EA Warns NFL Antitrust Case Could Jeopardize Licensing Market

By Daniel Kaplan, Staff Writer, SportsBusiness Journal

The sports licensing market is at risk if the NFL loses its antitrust case at the U.S. Supreme Court, Electronic Arts warned in a brief filed this week at the high court. EA’s position on the case, ironically, puts it at odds with the NFLPA, which sides with the NFL’s opponent in the case, though the union is paid more than $30M annually by EA. American Needle, an apparel company, sued the NFL for awarding an exclusive apparel contract to Reebok, arguing it is an antitrust violation. The NFL, which has won at two lower courts, argues that for the purposes of antitrust law, its 32 teams are not separate businesses, but akin to a single company and so its actions are not anti-competitive. For EA, not being able to collectively negotiate with all 32 NFL teams would be a major problem, the company said in a friend of the court brief. “EA could not produce a realistic, full-league NFL simulation without the cooperation of all the NFL clubs,” the company said. It also noted licensees would be hesitant to enter into contracts fearing antitrust lawsuits. VF, another NFL licensee, also filed a brief offering similar concerns about doing business with sports leagues that could not collectively negotiate. Glen Nager, the attorney for American Needle, said he has no problem with a license for all 32 teams. The issue, he said, is the Reebok deal is exclusive. The case is set to be argued January 13. More than 30 antitrust cases have been filed against sports leagues and circuits since '86, none resulting in an adverse ruling, but inflicting high costs, a brief filed by the ATP, WTA, NASCAR and MLS on behalf of the NFL said. So the American Needle case has shaped up to be the one that once and for all establishes whether sports leagues are largely immune from antitrust laws and can perform joint commercial activities. If the teams are considered separate competitors, then such conduct could be illegal.

UNIONS FEAR RULING COULD CARRY INTO LABOR TALKS: While labor unions like the NFLPA have sided with American Needle because they fear a broad ruling on behalf of the NFL could carry over into labor, those concerns were rejected by some of the amicus briefs. The NHL, for example, maintained in its filing that the case is not about labor. The unions have a different perspective, saying the core league functions that the NFL seeks antitrust protection for could include players. A union attorney did not respond to comment, however, about finding itself on the other side of a case from its largest licensee, EA. The NBA and NCAA also filed briefs on behalf of the NFL.

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