US Supreme Court and Sports (Post 1 of 2)

This is a sports related post. If you’re not into sports, this entry will be of no interest to you. I will make a separate entry with my non-sports topic.

As most of you American readers know, a huge battle is about to be waged in the US Supreme Court. It’s a very small item. Only it’s got huge, huge ramifications. I’m going to throw my comments in, and at the end I’ll provide two links for further reading.

The plaintiff is American Needle. Included on their “friend of the court” brief list is the NFL Coaches Association as well as the players unions in all major sports, among others.

The defendant is the National Football League (NFL). Included on their “friend of the court” brief list are every single professional sports league in the USA that has teams. All of them: NHL, NBA, MLS, the NCAA, professional tennis, and even NASCAR (though I refuse to acknowledge that as a sport). Even Master Card and Visa have thrown their hats in. What does this tell you? There are enormous sums of money involved. Sums measured in the hundreds of billions of dollars.

The case is American Needle v. NFL, 08-661 if you want to track it.

The high court will hear arguments Wednesday from American Needle that used to make NFL hats. They are seeking to overturn rulings that the NFL is one business, not 32 separate teams working together, and therefore immune to antitrust complaints. So maybe that doesn’t seem like a big deal to you.

Originally, American Needle sued the NFL and Reebok — who got an exclusive contract to make apparel in 2004, claiming the deal violated antitrust laws. Lower courts threw out the suit, holding that nothing in antitrust law prohibits NFL teams from cooperating on apparel licensing. It doesn’t matter if you agree or not, that’s the legal ruling.

Now, the NFL is asking the Supreme Court to review the case in hopes of getting a blanket antitrust exemption that could eliminate most, if not all, the antitrust suits against the league. In the Washington Post, New Orleans Saints quarterback Drew Brees wrote “It was an odd request similar to my asking an official to review an 80-yard pass of mine that the official had already ruled a touchdown,” You have to ask yourself: why would they do this?

It comes down to labour peace. An NFL victory would come at the cost of labour peace in pro sports, possibly leading to strikes and lost seasons for professional hockey, basketball, and football. Even the baseball players endorsed that view even though baseball has an antitrust exemption. Labour agreements in the NFL, NBA, NHL, and MLB all expire in or around 2011. Many analysts expect that if this exemption is allowed that the leagues will attempt to impose hard salary caps without approval of the players, remove free agency, and make it very difficult for free market conditions to reign.

The credit card companies are in this as I mentioned earlier. Why? Most people aren’t aware, but MasterCard and Visa are actually a confederation of banks much like the NFL is a confederation of teams. A ruling would allow them broad powers to fix pricing, invoke predatory pricing, and worse — all without fear of reprisals.

The articles as promised: USA Today and Associated Press.

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