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Sports Law
Rutgers University, Newark School of Law
Bondarowicz, Andrew

SPORTS LAW                               Andrew Bondarowicz                          Fall 2015
 
 
ANTI-TRUST
 
Sherman Act
 
15 USC §1—”Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”
 
15 USC §2—”Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]”
 
Fraser v. MLS (2002)—Global definition of market. MLS structure allows for free flow of capital. Soccer teams aren’t stand-alone businesses.
 
Federated Baseball League v. NL (1922)—Baltimore Terrapons were left out and no one wanted to buy them out. They sued NL under antitrust laws. Collusion + disproportionate market power. They said NL took overt actions and acted as a monopoly. The Sherman Act has an interstate commerce element, but the justices said when people watch the game, they buy tickets in their own state and watch it there. Not interstate activity, it’s an exhibition. The team travels, but this is incidental activity. Unlike goods in interstate commerce, the teams return to their home state after the game. The application of the commerce clause wasn’t extended until the 1940s. The market was defined by where the performance occurred. The Court didn’t really talk about the fact that NL was negotiating with teams in different states. The Court basically didn’t want to mess with baseball. Although it got a bit eroded along the way, the decision still holds.
 
Baseball—antitrust exception
Basketball—NBA / ABA
 
Flood v. Kuhn (1972)—Hurt flood got traded, he wasn’t happy about it and refused to play for the new team. He challenged the reserve clause under antitrust laws. The Court said this is not interstate commerce and they cannot help him. This case helped athlete’s unions and representation take shape.
Reserve Clause (baseball)—term+1 year. Unable to contract for one year after the contract with the team runs out.
 
Canadian Football League (CFL)—+1 clause. Small window to get out. There’s an agreement between CFL and NFL recognizing that window. 
 
USFL v. NFL—The USFL created teams in eight big cities where there were NFL teams. USFL decided to play in the spring when NFL doesn’t play and the stadiums are available. This started to drive up prices for players. The two leagues were in competition for TV, because that’s where most of the revenue comes from in football. The NFL started putting clauses into contracts for broadcast deals and stadiums to take USFL out. The USFL was spending a lot of money and losing it by expanding and little revenue. USFL sued NFL under antitrust laws, so that perhaps the two teams could merge. Deceptive deals with stadiums, unfair competition, TV rights etc. USFL won under the Sherman Act, but got only $3. The jury refused to award it punitive damages, and the league folded soon after the trial. The problem was that USFL tried to play in the fall after playing for 3 springs. They could have stayed in business if they didn’t try to change the season. The language in the NFL contracts and logistical issues triggered problems.  
 
Clarett v. NFL (2004)—Maurice Clarett, a 19-year-old former college running back, challenged on antitrust grounds the NFL’s so-called “three-year rule,” which prohibits players from entering the NFL Draft unless they are three years removed from high school. The Second Circuit ruled that the three-year rule is protected from antitrust challenges by the nonstatutory labor exemption, which shields the collective bargaining process from antitrust scrutiny in deference to federal labor laws. The Sherman Act makes an exception if there’s collective bargaining.
 
NFL Rule—At least 21 years old or 3 years out of high school. Smart investment, limiting liability & physical maturity. Very few 19-year-olds become superstar pros in football.
 
NBA Rule—At least 19 years old or 1 year out of high school. It’s more common for 18-year-old to become superstars in basketball.
 
NFL Players Association (NFLPA)—Mentioned in the case, but later dismantled. Clarett wasn’t a member of NFLPA. It used to rep current players, former players who can still play, drafted players, and non-drafted players who were about to be signed by an NFL team. Would the outcome be different if Clarett had also sued the NFLPA?
 
Mid-South Grizzlies v. NFL (1983)—A lawsuit filed by John F. Bassett, the owner

it virtually complete control'' over the Rangers' Web site.  The Garden claimed the NHL wants control over business opportunities that should be left to individual hockey clubs. According to the suit, the NHL was asserting authority over team Web sites, licensing agreements and advertising and sponsorship deals.  The Cablevision unit said the NHL unreasonably restricted a team's ability to distribute its own live games through the team's Web site and/or the Web site of its local television holder.  The Garden sought to enjoin the NHL from interfering in team-related businesses and no money damages.  
 
The NHL has great interest in the team websites, because they want to protect their brand. They need consistency and exclusive content. All teams can get equal distribution of revenues. Teams in NY are adversely affected by this. MSG has ownership in NY Rangers, so why give up a piece of your business? The court sided with the NHL. This case is about a fight within the league and is different from the above case.
 
NFL v. McBee (1986)—The Eighth Circuit held that defendant sports bar’s display of “blacked-out” games did not fall under an exemption regarding common use since satellite dishes were not commonly found in private homes and they infringed despite their use of the “clean feed” to the satellite. A “blackout” blocks certain programs from being broadcast in a particular market. Attempting to incentivize fans to come to football games, the NFL “blacks out” games that are not sold out within 72 hours of game time within a 75-mile radius of the stadium. Today, although there are roughly 30 million satellite dishes in use in homes in the United States, which is thirty times more than the case says that there were in 1986, the games within the “blacked-out” zone are still “blacked-out” on satellite TV.