SBJ/April 11-17, 2011/Labor and Agents

Players' lawsuit prompts talk of 'free-market' NFL

Early into the four-hour NFL lockout hearing in federal court last Wednesday, U.S. District Judge Susan Richard Nelson’s first query to the lawyer representing the players suing the league for antitrust violations was not to ask why she should order the league to open for business, but instead to question what that business would look like.

Lost in the understandable media focus of whether Nelson lifts the now month-old lockout is the tectonic change the players’ antitrust lawsuit seeks. For the first time in pro sports, the lawsuit wants a sports league to organize under truly free market principles. If the lawsuit succeeds, most if not all free agency restrictions, almost certainly the draft, and not to mention the salary cap, would reside in the dustbin of NFL history.

These restraints on player movement, agreed to through collective bargaining, have fueled professional sports for the last three decades and certainly are widely perceived as major contributors to the NFL’s success.

“I am a big believer in capitalism and the free market and I have no doubt that can produce a pro-competitive, efficient outcome,” said Jeffrey Kessler, the class counsel for the players in Brady v. NFL, during a panel discussion at the IMG World Congress of Sports last month.

Kessler envisions a league in which every player is an unrestricted free agent, including all incoming collegians, and teams are free to spend whatever they wish on payroll.

What would that look like? To Kessler, because of the NFL’s healthy revenue sharing, unfettered free agency wouldn’t affect competitive balance while players benefit. To others, beyond high-revenue teams spending wildly and shaking the foundation of the NFL’s “Any Given Sunday” ethos, most players would suffer.
“One has to be really careful what you wish for,” argued Phil de Picciotto, president of Octagon, which represents players, coaches and sponsors, speaking on the same panel and directly responding to Kessler. “If I were an owner, I would seriously consider advocating every player being a free agent every year. You will oversupply the market and lower player compensation by a song.

“Most of the players in aggregate would be losers,” de Picciotto contended.
Michael Weiner, executive director of the MLB Players Association and also a panelist, disagreed.

“I find it fascinating … to suggest it wouldn’t be good for players to be in a world where owners could pay them whatever they wanted.”

It’s unclear who’d win Brady v. NFL if it reaches trial, and advancing to that stage is by no means assured. The sides could settle, or a court could dismiss the case. Many of the past judicial decisions related to whether player restraints like drafts can pass antitrust muster are dated or focus on specific elements of narrow issues.

“All the antitrust cases that actually judged the legality or illegality of player restraints in a player market are all very old cases and they are all from a different time,” said Bill Daly, deputy commissioner of the NHL, speaking on the same World Congress panel. “A lot of those cases were decided during a time when antitrust precedent wasn’t where it is today.”

Even the U.S. Supreme Court’s decision last year in cap maker American Needle’s victory over the NFL ruled only that the league could not claim wide antitrust immunity. In fact, the justices wrote there were pro-competitive reasons for teams to work together. “We have recognized, for example, ‘that the interest in maintaining a competitive balance’ among ‘athletic teams is legitimate and important,’” they wrote unanimously. “While that same interest applies to the teams in the NFL, it does not justify treating them as a single entity for purposes when it comes to the marketing of the teams’ individually owned intellectual property.”

In other words, the Supreme Court’s rejection of the NFL’s arguments that its decision to pool commercial resources should be excused from antitrust scrutiny does not necessarily carry over to other areas like player restraints.

That may be why Kessler’s main argument about the draft, for example, is not that it’s an antitrust violation on its face, but that it does not actually enhance competitive balance. “Have all the top quarterbacks drafted in the first round worked out?” he asked. “Is there really a connection between your draft position and your competitiveness on the field?”

De Picciotto retorted, “The draft is not designed to guarantee competitive balance, just like capitalism in America is not designed to make everyone immediately successful. It is designed for the opportunity to be competitively balanced.”

To that thought, Kessler replied that what guarantees opportunity is untrammeled free agency.

More immediately, the issue for the NFL is what to do if the lockout is lifted by Nelson, who should rule by the middle of next week, or on appeal by the 8th U.S. Circuit Court of Appeals. The league’s lawyer, David Boies, calls this the catch-22 problem: The players are suing to force the NFL to impose a system that is allegedly illegal.

When Nelson asked players’ counsel Jim Quinn if there were any player services systems that satisfied him, he replied, “I believe there are systems that can pass [antitrust] muster,” without being specific.
“It’s possible you could sit down and work out a plan?” Nelson asked.

“Maybe not to the NFL’s liking,” Quinn replied, “but yes.”

Correspondent Jay Weiner contributed to this report.

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