- Lester Munson, Legal Analyst
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If the U.S. Supreme Court gives the NFL what it wants, the nation will see "radical" changes in the world of sports -- more strikes, more lockouts and even a new weekend football schedule -- according to a brief filed by four players' unions representing 3,400 professional athletes.
The 52-page brief is part of the high court's consideration of American Needle Inc. v. NFL, an antitrust case that, according to most experts, could be the most significant court decision in the history of American sports.
The case is under consideration in the Supreme Court as the result of both American Needle Inc., a manufacturer of hats and caps, and the NFL's asking for the court's review. The NFL triumphed over American Needle in the lower courts, obtaining rulings that the league's creation of a monopoly over logo apparel did not violate antitrust laws. The NFL now has asked the nation's highest court to expand the ruling over American Needle beyond apparel and into all operations of the league.
Although the case directly involves only the NFL, it will affect the NBA, the NHL and MLB as well. Recognizing the importance and possible influence of the case, the unions from the four major pro sports joined forces in a highly unusual effort and used 16 lawyers to produce a powerfully written brief warning of the consequences of a decision favoring the NFL. In the understated language commonly used in the high court, the unions said in their brief, "The outcome of this case is of great interest to the players' associations."
In a separate brief filed in opposition to the NFL's effort to gain immunity from antitrust laws in the American Needle case, more than 600 NFL head coaches, coordinators and assistants in the NFL Coaches Association told the Supreme Court that a decision in the league's favor would result in a salary cap for head coaches and a wage scale for assistants. That group is concerned a victory for the NFL would eliminate the current "robust competition" for coaches and allow owners to indulge in "anticompetitive collusion" that would drastically reduce coaches' salaries and benefits.
The warnings found in the brief filed by the unions include a prediction of a new scenario for America's football weekends. Under the current laws that govern the NFL's television contracts, the league is permitted to negotiate TV broadcast deals for only certain days and times. A 1961 federal law known as the Sports Broadcasting Act bars the NFL from broadcasting its games on Friday nights and Saturday afternoons when high school and college football games are being played.
The unions' brief explains that the law was written "to prevent the broadcast of NFL games from diminishing attendance at college or high school games."
If the high court grants to the NFL the broad immunity from antitrust laws that the NFL seeks, the league would be free to negotiate contracts for Friday night and Saturday afternoon broadcasts.
"We are absolutely against it," says Robert Kanaby, the executive director of the National Federation of State High School Associations. "Friday night is for high school football, and is a concept of community that is good for football and for the community itself."
According to a spokesman for the NFL, the players and the coaches are overreacting to the possibilties of the case. Suggesting that the case deals only with apparel licensing, the spokesman said, "Regardless of the outcome of the case, we do not foresee any possibility of seeking to schedule games on Friday nights or additional Saturday afternoons. Nor do we foresee any possibility of a wage scale or salary cap applicable to coaches."
In addition to their warning about Friday nights and Saturday afternoons, the players' unions are concerned about the effect of the case on free agency and player salaries. The NFL's demand for total exemption from the application of the nation's antitrust laws is, the unions argue, a "Trojan horse designed to free sports team owners" to "restrain competition for player services."
In plain language, the unions are telling the Supreme Court that a ruling for the NFL would allow the owners to engage in legal collusion that would eliminate free agency and reduce player salaries.
The union lawyers remind the high court that the players were able to obtain free agency and salary increases only through antitrust suits. Going out on strike does not work for NFL players, the brief suggests, because strikes have been "ineffective given the extremely short average career length of NFL players of approximately three years."
Listing the NFL Players Association's triumphs in the antitrust litigation of the early '90s, which were led by the late Gene Upshaw and resulted in free agency and doubled player salaries in a single year (1993), the union lawyers suggest free agency even helped the owners. The values of teams "skyrocketed" after free agency, "increasing from $288 million in 1998 to an average value of $1.04 billion in 2008."
Without the avenue of antitrust litigation to preserve salaries and benefits, the players argue, "labor disputes and work stoppages would likely ensue."
The target of the unions' brief is the NFL's assertion that it is a "single entity" and should be immune to the antitrust laws the players value so highly.
The NFL is not now and never was a single entity, the unions say. They assert that team owners "compete fiercely for players and coaches," that they do not share profits or losses as a single entity would and that they compete for fans nationwide.
Instead of limiting their marketing to their geographic regions, teams compete across the country. The Dallas Cowboys and MLB's Atlanta Braves, for example, both call themselves "America's Team." The Pittsburgh Steelers refer to their fans as "Steeler Nation," and the Boston Red Sox like to talk about "Red Sox Nation." The unions suggest competitive sales efforts for fans are not something a single entity would do.
In addition to competing for fans, the union lawyers say, professional teams set their own prices for tickets, concessions, parking, local advertising, signage, and sales of programs and novelties. According to numbers in the brief compiled by Kevin Murphy, an economist and professor at the University of Chicago who is a leading expert on antitrust issues, approximately $4.5 billion of the $7.5 billion in total NFL income for 2008 was generated from these revenue sources. It's another clear indication, the unions argue, that NFL teams that set their own prices independently cannot be viewed as a single entity.
The independent decision-making of the teams is further shown by the varying outcomes of the teams' efforts, according to the brief. Citing figures from economists who have studied the NFL, it states that individual team incomes in the NFL in 2008 ranged from $214 million to $345 million, a difference of more than 60 percent. The most profitable team earned $100 million more than the least profitable team, according to the unions' brief.
The disparate values of the teams also show their independence, the unions say. The Cowboys recently were valued at $1.65 billion, more than twice the value of the Raiders at $800 million.
The coaches' decision to intervene in the case with what is known as an amicus (friend of the court) brief pits the coaches against the franchise owners who hire them on an issue of the utmost importance to both sides.
Under current laws that govern monopolies such as the NFL, any attempt to set a wage scale or a salary cap would be illegal, according to the coaches' attorney, Barak D. Richman, a law professor at Duke who specializes in antitrust issues.
"The owners have been talking about a coaches' wage scale and a salary cap for the last seven or eight years," says Larry Kennan, the staff director of the NFL Coaches Association. "We are concerned that if they prevail in this case, they would set limits on pay and they would set limits on the number of coaches."
If the league attempted to set a wage scale for coaches, Richman writes in a 17-page brief, it would be a "naked horizontal restraint." That's antitrust language for unlawful collusion to set the price of a coach. If the NFL used its monopoly power in an attempt to set wages, it would be a violation of America's antitrust laws, allowing coaches to claim triple damages for their losses. But according to Richman, if the NFL wins the American Needle case, what had been unlawful would become lawful.
"The league would use its new power to cut costs. Cutting costs would include cuts in our health and pensions benefits, and cuts in our pay," Kennan predicts.
Kennan, who coached in the NFL for 15 years, was one of the founders of the NFLCA in 1997 and has worked for NFL coaches ever since in office space at the NFL Players Association headquarters in Washington, D.C.
"Coaches' salaries have increased percentage-wise over the last eight years more than any other group. That includes general managers, scouts, players and everyone," Kennan says. "Now that we have established ourselves and forced the owners to look at us differently, we want to keep what we have."
Although head coaches enjoy opportunities for broadcast work and for other positions in the NFL, Richman says assistant coaches would be "the most vulnerable to a collusive action on wages" from the owners.
"They would suffer the most if the owners' idea that the NFL is a single entity were adopted," Richman says. "They have only one market for their services, and they need competition in that market."
In the coaches' brief, Richman relies on court decisions that ended the NCAA's attempt to restrict the earnings of assistant college basketball coaches. The assistant coaches, relying on antitrust laws, attacked an NCAA-imposed salary limit of $18,000 and triumphed in court. It was a humiliating defeat for the NCAA, and is exactly what the NFL is trying to avoid in its attempt to persuade the high court that it is a single entity and immune to antitrust attacks.
During an earlier phase of the American Needle proceedings, both the NBA and the NHL filed amicus briefs in support of the league's request that the Supreme Court take the case for consideration. After the high court decided it would hear the case, six additional amicus briefs have been filed, including the unions' brief and the coaches' brief. Others are from the Justice Department, the Consumer Federation of American, the Merchant Trade Association, and a group of economists and academics. All six of those briefs argue against the NFL's claim that it is a single entity. There still is time for additional briefs to be filed.
A decision is expected in the late spring of 2010.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.