You may have heard the case talked about briefly on ESPN when the decision was handed down by the Supreme Court in May, but I don’t know how many people understand what the ruling means, or why it could have a potentially larger impact on pending bargaining agreement negotiations.
Essentially the crux of the dispute is that the American Needle Corporation had a non-exclusive license to produce hats for certain NFL teams around the league. American Needle was granted their license by the NFLP, the collective entity of the NFL who determines licensing and merchandising agreements. When the NFLP decided to switch to an exclusive license with Reebok in 2000, American Needle brought an anti-trust suit under Sect. 1 of the Sherman Act alleging in essence that they had been muscled out of their business by collusion on the part of the 32 separate NFL teams. The NFL argued back stating that Sect. 1 of the Sherman Act did not apply to them as they are one entity and not 32 separate corporations for the purposes of licensing and merchandising.
After almost ten years of litigation, the Supreme Court finally held that although the 32 NFL teams work together cooperatively on many issues such as the collective bargaining agreement and the NFLP licensing agreements, each individual team is its own private entity and as such, the NFLP’s actions in granting Reebok its exclusive license falls within the scope of Sect. 1 of the Sherman Act. The Supreme Court then remanded the matter back to the Seventh Circuit Court of Appeals for further hearings as to whether or not the NFL’s actions were in breach of Anti-Trust policies and statutes.
Now what does this mean for the NFL in the future? Imagine an NFL which is far more similar to the NCAA in terms of its marketing and licensing, where teams would be free to establish their own merchandising rights, and even more so, their own television rights (think Major League Baseball). Imagine the Ravens lining up in their trade mark purple and black, except with the UA emblem of Under Armour emblazoned on their chests instead of Reebok. Imagine watching Ravens home games on the equivalent of MASN as opposed to CBS or Fox or NBC or ESPN. Now I’m not saying that those scenarios are ever going to become a reality, but they are distinctly within the realm of possibilities depending on how the 7th Circuit holds.
It may not seem like such a huge deal, and it may seem trivial as the whole mess started over the rights to market hats, but the far reaching implications could touch everything from team revenue issues to the collective bargaining agreement itself. Its tough to stomach a situation in which the owners and the players are now fighting over marketing rights and over media income rights (more so than they already are that is). In a league that is very driven by dollars and cents, adding a new wrinkle could make an already explosive situation go nuclear.
Not every issue which could dramatically impact the NFL happens on the field or between the players and owners. Often times little, seemingly inconsequential issues spring up and have a butterfly effect on the Game as a whole. Like a pin prick in the hull of an oil tanker which expands and grows out of control. It will be interesting to see how this all plays out in the future.