May 24, 2010
On the surface, it seems like an innocuous lawsuit with a professional sports league and an equipment manufacturer at odds. But when the Supreme Court overturned an earlier District Court decision in the American Needle vs. NFL case, ruling that the NFL must be seen as 32 separate teams and not a single entity for antitrust purposes, it is not an exaggeration to say that in the current labor landscape, it was a major win for the Players Association.
In a nutshell, the American Needle equipment and apparel company sued the NFL in 2004, claiming that the NFL used monopoly status to deprive the company of the opportunity to sell team logo caps and hats. The league won the first ruling, but actually endorsed American Needle's appeal to the Supreme Court. Of course, the NFL's concept was not to lose a battle they had already won — it was to take a major step forward in a battle the league has been fighting for decades. If the Supreme Court ruled that the NFL could act as a single entity, with all its member clubs acting in concert, provisions against collusion in many ways would be severely affected or eliminated altogether. Basically, the league could establish salary ceilings for players in ways that would be illegal under other circumstances, effectively breaking the union and making a lockout inevitable. But the ruling against the NFL, given by Justice John Paul Stevens, was unanimous.
"The teams compete in the market for intellectual property," Justice Stevens wrote for the court. "To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks."
I asked ESPN's John Clayton, a man who keeps his finger on the pulse of the league's labor matters with more knowledge than most, about this case when I spoke with him at the 2010 scouting combine. Clayton intimated that if the NFL lost the appeal, circumstances would lean toward a resolution in the tension that currently affects the 2011 season. "Because, if the NFL wins it, they can really go for the jugular. They can control salaries, and control the system more," Clayton said. "If they lose the case, there may be more of a effort to try and get a [new CBA] deal done. Right now, it doesn't appear that the NFL wants to get a deal done, but it's so early to say. And let's put it this way: Do the owners want a lockout? No. They want to run their business. They've got an $8 billion business, and if they lock out, all they have left is $5 million in TV money that's really loaned to them. And they've all got debts on their stadiums and everything else. Right now, it's too early to call a lockout. The big thing is seeing where American Needle goes, and seeing who has the leverage."
With the league's loss in this case, and the spring owners' meetings beginning Monday, it's a very interesting and important time for the short-term future of the league. When the owners assemble in their private bunker, will the American Needle ruling affect their thought process? The case now goes back to district court, but a unanimous Supreme Court ruling is a fairly definitive flag in the ground. The nation's highest court has told the most powerful sports league in the country that it can't do whatever it wants. The repercussions should come soon.
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