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The NFL is not a Single Entity

The Supreme Court of the United States ruled that the NFL is not a single entity for any matters. Despite the fact that the NFL is one of the more centralist leagues, in that it attempts to share profits and package rights more so than other leagues, the Court has decided that no league consisting of separately owned teams is a single entity. That baseball is allowed antitrust freedom is an aberration and is limited to baseball. See the opinion here.

The NFL and other leagues are allowed to package their TV rights and sell them off as one entity because of the Sports Broadcasting Act. This act of Congress allows the leagues to avoid antitrust liability for the limited purpose of selling TV rights. MLB is allowed to conspire and act as a single entity even though it clearly is not. The MLB does not even need to pretend to be a single entity because of its broad antitrust immunity. The Court has always been reluctant to expand antitrust immunity to other leagues or to even expand the MLB’s immunity, leaving it up to Congress to repeal or expand immunity. However, since the NFL teams had begun to work together and act as one entity, it appeared that the Court would have valid legal grounds to justify a holding that the NFL is a single entity.

Had the Court broadly ruled that the NFL was a single entity, it would have allowed NFL teams to conspire in the restraint of trade without antitrust liability. This would mean that the NFL could, after the current collective bargaining agreement expires, dismantle the  NFL Player’s Union, remove free agency and expand the draft, without any legal recourse from the players. Of course, it may never have done any of those things, but it would have had the power. The Court ruling seems to go along with many other cases that dealt with expansion of antitrust immunity. However, the ramifications for the NFL will be very interesting since the exclusive licensing contract it has with Reebok has not yet expired.

Additionally, this ruling sends a message to all of the other sports leagues as to what they can and cannot do in terms of licensing. A study showed that after the NFL signed the exclusivity contract with Reebok, the cost of apparel with a team logo rose. Hopefully, if each team needs to negotiate on its own, the licensing costs should fall due to increased competition, leading to lower prices for fans.

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  1. David
    May 24, 2010 at 1:00 pm

    This is great news for the Catholic Church, since people in the US are trying to bring suit against the Vatican…Since the NFL is not one entity, neither could the Catholic Church be considered one entity.

  2. Mark Berardi
    May 25, 2010 at 8:27 am

    David: Thank you for the comment. While I see where you are coming from, I do not think that the American Needle opinion will do anything to shield the Catholic Church from “veil piercing”. However, you should read the Roman Catholic Archbishop of San Francisco v. Sheffield case. In that case, a man contracted with some agent of the Church overseas to purchase a dog. The Church agent failed to deliver, so the man sued his local archdiocese, the church agent, and even the Holy See. The court held that, basically, there was not enough sharing of resources and commonality to allow the corporate veil to be pierced all the way up to the Holy See. I think that that case offers more protection for the Church than American Needle.

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