Wednesday, January 13, 2010

The Supreme Court: American Needle v. NFL

I realize that this seems to have little to do with the Bulls, but this case will have a significant impact on the NFL, and all other professional sports leagues. As a fan of the NBA, NFL and MLB, you should read about this case and understand the implications. Here are two great reads, each presenting the legal info and ramifications in a very user-friendly way:

Saints' quarterback Drew Brees weighs in on NFL's Supreme Court case
As the starting quarterback for the New Orleans Saints, I am used to competing on the football field, not in a courtroom, and I rarely offer a public opinion on complex legal debates. But in a few days, the Supreme Court will hear oral arguments in American Needle v. NFL, a case that could have a profound impact not only on my sport but on all of American professional athletics. So even as the playoffs are beginning, I feel compelled to venture beyond the gridiron to share my thoughts on what is at stake.

The case involves a multimillion-dollar deal struck in 2000 between the National Football League and Reebok that grants Reebok the exclusive rights to make hats, sweatshirts and other gear with NFL team logos. What does that deal have to do with the ability of my teammates and me to perform our jobs and entertain football fans around the country? Potentially, quite a bit: The gains we fought for and won as players over the years could be lost, while the competition that runs through all aspects of the sport could be undermined.

American Needle is a small manufacturer of hats located in Buffalo Grove, Ill. As a result of the NFL's deal with Reebok, American Needle was excluded from the NFL-branded hat market, so it sued the league and Reebok. American Needle argued that the licensing deal violated antitrust laws because it restricted competition between businesses. The nation's antitrust laws constitute a fundamental part of our economic system and have protected consumers for more than 100 years, providing us with lower prices and fostering innovation.

The NFL originally won the case because the lower courts decided that, when it comes to marketing hats and gear, the 32 teams in the league act like one big company, a "single entity," and such an entity can't illegally conspire with itself to restrain trade. The NFL-Reebok deal is worth a lot of money, and fans pay for it: If you want to show support for your team by buying an official hat, it now costs $10 more than before the exclusive arrangement.

Why American Needle-NFL is most important case in sports history

On Wednesday, the United States Supreme Court will hear arguably the most important sports law case in U.S. history and one that could dramatically reshape how the NFL and other leagues conduct their business.

The facts of American Needle v. NFL are simple. From the late 1970s to 2000, apparel maker American Needle enjoyed a licensing contract with NFL Properties, a business which controls the NFL's licensing contracts (such as for the use of NFL logos on clothing and in video games). NFL Properties is equally owned by the 32 NFL teams, which share its revenue. Other apparel companies had similar licensing contracts with NFL Properties.

In 2002, NFL Properties signed an exclusive 10-year contract with Reebok for licensed NFL apparel. The contract meant that only Reebok could make NFL-licensed apparel. American Needle argues this contract is illegal under federal antitrust law.

You may be thinking something along the lines of, "Why would this be illegal? So what if NFL Properties decided to go with Reebok and only Reebok? Isn't NFL Properties a private company that can make whatever business decisions it wants to?"

In most cases, private companies enjoy tremendous freedom in their business choices. But NFL Properties -- and the NFL in general -- is not a typical company. It is so unique, in fact, that it often poses problems for courts.

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