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American Needle Ruling Provides Much Needed Ammunition to NFLPA.

Byline: Jeff Levine

Last week's American Needle ruling reinforced the decades-old notion that sports leagues cannot escape antitrust law. In denying the NFL's bid for independence from antitrust scrutiny, the United States Supreme Court ensured that the National Football League and its counterparts throughout professional sports would not be able to engage in anticompetitive activity without fear of consequences.

While many are praising the High Court's 9-0 decision to esumphatically reject the NFL's bid for antitrust immunity, not enough attention is being paid to the massive impact the American Needle decision has on the bargaining relationship between the NFL and its labor counterpart, the National Football League Players' Association.

The two parties are in the beginning stages of negotiating a new Collective Bargaining Agreement, which will terminate at the conclusion of the 2010 season. The NFL triggered the CBA's impending expiration by exercising its right to opt-out of the CBA early several summers ago, arguing that the current agreement was fundamentally broken and no longer fit the financial needs of the league. NFLPA Executive Director DeMaurice Smith responded to this argument by asking for the opportunity to audit the league's financials. However, thus far the league has refused to honor any of the union's requests. Besides occasional public requests by the NFLPA to jumpstart negotiations, no real bargaining has occurred as of late.

Some believe that the NFL was intentionally refusing to comply with the NFLPA's requests to see league financial information or otherwise engage in meaningful negotiations with the union until American Needle was decided. The reason for American Needle's importance: tactical advantage.

American Needle on its facts centered on the legality of the NFL's assignment of an exclusive group license to one vendor to manufacture NFL headwear. However, as the case developed and the league was in convincing the federal trial and appellate courts that it was a single entity, the stakes of the game morphed into a debate over whether the NFL and other professional sports leagues could gain an advance in virtually all areas of business by freeing itself from antitrust law by convincing the High Court that sports leagues operated as a single entity. Successfully convincing the Court would sanitize sports leagues from antitrust law.

Although the chances of success were slim, if the NFL had convinced the Court that it operated as a single entity, antitrust law would no longer apply to the NFL and most likely every other sports league. Such an outcome would have made a broad impact in virtually all aspects of sports law, from business decisions to labor-relations decisions. Specifically, an NFL exempt from antitrust law would have forced the NFLPA to change its negotiating strategy.

Under labor law, employers and employees are exempt from antitrust law if they enter into a collective bargaining agreement. However, if there is no employer-union relationship, then antitrust laws apply. If there is no union, individual workers may sue the employer under antitrust law for engaging in a variety of conduct so long as there is some sort of agreement that some way restricts trade. However, if an employer is exempt from antitrust law because it is a single entity, there cannot be any agreement to restrict trade. If antitrust law did not apply, the parties would be forced to work out an agreement through collective bargaining, which at times can be very much skewed toward the employer.

The NFL would have certainly possessed an advantage in its brewing war with the NFLPA if labor law only applied. For instance, the NFL could rely on its guaranteed contracts with companies such as DirecTV that will pay the league billions regardless of whether or not any games are played in 2011. The NFL is also engaging in conduct it has shied away from for years such as selling sponsorships to lotteries conceivably to raise more money for a potential showdown with the union. At this point in this labor conflict, the NFL seems to be better capitalized to withstand a prolonged work stoppage where the only remedy could have been through collective bargaining, which could last several years.

However the NFLPA no longer has to worry about a scenario where labor law only applies, as the High Court sent the NFL a resounding message that antitrust laws apply to football.

This decision finally gave the NFLPA some good news for negotiations. Richard Berthelsen, general counsel of the NFLPA, stated that the decision "strongly affirms that the NFL must play by the same rules other businesses do. The Court's decision affirms our belief that the NFL should not be allowed to operate as a monopoly to the detriment of fans, players and the government."

The Supreme Court's refusal to take away the NFLPA's most effective weapon means that the NFLPA has some ammunition to combat any overly aggressive or unreasonable behavior at the bargaining table by the NFL. This event also means that the parties have no excuse not to finally get back to the bargaining table and engage in meaningful negotiations. The Supreme Court's refusal to grant the NFL antitrust immunity means there is no reason not to bargain in good faith. However, the NFL's deep pockets could mean that the league will negotiate hard against the union regardless of it being susceptible to antitrust challenge. But at least the NFLPA now has a bit more leverage in that it can always punt any impasse in negotiations to the courts via decertification and suing under antitrust law.

Jeff Levine is a staff member of the Business of Sports Network (, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is a sports attorney, and the Executive Director of One Sports and Entertainment, International.

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Author:Levine, Jeff
Publication:The Biz of Football
Date:Jun 2, 2010
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