OT: Supreme Court Rules NFL as 32 teams, not one entity

Submitted by Plegerize on

The Supreme Court finally came down with a ruling and decided that the NFL should be considered 32 separate entities and not just one big one.

http://sports.espn.go.com/nfl/news/story?id=5214509

I'm not too up to date with all the legal jarble, but I believe this is a good thing am I right?

Erik_in_Dayton

May 24th, 2010 at 11:22 AM ^

But it seems that decision is limited to the issue of whether or not teams can choose the companies that they license their names/logos to for the sake of making hats, jerseys, etc. 

Wolverine In Exile

May 24th, 2010 at 12:02 PM ^

Would this open the door however for additional challenges? Like theoretically Pepsi suing b/c Coke is the official drink of the NFL and they are prohibited from selling Pepsi at NFL games? if the court rules that the 32 teams are separate entities, what would prohibit Jerry Jones from doing additional sponsorship deals so that product X is the official product of the dallas cowboys instead of the NFL? What clause in  a franchise agreement with the league would prevent them from doing so without opening themselves up to collusion lawsuits from other vendors?

Erik_in_Dayton

May 24th, 2010 at 12:13 PM ^

I think that this decision will make challenges re: the issues you describe either likely or not even necessary.  Having not read the decision, I'm inclined to think that Jerry Jones can contract with Pepsi if he wants to, given that he can apparently now contract with Reebok instead of Nike (or whatever company is the official jersey supplier). 

Zone Left

May 24th, 2010 at 12:22 PM ^

I think an argument could be made there.  I'm curious to see if this has ramifications for the collective bargaining agreement.

In a not-OT vein, does this have ramifications for the NCAA and the BCS?  If the NFL is 32 separate entities, then couldn't the BCS make the argument that they've entered into agreements with each conference (they have) and that those conferences member institutions have agreed to take part separate from the NCAA--thus making the Congressional huffing and puffing even more irrelevant than it is now?

joeyb

May 24th, 2010 at 11:25 AM ^

This means that the teams are acting in collusion and are most likely guilty of breaking anti-trust laws. I guess it depends on whether you interpret that as a good thing (most likely we get cheaper clothes now) or a bad thing (it could be the last straw on the camel's back for the NFL).

Bleedin9Blue

May 24th, 2010 at 11:36 AM ^

This is old, but it's where I got most of my information about this subject (along with some of the articles that it links to). I'd suggest reading it just because reading SmartFootball is always a good idea.

danimal1968

May 24th, 2010 at 12:27 PM ^

if the NFL was one entity, it could not be capable of conspiring to restrain trade because you can't conspire with yourself.  Since it is 32 entities, its conduct is judged against the "Rule of Reason."  The Supreme Court telegraphed in its opinion that a lot of what the NFL did should likely succeed but what the NFL wanted was basic immunity from sec. 1 of the Sherman Act.  It didn't get it.

wolverine1987

May 24th, 2010 at 1:24 PM ^

simply does not understand the football business--or is someone with a vested interest in seeing them that way.  The former would likely apply to most of the SC Justices.  There is an inherent need for cooperation in the major sports leagues that does not exist in other business.

joeyb

May 24th, 2010 at 1:31 PM ^

This is very true from the inside perspective of the NFL., but from the outside, each team is its own company that keeps its own books, sees its own profits, and has its own owner, independent from all other teams.

If each team were a house in a neighborhood, the NFL would be the Home Owners Association as opposed to the NFL renting the houses to each of the teams.

Calvin Bell Reverse

May 24th, 2010 at 2:15 PM ^

however, the SCOTUS addressed those kinds of needs in their opinion.  Collusion needed to ensure the integrity of the game and NFL product will still be allowed.  The holding narrowly addressed the IP aspects of NFL teams. 

The holding specifically mentioned NFL hats, and this is what I think the SCOTUS has in mind.  Meaning that the only differences you will see come out of this is the end of exclusive apparel agreements with reebok.  NFL teams will have to make their own licensing agreements.

A broader implication could be a shift in how the Court sees pro sports leagues.  Hopefully this will lead to the end of baseball's antitrust exemption (a complete absurdity).

IndyBlue

May 24th, 2010 at 4:49 PM ^

I don't think each team will have to separately license apparel.  The NFL could go back to its old arrangement it had before the deal with Reebok: each team licensed their logos to the NFL who then granted licenses to multiple companies (including Reebok and American Needle).  American Needle-Plaintiff essentially argued that that's what they wanted to happen.

Fresh Meat

May 24th, 2010 at 2:50 PM ^

Well simply saying the NFL is one business is incorrect as well.  Sports leagues are some form of hybrid between single entity and separate businesses.  This whole case is what I wrote my Law Review note on for ND.  Treating them as a single entity is both incorrect as a legal matter as well as being incorrect as a policy matter.  But they should have some special treatment than normal competing businesses because, as you said, that is the nature of a sports league.  It is best for SCOTUS to rule as they did and just allow Congress to fashion hybrid rules for pro sports leagues.

jmblue

May 24th, 2010 at 3:10 PM ^

I don't think this is a good thing.  Equitable revenue sharing has been essential to the health of the league.  That could go out the window if individual franchises are allowed to sign their own marketing deals. I hope this doesn't affect the salary cap.  If it causes it to be removed, the NFL could start witnessing MLB-sized payroll disparities.

IndyBlue

May 24th, 2010 at 4:48 PM ^

Those other issues will not be affected.  The sole issue in this case had to do with the NFL's decision to grant an exclusive license for NFL merchandise.  The Court pretty much stated in the oral argument (I haven't read the written decision yet) that the labor part of the business was a totally different aspect of the league and would be treated as such.  I took this to mean that a salary cap would be acceptable because of the nature of the league and the necessity of having some sort of parity.