What is the proper goal for a professional sports team, profits or championships?

Professor David Zaring asks if “the high-end sports team debt burden [is] a feature of private equity?”:

And plenty of other examples exist, as Americans continue to buy up the English Premier League, as concern grows that debt financing in high end soccer (Real Madrid, AC Barcelona are almost as debt ridden, Arsenal isn’t far behind) is reaching unsustainable levels. I’ll note that the most indebted teams are the ones who have been playing in the Champion’s League finals, of late, and the least indebted ones – those would be the non-private equity owned German teams (often owned by their fans, in fact) – are not. But that too, smacks of the risk-or-insolvency strategy that, fair or not, is almost as associated with private equity strategy as is a love of debt.

And one can go further. . . . It’s armchair empiricism at best, but if I were in major league baseball, the one American sport without a salary cap, I would worry about selling another franchise to a private equity firm.

This question runs right to the core of the paradox of big time sports, with a modern financial crisis twist. For traditional businesses, there is (generally) a single primary goal: become and remain profitable, thus ensuring that you survive. Many people assume that all businesses do this well and the only issue is how to fairly distribute their profits, but if you take the longer view you’d be surprised how much turnover there is among the largest companies — many that at one time were among the largest on the planet now no longer exist. A perusal of the companies that historically made up the Dow Jones Industrial Average confirms this. So remaining profitable is a constant struggle.

On the other side, you have the teams’ professed goal: to win games and championships. Of course it’s not clear that these two interests are aligned: sure, more wins tends to result in more ticket sales and sales of merchandise, but putting out such a good product requires expensive players, expensive coaches, and expensive facilities. There’s no guarantee that the “break-even” point from a profit or business standpoint would result in championship level output. It might be to have a winning season but avoid New York Yankees levels of expenses.

This tension is not new, and the two motives have generally been able to coexist. Everyone, at least implicitly, understands that sports teams must at least make some money (just ask the USFL what it is like to have an unprofitable sports franchise), but fans and the sports media tend to turn on owners who are perceived as pursuing profits ahead of wins. The most beloved owners tend to be the ones who establish an image of being willing to spend and even lose money to see their team succeed, even if in practice that is really the case. But things have gotten more interesting in recent years.

There are a number of factors now that have not always been present in major sports. The first factor is the one that underlies them all, which is that, at least in certain sports like professional football, it would be very difficult for a franchise to actually be unprofitable. This is because the league as a whole generates massive revenues, and it redistributes much of that revenue among the various teams, including TV revenues, merchandising, and even some team specific revenues get redistributed to other teams (though that may change). Buttressing this is that, despite the high demand for professional football, the league has an effective monopoly over the sport and limits the numbers of teams.

This sounds like a strange point but think about it: The NFL limits the league to keep the revenues per team artificially high, whereas if you wanted to open up the market for football teams (i.e. if we imagine the NFL didn’t enjoy all the legal exemptions it now does to restrict who can have a team), you’d see a lot of people starting new football teams because each one, even the bad ones, enjoys profits. It’s the old supply and demand argument: if you are making big profits making widgets, eventually — unless there are significant barriers to entry — others will jump in and sell widgets too and get profits too, until the market got saturated. Don’t think others would start teams? I believe they would (though I admit this example is very artificial) as there are many geographic areas of the country without a football team and, further, football, being a sport, would attract many wealthy hobbyists. Think about horse racing: The sport of kings is profitable for very few owners despite the large purses for winning, because, to oversimplify, wealthy people can buy a horse, get it cleared, and begin competing.

The point is that NFL teams effectively make monopoly profits, which allows them more freedom to “go for winning” as opposed to always focusing on profitability. But that’s not always the case with sports leagues, as we’ve seen with European soccer and other leagues, including non-NFL football leagues.

Next, you have the imposition of the salary cap, which is a great deal for owners and a terrible one for players. Of course, that is different than saying it is bad for sports fans, because it might well be good for them (competitive balance and all that). But it’s a terrible deal for players as a whole because it makes competing for salaries a zero sum game: Assuming teams max out the salary cap (as most teams effectively do in football), each additional dollar a player earns is taken from a teammate. On the other hand, for owners it protects them from the hard business versus winning decisions owners in leagues with looser salary caps must make. In Major League Baseball, every team is compared to the Yankees and Red Sox, simply because they tend to outspend everyone else. Sure, when a lesser team wins it’s a great underdog story, and occasionally it gives rise to superior management techniques as with Moneyball, but sports contests are like wars between countries: At the end of the day, the bigger team with more resources is probably going to win.

If you combine the above two points, you have a very owner-friendly system in a league like the NFL: You have guaranteed profits from your restrictions on other entrants into the market and you have alleviated pressure from the fans and media to focus on winning by spending more because of the salary cap.

But let’s get back to Zaring’s point about debt. (more…)

That’s what I call a shootout

Back in 1990 — before the spread offense had been invented, so we’re told — Houston beat TCU 56-35 in one of the greatest aerial duels of all time. TCU’s quarterback, Matt Vogler, threw for 690 yards and five touchdowns on 44 of 79 passes. Houston’s David Klingler countered with 563 yards and seven touchdowns on 36 of 53 passing (with four interceptions). Of course, Klingler was running John Jenkins’s brand of the run and shoot. Below are the scoring drives from the first half (hat tip to Football Mastery for the vids):

See below the jump for the second half clips:
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Smart Links 2/22/2010

Last season, despite similar hype, Tennessee’s Eric Berry outshone USC’s Taylor Mays. One oft-cited flaw in Mays’s game was his over-reliance on the kill-shot — his desire to lay huge hits on receivers sometimes results in his getting out of position and either not breaking up the ball or just missing the angle. But oh, those hits were fierce.

The result, however, has been that his draft stock has fallen. As Dr Saturday notes, he went from a likely top 5 or 10 pick last year to a late first-rounder (and possibly even a second rounder) this year. But was this because Mays was freelancing, or was he coached to do it? In his words:

“I think there is some truth to [his reputation for going for too many big hits] but at the same time that is what I was coached to do. At USC, I was coached to deliver knockout shots. I have the potential athletically and mentally to catch the ball and go after the ball. In one week [at the Senior Bowl] I was able to go from only hitting receivers to going after the ball. I just want a chance to work with a coach who can help me do that.”

Doc Sat speculates that maybe this kind of coaching from Carroll is one of the reasons that his teams went from stunningly great turnover margins in his first six seasons to more down to earth levels. I do, however, have never been convinced that you can really coach turnovers. Teams that play a lot of zone defenses (well) tend to get more interceptions because they have more eyes on the ball, but that’s about it, really. Better talent too can help, but fumbling and even interceptions to a lesser extent tends to even out over time. I’m not saying coaches shouldn’t coach turnovers, but it’s not something there is a lot of control over. Six seasons is a lot, but not enough to prove that luck wasn’t a big factor.

2. Blutarsky observes that Auburn has made Gus Malzahn the SEC’s highest paid offensive coordinator at $500k a year. But the Senator also notices that Malzahn’s salary is still significantly less than several other defensive coordinators around the league, and wonders why that is. I think he hits on the most likely answer: Many of the head coaches have offensive backgrounds, and thus hire defensive coaches to complement that. Auburn, with head coach Gene Chizik, a former defensive coordinator, is just the opposite.

3. L.A. Times Reports on Pete Carroll’s and USC Athletic Director Mike Garrett’s meeting with the NCAA on the Reggie Bush/O.J. Mayo fiascoes: “USC representatives spent more than eight hours in a hotel ballroom fielding questions from the 10-member infractions committee.”

4. Offseason football writing often tends to turn into a catalogues of player arrests and petty offenses or injuries, which is more depressing than interesting to me (except when done exceptionally well). But, as Doc Sat (and others) point out, what’s going on at Oregon is worth a closer look, if for no other reason than that it might have very real effects on their football team in the fall.

5. Bill Walsh’s quarterback manual. Seriously. Do I need to say anything else? Just download it, and work your way through it. The best part? It’s not even that advanced or complicated. He used to send a lot of this stuff out to high school coaches he was recruiting or had relationships with. (Thanks to reader Topher for the link.)

6. New rules intended to clean up the game are moving through the system. From the Wiz:

pryor

You might recall Terrelle Pryor’s tribute to Michael Vick in Ohio State’s opener last season against Navy. The words “Mike” and “Vick” were written on his eye black.

Vick wasn’t alone. Tim Tebow got his faith-based message across each game, and countless other players had a message for viewers, from an area code or simple shout-out to mom. Those days are coming to an end.

The Football Rules Committee, meeting in Fort Lauderdale, voted to require players who wear eye black to use solid black with no words, logos, numbers or other symbols. The rule will be in effect for the 2010 season, pending approval by the Playing Rules Oversight Panel. The oversight panel regularly rubber stamps recommendations by the rules committee.

Other rules changes include a crackdown on taunting. Players who draw flags for taunting gestures on their way to a touchdown would have the penalty assessed from the spot of the foul, taking away the score. Penalties that occur in the end zone would continue to be assessed on the extra-point attempt, two-point conversion try or ensuing kickoff. That proposal, which received near-unanimous support, would take effect in 2011.

The committee also agreed to stringent standards on players who have suffered a concussion. Such players will now have to be cleared by a doctor before returning to competition.

TV monitors will be allowed in coaches’ booths in press boxes beginning in 2011. Feeds and equipment for home and visiting teams must be identical.

There will also be a requirement for a 10-yard buffer zone for pregame warmups. A no-player zone will be mandated between the 45-yard lines 60 minutes before kickoff.

Smart Football Super Bowl Preview: Manning vs. Brees

Give the media two weeks before the Super Bowl and they will find every weird angle to take to fill the void: Who has the best food (uh, not Indianapolis); what U.S. Presidents are like what Super Bowl (In a matchup between Super Bowl III, with Broadway Joe, against Thomas Jefferson, the third President, Jefferson won because he “wanted it more.”); and opinion from every blustery ex-player and coach that can be found. But now that the game is here, there’s one aspect that absolutely is at the top of my list: The game features arguably the two best quarterbacks in the league who run undoubtedly the best — and most interesting offenses.

Colts

The show Peyton runs is amazing not only because of its effectiveness, but also because of its simplicity. Indeed, in all but specialty situations they have basically two personnel groups — two wide receivers, two tight-ends, and one running back and three wide receivers, one tight-end and one running back — and they have run the same few plays for the last decade. They rarely shift and instead rely on Peyton to get them to the line and find the appropriate play.

The theory for all this is simple. Although a defense has some options and disguise some things, there are only so many things a defense can do: they might be able to disguise press or loose coverage, or rotate the secondary or send an unexpected blitzer, but they can’t move a cornerback from one side of the field to the other after the snap, and there might be blitzers but there are only so many candidates. As a result Peyton gets his team to the line and surveys the defense. Offensive coordinator Tom Moore typically sends in three plays: two passes and a run or two runs and a pass, and Peyton makes his choice among those three options. Typically, Manning gets the ball snapped with under six seconds left on the play clock; he both wants to take his time surveying the defense and limit late shifts before the snap.

And Manning’s menu of plays are both simple and have been constant for a decade. For runs, he basically has three choices: outside zone (the most common), inside zone, and draw (there are a few others mixed in as well). Believe it or not, the run game comes basically verbatim from what the University of Colorado did in the early 1990s (except for the option runs, of course) — football is not as complicated as people think.

For the passing game, on early downs they run a lot of play-action, where the goal is either to beat the defense deep (through post routes and go routes) or to hit a deep void with a deep crossing route or corner. (The deep crossing route concept is described here.) Another go-to concept is three-verticals, though Manning likes to look for the inside slight off play-action as a quick throw right behind the linebackers. (Video below courtesy of Brophy.)

Play-action from under center:

Play-action from shotgun:

On passing downs and when Peyton is in the shotgun, you’ll see most of the traditional routes that other teams run, but far and away his favorite is the “levels” play. It’s almost idiotically simple — the inside receiver runs a ten-yard in route (often Dallas Clark) while the outside receiver (Reggie Wayne, most typically) runs a five yard in-route. Typically the linebacker runs with the slot and the quick five yarder is open, but once he’s hit that a few times Manning will hit the inside square-in for an easy first down.

levels

I’ve described the “levels” concept (with video) previously here. Below is another diagram showing what typically happens with the coverage:

ds
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Montana Magic

Stumbled across these great videos of Joe Montana, grand executor of Bill Walsh’s precision offense. There are many great things to notice from these clips, but in particularly focus on Montana’s footwork. This is one area where quarterbacks as a whole have regressed.


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Smart Notes 1/18/2010

1 Is it possible for a defense to be “good against the run” or “good against the pass,” or is it merely good, mediocre, or bad? Chase Stuart, in two excellent posts heavy on the game theory (available here and here), shows that, at the very minimum, it’s difficult to say anything meaningful about a defense other than to comment on its general effectiveness; the two phases are too inextricably intertwined. For fans and commentators I think this is correct, though from a gameplanning perspective it remains possible to identify which defenders are most dangerous and what is most difficult to accomplish, not to mention whether the defense is tilting to the pass or run — i.e. extra defensive backs or guys in coverage, or extra run defenders.

2. Survivor bias on the gridiron. From the Freakonomics blog.

3. Tim Tebow’s loping release. During the broadcast of Florida’s bowl game, Brian Billick showed exactly what is wrong with Tebow’s release: It’s long, he brings the ball down too low (this motion generates no additional power or accuracy), and it exposes the ball both to a fumble and to a defender who might break on the ball. See it here (h/t Doc Sat):

The word I had gotten was that Scott Loeffler, Florida’s quarterback coach, had made significant progress with Tim on this but that come gametime, well, a player’s gotta play how he knows how. And Tebow had earned the right to play his way. Yet it is troubling to the lack of progress, and it will hurt him in the draft. But what if it was worse, than a lack of progress — what if Tebow actually regressed on this point? Check out this video which charts Tebow’s release over time, and you be the judge.

4. “Football Island”:
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Smart Notes 1/14/2010

1 There’s a new book out there that I highlight recommend: Coaching the Under Front Defense, by Jerry Gordon. It’s a very nuts and bolts approach to the “under front,” a very common shifted variant of the traditional 4-3 defense, which is the defense of choice for teams and coaches as diverse as Charlie Strong (Florida, now Louisville) and Pete Carroll (USC, now Seattle Seahawks). I hope to have Jerry contribute to the site soon.

2. Haiti. EDSBS collects links on how and where to donate for Haiti. Please do.

3. American Needle round-up. In addition to my post from yesterday, there has been some other great work on yesterday’s oral arguments. The consensus with all seems to be: The NFL won’t get what it wants, though it may ultimately win the case on narrower grounds. From the NFL’s perspective, it was kind of like going deep on second and short: could have been a big play, but as it stands they’ll probably get the first down. If you read one thing, I highly recommend Josh Levin and Dahlia Lithwick’s piece on Slate, where they note how little the Justices seem to know (or care) about football. Both Justices Breyer and Sotomayor disclaim knowledge of football, and Breyer keeps turning the hypotheticals into ones about baseball. Justice Alito, who is a huge baseball fan, doesn’t seem too interested either. (The Court’s biggest football fan, Justice Thomas, is more of a college football fan — his favorite team is the Nebraska Cornhuskers — and in any event he rarely if ever asks questions at oral argument.) Other good takes on the case from: Adam Liptak (NY Times), David Savage (L.A. Times), Jess Bravin (WSJ), and Ashby Jones (WSJ Law Blog).

4. “Depends on what the meaning of ‘is,’ is.” Check the 1:30 mark of Lane Kiffin’s press conference.

5. Speaking of books, I’m currently reading Hilary Martel’s Wolf Hall: A Novel (Man Booker Prize), a sort of reiminaging of the court of Henry VIII. I recommend it.

Recap: Supreme Court hears argument in American Needle v. NFL

The U.S. Supreme Court today heard argument in the American Needle v. NFL case, which proposed the question whether the NFL is a “single-entity” for antitrust purposes and thus immune to antitrust liability. (Read more about it here.) Or does it present that question? The excellent Lyle Denniston attended today’s oral argument (and, unlike most sports outlets, understands the issue), and has his take up on scotusblog.com:

If the National Football League, and other pro sports leagues, want to combine their efforts in commercial activity, they probably are going to have to justify that in federal court, in perhaps prolonged trials focusing on whether any such action is really for the good of the game, or is aimed only at making more money. Just one trip to the Supreme Court to avoid that, it appears, will not be enough. That prospect loomed on Wednesday as the Justices weighed the NFL’s broad claim to antitrust immunity for joint operations, a claim that the other pro sports leagues similarly make.

The Court heard 70 minutes of oral argument in American Needle v. NFL (08-661), a case that supposedly was to focus on a single, simple question: is the NFL, along with its 32 teams, a “single entity” and therefore immune to the Sherman Antitrust Act when they act jointly in a business effort? But Justice after Justice insisted strenuously that that is not really the issue, and that the case probably needs to go back to the lower courts for a potentially penetrating inquiry into what kinds of commerce are closely enough related to pro football that they escape antitrust liability.

In particular, the Justices were unconvinced of the NFL’s sweeping arguments:

The specific kind of activity under legal attack in the case is the joint effort of the NFL and its teams to sell hats, jerseys, and other fan gear displaying the teams’ trademarked logos. While the NFL insists that that is crucial to promoting the popularity of the games on the field, it did not appear that any Justice was firmly convinced — right now — of that. From the bench, for example, came the question of whether the NFL could escape antitrust liability if it decided, jointly, to build houses. While the NFL’s lawyer said that would not promote the game, Chief Justice John G. Roberts, Jr., shot back that, maybe, selling trademarked goods was closer to selling houses than it was to promoting football games. And that, it seems, is precisely the issue that would dominate a subsequent trial on the legality of joint selling of fan goods.

That doesn’t mean, however, American Needle would win the case outright — indeed, they probably have a loser. But the sweeping legal ruling that the NFL won at the lower courts preempted further inquiry into the specific facts. A remand to the lower courts would allow the NFL to win the case on narrower grounds that would not have much application in other, future cases beyond this one. Moreover, such a ruling would absolve the Justices of the danger of deciding a case about the NFL that applies to a wide swath of joint business ventures throughout the country. (The NFL’s argument was founded largely on its exceptionalism: We are the NFL and get this treatment, though no other business joint ventures should. That kind of argument is more persuasive on Around the Horn than it is in the Supreme Court building.) As Denniston added:

The content of the entire argument strongly suggested that there was not now a majority either to uphold broad immunity for pro sports leagues’ joint commercial enterprises, or to make everything the league and its teams do jointly open to antitrust challenge. What most of the Justices seemed to be tempted by was a middle-ground approach, with each specific joint effort tested under a “rule of reason” analysis to determine whether it was essentially to the success of the sporting enterprise. Even that, though, would amount to a significant tactical loss for pro sports.

I will post the transcript when it is up.

Update: The Associated Press has an article up titled “Court seems sceptical of NFL antitrust protection.”

Update: The transcript of the oral argument is available here.

Update again: It’s unclear what the Supreme Court will actually do (likely hold that these decisions of the NFL are subject to a “rule of reason” analysis, which means that the NFL could win below but they aren’t automatically immune). But this exchange at the end of the argument explains why I think it is highly unlikely that the NFL will succeed (after the jump; Levy is the NFL’s lawyer):

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Texas vs. ‘Bama: Smart Football in review

Apologies for not posting more about this game (and for lack of posting in general — factors beyond my control), but tonight’s matchup involves two teams that I’ve written much about.

On the one side you have Nick Saban’s Alabama squad. On offense, the run game that propelled Mark Ingram to the Heisman trophy involves basically five or six run plays: inside zone, outside zone, power, counter, and sometimes a draw and sometimes a toss play. But it’s the defense that makes ‘Bama go. Of course, I’ve previously written about Saban and his strategies and philosophy:

Saban has been coaching defense – and coaching it quite well – for decades. But there is no question that the defining period of his coaching career was 1991-1994, when he was Bill Belichick’s defensive coordinator with the Cleveland Browns. Just knowing that tells you a great deal about Saban’s defense: he (primarily) uses the 3-4; he’s very aggressive, especially on passing downs; he wants to stop the run on first and second down; he’s not afraid to mix up schemes, coverages, blitzes, and looks of all kinds; and, most importantly, he is intense and attentive to detail, which is the hallmark of any great defensive coach.

…One thing that distinguishes Saban is that he uses pattern-reading in almost all of his coverages, including the traditional Cover 3, whereas many coaches only let certain defenders pattern read or only use it with certain defenses like Cover 4. Sounds a lot like Belichick, no?**

On the other side is Texas and their great quarterback, Colt McCoy. McCoy, who will deservedly be considered one of the great quarterbacks of all time, did not have an overly impressive year. He had some good games but few of those came against top flight opponents. He’ll have to carry the load for Texas, which is something I think a now relatively pressure free McCoy can do. I have previously written about McCoy’s pass game too:

Colt McCoy, University of Texas’s record-setting triggerman (and Heisman hopeful), is known for one thing above all else: his astounding accuracy. . . .

Texas’s favorite route concept, by far, is something known as the “two-man” game, known in some coaching circles as the “stick concept.” Texas runs their a little different, but they also use it a great deal; it’s their number one concept by far. . . .

This concept has been Texas’s go-to route since Mack Brown and Greg Davis arrived. Everyone from Major Applewhite, to Chris Simms, to Vince Young and now McCoy have been asked to master the play.

The concept itself is simple enough…. It can be run from really any formation — any set with at least two receivers to one side — but Texas favors it from sets with at least three receivers, as the diagram below shows. This way the outside receiver can run deep. He serves both as an option on the fade route against single-coverage, but primarily he draws the defense away. And, from a formation and personnel standpoint, he typically draws the other team’s cornerback, allowing the two inside receivers to work against inferior pass defenders — the linebackers, safeties, and nickel backs.

The “two-man” concept itself has one receiver run immediately to the flat, while another bursts upfield to a depth of about eight yards — slightly deeper than most other teams run the route. He can then turn inside or outside depending on where the coverage is pressuring him. He wants to find the crease in the zone and to find the window that gets created as the flat defender widens for the other receiver on the “shoot” route to the flat. Against man coverage, he can break back to the sideline….

…[I]n watching Colt, I see a lot of parrallels with another guy known for his accuracy: Drew Brees. Both have underrated athleticism, both are smart, and both can stick the ball on the receiver, exactly where they want to. That is something that cannot be taught, and it should continue to serve Colt well.

It will be fascinating to see who comes out on top tonight.

**FN: During the Big 12 title game Jesse Palmer kept saying that Nebraska was “pattern reading” Texas’s routes and therefore defeating them. Some bloggers picked up the trail, but although true that Bo Pellini uses some pattern reading, this was not the reason they lost. They lost because Nebraska could blow up pass and run plays with a couple of linemen (Suh!) and swarm everyone else. Texas’s pass game understands pattern reading and is as well prepared for it as you can reasonably be. There are criticisms of Greg Davis but I’m not sure this is one of them.

More on whether the NFL is a “single-entity” for anti-trust purposes

This question — which is trickier than many give it credit for — is the subject of an upcoming Supreme Court case, American Needle v. NFL. I previously discussed it here, and now Gabriel Feldman of Tulane Law School is chiming in:

[American Needle v. NFL] involves an unremarkable set of facts. For many years, all of the NFL teams jointly licensed their trademarks and logos to a variety of apparel manufacturers. American Needle was one of these licensees, and had sold NFL-logoed hats since the late 1950’s. After retail sales of sports-related merchandise struggled in the 1990’s, the NFL teams decided to grant an exclusive license to Reebok to manufacture all NFL-licensed apparel, thus eliminating American Needle’s ability to continue selling NFL hats. In response, American Needle brought an antitrust lawsuit against the NFL and its teams, claiming that the exclusive license with Reebok eliminated competition in the market for NFL apparel and constituted an illegal “contract, combination…or conspiracy” in violation of the Sherman Antitrust Act. In American Needle’s brief to the Supreme Court, they note that “a Reebok vice-president hailed the elimination of price competition as ‘a godsend from a profitability standpoint,’ explaining that ‘[b]asic fitted caps that were selling for $19.99 a few years ago because of the price pressures are now selling for $30.'”

…[T]his case is about a lot more than whether the NFL’s exclusive license violates Section 1 of the Sherman Act. Instead, at issue here is whether the NFL is even capable of violating Section 1. Section 1 of the Sherman Act only applies to agreements, and (as Rob Bass and DJ EZ Rock might have put it) it takes two to make an agreement. So, for example, if all of the manufacturers of wool hats in the world got together to make a series of agreements, those agreements would be scrutinized under Section 1 to ensure they were not anticompetitive (e.g., to ensure that the manufacturers were not agreeing to fix prices). The question is, what happens when all of the NFL teams in the world get together and make a series of agreements? Should those agreements be scrutinized under Section 1?

In American Needle, the NFL argued that they are a single entity, and thus incapable of violating Section 1 (because a single entity cannot reach an agreement with itself). The NFL concedes that they do not look like a traditional single entity — that is, a single firm with a single owner. Instead, the NFL argues that they are a single entity because the NFL is a product that can only be created by cooperation among its teams, and none of its teams have any economic value without the league. The NFL’s argument is that the product created by the NFL teams is an interconnected series of games (the regular season) that leads to a playoffs, that eventually produces a Super Bowl champion, and that no individual team can produce this product on its own. Rather, the teams must make a series of agreements with each other–where to play, when to play, under what rules, etc. The NFL believes that this interdependence and need for cooperation renders the league a single entity, and that all of the agreements made by the league and its teams –ranging from scheduling to free agency restrictions to salary cap rules to franchise relocation restrictions –should thus not be subject to scrutiny under Section 1.

This is not a new argument. Sports leagues have been making this same argument for over thirty years, and virtually every court to address the issue has rejected the argument for over thirty years, often finding that agreements made by teams have violated Section 1. . . . I want to quickly touch on three basic points that have either been overlooked or misconstrued by the press covering this story.
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