By Robert Barnes and Mark Maske
Washington Post Staff Writers
Tuesday, May 25, 2010; D03
The Supreme Court unanimously shot down the NFL's longtime quest for protection from antitrust laws Monday in a decision that was cheered by its players' association and held lessons for other professional sports leagues.
The court said that the NFL should be considered as 32 individual, independent teams when it came to selling licensed items such as jerseys and caps. The court rejected the league's argument that it should be exempted from antitrust laws because it acts as a single entity.
"Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned," Justice John Paul Stevens wrote for the court.
Gabriel A. Feldman, director of the Sports Law Program at the Tulane University Law School, called the decision "clearly, a resounding defeat for the NFL on its single-entity argument."
Even so, he said, the court's decision leaves the league in no worse position that it was before the high court challenge; only Major League Baseball has an antitrust exemption. "The benefits of a win far outweighed the costs of a loss," Feldman said.
The ruling comes with the NFL and its players' union attempting to negotiate an extension of their collective bargaining agreement. Their current labor deal expires following the 2010 season, and players and union officials have said they expect the owners to lock out the players in 2011.
The NFL Players Association for months had called the outcome of the case significant to the sport's labor situation, contending that a Supreme Court ruling in favor of the NFL would have given the franchise owners too much bargaining leverage over the players by shielding the owners from a potential antitrust lawsuit by the players.
Feldman predicted the ruling may "kick-start" the negotiations.
A broad ruling for the NFL could have shielded the league from all sorts of challenges, such as contracts over television rights or the location of its teams, and given it greater leeway over the salaries paid to coaches and players. It was supported by the NBA, the NCAA, NASCAR and other sports leagues.
The lawsuit the court was considering was about hats. It was filed by American Needle Inc., which until 2000 had a contract to sell team caps. The NFL decided to award all of its apparel franchises to Reebok, and American Needle sued. Lower courts agreed with the NFL that it was acting as a single entity, and they threw out the suit without conducting the fact-specific test called for in antitrust legislation to determine how a decision affects competition.
It may be true that the NFL can't compete with itself, Stevens said, but it is made up of teams that do compete, not only on the field "but to attract fans, for gate receipts and for contracts with managerial and playing personnel."
Using this year's Super Bowl between New Orleans and Indianapolis as an example, Stevens wrote: "To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks. When each NFL team licenses its intellectual property, it is not pursuing the common interests of the whole league but is instead pursuing interests of each corporation itself."
He added that "decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that deprive the marketplace of independent centers of decisionmaking, and therefore of actual or potential competition."
The decision does not decide the case for American Needle. It only gives the company another chance to convince a lower court that the Reebok decision was anticompetitive.
Feldman agreed with Greg Aiello, the NFL's senior vice president of public relations, that the Supreme Court's decision gives the NFL ammunition to use in lower court that the league may in some cases act as a single entity.
"The Supreme Court recognized that 'special characteristics' of professional sports leagues, including the need for competitive balance, 'may well justify' business decisions that among independent competitors would otherwise be unlawful," Aiello said in a written statement.
"We remain confident we will ultimately prevail because the league decision about how best to promote the NFL was reasonable, pro-competitive, and entirely lawful."
DeMaurice Smith, the executive director of the NFL Players Association, said the decision should clear the way for contract negotiations.
"Today's Supreme Court ruling is not only a win for the players past, present and future, but a win for the fans," Smith said in a statement. "While the NFLPA and the players of the National Football League are pleased with the ruling, we remain focused on reaching a fair and equitable collective bargaining agreement. We hope that today also marks a renewed effort by the NFL to bargain in good faith and avoid a lockout."
Aiello maintained that the court's decision "has no bearing on collective bargaining, which is governed by labor law."
The case is American Needle v. NFL.