NFL Wants to Go Steady--With Reebok
Call it the Super Bowl for lawyers and the reckoning for football fans. On January 13 the owners of all thirty-two NFL teams asked the Supreme Court to shield them from anti-trust laws. Their argument is that the league does not comprise, despite all evidence, thirty-two individual competing units but is made up of one "single entity."
This might seem bizarre on the face of it. After all, the 49ers and Cowboys don't meet on the field to sing "Kumbaya," and players don't rotate from team to team. But the NFL has won in court every step of the way, and the outcome of this case could provoke a labor lockout or strike that would shut down the most popular sport in the country.
The legal saga started in 2000, when Reebok signed an exclusive contract to slap the NFL logo on its caps and jerseys for every team in the league. Illinois-based hat manufacturer American Needle was, in turn, left out in the cold, no longer allowed to strike deals with individual teams; so it therefore sued the NFL, claiming that by brokering this deal with Reebok, the NFL had violated the Sherman Act.
To the NFL, it was like discovering penicillin. This small merchandiser had been growing like a pestering fungus until that Aha! moment hit, and the league's legal team realized the opportunity before it: a chance to knock out competition among apparel providers.
While the NFL repeatedly won the case in the lower courts, American Needle appealed to the Supreme Court for a hearing. The Court first reached out to the Obama administration to weigh in on the matter. Solicitor General Elena Kagan told the justices, "This case would be a particularly unsuitable vehicle to consider the broad rule that the NFL seeks." Heedless of Kagan's warning, the Supreme Court took the case, and with the NFL's support, American Needle's wish was granted. Now the "single entity" argument will be tested at the highest level, and, like the MLB All Star Game, this time it counts.
To anyone who pays attention to the billion-dollar catfight between Jerry Jones, owner of the Dallas Cowboys, and Dan Snyder, owner of the Washington Redskins, each year, in which a new owner is crowned at the unveiling of the franchise value rankings, the idea that the NFL is one company and not thirty-two competing businesses is just absurd. They are called franchises for a reason. Each franchise makes individual business decisions about how to market its product against opposing franchises wearing different-colored uniforms.
However, the NFL insists that even though it is made up of individual teams with individual profits and losses, it is still that "single entity." As the sports experts at Forbes wrote, "From a business standpoint, the NFL, like any sports league, has always predominantly acted as a single entity. Teams compete on the field, which does mean bidding on players and coaches. But from a business standpoint, they're partners above all else." Forbes, "the capitalist's bible," turns collectivist. Why?
It's simple. The NFL's collective bargaining agreement expires in March 2011. There will be no salary cap or salary floor in the league if a new deal isn't reached by March 5, 2010. If the Supreme Court rules that the NFL is a single entity, that changes the way the league negotiates--or doesn't negotiate--with the players. Teams could slash payroll, violate labor law, and the NFL Players Association would have no recourse. Lockout, here we come.
DeMaurice Smith, NFL Players Association executive director, has told ESPN that he has called upon his players to save 25 percent of their salaries over the next two years: because of uncertainty around salary caps and floors, "I look at the way in which it looks like we're moving to this lockout, and first and foremost, we have to be in a position where our young men are in a position to be able to take care of themselves and their families."
New Orleans quarterback Drew Brees took a break from preparing his team's Super Bowl run last week to deliver some Supreme Court testimony. In an op-ed published in the Washington Post, Brees warned that "if the Supreme Court agrees with the NFL's argument that the teams act as a single entity rather than as 32 separate, vigorously competitive and extremely profitable entities, the absence of antitrust scrutiny would enable the owners to exert total control over this multibillion-dollar business."
Serving on the Executive Committee of the Players Association, Brees understands that the players' collective future hangs in the balance. The owners are looking to knock labor rights back into the Stone Age, or at least back to 1993, before Freeman McNeil, football's Curt Flood, left a mammoth footprint on the game by fighting for and winning his rights as a free agent. The players sink or swim with the final decision to be delivered this summer.
It would be even worse for fans, and not only because the Sunday entertainment would go the way of Lost.
If owners were emancipated from anti-trust laws, collusion would be the law of the land. After all, they aren't thirty-two competing entities but one solid corporation. They then could do more than slash payroll. They could raise ticket prices through the roof, and charge $100 for a stocking cap. The NFL-Reebok deal struck a decade ago illustrates quite clearly how the costs of doing business this way are passed on to fans, as "official hats," Brees notes, "cost $10 more than before the exclusive arrangement."
Owners could move clubs on a whim, and be protected legally from violating any individual agreements with individual municipalities. After all, they would be acting in the interest of their "one entity."
In other words, think about everything you despise about the NFL experience: disloyal franchises, overpriced merchandize, unbridled greed, and give it an injection of a Mark McGwire cocktail. The NFL already acts like it has diplomatic immunity. It feeds at the public trough for stadium construction, charges a fortune for tickets, parking, souvenirs and--most tragically--beer, and accepts public input about as well as the CIA does. It is also about as transparent. In addition, if we've learned nothing else from the scandals in banking and on Wall Street, the last thing big business needs in this country is more legal protection and less transparency. We all--fans and players alike--have every right to fear what further legal protection would mean for the future of fandom, no matter what they say at Forbes.