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A Gathering Storm?

2009 September 21
by Brad Humphreys

A case currently before the US Supreme Court could have a huge impact on professional sports and sports fans in North America. The case, American Needle v. NFL, started out as an innocuous antitrust case. American Needle is an apparel manufacturer that some NFL teams contracted with to produce hats, t-shirts and jerseys. In 2000, the NFL signed an exclusive contract with Reebok to provide apparel to all 32 NFL teams. American Needle sued the NFL, all the NFL teams, and Reebok for restraint of trade, and lost. Appeals ensued.

What was once a relatively minor anti-trust case has somehow made its way to the US Supreme Court. The issue before the Supreme Court is no longer a piddly restraint of trade case about who has the rights to manufacture NFL licensed merchandise. The Supreme Court will instead rule on whether or not the NFL can be considered a “single entity” in all its business functions. If the Court finds that the NFL constitutes a “single entity,” the NFL would have a blanket antitrust exemption, in all cases except where the NFL would collude with other sports leagues to fix prices. Such an exemption would have consequences in input markets, affecting players and coaches, and output markets, affecting television broadcasts. It would also increase the power of the NFL and other sports leagues to extract subsidies from taxpayers for facility construction and operation. It could also affect other North American leagues – the NBA and NHL have both filed Amicus Curiae briefs. The Supreme Court will rule on this case in the upcoming 2099-2010 session.

For those interested in learning more about the case, I have set up a resource page with links to relevant filings, like the NBA and NHL briefs, and other information like blog posts. I will keep this page up to date as more information becomes available.

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