House Judiciary Committee may seek to overturn NFL’s antitrust exemption

[sharpe1027]

Well, you can certainly commit antitrust violations by yourself. But all of the antitrust violations alleged by the players in Brady v. NFL (the salary cap, free agency restrictions, the draft, a rookie wage scale) would be entirely acceptable if the NFL were one corporation, since every corporation should have control over how much they pay their employees, whether or when they promote or transfer their employees, who they hire, etc.

I do not believe that is true.

[sharpe1027]

You are right in the first part, but as far as filing taxes seperate and then acting as a single entity....well, that is a franchise and its exactly what each team is. The NFL is unique only in that they directly compete for entertainment, therefore its much trickier than most situations. But, all franchises have to answer to the parent corporation for quality of product and such, and in the case of the NFL, the only way you can advance the name brand is by divvying up the talent. Which is why the arrangement with revenue sharing and in turn forcing owners to spend XX dollars minimum is so vital to the overall brand.

Now, my point about anti trust is that the cowboys can't really be "anti trust" against the packers, but the NFL can against another company. The NFL is the company, not the cowboys. McDonalds franchise owner one can't get sued for anti trust by McDonalds owner two. They both must abide by the rules of the parent company because they are franchises....which is all NFL teams are. The NFL sets the rules (salary cap, revenue sharing, etc) to grow the brand in the best possible way. Teams work together as franchises, they don't compete. The NFL has done a poor job of legallly arranging their operations or else they wouldn't need an anti trust exemption as they would be "exempt" from it by their set up. McDonalds can be guilty of anti trust violations against Burger King, but not against itself.

No NFL team is suing another NFL team, so your analogy doesn't make sense to me.

[Lurker64]

I do not believe that is true.

Which part? That a corporation should not have control over who they hire, where their employees work, and how much their employees get paid? Or that the Brady et. al.'s complaint is not about things like the Salary Cap, free agency restrictions, the rookie wage scale, and the draft?

[sharpe1027]

Which part? That a corporation should not have control over who they hire, where their employees work, and how much their employees get paid? Or that the Brady et. al.'s complaint is not about things like the Salary Cap, free agency restrictions, the rookie wage scale, and the draft?

Sorry, I meant this part: "antitrust violations alleged by the players in Brady v. NFL (the salary cap, free agency restrictions, the draft, a rookie wage scale) would be entirely acceptable if the NFL were one corporation".

What basis do you have to say this?

[Lurker64]

Sorry, I meant this part: "antitrust violations alleged by the players in Brady v. NFL (the salary cap, free agency restrictions, the draft, a rookie wage scale) would be entirely acceptable if the NFL were one corporation".

What basis do you have to say this?

Okay, if the NFL were one corporation with 32 divisions.

Salary Cap: The NFL is simply setting a budget for employee costs for each division. Every corporation sets budgets like this. It's no different than any random company telling its IT department "You only have so much money to spend on personnel".

Free Agency Restrictions: the NFL is simply restricting when employees are eligible for transfers/promotions/raises. No corporation gives out these things just because you want them without concern for qualification.

The draft: The NFL allows its divisions to choose the most promising incoming employees. This is simply tantamount to allowing its branches to decide who to hire to do what. You can't say a corporation shouldn't have discretion on who they hire and what tasks they assign to that person.

Rookie Wage Structure: Incoming employees have fixed salaries as a function of qualifications. This is extremely common.

What have I described that wouldn't be acceptable if the NFL were one corporation?

Remember, that the anti-trust charges alleged by the players is that 32 separate businesses have colluded to pay their employees less. If one business decides that they want to pay their employees less, there's nothing a priori wrong with that, particularly if they choose to honor all existing contracts.

[sharpe1027]

Okay, if the NFL were one corporation with 32 divisions.

Salary Cap: The NFL is simply setting a budget for employee costs for each division. Every corporation sets budgets like this. It's no different than any random company telling its IT department "You only have so much money to spend on personnel".

Free Agency Restrictions: the NFL is simply restricting when employees are eligible for transfers/promotions/raises. No corporation gives out these things just because you want them without concern for qualification.

The draft: The NFL allows its divisions to choose the most promising incoming employees. This is simply tantamount to allowing its branches to decide who to hire to do what. You can't say a corporation shouldn't have discretion on who they hire and what tasks they assign to that person.

Rookie Wage Structure: Incoming employees have fixed salaries as a function of qualifications. This is extremely common.

What have I described that wouldn't be acceptable if the NFL were one corporation?

Even a single company can be subject to antitrust. A company cannot use its monopoly power in an anticompetitive fashion.

I think that the player's current complaint states that the relevant market is the market for the services of professional football players. NFL controls pretty much the entire market for services of professional football players, so this is not the same as a standard employee-employer relationship.

Since the NFL has nearly 100% monopoly power, I would expect that the players would able to come up with a decent position regardless. For example, if the NFL, even a single organization, uses it monopoly power (i.e., a lockout) to suppress competition in the market for services of professional football players, it might still be a problem.

[Lurker64]

Even a single company can be subject to antitrust. A company cannot use its monopoly power in an anticompetitive fashion.

I think that the player's current complaint states that the relevant market is the market for the services of professional football players. NFL controls pretty much the entire market for services of professional football players, so this is not the same as a standard employee-employer relationship.

Since the NFL has nearly 100% monopoly power, I would expect that the players would able to come up with a decent position regardless. For example, if the NFL, even a single organization, uses it monopoly power (i.e., a lockout) to suppress competition in the market for services of professional football players, it might still be a problem.

Anti-Trust Law has three main concerns:

* agreements or practices that restrict free trading and competition between business.
* abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position.
* mergers and acquisitions of large corporations, including some joint ventures.

Currently, the NFLPA's antitrust allegations are entirely along the first bullet point. It's clearly an antitrust violation for any number of independent businesses to collude to drive up or down specific prices. A corporation that is a single entity cannot "restrict competition or free trading" with itself, particularly since the league can (and does) take no action to drive any potential competitors out of business.

So if the league were one entity, the heart of the NFLPA's complaint is that "It is abusive to pay Peyton Manning only $10m for a one year contract" and "It is abusive to not guarantee $50m to rookie #1 overall draft picks" which is a very weak argument. Especially since this behavior is not intended to dominate the market, it's intended to protect the bottom line. If some other league were to come along and offer Peyton Manning $20m/year for 5 years, the NFL's position does nothing to prevent or undermine this.

One company electing not to pay their employees even more in order to protect the bottom line simply cannot be an antitrust violation. Remember, antitrust law does not exist to punish businesses and protect labor. Labor laws do that. Antitrust laws are in existence to promote competition, as the stated purpose of the antitrust laws are to protect consumers.

[sharpe1027]

Anti-Trust Law has three main concerns:

* agreements or practices that restrict free trading and competition between business.
* abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position.
* mergers and acquisitions of large corporations, including some joint ventures.

Currently, the NFLPA's antitrust allegations are entirely along the first bullet point. It's clearly an antitrust violation for any number of independent businesses to collude to drive up or down specific prices. A corporation that is a single entity cannot "restrict competition or free trading" with itself, particularly since the league can (and does) take no action to drive any potential competitors out of business.

So if the league were one entity, the heart of the NFLPA's complaint is that "It is abusive to pay Peyton Manning only $10m for a one year contract" and "It is abusive to not guarantee $50m to rookie #1 overall draft picks" which is a very weak argument. Especially since this behavior is not intended to dominate the market, it's intended to protect the bottom line. If some other league were to come along and offer Peyton Manning $20m/year for 5 years, the NFL's position does nothing to prevent or undermine this.

One company electing not to pay their employees even more in order to protect the bottom line simply cannot be an antitrust violation. Remember, antitrust law does not exist to punish businesses and protect labor. Labor laws do that. Antitrust laws are in existence to promote competition.

Well, I doubt they would bring exactly the same argument, and they also did not argue what you stated above (i.e., that it is not fair to pay a certain amount). It would probably not be about paying their employees a certain amount but rather about specific actions they use to suppress competition. I would bet that the player's lawyers could come up with a good position that the NFL is engaging in "abusive behavior by a firm dominating a market."

My point is simply that the fact that the current structure makes the player's case a virtual slam dunk (at least in some regards) does not mean that a different structure would solve all issues for the owners.

[Lurker64]

My point is simply that the fact that the current structure makes the player's case a virtual slam dunk (at least in some regards) does not mean that a different structure would solve all issues for the owners.

It's actually not a slam-dunk at all, if you carefully read the text of the American Needle decision. The text of the decision does recognize that the NFL does have an interest in collective action in order to improve competition on the field. In keeping with this, the league simply has to argue that decisions like the salary cap and the draft are simply intended to encourage parity and to prevent one team from dominating the field, which would drive down the value of the product for everybody.

I would not be surprised at all if, assuming Brady v. NFL goes all the way to the supreme court that the court sides with the league in that it's equally reasonable for a league to set off-field rules intended to further on-field competition as it is to set on-field rules intended to further on-field competition.

[sharpe1027]

It's actually not a slam-dunk at all, if you carefully read the text of the American Needle decision. The text of the decision does recognize that the NFL does have an interest in collective action in order to improve competition on the field. In keeping with this, the league simply has to argue that decisions like the salary cap and the draft are simply intended to encourage parity and to prevent one team from dominating the field, which would drive down the value of the product for everybody.

I would not be surprised at all if, assuming Brady v. NFL goes all the way to the supreme court that the court sides with the league in that it's equally reasonable for a league to set off-field rules intended to further on-field competition as it is to set on-field rules intended to further on-field competition.

I made certain that I qualified the slam dunk to only be with "at least in some regards." In this case, the "at least in some regards" would be that there are separate teams that work together to agree on the acts (salary cap, etc.). Now, whether or not the acts are antitrust violations is another matter.