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 NFL a Single Entity or 32 Separate ones? 
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Post NFL a Single Entity or 32 Separate ones?
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Justices seem skeptical of arguments
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Associated Press
WASHINGTON -- The Supreme Court on Wednesday didn't seem interested in immediately granting the National Football League the broad antitrust law protection the league is seeking.

Justices seemed skeptical of arguments that the NFL should be considered one business, not 32 separate teams working together, when it comes to selling NFL-branded items. The lower courts had thrown out an antitrust lawsuit brought against the league by one of its former hat makers.

American Needle, Inc. appealed the dismissal to the Supreme Court. But the NFL also appealed, 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 are supporting the NFL in hopes the court will expand broad antitrust exemption to other sports.

If the court rules broadly for the NFL, it could shield professional sports leagues from antitrust claims in several areas, including player salaries, location of teams, video game rights and television broadcasting rights.

"You are seeking through this ruling what you haven't gotten from Congress: an absolute bar to an antitrust claim," Justice Sonia Sotomayor told NFL lawyers.

NFL lawyer Gregg H. Levy said the league is making a narrower argument, as "long as the NFL clubs are members of a unit; if they compete as a unit in the entertainment marketplace ... they should be deemed a single entity" and not subject to antitrust law.

"The question is: Should they be permitted to join their centers of economic power into one when they promote and sell their T-shirts, sweatshirts, etc.?" Justice Stephen Breyer said.

American Needle had been one of many companies that made NFL headgear until the league awarded an exclusive contract to Reebok International Ltd. in 2001.

American Needle sued the league and Reebok in 2004, claiming the deal violated antitrust law. Lower courts threw out the suit, holding that nothing in antitrust law prohibits NFL teams from cooperating on apparel licensing so the league can compete against other forms of entertainment.

American Needle wants the lawsuit restored in the lower courts, while the NFL wants the Supreme Court to uphold the lower court's decision that it can be considered a single entity and apply it around the nation.

American Needle's lawyer, Glen D. Nager, under prompting from Justice Ruth Bader Ginsburg, told the court they believe that everything that "these 32 separately owned and controlled teams joined together to do by in concert, by agreement, by consent" should be subject to antitrust investigation.

"You want the Patriots to sell T-shirts in competition with the Saints or whoever," said Breyer, who said he knows baseball better. Breyer argued that it is unlikely that NFL teams could compete with each other in selling apparel, because when it comes to baseball, "I don't know a Red Sox fan who would wear a Yankees sweater even if you gave it away."

Nager argued that to a 3-year-old child, team allegiance wouldn't matter.

"They have very small allowances," Breyer said to laughter.

Several justices wondered whether the antitrust investigation could stretch to the rules of the game and scheduling, "things that it just seems odd to subject" to antitrust investigation, Chief Justice John Roberts said.

Levy argued that the licensing and selling of NFL apparel is something the league does to promote the sport as a whole, something Justice Antonin Scalia disagreed with.

"The purpose is to make money," Scalia said. "I don't think that they care whether the sale of the helmet or the T-shirt promotes the game. They sell it to make money from the sale."

The purpose of the licensing is to improve and promote the attractiveness of the game product, to get more people interested in watching the games on television, to get more people interested in buying tickets to the game, Levy replied.

"Well, I suppose that that issue could be tried," Scalia said.

Jeffrey Kessler, a lawyer for the NFL Players Association and several other professional sports unions, said afterward that NFL teams believe they should be allowed to "fix the prices of labor, that they could impose restrictions that would prevent good teams from getting better, or take any other conduct without the antitrust laws coming into play."

Levy disagreed.

"This case doesn't have anything to do with union agreement issues," he said.

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January 13th, 2010, 8:14 pm
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Quote:
Jeffrey Kessler, a lawyer for the NFL Players Association and several other professional sports unions, said afterward that NFL teams believe they should be allowed to "fix the prices of labor, that they could impose restrictions that would prevent good teams from getting better, or take any other conduct without the antitrust laws coming into play."

Levy disagreed.

"This case doesn't have anything to do with union agreement issues," he said.


That Levy guy is one shrewd attorney.

He is correct in that the immediate case is not about union agreement issues. The immediate case is about how the NFL deals with the businesses that it uses to market its products.

However, the part Levy left out of his comment is that if the NFL gets the ruling it wants, then the consequences of this suit WILL impact labor negotiations.

If the NFL gets the ruling it wants (i.e. broad antitrust immunity) then it can set compensation for the players...all the players. The players will no longer be bargaining with the individual teams for contracts. Instead they will have to bargain with the NFL as a single entity. So the power shifts to the NFL because it can say, "we will pay you this much, take it or leave it." Individual NFL owners will be powerless to negotiate differently. Free agency and rookie contracts as we know them will be gone.

This would allow the NFL, NHL, and a host of other sports entities do what they cannot legally do now, that is control player salaries and free agency to a degree that has not been seen since before the 1960s.

The only choice the players would have is to not play or go else where. For the NHLers and NBAers, there other leagues overseas that they can play in that will pay virtually the same compensation as they get now. But there is no where for the NFLers to go. It's the only game in town.

It will be interesting to see what the Court does with this. It may give the NFL some leeway on this issue, but I would be surprised if they give them everything the NFL is asking for.

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January 18th, 2010, 9:00 am
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ONly reason I would disagree is because baseball does not do it yet and they have had one. Maybe it is true, just thought I'd point that out.

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January 18th, 2010, 10:30 am
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steensn wrote:
ONly reason I would disagree is because baseball does not do it yet and they have had one. Maybe it is true, just thought I'd point that out.


True baseball does have the status the NFL is looking for. However, there are some significant differences between the two that I think are important.

First, baseball does not and has not ever had a cap on salaries, at least in the sense that football does. There are a few owners in baseball that vehemently oppose a cap system. Every time the subject comes up, those owners throw a fit and everybody else backs down.

The second difference is the money involved.

Football does have a cap and it has strong leadership in the league offices. For some things the NFL does act like separate entities. But a good portion of how the league is run is from the top down, unlike baseball. The NFL owners are already used to having to live within a cap system, so what difference to them would it make if the numbers of that cap changed?

That's where the second difference (the money) comes in. What NFL owner is going to turn down the ability to put more money into his pocket by reducing the payment of salaries? That's already the thesis of the upcoming labor negotiations.

Also, do not overlook the other aspects that this status could affect, like stadium revenues and local TV fees. Can you imagine every stadium having to negotiate with the NFL instead of a single team owner. That's a much different scenario than it is now.

Your right that baseball has the power to do this and has not used it, but baseball is a different animal than the NFL. I think baseball has weak and ineffective leadership, and it has been that way for years. Just think about some of the goofball decisions they have made over the years. Not the least of which is how they have handled the steriod problem.

On the other hand, the NFL had exceptionally strong leadership and has already shown the desire and will to use its collective power. Why wouldn't the NFL use more power if it could?

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January 18th, 2010, 12:19 pm
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Fair points... I just have a "feeling" based on no insight that it won't happen. But I'm totally open to you being right.

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January 18th, 2010, 12:24 pm
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I don't think the Court is going to give the NFL everything they want either. The NFL will probably get something, but not unfettered antitrust status. So the scenario I laid out is a long shot at best, but that is more or less what the NFL COULD do if they get the lock, stock, and barrel from the Supreme Court.

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January 18th, 2010, 12:32 pm
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tjkac, I'm sorry, but I disagree with almost everything you're saying here. Regardless of what the Supreme Court ruling is, the league and the union will still have to negotiate a Collective Bargaining Agreement. It will not give the NFL the power to do whatever it wants in terms of salary, free agency, etc. because those issues will still need to be addressed in the CBA. With that said, the NFL would gain leverage and it would severely hurt the union's ability to gain everything that it wants during the negotiations.

The real reason that the union is opposed to the NFL being ruled a single entity is because it would destroy their lockout strategy. For years, the NFLPA has threatened to decertify and sue the league for violating antitrust laws if they were ever locked out. If the NFL is deemed to be a single entity, then the antitrust laws wouldn't apply and the union wouldn't be able to sue them on that basis. That's what they're afraid of.

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January 18th, 2010, 1:15 pm
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Actually I agree with your points.

The NFLPA should be afraid of this for the reasons you state and it is those same reasons that what I said could happen.

The NFL is the only league for football players to play in and make money. Without the ability to sue for antitrust violations, what recourse does the NFLPA have but to accept whatever the league gives them? Where else are the players going to go and play? The CFL? Maybe some of them would. But certainly not all the NFL players.

If the NFL gets the ruling they want, they can in effect basically say to the NFLPA, here's our terms, take it or leave it. What answer does the NFLPA have if there are no antitrust violations to cite?

Sure somebody could try to start a new league, but good luck with that since most of the stadiums are owned by the NFL owners.

So yes, you are correct that there would still have to be a CBA, however, there would be nothing to stop the NFL from dictating the terms of that CBA.

The players could not accept the new CBA. So what? The league gets replacement players that are willing to take the deal. The quality would go down, but in a year or two your going to have a whole bunch of college players and ex-NFLer's that are going to be looking longingly at that paycheck.

A ruling like the NFL wants is a game changer for the league because unlike baseball, the NFL will use the antitrust status to its advantage. The league operates as a virtual monopoly as it is, antitrust status would just enable them all the more.

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January 18th, 2010, 2:34 pm
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OK, I understand your point better now, but you're forgetting a very important aspect of all this. Who owns the NFL and would have to ratify any CBA agreement? The answer is the 32 individual team owners (kinda like a board of directors) and most of them have egos that wouldn't allow the league office to dictate how they should run every facet of their team. There isn't any way that Dan Snyder, Jerry Jones, and a few others would approve such an agreement that limits their own ability to run their team as they see fit.

That's why I took issue with this statement of yours:
tjkac wrote:
If the NFL gets the ruling it wants (i.e. broad antitrust immunity) then it can set compensation for the players...all the players. The players will no longer be bargaining with the individual teams for contracts. Instead they will have to bargain with the NFL as a single entity. So the power shifts to the NFL because it can say, "we will pay you this much, take it or leave it." Individual NFL owners will be powerless to negotiate differently. Free agency and rookie contracts as we know them will be gone.

The owners simply won't give the league office that much power.

I do agree with you that the players would be screwed though. They wouldn't be able to sue the NFL and they realistically wouldn't have any other place to go. I suppose the UFL would grow much stronger, but not to the point that they could rival NFL player salaries. The players would be forced to take whatever the NFL offers, but I seriously doubt it will reach that point.

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January 18th, 2010, 3:26 pm
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