The American Needle, Inc. (ANI) v. NFL case has some legal experts predicting doom and gloom while others are adamant there’s nothing to fear.  Who’s right?  We won’t know until the U.S. Supreme Court issues a ruling sometime next year.  But one thing is certain:  The potential to change the antitrust landscape is enormous.
The average American is probably more familiar with the needle in the haystack than the American Needle case, which is understandable.  Antirust law is among the more mundane and specialized areas of law, but the facts of the case are easy to understand.  ANI was one of several companies that had manufactured caps bearing the logos of NFL teams for decades.  But in 2000, the NFL signed an exclusive agreement with Reebok, ANI’s main competitor.  ANI sued the NFL, alleging that the agreement with Reebok was a violation of Section 1 of the Sherman Antitrust Act, in effect, an illegal restraint of trade.
The NFL denied the restraint of trade and further contended that the 32 member clubs should be viewed as a single-entity.  As a single-entity, the NFL couldn’t engage in “a combination, contract or conspiracy” to restrain competition, which would effectively exempt the league from scrutiny under the Sherman Act.  A number of courts have previously determined that sports leagues could not be deemed a single-entity, even though the member clubs banded together for certain activities such as the sale of television rights and licensing of trademarks. Prior case law seems to be consistent with how teams within a league operate, including competing against each other for free agents, sponsorships and customer loyalty.
But to the surprise of virtually everyone, both the Federal District Court and the Court of Appeals for the Seventh Circuit agreed with the NFL.  Their reasoning was based on the fact that for years NFL clubs had collectively licensed their trademarks, therefore they should be viewed as a single-entity for the purposes of deciding the ANI case.  While most legal experts disagreed with the reasoning, a decision in favor of the NFL was expected based on other interpretations of the Sherman Act.
ANI refused to quit.  They petitioned the U.S. Supreme Court to hear the case.  The odds were long, as the court accepts roughly 75 out of approximately 7,500 such requests annually.  But in a shocking development, the NFL supported ANI’s appeal.  Even though they had prevailed in the lower courts, the NFL wanted more.  They argued that the single-entity determination should be applied to all business activity by the league, not just their actions in licensing logos.  In other words, the league wants the court to grant it total immunity from the antitrust laws.
The ramifications of such a ruling are immense.  The NFL could effectively engage in antitrust action – e.g., unilaterally eliminate free agency, increase the price of logoed merchandise, and enter into broadcast arrangements – without fear of reprisal from the players’ union, vendors, or TV networks.  And if the NFL was exempt from antitrust laws, the same would apply to other sports leagues, the NBA, NHL, MLB, and perhaps the NCAA.  Even the BCS, currently under fire from congress for engaging in antitrust activity, could argue immunity.  It came as no surprise that several professional sports leagues indicated they will file friend of the court briefs in support of the NFL’s position.
In addition to the havoc a ruling in favor of the NFL will wreck on labor unions and businesses, the effect on the average fan is obvious:  It will cost more to be a fan.  The price of tickets, media access and merchandise will all increase.
That, of course, is the worst case scenario.  First, the NFL has to win, no sure thing when handicapping what the court will do.  And although a win would give the NFL the legal protection to implement a scorched earth strategy, if they implement such actions, the league will alienate virtually everyone who doesn’t own an NFL franchise, including members of congress.  That’s where the NFL must tread lightly.  Congress passed the antitrust laws and congress has the power to amend them.  If they do, any court victory could be rendered moot.
Will the ANI case result in Armageddon or merely preserve the status quo?  We’ll soon find out.

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