That’s the question presented in the upcoming U.S. Supreme Court case. And while there has already been some hyperbole (ESPN: “Antitrust case could be Armageddon”), the case does present some real and interesting questions, including ones beyond the narrow issue of the NFL and other sports leagues — I know, it’s hard to imagine anything beyond sports leagues. Here is how the full issue was summarized by David Savage in the ABA Journal:
[I]n American Needle v. National Football League, the justices will decide a legal question that has long hung over pro sports. Are their leagues a “single entity” and, therefore, immune from antitrust laws, or can these independently owned teams be sued for conspiring to restrain trade? A suburban Chicago maker of stocking hats and caps, American Needle sued in 2004 after it was shut out from using NFL logos. The league had made an exclusive deal with Reebok. The suit was thrown out by the 7th Circuit, but the justices agreed to decide whether pro leagues are shielded from antitrust charges.
Upon reading this you probably have an impulsive answer right away. Either, “Hey, of course the NFL is just one entity!” Or “Hey, of course there are thirty-two teams!” But you have to understand the weird nature of sports leagues as a branch of joint ventures, and the stakes — that a ruling of them as a joint entity makes them immune from anti-trust action, even with respect to other possible competitors.
Without getting too complicated, baseball has long enjoyed a unique place in anti-trust law — it doesn’t apply to it. Other leagues have come close, but haven’t been so lucky. There’s really no reason for these leagues to have such unique status, but baseball does and football wants it, anyway it can get it. The best they can muster from a policy perspective is that “hey, we’re the NFL, we’re important right!” And, within the cloistered halls of the NFL (not to mention ESPN, and the like) the world begins and ends insofar as it affects The Game, be it terrorism or the stockmarket or whatever else.
But legal battles in real courts deal with larger themes. Specifically, the government, in the form of the Solicitor General’s office, was asked to chime in on this case. This put them in an awkward position because (a) American Needle has a very weak case, even apart from this “single-entity theory,” and (b) the government really only cares about this case insofar as it affects other joint-ventures beyond sports leagues. As Morrison & Foerster partner Deanne Maynard noted at a recent Supreme Court panel, if the Court rules in favor of the NFL, this case could have wide-ranging implications beyond just sports organizations.
“I think it could affect any kind of joint business venture,” she said. “It could mean that in doing these (joint) activities, the companies are a single entity.”
Moreover, here’s some excellent commentary and background from Lyle Denniston of SCOTUSBlog (written while the Justices were still considering whether to hear the case): (more…)
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