NFL's new equity rule could be a clear collusion/antirust violation
On the surface, the NFL's new ban on owners giving equity to players and employees falls within the broad range of things the league can do, if it wants. Whether this specific exercise of oligarch prerogative complies with all applicable laws remains to be seen.
The no-equity rule could invite two specific types of legal challenge. The NFL Players Association could argue that the rule amounts to collusion per se. Any non-players (or teams) separately could argue that the rule violates the antitrust laws.
The rule was created to protect owners from themselves, and then to protect other owners. As explained by Ben Fischer of Sports Business Journal, "the finance committee and NFL lawyers were moved by an expectation that employees and candidates -- including players -- will soon start to ask for equity more often, particularly in light of the practice emerging in other leagues." By crafting a rule preventing any owner from giving equity to players or other employees, the league avoids "an arms race."
As to the NFLPA, the rights and obligations of the parties appear in the Collective Bargaining Agreement. Nothing in the CBA prohibits a team from giving equity to a player, as long as the value of the equity is properly reflected within the salary cap. (Indeed, there would be no need for a rule preventing players from receiving equity if the CBA already prevented it.)
By unilaterally taking the equity option off the table at a time when Aaron Rodgers was trying to get equity from the Jets and USC quarterback Caleb Williams had been making noise about wanting a piece of the team that drafts him, the NFL has changed the rules without bargaining with the union. Also, this 32-team agreement to prevent equity transfers to players in defiance of the CBA becomes collusion.
Last week, we asked the NFLPA for its reaction to this rule. The union, which has basically slipped into a P.R. coma since the election of new executive director Lloyd Howell, has not responded.
As to non-players, the antitrust laws become relevant. The NFL consists of 32 independent businesses. Why should some of them be able to tell others how to run their businesses? This includes telling them how to distribute ownership in their businesses. It might be a bad business decision to, for example, give a coach one percent of the team in order to hire him, but that's a business decision each owner should be allowed to make.
There is no salary cap for coaches. Absent a union, a cap would be a clear and obvious antitrust violation. The no-equity rule is a less obvious antitrust violation, but it seems to be an antitrust violation nonetheless.
The league apparently is willing to take its chances in court. There's too much at stake, given the dramatic ongoing increases in the values of teams. Once the equity bridge is crossed, players and other employees have a chance to truly level the playing field with owners, participating in the generational appreciation of the franchise asset that continues long after a playing or coaching career ends.
Will someone sue? It's in the DNA of Raiders owner Mark Davis, whose plan to both hire and to give equity to Tom Brady has been stymied by this new rule.
Decades ago, Al Davis sued the league for antitrust regarding the team's move to L.A. Maybe Mark, just maybe, will take a page from his father's legal playbook.
