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.