An American Needle in a haystack

The highest court in the land doesn't often deal with sports cases, let alone apparel cases dealing with football teams. Thus, today's unanimous ruling against the NFL by the United States Supreme Court in the American Needle case is an interesting one. The NFL took a shot in January that the "Single Entity" argument would work in insulating them from antitrust attack.

In simplest terms, the Single Entity argument is that since the 32 NFL teams act collectively and in concert in presenting the product of professional football, they are one entity incapable of conspiring or combining with itself. An interesting argument indeed, but a loser today.

As I wrote about at the time of the oral arguments, the result is no surprise. With the 32 NFL teams competing vigorously on and off-the-field in order to gain any kind of edge, an argument that the league is a "single entity" for antitrust immunity purposes was not a strong one.

To quickly review, when the NFL granted Reebok an exclusive license to outfit their players and coaches in 2002, American Needle, one of the apparel companies excluded as a result of the Reebok deal, argued that the NFL could not collectively do this and took its case all the way up the ladder to the Supreme Court. This is where the appeal got interesting, as the NFL joined American Needle in asking the court to take the case.

To use a football analogy, with American Needle having already been called offside by the lower courts, the NFL had a chance to go for broke without losing ground on the play. At worst, it believed the outcome could be a five-yard penalty, which it received. At best, the NFL could have a game-changing play, a declaratory judgment from the Supreme Court that it’s entitled to an antitrust exemption that could insulate them from any player claims and, in effect, give them the ultimate hammer to hold over the head of the union. It was certainly worth a shot by the league and its lawyers.

What does the NFL's loss today mean? Generally, we are at the same place we were before the arguments to the highest court in the land. However, it does present some potential collective bargaining issues.

The NFL does not have this trump card of antitrust immunity to wield over the NFL Players Association. It could have had all the advantages of labor law combined with antitrust protection, a powerful concoction to forge a favorable agreement.

Conversely, the NFLPA can now at least have the appearance of negotiating leverage with the possiblity of decertification, meaning that they would cease to be a union in order to pursue antitrust claims in court. As a union, the players are bound by labor laws, which have been very favorable to management. As a decertified "association", the possibility for financial gains by players increases many fold, as the case in 1992, which led to the current CBA.

Most importantly, the ruling will -- hopefully -- jump start more productive talks toward a new agreement between the owners and players toward labor peace in the NFL past this season. These negotiations have been dormant for a while, as the owners have been reaping the advantages of the uncapped year. There are many issues to discuss: the continued existence -- or not -- of the Cap, player safety, player conduct, and the recent angst-ridden issue of performance-enhancing substances, which I will get to tomorrow.

The NFL took its free play and it was unsuccessful. The result may have a larger effect on other sports leagues than the NFL. The best news may be that the focus of the lawyers' efforts can now switch from the court room to the board room as perhaps collective bargaining will resume.

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