Will Anti-Trust Laws Continue to Apply to Professional Sports Leagues?

That's seems increasingly unlikely. Come August, the Supreme Court will rule on the pending case of American Needle, Inc. v. NFL, and the decision the court very well may end up making in favor of the NFL, frightens me. Lester Munson does a great job breaking it down:

The case began innocuously enough in Chicago in December of 2004 when American Needle, Inc. (ANI), filed an antitrust case against the NFL, claiming that the league was using its monopoly powers illegally to deprive the company of its share of the market for caps and hats bearing logos of NFL teams. ANI had made knit caps and baseball hats bearing NFL logos for decades until the NFL ended the relationship in 2000.

But American Needle didn't give up. It filed a request for review to the U.S. Supreme Court, one of 7,500 or so such requests filed annually. The court takes only 70 or 75 cases for decision each year, and American Needle's quest seemed quixotic at best.

Then, in a stunning development, the NFL told the Supreme Court it endorsed American Needle's request for a hearing and a decision. The league's attorneys announced, in a remarkable understatement, that they "are taking the unusual step of supporting" American Needle's effort to have the case reviewed at the highest level.

The league's action was a legal bombshell. Instead of standing on its lower-court wins over American Needle, the league told the Supreme Court that it wants the justices to consider an issue far beyond the caps-and-hats contract. It wants the court to grant the NFL total immunity from all forms of antitrust scrutiny, an immunity that would then apply to the NBA, the NHL and MLB, as well.

In essence, the NFL agreed with the appeal in the hopes that the Supreme Court will rule that the NFL is a single entity competing with other entities in the entertainment business, rather than 32 competing teams. Ruling that the NFL is a single entity would basically get rid of anti-trust allegations such as collusion, price-fixing, etc., as well as greatly weakening the already-relatively-ineffective NFL Player's Union, whose victories (such as for free agency) have generally come in anti-trust lawsuits.

And the ruling would impact not just the NFL. If the NFL is ruled a single entity, then the NBA, NHL, and MLB may also be ruled as such, and the price-gouging of fans and exploitation of players with relatively weak unions (although it seems baseball is in a slightly better place thanks to a stronger union) can begin. And this isn't paranoia. In his previous legal analysis for ESPN in issues ranging from the Kobe Bryant rape allegations to the SEC investigating Mark Cuban for insider trading, Munson has offered very sound and intelligent analysis for legal experts and legal dummies (like me) alike. Here's Munson's take on what could happen if the Supreme Court rules in favor of the NFL

If the NFL can find five votes for its single-entity concept, it will transform the industry.

Leagues will enjoy unfettered monopoly powers.

Salaries for players and coaches will drop.

Free agency will wither away.

Sponsors will pay more.

Fans will pay more for tickets, television and Internet broadcasts and for paraphernalia.

And owners' profits will soar.

That's about as concise as you could make it, and as bleak as things could be. Sure, if you don't particularly care for football (as I don't), then you don't have to spend the money, and the diehards can spend money the way they like. But this isn't about picking a sport and sticking with it. This would be a vulgar display of abuse and power on the owners' sides, something that has already begun (the year after not renewing its contract with American Needle, Inc., NFL hat prices jumped 50%, from $19.99 to $30). Everyday fans who like to show their support for their teams would have a harder and harder time being able to afford the goods, and would have nowhere (other than the black market, which could really burgeon thanks to things like this) to turn to. Their options would be limited: either shell out a ridiculous amount for an organization you like and an identity you've adopted, and help a multi-millionaire get even richer, or let part of your identity die as you opt not to spend the money. And if you don't like it, there are probably plenty of other suckers whose money those greedy owners will gladly take. It's like trying to buy season tickets at the new Yankee stadium, only on an industry-wide level.

And that only addresses the fans. What the players, coaches, and managers are facing is even bleaker. The MLB union is the strongest of the four unions in professional sports, so maybe it could hold out a bit better. But the fact that the NBA and NFL players' unions usually win their complaints via anti-trust lawsuits effectively means that a ruling in favor of the NFL would strip players in those leagues of any sort of meaningful labor rights. Hell, the NFL was dragged kicking and screaming into allowing free agency, and that didn't even happen until the late-1980s and early-1990s. And the NFLPA's fight to have the NFL take better care of its players in retirement when they suffer the long-term effects of abuse they suffered as athletes, well, that would probably be a dead letter too. And the sports leagues could all collude to keep salaries low for both players and managers. Sure, people get indignant when A-Rod can opt out of the last 3 years of a $252 million contract, just to sign a $275 million 10-year deal, but you can't deny the major pay improvements that players in the MLB have enjoyed, watching the minimum pay go up to $390,000 last year, after the paltry salaries players previously made.

And for those who think, "oh, well, maybe the Supreme Court will rule in favor of American Needle, Inc." Maybe it will. But if anybodh yas paid even the slightest attention to how court decisions under the Roberts court have trended, they almost always end up deciding (usually 5-4) in favor of businesses over labor, and I don't see why Sotomayor's arrival will change that (she's replacing Souter, not Thomas or Scalia). Sure, the Court may rule against single-entity status for the NFL, but it hasn't exactly offered a lot of hope in its previous recent decisions.

Again, I'm far from a legal expert, and so maybe there are alternative solutions (such as Congressional action), but the notion that professional sports should be exempt from all anti-trust monitoring and regulation is bunk. It will absolutely destroy the players' labor rights and organizations. It will force fans to either stop buying products to show support for their team, or to pay ridiculous amounts so the owners can get richer. And we'll be able to watch such fine, upstanding individuals as the Steinbrenners, Donald Sterling, Jerry Jones, Al Davis, and others get richer.

And that's a bleak future for professional sports.