Tuesday, May 25, 2010

Be Careful What You Wish For

Yesterday the Supreme Court delivered a serious blow to the NFL and its ego.

Several years ago, the NFL signed an exclusive ten year merchandising contract with Reebok. One of their former suppliers, American Needle, filed an anti-trust suit against the NFL claiming that they should have the right to bargain with each individual team for contracts. The NFL argued that they were not 32 independent teams, but instead one body with 32 locations. The NFL won at every level on this issue. But, after they won at the federal appellate court, they joined American Needle in appealing to the Supreme Court for a final ruling. The NBA and NHL also filed friends of the court briefs supporting the Court in ruling on this issue.

Of course, what the NFL figured was that they had won all along, and so why wouldn' t the Supreme Court also rule with them, after all they are the NFL. What they were really seeking had nothing to do with merchandising rights, but instead they wanted anti-trust exemptions. This would give them huge powers in negotiating rights, especially with the player's union. But their arrogance blinded them to Lord Acton's famous statement: "Power corrupts, and absolute power corrupts absolutely."

In their 9-0 decision (what divided Court?), the Court ruled that the NFL is in fact 32 different entities operating collectively, but they cannot act as one on certain issues, like merchandising. It is not yet clear what all the ramifications of this ruling are, but this could be a landmark decision in regards to how sport leagues are dealt with on these issues. The one exception is the MLB which does have exemption. Gregg Easterbrook wrote a great piece on the case after oral arguments (you can find it about half way down).

The Court clearly put the NFL back in its place. This is a positive for any entity that gets too big for itself, which the NFL clearly did. While it is unknown whether the Court would have heard the case only on American Needle's appeal, the fact that the NFL appealed its own victory speaks of their presumptuousness and arrogance.

Never believe that you are so big and so entitled that you can't have your hand slapped out of the cookie jar (are you listening big banks and corporations?). Churches are also learning this lesson the hard way.

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