By whatever metric you choose— TV ratings, revenues, opinion polls —pro football is America’s most popular sport. While the NFL is king among those born since Super Bowl I, baseball still reigns at hangouts frequented by older, intellectual types: the Harvard faculty lounge, George Will’s family room, and, this cold Wednesday morning, the U.S. Supreme Court. At oral argument in American Needle v. NFL, Justice Sonia Sotomayor—credited for ending the 1994-95 Major League Baseball strike —admits she doesn’t “know enough about football” to conjure a reasonable hypothetical about an alternate, Saturday-only league. And Justice Stephen Breyer, who also confesses to “know baseball better,” quickly abandons talk of the New England Patriots in favor of a discussion of the Yankees-Red Sox rivalry. After these displays of pigskin ignorance from the Washington Supremes’ starting nine, it’s not surprising to learn that the people least likely to express a preference for the NFL are those with postgraduate educations.
People who don’t wear robes to their jobs will likely know that the NFL is an association of independently owned teams. The NFL, as a single entity, regulates things like the season’s schedule, the rules of football, and team colors. And while the teams own the rights to their own intellectual property, since 1963 they have worked together to promote their products. For several decades American Needle Inc., a maker of headwear based out of Buffalo Grove, Ill., held a nonexclusive apparel license with NFL Properties. But in 2004 the NFL decided to solicit bids for an exclusive manufacturer and ultimately gave a 10-year license to Reebok. American Needle sued under the Sherman Act, claiming that the NFL violated federal antitrust laws by conspiring to give the licensing franchise to Reebok. This was unfair to Reebok’s competitors and also to consumers.
If we promise you a wardrobe malfunction at halftime, will you stick with us through a saucy explanation of antitrust law? The Sherman Act doesn’t allow companies to collude in ways that impair competition or harm consumers, but Supreme Court precedent holds that a parent company and its wholly owned subsidiary can’t be said to have conspired. American Needle lost at the trial court and again at the 7th Circuit Court of Appeals, both of which determined that the 32 NFL teams can’t conspire with one another to make an apparel deal because they are a single entity for antitrust purposes (in part because the teams can’t really be independent entities considering they can’t produce a game unless another team shows up on the field). The Supreme Court agreed to hear the case. Everyone is freaking out over the possibility they’ll side with the NFL, which could potentially imperil free agency, emasculate players’ unions, and drive up ticket prices, all of which could force Americans into watching Monday Night Curling.
This is one of those days in which the advocates seem to have forgotten that oral argument is not a contact sport. The justices’ egos are built for croquet, not football. But whether it’s Glen D. Nager (arguing on behalf of American Needle), who steps on Justice Stephen Breyer’s words so many times that Breyer is forced to say, “I am asking a question here,” or Gregg H. Levy (representing the NFL), who brazenly tells Justice Anthony Kennedy he “takes issue” with his hypothetical, neither lawyer seems to understand that arguing with the refs is never a winning strategy at the court.
When Nager rises to speak for American Needle, he quickly describes the NFL as “32 separately owned profit entities.” Ruth Bader Ginsburg asks whether that means every single decision made by the NFL, about anything, could be a potential antitrust violation and subject to antitrust’s so-called Rule of Reason analysis. Nager says yes, leading Kennedy to ask whether an NFL rule change that gives “the passer more protection” and hurts teams that prefer to run the ball would also be subject to Sherman Act scrutiny. Justice Samuel Alito, another baseball fan—his love for the game is so all-consuming that he gives lectures on 1922 baseball antitrust cases, by choice—asks whether two NFL teams might collude to play more than the 16 scheduled games.
Chief Justice Roberts chides Nager for continuing to assert that there is “obvious horizontal agreement between the teams,” asking, “Isn’t that the very question before the court?” Nager agrees—”You’re exactly right,” he says—at which point the chief, laughing, says, “Then you agree that you’ve been begging the question?”
Breyer, dreaming of the American League Championship Series, asks whether the 32 NFL teams are really competing against one another for fans given that, “I don’t know a Red Sox fan who would take a Yankees T-shirt if you gave it away.” When Nager suggests that 3-year-olds have somewhat less-ironclad rooting interests, Breyer retorts that they also have very small allowances. Then Scalia chides Breyer for asking questions that have nothing to do with whether this specific case needs to go back to the trial court. Breyer replies, “I’m not certain this is irrelevant, but given Justice Scalia’s persuasive remark, I will withdraw my question.”
Nager offers up a strange little touchdown dance toward the end of his presentation in which he says he knows the court is sensitive to the fact that the Rule of Reason is “not quite as well understood, and is an evolutionary doctrine, [although it is] perfectly well understood by me.”
Justice John Paul Stevens, never one to throw a flag for unsportsmanlike conduct, suggests that since the league shares the apparel revenue equally among all 32 teams, they can’t possibly be anti-competitive. “You are not competing among the members of the league,” Stevens said. “You’re competing in the market that includes all sports paraphernalia.” He adds, “That’s the end of the ball game.” (Toward the end of the morning, Stevens makes a crack about “these players who make so much money.” Is the 89-year-old taking a second look at a football career? After all, the NFL’s 2009 rookie minimum of $310,000 is slightly higher than his annual salary of $208,100.)
The Obama administration sided in part with each party, suggesting that the 7th Circuit got it wrong; that the NFL is anti-competitive except when it isn’t; and proposing a new, arguably more complicated test, for such complicated cases. Because all the sports talk was too exciting, Malcolm Stewart, arguing for the administration, turns the case into a fight about Dunder Mifflin, worrying to death a hypothetical scenario in which the NFL engages in anti-competitive paper-product practices.
Gregg Levy, the NFL’s representative, faces a tough defensive line this morning. The pocket collapses on him after his claim that the 32 teams are “not independent sources of economic power, because none of them can produce the product of the venture on their own.” Breyer asks what their ability to put on a game alone has to do with anything. “I thought we were talking about T-shirts and helmets. I thought it’s the simplest thing in the world. You pick up the phone and say, Hello, Shanghai, do you have a helmet?”
Levy says that selling branded clothing is really just the NFL’s way of putting flyers under windshields. The purpose of licensing apparel is to promote the game of football, he says, and fans in Redskins and Saints hats are walking billboards promoting the next Sunday’s games. Scalia finds this whole premise preposterous: “The purpose is to make money. I don’t think that they care whether the sale of the helmet or the T-shirt promotes the game.”
Each of the 32 clubs is worthless apart from the NFL, Levy argues: The “trademarks don’t have value independent of the game.” He then gets to the NFL’s fundamental purpose in pursuing this case. The question of how to deal with antitrust claims against sports leagues is “an area of the law that has been troubled for many years.” Sotomayor, sussing out Levy’s notion about how to untrouble the law, asks what, in his opinion, leagues could possibly do that would be subject to antitrust law. He explains that the line is between promotion and production of the game. “So … you are seeking through this ruling what you haven’t gotten from Congress: an absolute bar to an antitrust claim?” she asks.
Levy denies that’s his game, but it seems clear that Sotomayor is right. The NFL—as well as the NBA and NHL, both of which filed amicus briefs in support of their football counterpart—wants what Major League Baseball has: a broad antitrust exemption. When Scalia asks whether it would be anti-competitive for teams to fix the prices at which franchises can be sold, Levy says probably not. That feeds into everyone’s fears about what kind of nefarious schemes the NFL would concoct with a favorable ruling.
It’s fairly clear that most of the justices would like to send this case back to the trial court for a fuller hearing. After further review, almost everybody suggests that one more rinse on the “reasonable” cycle in the lower courts would do wonders to clear up the precise issues in this case. The NFL, it seems, has found itself in the only place in the world where football can strike out.
Correction, Jan 14, 2010: The caption accompanying the photograph originally stated that it was a “referee’s cap.” Caps worn by referees are white, not black.
