The National Football League took a hit today when the Supreme Court ruled against the organization
in a lawsuit brought about by hat-making company American Needle, Inc. Formerly employed by the NFL to make team apparel, the company lost its contract when the NFL decided to sign over exclusive rights to Reebok to make all of the league's official hats. Initially losing the suit, American Needle appealed to the highest court, claiming that the NFL is in fact comprised of 32 separate companies, not a single large one, and accused the teams of colluding to exclude American Needle. The Supreme Court agreed and decided on Monday that the NFL will not receive broad antitrust protection. What does the ruling mean for the league? Here's a breakdown of the winners and losers of American Needle v. NFL.
- The Players, says Yahoo's Doug Farrar. While the lawsuit involved contracts and collusion around the league's retail aspect, the court's decision is a huge deal for the league's Players' Association—the union that negotiates contracts on behalf of the players. This fact means that next year when the union goes into negotiations over player contracts, the league can't act as one giant entity and set standard salary caps. "If the Supreme Court ruled that the NFL could act as a single entity, with all its member clubs acting in concert, provisions against collusion in many ways would be severely affected or eliminated altogether. Basically, the league could establish salary ceilings for players in ways that would be illegal under other circumstances, effectively breaking the union and making a lockout inevitable."
- Consumers, says Michael K. Ozanian in a short blog at Forbes. He says today is "a great day for consumers who may no longer have to pay for the anti-competitive actions of the leagues and their partners."
- American Needle, sort of. While they did win the case that the NFL is not one large company, says Kristi Dosh at Forbes, in order to get that NFL contract back, "American Needle will have to prove that the teams colluded in an illegal restraint of trade (not all restraints on trade are actually illegal). Personally, I'd be shocked if American Needle prevailed. Exclusive agreements are entered in sports, and in business, all the time. The NFL should be able to make a strong case that the exclusive agreement with Reebok was entered into without violating antitrust laws."
- Reebok, says Deadspin's Barry Petchesky in the best explanation of what the ruling means. He says, that Reebok "along with every company that has exclusive licensing deals with the league, could be the biggest losers. The NFL is a money factory, and even given the huge payments for exclusive rights, everyone selling NFL products are making out like bandits. Should the district court find the league in violation of antitrust laws, the field would be open again for other manufacturers.
- Other Professional Sports Leagues, says Greg Wyshynsky at Yahoo's hockey blog. Questioning the ruling's ramifications for the NHL, he asks, "might there be larger implications for the NHL here? Potentially. In its brief, the League mentioned both the Dolans' suit to control the New York Rangers' intellectual property rights as they pertained to new media; as well as the bankruptcy proceeding for the Phoenix Coyotes in which billionaire Jim Balsillie sought to move the team to Canada. In both cases, the sovereignty of the NHL's Constitution and the power of its Board of Governors were tested. Could this apparent victory for the 'individuals' that make up the 'whole' have changed the dynamics of either case?"
- The NFL, sort of, says Thomas Van Riper at Forbes.com. While the NFL technically lost the suit, he says, theoretically it's more the fact that they didn't win. "Basically, the league failed to get a blanket antitrust exemption it never had in the first place. Any big changes in how the league does business will only come if the plaintiffs can prove harm to consumers."
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