Posts Tagged ‘NFL’

The Supreme Court has decided in American Needle v. the NFL, No. 08-661, that the National Football League Properties (NFLP) which was formed to develop, license, and market fan gear was not a single entity for antitrust purposes. In other words, the 32 teams could be violating anti-trust laws by licensing fan gear solely to Reebok in restraint of trade, which could have the effect of dampening competition. This case was brought by a small hat manufacturer whose license to sell football hats was not renewed when the NFLP gave Reebok the business for all 32 teams. This case was sent back to the trial court for further argument. As I wrote previously, Drew Brees argued very strongly against the NFLP being considered a single entity because of the potential for the NFLP getting around antitrust laws with respect to free agency, not just in the selling of hats. This seems to be the right decision as 32 teams which in fact compete with each other not just on the field, but also for fans, could carry a lot of clout in awarding contracts. By giving one license out to manufacturer fan gear, they prevented other manufacturers from competing with Reebok and keeping the prices down for all fans. Obviously, the NFLP has an interest in monitoring the licenses, as they receive royalties from these manufacturers, but it serves no purpose to limit the manufacturing and distribution to one entity.


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I have to admit, I wasn’t really following this case until I read a very articulate editorial by Drew Brees, a Quarterback for the New Orleans Saints and former Austinite, in the Austin American Statesman (1-11-10 – page A7). Apparently the Supreme Court will be hearing American Needle v. NFL, Supreme Court Docket No. 08-661; an antitrust case brought by an Illinois manufacturer of hats who lost its antitrust claim in the Federal Court of Appeals in Illinois (7th Circuit). The antitrust claim arose from the NFL’s granting an exclusive license to Reebok to manufacture NFL fan products such as hats, jackets and the like. As the Illinois company, American Needle, pointed out, the effective monopoly has in fact increased prices for such fan gear since Reebok was awarded the contract in 2001, and has prevented smaller companies from getting into the market. The Supreme Court will decide if the NFL should be considered one entity (in which case there is no monopoly because you can’t have a monopoly with yourself) or 32 separate entities (in which case they could be found to be conspiring to restrain trade in the fan product area). What Mr. Brees pointed out was that this ruling could also affect the NFL’s ability to monopolize other areas. Apparently the NFL made the unusual request to the Supreme Court that it rule the NFL is one entity for purposes other than just fan gear. The result which Mr. Brees fears is that such a ruling could effectively overrule the 1993 decision in McNeil v. NFL, 790 F. Supp. 871, 896-97 (D.Minn. 1992), a previous antitrust lawsuit against the NFL, which paved the way for free agency among football players. Depending on how far the Supreme Court goes, the decision in the American Needle case could have ramifications for free agency, ticket prices, and, of course, fan gear, in other sports as well.

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