Contracts Hang In Balance As NFL Case Kicks Off For a decade, Reebok has had an exclusive merchandising contract with the NFL's 32 teams. American Needle Inc., a family-owned business, says the contract violates antitrust laws, and the Supreme Court will hear the case Wednesday. The result will affect not only the NFL but also other professional and collegiate sports leagues.
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Contracts Hang In Balance As NFL Case Kicks Off

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Contracts Hang In Balance As NFL Case Kicks Off


Contracts Hang In Balance As NFL Case Kicks Off

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The Supreme Court turns to the business of pro-football today. It's going to hear a case that deals with the National Football League's exclusive licensing deal for selling billions of dollars worth of caps, jerseys, sweatshirts, and other apparel.

The court's ruling will either leave in place - or jeopardize -professional and collegiate sports deals that are in place right now. Here's NPR legal affairs correspondent Nina Totenberg.

NINA TOTENBERG: It used to be that lots of different companies had NFL licenses to sell stuff with NFL team logos. But since 2000, it's been all Reebok, all the time. That's the year the NFL decided it wanted to award its merchandising license for all 32 teams to just one company - Reebok.

Among those frozen out was American Needle, a family-owned company that specializes in head wear. The company went to court, claiming that the 32 teams, operating though the NFL, had conspired to give Reebok a monopoly in violation of the federal antitrust laws. The NFL countered that the league is a single entity that operates as one business, not 32 competing businesses.

A federal appeals court agreed with the NFL, and American Needle appealed to the Supreme Court.

JEFF CAREY: By doing that, they eliminated all of the price competition that existed among the existing licensees, with the result that they caused the prices to rise, and they collected more royalties.

TOTENBERG: He says that immediately after the Reebok deal eliminated competitors, the price of a high-end fitted team cap jumped from $19 to $30.

Reebok and the NFL counter that there can be many explanations for such a jump in price, including a better-quality product. And the league argues that a single licensee, among other things, is better able to fill orders quickly at the time of playoff and championship games.

But the crux of the case centers on whether the NFL is a single business or an umbrella organization for 32 competing businesses.

Nobody from the NFL wanted to talk on the record for this broadcast, but lawyers for other big sports leagues were less reticent. Jeff Mishkin filed a brief on behalf of the NBA. Football, he notes, can only be produced through the cooperation of the teams. And when it comes to merchandising agreements, the competition is not between the teams but between the NFL and other sports and entertainment.

JEFF MISHKIN: NFL competes against NBA basketball, Major League Baseball, the National Hockey League - lots of other entertainment products.

TOTENBERG: So the price competition for a hat, he argues, is not between the teams but between a football hat or one for basketball, hockey, baseball or even a rock group.

MISHKIN: If the price of the hat you want gets too high, you will go buy another hat at a price you can afford.

TOTENBERG: A football hat. You won't buy a football hat. You will buy a basketball hat.

MISHKIN: Yeah, but it's a hat.

TOTENBERG: American Needle's Jeff Carey finds that theory laughable. People who want a Washington Redskins hat aren't going to be satisfied with a Washington Nationals hat, he says. A hat is not an NFL hat, it's a team hat.

CAREY: When you turn on your local radio, do you hear an ad for there will be an NFL football game or do you hear an ad that says the Washington Redskins are playing the Dallas Cowboys?

TOTENBERG: At a recent Atlanta Falcons game, a sampling of tailgaters showed a lot of team loyalty and no talk about the league. Ivan Mann said the price of jerseys and hats is a little high.

IVAN MANN: But it's a worthwhile investment - we're supporting the team.

TOTENBERG: Roy Irby, too, was all about the Falcons.

ROY IRBY: I've got on my Michael Turner jersey number 33. I'm a Michael Turner fan all the way live(ph).

TOTENBERG: None of the gamegoers we sampled knew about Reebok's exclusive deal with the NFL, but everyone in the sports business knows. While few experts expect a broad ruling in favor of the NFL, if the league is declared a single entity, that could allow it to set higher prices for tickets, concessions, parking at games, and even fees to join fantasy football leagues.

Nina Totenberg, NPR News, Washington.


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