Supreme Court Case Won't Live Up To Hype
CNBC Sports Business Reporter
You are going to be told over and over again today that this American Needle case against the NFL, that is being heard today in front of the Supreme Court, is a case of paramount importance. That it can forever change how sports leagues are run.
I'm here to tell you that — although it has made its way all the way to the Supreme Court — it's not going to be that big of a deal.
Because even if the court sides with the NFL, and rules it as a single entity, I can't possibly see the court saying that the single entity ruling is so broad that it encompasses everything the league does. There's just no way that I can see the day where unions are disbanded and league's teams collude to fix prices at all levels.
If you haven't heard, the case involves hat maker American Needle, which sued the NFL after the league's licensing arm agreed to an exclusive deal with Reebok. American Needle claimed the deal, which shut them out of the NFL business, violated antitrust laws because the teams were technically 32 separate businesses that shouldn't be allowed to control licensing rights as a group.
The reason why the case made it to the Supreme Court is because this case is so unique. You see, the league's teams are technically competitors and, in a normal business environment, wouldn't be able to decide together how to operate business.
American Needle won lower court decisions, but the U.S. Court of Appeals most recent decision sided with the league's single entity argument for something like apparel sales.
That's the only way I can see the Supreme Court going — that for the purpose of merchandise and sponsorship, the league acts as a single entity.
American Needle argues that the league's exclusive deal with Reebok allows the league to fix prices as a monopoly. That's not necessarily true. The league and Reebok charge what the market commands, even if that market is slightly warped by a single company in the business.
Remember, while the teams are competitors on the field, they're not really competing against each other for much in the business world, including gate revenue. They, for the most part, operate in different cities and need each other to play games.
Also remember that, with the exception of the Dallas Cowboys — which has its own merchandise distribution system — revenue with team logos are split equally.
Bottom line: This is hardly Verizon versus AT&T, folks. So the single entity structure for these purposes makes sense. The league should have the rights to peddle its team trademarks
As for salaries, I just don't see the court ruling that the single entity structure holds here. They can't destroy the idea of unions and free agency because, unlike the apparel side, teams really do compete for talent.
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