Tuesday, June 30, 2009

anti trust?

Back in 1961, Pete Rozelle put the NFL on the map.  You see, up until
that time, the NFL was a loose collection of teams that really had
limited exposure.  Rozelle decided to act on behalf of all teams, and
negotiated a contract with a TV network (CBS) that allowed them to get
that exposure on a national scale.

But it did so much more.  A group turned around and sued the NFL
alleging that the NFL was essentially a monopoly, and thus violated
anti-trust regulations. The court ruled that the "pooling" of rights
by all the teams to conclude an exclusive contract between the league
and CBS was illegal. Undeterred, Rozelle worked with some allies in
congress to frame the situation a little differently, and the Sports
Broadcasting Act of 1961 was passed. This act "permits certain joint
broadcasting agreements among the major professional sports and
permits the sale of a television 'package' to the network or networks"
which is essentially what happens today.

And, by the way, it also limits the games that can be shown by
including the blackout rule.

In any event, by that law, the NFL received its first level of
anti-trust exemption.

Later, in about 1970, when the upstart AFL came along, the NFL played
nice and merged with them. Although there are a lot of good reasons
to do so, one of them certainly was anti-trust. And not surprisingly,
congress once again stepped in to ratify the way that the league was
established, thus solidfying their position.

Over the next 30+ years, there have been many claims against the NFL's
anti-trust status. One of the biggest challenges came from the USFL
from 83-85, which was taking on the NFL on the corners, but not head
on. Donald Trump was one of the people who thought the NFL could and
should be challenged and wanted to move to be a fall league and take
on that exemption. The other owners thought better of it, and
ultimately there was no challenge.

Then, about 2 years ago, Senator Arlen Specter and a couple of others
decided to "look into" the NFL's anti-trust exemption because of the
NFL Sunday Ticket on Direct TV and Comcast's legal battle. Again,
nothing came of it, but there's still some room to re-open the file.

Channeling the spirit of Rozelle, the NFL pulled an end-run of its
own. A couple of years ago, they negotiated a contract with Reebok to
be the exclusive apparel provider for the league. Prior to that, each
team could negotiate its own deal with a supplier, and the league also
purveyed suppliers. Feeling slighted by the NFL's actions, one of the
suppliers filed suit under anti-trust laws claiming - as the TV case
did before it - that the NFL could not act as a single entity and
enter into an agreement. The courts sided with the NFL, and the
suppliers appealed.

The appelate court upheld the judgement.

Then, the NFL did something unexpected. *They* appealed to the US
Supreme Court for a hearing. Now why would they do that if they won?
Because they want the Supreme Court to uphold their standing as
anti-trust exempt, and to allow for a broad interpretation of that
ruling. That would essentially allow them to act in what amounts to a
monopolistic manner, without fear of there being "frivolous lawsuits,"
The NHL and NBA saw it as a good thing for their sports, and also
signed on to be involved in the ruling as "friends of the court"....in
essence to ride the coattails if they can.

Of course this all has some bearing on the labor issues that are still
hanging out there. The NFL undoubtedly feels it has more leverage if
they get this ruling. And the TV deals can go however they want -
unless and until Sen Specter decides to get involved again.

Remember, in 1961, the legislature overtuned what the court found.
Could it happen again? Who knows.

But one thing I can tell you for sure is that such a ruling is bound
to be bad for the smaller operations, and probably for us fans, too,
in the long run.

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