League Properties, to jointly develop, license and market its logos does not mean it can escape antitrust scrutiny, Stevens said.

"If the fact that potential competitors shared in profits or losses from a venture meant that the venture was immune from" antitrust law, Stevens said, "then any cartel" could evade the antitrust law simply by creating a 'joint venture' to serve as the exclusive seller of their competing products."

The argument that NFL teams also need each other to play an NFL season also doesn't work, Stevens said. "A nut and a bolt can only operate together, but an agreement between nut and bolt manufacturers is still subject to" antitrust scrutiny, Stevens said.

The league argued that a court decision against it "would convert every league of separately owned clubs into a walking antitrust conspiracy" and bring legal challenges to any decisions that the teams make collectively like scheduling.

But Stevens disagreed.

"The fact that NFL teams share an interest in making the entire league successful and profitable, and that they must cooperate in the production and scheduling of games, provides a perfectly sensible justification for making a host of collective decisions," he said.

The case is American Needle v. NFL, 08-661.

[RedRenesis]

Im no lawyer, but Stevens makes an argument about opening the process to competition, but if you get 32 teams that all choose to sell their rights to just one company each, have you reached 'actual or potential competition'? That one company can still produce a line of products for that club that you may or may not like, and charge what you may or may not want to pay. Kinda like what Reebok has over the market right now. So in the end does anything really change?

[Don]

Basically if the teams all want Reebok, then thats their right. But the NFL cannot make a blanket decision for all the teams as to who can make their merchandise.

[Mac the Knife]

Yale, correct me if I'm wrong here, but this ruling doesn't remove any anti-trust exemption the NFL previously enjoyed, it simply neglects to give it an exemption. The NFL didn't have an anti-trust exemption in this area, and the court merely confirmed that and remanded the case back to the lower courts for further review.

[Gothamite]

Yale, correct me if I'm wrong here, but this ruling doesn't remove any anti-trust exemption the NFL previously enjoyed, it simply neglects to give it an exemption. The NFL didn't have an anti-trust exemption in this area, and the court merely confirmed that and remanded the case back to the lower courts for further review.

That's my understanding as well. The NFL doesn't have an exemption, but desperately wants one. They specifically chose this case to ask SCOTUS to use this case to give them an antitrust exemption.

Whoops.

[gueman]

So do you think teams will start to strike deals of there own? Say the Ravens with home town Under Armour? Could Nike, Adidas, and others become NFL suppliers again?

[oddball]

I think what everyone is missing is how this is no different than what drinks you sell at the stadium or who your hot dog supplier is. The ruling is correct. The only way the NFL can force teams to go through the same manufacturer is to own all 32 teams. What this does, is actually allow other companies to strike deals with teams, which I think is fair. It doesn't mean that there won't be Reebok caps by all 32 teams, but that other manufacturers can produce caps for teams.

[rams80]

I for one eagerly await the Rams' new digs that are made by Ma and Pa's ye olde sewing Emporium.

Lowest bidder FTL!

[BBTV]

I think what everyone is missing is how this is no different than what drinks you sell at the stadium or who your hot dog supplier is. The ruling is correct. The only way the NFL can force teams to go through the same manufacturer is to own all 32 teams. What this does, is actually allow other companies to strike deals with teams, which I think is fair. It doesn't mean that there won't be Reebok caps by all 32 teams, but that other manufacturers can produce caps for teams.

Do different McDonalds use different coffee cup vendors? I'm not sure, but I'd doubt it. There's power in uniting, and it's just good business... as long as there is still revenue sharing. The fact is that they are not 32 independant businesses. What good is a franchise if there's no league for them to play in? It's not like Daniel Snyder can just say that he "owns" the Redskins, and is taking them to the UFL. He owns a franchise in the NFL - outside of the context of the league, it's totally worthless. They all need each other, and all need to work together.*

*except for Jacksonville, who just brings everyone down. Let's just move them already.

[gueman]

I think what everyone is missing is how this is no different than what drinks you sell at the stadium or who your hot dog supplier is. The ruling is correct. The only way the NFL can force teams to go through the same manufacturer is to own all 32 teams. What this does, is actually allow other companies to strike deals with teams, which I think is fair. It doesn't mean that there won't be Reebok caps by all 32 teams, but that other manufacturers can produce caps for teams.

Do different McDonalds use different coffee cup vendors? I'm not sure, but I'd doubt it. There's power in uniting, and it's just good business... as long as there is still revenue sharing. The fact is that they are not 32 independant businesses. What good is a franchise if there's no league for them to play in? It's not like Daniel Snyder can just say that he "owns" the Redskins, and is taking them to the UFL. He owns a franchise in the NFL - outside of the context of the league, it's totally worthless. They all need each other, and all need to work together.*

*except for Jacksonville, who just brings everyone down. Let's just move them already.

Well McD's and many other large companies do use different vendors, however those vendors must meet certain criteria depending on the product. So you could have 50 independent companies across the USA that will make napkins or cups or what ever. But for some services, say repairs then each unit can find who ever it wants.

I have a feeling that this will end things like "Coors Light the official beer of the NFL." I do think the NFL will issue a level of standards in many areas that the teams should follow just like McDonald's and other companies with franchises.

Either way the future should be very interesting for the NFL

[Saint Zephyr III]

I think a way to understand this is how you'd understand the relationship between the federal government and the state governments. While each state has to follow the Constitution, federal laws, and the Bill of Rights, each state is ultimately its "own" state. For example, just because there's a federal law against medical marijuana, several states have their laws that allow them to have it.

So the only thing that I can see happening from this is that while the Dallas Cowboys could have a contract with Bud Light, the Houston Texans could have a contract with Lone Star or the Washington Redskins could have Coors Light or, hell, the Seattle Seahawks could have one with Starbucks rather than a single blanketed contract obligation. So in a way, this could actually help the collective revenue pool since the really big contracts that teams can get individually would still benefit all the teams..

[GMac]

I think a way to understand this is how you'd understand the relationship between the federal government and the state governments. While each state has to follow the Constitution, federal laws, and the Bill of Rights, each state is ultimately its "own" state. For example, just because there's a federal law against medical marijuana, several states have their laws that allow them to have it.

I believe federally its legal to have pot as long as you have a prescription it is only legal in a few states for it to be prescribed... but still illegal to be grown by federal law... its a giant mess... but the funny thing is there are people in the states still getting federally funded, and grown marijuana and they will continue to receive it till the day they die, the program was ended by Bush Sr. but they couldnt take away these peoples medicine... Penn and Tellers Bull:censored: cover it in their "War on Drugs" episode.. its really an eye opener...

But back to the real topic at hand... While I believe the teams should be able to cut their own deals, I do think its better for all teams involved if the league can do some blanket deals... for instance you will get a team like the Cowboys getting a major beer deal like say Budweiser, and who will Jacksonville get Mickey's Malt Liquor...

[Gothamite]

I have a feeling that this will end things like "Coors Light the official beer of the NFL." I do think the NFL will issue a level of standards in many areas that the teams should follow just like McDonald's and other companies with franchises.

I don't see that at all. The NFL can still have the official ______ of its umbrella organization, and teams can have their own official _______. That's the way it has been for some time.

Bud Light will have the rights to the NFL shield and its marks, including the Super Bowl.

But it doesn't have exclusive rights to team logos -- team deals are done separately. Not only that, team alcohol deals are also not exclusive. So the same team can have both Coors and Bud Light as sponsors.

This deal also doesn't include spirits rights nor does it include any television advertising exclusivity on NFL broadcasts, other than an extension to the exclusive Super Bowl rights it had already owned through 2012.

And it doesn't include the rights to use any players. Active players can't endorse alcohol brands.

(by the way, how did the NFL get Bud to pay $1.2 billion for that?)

What the NFL is potentially losing, based on the outcome of the underlying lawsuit, is the ability to dictate that one company and one company alone can license the right to produce merchandise for all teams. Remember the days what you could a replica of your team's football jersey made by Nike, or by Starter, or by Reebok, or by Wilson, all in the same store? Those days might be back again.

Now, there are farther-reaching implications of antitrust protection beyond merchandising, which is why the NFL so desperately craves it. But they shouldn't have tried to force SCOTUS' hand - this ruling sets that goal back by decades at least.

[Mac the Knife]

The fact is that they are not 32 independant businesses. What good is a franchise if there's no league for them to play in? It's not like Daniel Snyder can just say that he "owns" the Redskins, and is taking them to the UFL. He owns a franchise in the NFL - outside of the context of the league, it's totally worthless. They all need each other, and all need to work together.*

Actually, Dan Snyder could do exactly that if he chose - and in fact, it has precedent in pro football (albeit not for over half a century). Each franchise in the NFL is a business entity in and of itself, and as such, they can leave the NFL at any time. The reason they don't, aside from the obvious, is that there are legal and financial ramifications for doing so - but at least in theory, it could be done.

[rams80]

You know, the more I think about this, I'm a bit surprised by the decision. Based on some of their more prominent recent rulings, I had gained the distinct impression that the current SCOTUS was very much pro-big business.

[The_Admiral]

I think they still are, but Goodell and the NFL were so over the line on this one that even the Supreme Court had to bust him down a little.

[Gothamite]

True enough. A rare misstep for the NFL - when Goodell screws up, he really screws up.

[IceCap]

You know, the more I think about this, I'm a bit surprised by the decision. Based on some of their more prominent recent rulings, I had gained the distinct impression that the current SCOTUS was very much pro-big business.

There's a distinct difference between being pro-big business and being pro-monopoly.

I think what everyone is missing is how this is no different than what drinks you sell at the stadium or who your hot dog supplier is. The ruling is correct. The only way the NFL can force teams to go through the same manufacturer is to own all 32 teams. What this does, is actually allow other companies to strike deals with teams, which I think is fair. It doesn't mean that there won't be Reebok caps by all 32 teams, but that other manufacturers can produce caps for teams.

Do different McDonalds use different coffee cup vendors? I'm not sure, but I'd doubt it. There's power in uniting, and it's just good business... as long as there is still revenue sharing. The fact is that they are not 32 independant businesses. What good is a franchise if there's no league for them to play in? It's not like Daniel Snyder can just say that he "owns" the Redskins, and is taking them to the UFL. He owns a franchise in the NFL - outside of the context of the league, it's totally worthless. They all need each other, and all need to work together.*

Not anymore. Prior to this ruling maybe, but not after. According to the SCOTUS he could if wanted to, at least in theory. He won't, because it would be an idiotic thing to do, but there's nothing stopping him from a legal perspective anymore. The NFL should have just left well enough alone and not tried to force the Court's hand. This one backfired.

*except for Jacksonville, who just brings everyone down. Let's just move them already.

Well yeah. But it makes to much sense to just do it. They'll fight to keep the team where it is longer then necessary.

What the NFL is potentially losing, based on the outcome of the underlying lawsuit, is the ability to dictate that one company and one company alone can license the right to produce merchandise for all teams. Remember the days what you could a replica of your team's football jersey made by Nike, or by Starter, or by Reebok, or by Wilson, all in the same store? Those days might be back again.

I don't think those days will be back again, exactly. I think what's much more likely to happen is a situation where teams opt to go away from Reebok, but you can still only buy replicas that match with what each team is wearing. Say the Pats decide to stay with Reebok. Well all the Pats replicas will be Reebok. If the 49ers decide to to go with Nike, then all the 49ers replicas will be from Nike. And so on.

Ultimately, from a uniform design standpoint, I think this is a good thing. Think about it. Almost every time someone posts a league-wide redesign in the Concepts section what's the major problem? It's that when you have one designer working on all the teams eventually you end up with a situation where a single group of aesthetics has permeated the entire league. All the concepts may be very well done, but the same person has designed them all, and thus all the uniforms are based in the same aesthetics. Well that's what's been happening in real life since the NFL went to a single supplier in Reebok.

The Cardinals/Falcons and Bills/Bengals are the most obvious examples of this. We have a situation where the same design team is handling every new NFL redesign. Thus the same tastes and aesthetics are present in some form in all of their work. If teams now have the option to go with other suppliers we may get more variety in new uniform designs.

[BBTV]

How could he just pick up his team and move it to a new league? Aren't player and coach contracts bound to NFL? Or could he sign Albert Haynesworth and then a week later tell him that he's going to be playing in the Arena league?

I thought that the owners really owned the rights to a franchise, not literally the team.

[IceCap]

How could he just pick up his team and move it to a new league? Aren't player and coach contracts bound to NFL? Or could he sign Albert Haynesworth and then a week later tell him that he's going to be playing in the Arena league?

I thought that the owners really owned the rights to a franchise, not literally the team.

I think this new SCOTUS ruling changed all of that. The contracts aren't NFL contracts, at least not anymore. They're professional football contracts issued by individual teams that happen to choose the NFL as the league they want to compete in.

So yes, in theory Dan Snyder could sign Mr. Haynesworth and then tell him he's decided that the AFL is the place for the Redskins. He won't, because it would be incredible idiotic, but theoretically he could do it.

So I guess the best way to summarize it is that pre-SCOTUS ruling the teams were considered NFL franchises, post-SCOTUS ruling the teams are independent pro football business entities that have decided to compete in the NFL.