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Supreme Court Intercepts NFL's Antitrust Exemption Claims
The NFL's quest for world domination was delivered a blow today by the U.S. Supreme Court, as it unanimously ruled against the NFL's claim that the league operates as a single entity. In a move that could have ramifications for the league's exclusivity agreements with DirecTV, Reebok, and Electronic Arts, the court ruled that the league operates as 32 individual teams and not as one incorporated business, thus blocking its request for antitrust protection.
“Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned,” said Justice John Paul Stevens.
The lawsuit in question was filed by American Needle Inc., which previously made NFL merchandise under contracts with individual teams. American Needle claims the 32 teams conspired to freeze them out of the NFL-licensed hat market by signing a 10-year exclusivity agreement with Reebok. Now that the issue of antitrust exemption has been cleared up, the case is being kicked back to a federal court in Chicago for an official ruling. "“We remain confident we will ultimately prevail because the league decision about how best to promote the NFL was reasonable, pro-competitive, and entirely lawful,” said NFL spokesman Greg Aiello.
Though we don't expect to see any new lawsuits filed before the American Needle case is resolved, the Supreme Court ruling could open the door for litigation challenging the NFL's exclusivity agreements pertaining to merchandising, cable packages like the NFL Sunday Ticket, and video games. For instance, if it had the expendable cash to pay the extensive legals fees surrounding a lawsuit and the faith that its subsequent game could recoup the money, 2K Sports could challenge the exclusivity agreement in court to resurrect its NFL 2K series. Before 2K fanboys get their hopes up, please realize that's a BIG if. The NFL's exclusivity agreement with Electronic Arts runs through 2012.
When we reached out to EA Sports for a statement on the Supreme Court ruling and the potential damage it could do to Madden's NFL exclusivity deal, EA Sports senior PR manager Rob Semsey said, "We have no comment, but will let you know if we do at some point."
This ruling could also spell potential disaster for sports video games. If greedy teams start operating with only their bottom line in mind (looking at you, Jerry Jones), we could be stuck with a Dallas Cowboys Football game featuring no other NFL team licenses and a Madden NFL game lacking America's team. Yuck.
UPDATE: An EA spokesperson has offered the following statement: “The NFL has been a great partner for nearly two decades. Today’s Supreme Court decision does not impact that relationship or the agreements we have in place to make great NFL-branded games.”
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