View Full Version : NFL a single entitity?
And therefore immune to anti-trust lawsuits? (http://sports.espn.go.com/espn/columns/story?columnist=munson_lester&id=4336261)
I hope and pray this resoundingly fails before the court. Way to long to post all of it but here's the relevant excerpt...
The case began innocuously enough in Chicago in December of 2004 when American Needle, Inc. (ANI), filed an antitrust case against the NFL, claiming that the league was using its monopoly powers illegally to deprive the company of its share of the market for caps and hats bearing logos of NFL teams. ANI had made knit caps and baseball hats bearing NFL logos for decades until the NFL ended the relationship in 2000.
Four and a half years ago, the case was nothing unusual. These sorts of legal actions happen all the time, as the NFL is a popular target for antitrust cases large and small. The league's law firm, Covington & Burling in Washington, D.C., has defended similar suits for nearly 60 years -- recently, the unsuccessful attempt by Ohio State running back Maurice Clarett to alter the NFL's draft age requirements. Notable losses for the league came in the antitrust cases filed in Minneapolis by Freeman McNeil and Reggie White in the late '80s and early '90s that established free agency and other important benefits for NFL players.
For a time, the American Needle case seemed on its way to a rapid conclusion. The NFL won as quickly and as conclusively as anyone can win an antitrust lawsuit in the trial court and in an appeals court.
But American Needle didn't give up. It filed a request for review to the U.S. Supreme Court, one of 7,500 or so such requests filed annually. The court takes only 70 or 75 cases for decision each year, and American Needle's quest seemed quixotic at best.
Then, in a stunning development, the NFL told the Supreme Court it endorsed American Needle's request for a hearing and a decision. The league's attorneys announced, in a remarkable understatement, that they "are taking the unusual step of supporting" American Needle's effort to have the case reviewed at the highest level.
The league's action was a legal bombshell. Instead of standing on its lower-court wins over American Needle, the league told the Supreme Court that it wants the justices to consider an issue far beyond the caps-and-hats contract. It wants the court to grant the NFL total immunity from all forms of antitrust scrutiny, an immunity that would then apply to the NBA, the NHL and MLB, as well.
"It's a strategy of high risk and high reward," says Randal Picker, a professor at the University of Chicago Law School who focuses on antitrust issues in the high court. "The NFL is making a bold bet on a big issue."
The court's first response was to ask the Obama administration for its thoughts on the issue. Sensing the historic possibilities of the case and the magnitude of the ramifications, Elena Kagan, the solicitor general appointed by President Barack Obama, urged caution, telling the justices, "This case would be a particularly unsuitable vehicle to consider the broad rule that the NFL seeks."
But that wasn't enough to keep the Supreme Court from accepting it.
The legal doctrine at the center of the case is known as "single entity." If the NFL manages to persuade the Supreme Court that the league is a single entity competing with other providers of entertainment rather than a group of 32 separate businesses competing with each other, the landscape of the sports industry will be transformed, according to law professors and experts contacted by ESPN.com.
If it is a single unit and not 32 separate, competing teams, any violation of American antitrust law would be impossible to establish. A violation of the Sherman Act begins with a "combination, contract or conspiracy" that restrains competition and hurts consumers. If the NFL is a single unit, it cannot be in combination, contract or conspiracy. It would be immune to the antitrust cases that have allowed player unions to establish and to protect free agency and other benefits.
Under the rule of single entity suggested by the NFL, the league could be vulnerable to antitrust scrutiny only if it were to join with other leagues or other providers of entertainment in setting prices, a highly unlikely development.
The NFL has been trying for decades to sell the idea that it is a single entity and so should be immune to antitrust attacks, with uniformly bad results. At least seven times in federal courts throughout the U.S., judges have been quick to recognize that NFL teams compete with each other for free-agent players, for coaches, for executives, for sponsors, for naming rights money and for fans.
Enti-tity? Hmmmm.
*ponders Freud*
*scribbles some notes on Wook's dossier*
Dude. Two years of build up resulting in blue balls. I have sex on the brain and am completely willing to acknowledge said fact.
silverwhisper
07-20-2009, 12:11 PM
way TMI, o furry one.
way TMI, o furry one.
When does that ever stop me? :sawink2:
On topic... I find it ridiculous that the 32 teams who compete against each other on the field, for players, for more or less everything concerning their organizations are operating as a single entity.
carmachu
07-20-2009, 12:18 PM
Dude. Two years of build up resulting in blue balls. I have sex on the brain and am completely willing to acknowledge said fact.
Two words to cure that:
Ed's mom
silverwhisper
07-20-2009, 12:24 PM
hold on--wasn't the NFL/AFL merger explicitly called a non-monopoly or somesuch?
Except they are a single organization that is selling access to athletic competitions. They may compete for resources internally, but the NFL has control down to the level of the team, does it not?
hold on--wasn't the NFL/AFL merger explicitly called a non-monopoly or somesuch?
Bingo. In all aspects of their organization the NFL is a super entity over 32 distinct, separate, businesses. Said 32 teams colluded to create the NFL back in the AFL/NFL merger. Players are acquired individually, rule changes have to be approved by the owners, etc... The list of things the NFL does collectively is short. The CBA with the players, and their licensing deals. In every other aspect of business they compete with each other. The individual teams control the NFL, the NFL does not control the individual teams.
Compare that to a fast food brand where there are individual owners but they are answerable to the parent organization. That's not the case here.
I'm sorry, but the NFL can fine players, can it not? And has control over marketing agreements? And broadcasting agreements? You can put a wig on it, you can say it's not a monopoly, but that's not really the case, is it? It's not like NFL teams compete with any non-NFL teams, right?
Head to head competition? No. But in the market they do compete for viewers, advertising time, (As in the value of the advertising time during their games.), and attendance. Their season overlaps with Hockey, Basketball, and Baseball and a lot of cities have more than one of the 4 major sports teams. (NYC has 2 of each for the NFL, MLB, and NFL and an NBA franchise.) To a certain limited extent they even compete for collegiate athletes who play more than one sport. (And I don't know how common or rare that is but it's common enough that you hear about it regularly but rare enough to be notable about any given individual.)
The sports definitely compete with each other. And all those other areas of competition are relevant because this isn't just about the on field activities. It's about all the financial activities of the NFL. And that's the point. Financially NFL teams are in some pretty heavy competition with each other. An NFL team, or any major sports team for that matter, is not a franchise in the sense that a McDonalds is a franchise but that is the claim they're trying to make.
Specifically in the case of a normal franchise the franchising agency tells the franchise owners what their menu's will be, what their decor will be, etc... Basically McDonalds, Shell, Ford, 7-11, Oil Can Henry's, etc... tells the owners a large part of how they will run their business. They essentially run large parts of the business. With the NFL and other sports franchises that is not the case. The NFL does some of those things but they must then be approved by the owners and IIRC approved unanimously. (As in any changes to the business environment.)
If the owners wanted to they could scrap the NFL central office and they would not be out of business or lose their franchises. You'd still have 32 different teams with 32 different owners, management structures, etc... They've tried for years to pass themselves as being the same thing as any other franchise arrangement out and they're not. There's some pretty extreme differences between what they do and the typical franchise arrangement.
Brother Brian
07-20-2009, 01:58 PM
I actually find it to be a VERY intriguing argument.
All NFL teams are franchisees, exactly like McDonalds. The only really different is that the MickeyD's on the corner of Main and Elm doesn't label itself as "The Main and Elm Friers" McDonalds Franchise.
Compare it to, say the UFC. In that case, sure the fighters compete against each other, but at the end of the day, the money is in the entertainment of fans, who are shelling out PPV dollars, and in that view, they are actually working together.
And Wook, you are completely wrong about the teams controlling the NFL. Let's say that the Lions, sick of the jokes, agreed to play USC in an exhibition match before the season. Do you think they could? Think again.
And while there are 32 owners, each of them is bound by contract to the central office. They would see the value of their franchise disintigrate without the NFL to hold them together. Furthermore, they would invalidate their contracts with their players by doing so.
Look at it this way, when the XFL, USFL, Arena Ball, etc, etc started up, did anyone say "Oh look, the Las Vegas Roughriders are competing with the Oakland Raiders?" No, it was one business competing with another, the NFL.
While I can see a legal case being made the other way as well, I wouldn't find a decision supporting the single entity position to be out of left field.
So the professional football monopoly competes with the professional basketball monopoly and the professional baseball monopoly? And the professional hockey monopoly? That's your counterargument? And great, so the team owners are essentially powerful members of the board of directors. The NFL certainly seems to me to be a single entity, dude.
No. My counter argument is that the NFL is not a single entity as it's member teams compete with each other in all aspects of business and sport. A codified set of rules for fair play does not a single entity make. IT is full of standards. Manufacturer's adhering to those standards don't become a single entity just by virtue of such. And to make a finer point of it the level, and nature, of competition between Intel, AMD, and Motorola is pretty damn "friendly" like unto how the NFL does things. (Language standards, sharing product back and forth for benchmarking, etc... They even go so far as to not make use of leaks from developers of the other guy's stuff.
They're 32 different business that work together. Specifically they're 2 different leagues that agreed to certain rules to play nice by. They've been trying for years to sell this idea legally that they're the same, structurally, to actual franchise companies. They're not and I hope the court reaffirms that.
All NFL teams are franchisees, exactly like McDonalds.
Except they're not exactly like McDonalds. The Lions would get in trouble, as the but of yet another joke, because Mr. Ford agree to the current strictures along with all other 32 teams. The Lions, Giants, Jets, or any other NFL team doesn't work for the NFL. It's the other way around. They created the NFL as a governing organization to keep an even field wrt to the product they offer. If they wanted a new governing organization they could scrap the NFL, and move on to some other model.
If a group of them wanted to go off and do their own thing they could. They would not have to give up their names as the Cardinals, Giants, etc... That's a pretty basic, fundamental, difference between them and what they're claiming to be.
silverwhisper
07-20-2009, 02:37 PM
wook, as chimaera noted, just b/c sports teams compete athletically against one another, it doesn't mean that the businesses compete with one another.
and ultimately, they don't. the league in fact exists to prevent exactly that kind of competition: that's why they league puts together a schedule that (usually) ensures that teams in the same markets aren't scheduled to play the same time slot.
They more than just "work together", the NFL is controlled by its members (http://en.wikipedia.org/wiki/NFL) and, moreover, the NFL represents them all.
Yes. I've said that several times now. But the claim the NFL is making is that they are the same, because they've set up the NFL central office and administration, as any other franchise organization. (McDonalds, Oil Can Henry's, 7-11, etc...) And they're not. I'm not saying they're not similar, there's a lot of superficial similarities, but they fundamentally different in terms of how the NFL exists wrt the individual franchises.
Let me put it another way... The incredibly beleaguered Ford, GM, and Chrysler decide, after a theoretical decision for the NFL comes down the pipe, that they're going to take advantage of this create a parent organization called "NA Auto Manufacturers" and set up all sorts of collusion wrt price points, employee wages, number and location of dealerships, etc... All very open and public and then claim anti-trust exemption as a "single entity".
That's what the NFL is trying to do here, specifically what they did with the merger, (They've been making this claim more or less since then.), and what I outlined is the sort of things other sectors of the economy could do. It would be terribad decision.
Brother Brian
07-20-2009, 03:05 PM
No. My counter argument is that the NFL is not a single entity as it's member teams compete with each other in all aspects of business and sport. A codified set of rules for fair play does not a single entity make. IT is full of standards. Manufacturer's adhering to those standards don't become a single entity just by virtue of such. And to make a finer point of it the level, and nature, of competition between Intel, AMD, and Motorola is pretty damn "friendly" like unto how the NFL does things. (Language standards, sharing product back and forth for benchmarking, etc... They even go so far as to not make use of leaks from developers of the other guy's stuff.
They're 32 different business that work together. Specifically they're 2 different leagues that agreed to certain rules to play nice by. They've been trying for years to sell this idea legally that they're the same, structurally, to actual franchise companies. They're not and I hope the court reaffirms that.
Wook, the franchises are involved in profit sharing with each other. Every team makes a little money whenever a Steelers shirt is sold.
If Intel gave AMD money for every DualCore chip sold, then it would be similiar. It's not.
Intel and AMD don't open their books to each other like NFL teams do.
I'm sorry man, it's just not the same.
Exactly how many non-NFL professional football teams are there, Wook? Not "arena" football, not some pale substitute. And how many of those (assuming any exist) would be allowed to compete with an NFL team?
So you'll exclude anyone offering a similar product and then ask me who offers a similar product? The Arena Football League, and the NFL, and the UFL (http://en.wikipedia.org/wiki/United_Football_League_(2009)) all compete for players, coaches, venues, contracts for advertising, and television revenues, etc... (Never mind the USFL (http://en.wikipedia.org/wiki/United_States_Football_League) which had quite a bit talent on the rolls equivalent in quality to the NFL. They just did a poor job of managing their product.) Restricting your comparison to head to head competition is silly. This decision doesn't have anything directly to do one way or the other with direct head to head games. It has to do with how the businesses are organized and compete with other businesses. And then there's the CFL. (http://en.wikipedia.org/wiki/Canadian_Football_League) There's actually quite a bit professional football going on out there. And even the NFL has tried to start up professional leagues beyond just the NFL. NFL Europa (http://en.wikipedia.org/wiki/NFL_Europa)
If you wanted an exmple of a football organization not competing with the NFL you'd be looking for something like this. (http://www.americanfootballassn.com/)
Brother Brian
07-20-2009, 03:10 PM
Except they're not exactly like McDonalds. The Lions would get in trouble, as the but of yet another joke, because Mr. Ford agree to the current strictures along with all other 32 teams. The Lions, Giants, Jets, or any other NFL team doesn't work for the NFL. It's the other way around. They created the NFL as a governing organization to keep an even field wrt to the product they offer. If they wanted a new governing organization they could scrap the NFL, and move on to some other model.
If a group of them wanted to go off and do their own thing they could. They would not have to give up their names as the Cardinals, Giants, etc... That's a pretty basic, fundamental, difference between them and what they're claiming to be.
No, actually they couldn't.
They have contractual financial obligations to the other owners, and it would ruin all but the richest of them to do so.
Further, they would have no players, as all players sign NFL player contracts, (IE sign with "The New England Patriots of the National Football League"), which would be rendered null and void by the team ceasing to be an NFL team.
So, essentially, they would have no right to the players, the name, or any other aspect of the team. (If they own the stadium (most don't), they have the right to play there.)
That's like saying that the owner of a McDonalds has the right to close down his McDonalds and open a Wendy's in the same spot.
That's fine, but he still has to pay McDonalds the franchise fee.
Brother Brian
07-20-2009, 03:19 PM
So you'll exclude anyone offering a similar product and then ask me who offers a similar product? The Arena Football League, and the NFL, and the UFL (http://en.wikipedia.org/wiki/United_Football_League_(2009)) all compete for players, coaches, venues, contracts for advertising, and television revenues, etc... (Never mind the USFL (http://en.wikipedia.org/wiki/United_States_Football_League) which had quite a bit talent on the rolls equivalent in quality to the NFL. They just did a poor job of managing their product.) Restricting your comparison to head to head competition is silly. This decision doesn't have anything directly to do one way or the other with direct head to head games. It has to do with how the businesses are organized and compete with other businesses. And then there's the CFL. (http://en.wikipedia.org/wiki/Canadian_Football_League) There's actually quite a bit professional football going on out there. And even the NFL has tried to start up professional leagues beyond just the NFL. NFL Europa (http://en.wikipedia.org/wiki/NFL_Europa)
If you wanted an exmple of a football organization not competing with the NFL you'd be looking for something like this. (http://www.americanfootballassn.com/)
As for the question if the NFL is a monopoly, of course it is, but it is one only because nobody has been able to put out a product that can compete with it.
There was the USFL (and for Chim, think of the USFL as Affliction, they signed away a number of very big names coming out of college in the mid 80s by offering mindblowing money. They failed because they couldn't get viewership enough to stop bleeding money. I actually thought it was a good product though.) The USFL actaully won an anti-trust case against the NFL...for $1 in damages, as the jury decided it was a technical violation of the law with no significant impact on the USFL's operations.
Wook, while it is true that at one time, each time was it's own entity, it has been decades since that was true. Teams gave over their "soverignty" in order to have a united front against the NFLPA. The NFL negotiates union contracts, not the teams. The NFL imposes rules on the teams.
You argue that the power of the NFL is mostly in the hands of the owners, but as Chim has said, that just makes the franchisees powerful members of the board of directors. It doesn't make them seperate companies.
Dude. Maybe I'm missing something, but I've been arguing *exactly* the case that the NFL is a monopoly. You claim to be rebutting me and then turn around and say that if the automakers got together and did the exact same thing, it would be monopolistic. What am I missing here?
They NFL is not denying that they're a monopoly. What they're asking for is to operate as a monopoly and at the same time be exempt from the laws governing monopolies because they're claiming that they have complete 100% control over the existence of those member franchises and that's the part that really isn't true. (EDIT: This is why I keep going to McDonalds as an example. They are an actual single entity organization and the traits you find there are consistent across other single entity organizations and aren't true of the NFL.)
Major league Baseball has that sort of exemption granted to it by Congress but they're the only sport that has it, or has had it.
You argue that the power of the NFL is mostly in the hands of the owners, but as Chim has said, that just makes the franchisees powerful members of the board of directors. It doesn't make them seperate companies.
If the NFL told Jerry Jones, Al Davis, The Ford Family, or the Kraft family that they were taking their team away from them under whatever guidelines the league could attempt to do such how exactly do you think the owners of those teams would react? What do you think the legal fallout would be thereof?
They're not members of a board of directors. At most that's what they try to portray themselves as. They are separate individual businesses working together.
silverwhisper
07-20-2009, 03:30 PM
untrue re: MLB: it was a term (http://en.wikipedia.org/wiki/AFL-NFL_merger#The_merger_agreement) of the NFL/AFL merger.
Brother Brian
07-20-2009, 03:37 PM
If the NFL told Jerry Jones, Al Davis, The Ford Family, or the Kraft family that they were taking their team away from them under whatever guidelines the league could attempt to do such how exactly do you think the owners of those teams would react? What do you think the legal fallout would be thereof?
They're not members of a board of directors. At most that's what they try to portray themselves as. They are separate individual businesses working together.
I think that Kraft et all would fight them if the NFL didn't have the legal authority to strip him of his franchise for the reasons stated.
Which is exactly what I would expect the owner of a McDonalds franchise to do.
Brother Brian
07-20-2009, 03:56 PM
Which is kind of hampered by collusion, wouldn't you say? It's a bit glib to say that nobody's been able to put out a competitive product, as if that's somehow an entirely innocent thing. The NFL seems to make sure nobody can compete.
Except it's not collusion if it's a single entitiy. Nobody expects McDonalds francisees to compete against each other.
That's brutal. What the hell is a "technical" violation of the law supposed to mean?!?
Now *I'm* getting confused... :whacky011:
You labeled those Wook, but it was my quotes.
Here's the wiki on the USFL:
http://en.wikipedia.org/wiki/United_States_Football_League See, like Affliction, Trump's even involved. ;)
Basically, the thought was that since all three TV networks had an NFL contract, the USFL couldn't get on TV when they moved to fall games. (Origionally it was concieved that they would play in the spring, but couldn't compete with baseball.) While the jury felt it was true, they also didn't feel that the NFL did it to prevent the USFL from competing, thus awarding them $1, which got tripled into $3 due to anti-trust laws. So technically there was a monopoly, but there was no proof of malice with it.
In the mean time, the USFL was on the networks when they played spring ball, so the idea that the NFL was specifically using their market position to crush them just doesn't stand up.
Brother Brian
07-21-2009, 09:30 AM
Wook is arguing that each NFL team is an entirely seperate business, and thus their combining under the NFL banner for any and all contract negotionations is a violation of anti-trust laws.
The NFL is arguing that the NFL is a single entity, that each of the teams represents a part of a unified whole. I tend to agree with this, and Wook has been factually wrong on his reasons why they wouldn't be considered a single entity.
Brother Brian
07-21-2009, 09:44 AM
Ah, I see. I guess what I'm arguing is that the NFL is acting as a single entity in an anti-competitive manner. So Wook and I largely agree. I guess the issue was the label on the nature of the collusion.
I don't think anybody is disagreeing that the NFL is acting as a single entitity.
The question is, are they 32 seperate businesses acting as a single entity, (which would be collusion, and a violation of anti-trust laws), or are they actually just a single entity.
I argue that they are a single entity.
1. Revenue: While each franchise keeps the majority of their revenue, the league does have revenue sharing; weaker teams are subsidized by stronger teams.
2. Lost Soveregnty: Wook indicates that an owner could pull their team out of the NFL and put them in another league, giving up only the name. This is patently false. Doing so would actually violate the franchise owner's agreement with the league, sponsers, players, coaches, etc. The team exists only in it's connection to the league.
(It is true that way back when each owner was fully in control of their team. However this was back when leagues and teams started and ended constantly, where college football was "real football" and pro football was laughed at. The owners solidified with the NFL, (and the AFL started using the NFL model). When the players unionized, the owners became even more centralized into the league office. Each team is officially a franchise of the NFL, and exists only as much as the league does.
3. Seperate Leadership. Roger Goodell runs the NFL. He is not a team owner. His job is to keep the league moving forward, even when it means standing up to individual owners.
I'm not saying that the single entity position is a slam dunk, but I do believe that it's a strong case to make to the SCOTUS.
Brother Brian
07-21-2009, 11:03 AM
I can see that it is eminently arguable both ways. I tend to agree with you that the NFL is basically one big company. I find the anti-trust stuff to be problematic; I don't think the NFL faces any real competition, not in terms of football. Now, is that their fault? Or just another weakness in the capitalist system, another example of free-market theory not working in practice? ;) :sagrin:
I think it's largely the latter. When you break down large industries (Entertainment) into sub-categories (Sports), and then into even more specific sub-sub categories (Individual sports) it doesn't surprise me at all that the market is unable to hold up to much competeition within the smallest divisions.
Let's say we have 100 people who want to be entertained. And half of them are entertained by sports. And half of those are entertained by football.
How many football leagues do you need to entertain them. We currently have 2 (Professional and College). They don't compete for players however. So the NFL has the best players in the world, but more than that, they have that psychological connection with the fans. I love the NE Patriots, and I have for so long that the players on the team are largely less important than the team itself.
So you could put a UFL team in Maine, and I would likely still support the Patriots more than them.
There's just not a ton of room now that you've cut the slice so thin.
That said, I think it's legitimate to say that the NFL does compete with Baseball, Basketball, Hockey, UFC, etc as sports, and against sports, movies, TV, etc, as an entertainment business. Certainly there is plenty of competion there.
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