The Supreme Court, in a major sports antitrust action, dealt the death blow yesterday to a rule barring National Football League team owners from holding controlling interests in major teams outside of football.
Without comment, the court let stand a lower-court decision that said the NFL cross-ownership rule was illegal under U.S. antitrust laws. The North American Soccer League had challenged the restriction on the grounds that it substantially restricted the amount of money available for investment in its clubs.
The 1978 amendment to the NFL bylaws was originally directed at Lamar Hunt, who owned Dallas and Tampa Bay NASL teams as well as the Kansas City NFL team, and the Robbie family, who owned the NASL franchise in Fort Lauderdale and the Miami Dolphins.
The NFL said the rule actually encouraged competition by preventing monopolization of teams in different sports by a few owners. The Court of Appeals for the Second Circuit disagreed, however, reversing a U.S. District Court judge and ruling that the prohibition was designed to hold back investment in soccer teams which could rob the NFL of part of its audience.
"The purpose of the ban was to weaken the NASL and its member teams so that they could not compete as effectively against the stronger, more mature and lucrative NFL teams as they might be able to do with the aid of capital investment by NFL team owners," the court said when it ruled that the provision violated the Sherman Act.
The Supreme Court declined to review that decision yesterday. The action ends the particular battle, but as a simple denial of a grant of review, it does not resolve the important legal issues involved.
In asking the Supreme Court to step in, the NFL noted that the confused application of antitrust laws to sports has "created virtual judicial havoc" with each lower court free to develop its own techniques for dealing with individual cases. In particular, it said the appellate court was wrong to treat NFL team owners as competitors with one another when the league was really composed of "joint producers of a single common entertainment product."
The NFL also said that the pool of money available for sports investment was wide enough so that its restriction did not illegally dry up money for the soccer league.
Justice William H. Rehnquist dissented from the court's decision not to hear the NFL appeal. "The antitrust laws do not require the NFL to operate so as to make it easier for another league to compete against it," he said.
An NFL spokesman said: "We are disappointed but not really surprised in light of the extraordinary case load the Supreme Court is facing. We continue to believe that the Court of Appeals decision is another classic example of utter confusion in applying antitrust laws to sports leagues."