American Needle Clobbers the NFL

As updated earlier, the US Supreme Court today ruled 9-0 in favor of American Needle in its case against the National Football League. The case originated some ten years ago, when American Needle negotiated the merchandising rights with an NFL team. The National Football League then negotiated and signed a merchandising apparel agreement with Reebok, that gave Reebok the exclusive right to manufacture and sell the merchandising apparel for all 32 teams. American Needle then filed suit in Chicago, arguing that the NFL violated the Antitrust Laws as it applied to the teams within the league. Antitrust laws were enacted to prevent entities from working together in an effort to limit competition or place restraints on trade. American Needle argued that the teams within the NFL were actually individual entities, acting together within the structure of the NFL, and therefore, and efforts by the league to place restrictions or act on behalf of all the teams violated the antitrust laws because the teams were then colluding to limit competition. The NFL argued that the National Football League was one single entity, with 32 members, and as a result, the league could negotiate on behalf on all of the teams without violating these antitrust laws. Ultimately, the court ruled in favor of American Needle, and decided that the NFL is actually comprised on 32 different entities. What was strange about this case was not only the 9-0 vote by the US Supreme Court, which rarely happens due to the different views and opinions by the Justices, but also that the NFL had previously scored two victories in this case in the courts before the Supreme Court.

A lot has been made about how this ruling not only applies to the National Football League, but to other sports as well. Had this ruling been in favor of the NFL, fans could have seen the effects of it in their wallets. Not only could the NFL have fixed merchandising costs, which would be much higher without there being competition to drive costs down, it could have gone much further, such as the NFL fixing ticket prices to help increase revenue. Other major sports were keeping their eye on this case as well, for the reasons just laid out. It would have given the other leagues much more authority and opportunity to act on behalf of all the teams within the league, and ultimately do what was best for the league, and not necessarily what was best for the players or fans.

Click here and here for an ESPN.com and SI.com column on what this ruling means to the NFL, as well as players, unions, and fans.

American Needle v. NFL

Breaking News...The Surpreme Court has reversed the decision of the Seventh Circuit Court, and ruled in favor in American Needle in its case aginst the National Football League, in a 9-0 decision. Click here to view the opinion. More to follow...

The Future of Sports Agency In The Hands Of The Courts

The future landscape of athlete representation could rest on the outcome of two lawsuits filed in Ohio and California. Matthew Baldwin, a little known sports agent, has filed suit against IMG, his former employer, requesting that the court free him from the restrictions stated in his contract with IMG, which prevent him from bringing his clients with him to his new position with CAA. IMG has countersued in Ohio, asking the court to enforce the contract. These restrictions are very common in agents’ contracts, but courts aren’t always willing to enforce a contract that prevents someone from “earning their living.” While this in itself isn’t a big case, it could have huge ramifications down the road. As stated in the Sports Business Journal (Published May 17, 2010),

“Even though Baldwin, who worked for Gary O’Hagan, the head of IMG Coaches, isn’t a big name, the industry is buzzing about the case because it pits IMG, the firm widely credited with inventing the sports business, against CAA, which was built chiefly on the hires of former IMG executives.”

Not only is this an important case because it pits two heavyweights agencies against each other, but many of the top agents in the country have deals set to expire in the next couple of years with their current employers, and the outcome of this case could go a long way in determining whether these established agents could sign a huge multi-year contract with another firm and bring their clients with them. Clients are typically more loyal to their agent than they are to the company who employs the agent, so when an agent changes companies, he/she generally brings the vast majority of their clients with them, immediately boosting the revenue of the new firm. It will be interesting to keep an eye on these lawsuits as well as how they will affect the future of the agency business. Stay tuned…..

NFL Appeals Williams’ Cases to US Supreme Court

It has now been almost two years since the William’s Wall have tested positive for a banned substance, and after several hearings in a few different courts, the NFL is now appealing the case to the US Supreme Court. As most of you will remember, Minnesota Viking’s defensive linemen Kevin and Pat Williams tested positive for bumetanide, an ingredient in the weight loss supplement StarCaps, that also acts as a masking agent for performance-enhancing drugs. The players are arguing that the drug testing policy agreed to in the collective bargaining agreement of the NFL violates the state law of Minnesota. The NFL, in turn, is arguing that this is a federal case, and the collective bargaining agreement should overrule any conflicting state law, otherwise there will be different rules that apply to different teams depending on in what state they are located.

The case originally was filed in the 8th Circuit Court, where a federal judge then sent the case to state court. The state court ruled last week that the NFL failed to abide by state law in their failure to notify the two players of their positive drug test. However, the judge did rule that this violation was not severe enough to prevent the NFL from suspending the two players. The NFL is appealing the case to the US Supreme Court in an effort to get the decision of the 8th Circuit Court overturned, and have the federal courts hear the case.

Based on the recent developments, it looks as though there is a growing chance that the suspension of the Williams’ will stand. However, the NFL is concerned with more than that. Roger Goodell and the NFL want precedent to be set, because they do not like their authority to be challenged. If there is one thing we have learned since Goodell has taken over, it is that he likes having the authority and ability to make decisions without having them questioned. Look at the personal conduct policy. Goodell has the exclusive power to determine if the policy was violated and what the consequences should be. If a player does not agree with the punishment under the policy, he can appeal he penalty…wait for it…back to Commissioner Goodell. That’s right, you have to plead your case to the very person that handed out the penalty and explain why you think he was wrong. The NFL would also like to establish precedent so other players would not view these proceedings as an opportunity to challenge any future positive tests. So stay tuned to this story to see if the US Supreme Court will even hear the case, and if so, whether a state law can supercede the collective bargaining agreement of a private entity that operates across state lines.

Delaware Sports Betting Hits Another Roadblock

Last week, the U.S. Supreme Court all but eliminated the possibility of Delaware beginning to accept individual bets on professional sporting games. The argument was based on whether having the state allow betting violated the Professional and Amateur Sports Protection Act of 1992. Under that law, no betting on professional or amateur sports games was permitted, with special exemptions granted to Nevada, Delaware, Montana, and Oregon because, at the time the law was passed, they all previously operating some form of sports betting. However, Delaware only offered parlay bets, and only offered them on NFL games. A parlay is a single bet that links together two or more wagers, where winning the parlay bet is dependent on winning all of the individual wagers. The professional leagues and the NCAA argued that offering any other bets other than parlay bets on NFL games would violate the 1992 statute. The attorneys for the state of Delaware argued that allowing additional betting would help offset some of the state’s record deficit, and operating a sports lottery would not violate the law. The U.S. Supreme Court did not hear the case, instead allowing the ruling from the appeals court to stand, which stated that the state could only continue to offer parlay bets and they only can be offered on NFL games.

It looks as though this could finally be the end for what Delaware envisioned would be a boost in revenue. The state expected at least $17 million in revenue from offering sports betting if they were allowed to do so, which is a small amount when compared to the $350 million deficit the state is currently facing. It also would pale in comparison to the $2.5 billion that was wagered in Nevada sports books last year, which even though that seems like an enormous number, represented less than 1% of the total amount wagered, legally and illegally, throughout the country last year!!

Lawrence Taylor Takes Another Hit

Lawrence Taylor has now officially been arrested and charged with third degree rape and patronizing of a prostitute for his alleged activity with a 16 year old girl at a New York Holiday Inn. This is not the first run-in with the law LT has experienced. He has been arrested and charged numberous times over the past 15 years for various things such as attempting to purchase "crack" from under cover police officers, drug possession, and traffic violations, among others. In New York, third degree rape (or statutory rape as many people know it) is when an adult engages in sexual activity with a person under the age of 17. Third degree rape is a strict liability crime, meaning there does not have to be intent to commit a crime by LT, and fault is irrleveant. It is not a defense if LT thought she was 17 or even if the alleged victim consented. If convicted, these charges carry a maximum prison sentence of 5 years. Because third degree rape is a Class E felony in New York, if LT is willing to negotiate, he could likely agree to a reduced charge and get off with little or no prison time. This is just another sad chapter in the life of what may be the best defensive player of all-time in the NFL. For those of you who didn't get a chance to appreciate him, he had an unparalleled combination of speed and strength that dominated opposing offenses (as well as opponents in Tecmo Bowl on the original Nintendo). On a positive note, at least there were no drugs found at his hotel room when he was arrested.