The US Supreme Court ruled unanimously on Monday that the National Football League (NFL) cannot be considered a single business entity, quashing the league’s hoped for broader antitrust protection in selling branded memorabilia.
The nine justices reversed a lower court decision that blocked a Chicago-based clothing manufacturer from suing the NFL, rejecting the league’s argument that it should enjoy wide protection from antitrust lawsuits because it operates as a single business and not 32 separate team businesses competing with one another.
At issue was an NFL contract American Needle lost to Reebok to produce caps, jerseys and other branded items.
American Needle argued that the league’s 10-year exclusive contract with Reebok violated antitrust law because all 32 NFL teams conspired to hamper competition. But the league said it did not violate antitrust statutes because the teams are all part of a “single entity” business.
“Each of the teams is a substantial, independently-owned and independently-managed business,” retiring Justice John Paul Stevens wrote on behalf of the Supreme Court.
“The teams compete with one another, not only on the playing field, but to attract fans, for gate receipts and for contracts with managerial and playing personnel.”
The decision noted that the teams, which operate “independently” through the NFL, “are not like the components of a single firm that act to maximize the firm’s profits.”
Rather, it said the teams “remain separately controlled, potential competitors with economic interests that are distinct” from the NFL’s financial well-being.
Democratic Senator Patrick Leahy, who chairs the Senate Judiciary Committee, hailed the decision.
“This ruling is a rare win for sports fans, and in fact for all Americans who value competition in the marketplace ... The antitrust laws promote competition, which enables consumers to pay lower prices and receive more choices,” he said in a statement.
While only affecting American Needle for now, the ruling could pave the way for dozens of lawsuits to be brought against other professional sports leagues.
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