56 Pages Posted: 11 Sep 2009 Last revised: 21 Jul 2013
Date Written: January 15, 2010
This Feature will explore American Needle, Inc. v. NFL and its potential impact on professional sports in the United States. In August 2008, the United States Court of Appeals for the Seventh Circuit held that the National Football League (NFL) and its teams operate as a “single entity” for purposes of apparel sales. Because a single entity cannot conspire with itself, it cannot violate Section 1 of the Sherman Act, which prohibits concerted action that unreasonably restrains trade. The U.S. Supreme Court recently granted a writ of certiorari and will review American Needle in its 2009-2010 Term.
As this Feature will detail, American Needle presents the most meaningful sports law controversy in recent memory. For the first time, a U.S. court of appeals has expressly recognized that in certain settings of collusive behavior, a professional sports league and its independently owned franchises may function as a single entity. American Needle offers the Supreme Court an opportunity to settle a longstanding source of confusion: how should antitrust law regulate the peculiar, perhaps incomparable, business entity known as a professional sports league?
The stakes could not be higher. If the Supreme Court agrees with the Seventh Circuit or, as the NFL hopes, furnishes an even more sweeping recognition of single entity status, professional sports leagues could be shielded from Section 1 in a bevy of decision-making contexts that have traditionally been subject to Section 1 scrutiny. Particularly when compared to their past treatment, leagues could become uniquely sovereign and commanding.
This Feature will begin by describing the litigants in American Needle and the underlying relationship between antitrust law and the NFL. The Feature will then turn to a substantive analysis of American Needle and its implications for the NFL and other organized associations of sports, including the National Basketball Association (NBA), Major League Baseball (MLB), and the National Collegiate Athletic Association (NCAA). Single entity recognition may benefit these organizations when they negotiate television contracts, restrain players’ salaries and employment autonomy, and execute exclusive contracts with sponsors and licensees, among other pursuits traditionally subject to Section 1 scrutiny. This Feature will conclude with a recommendation that the Court reject the NFL’s single entity defense on the grounds that it would belie legal precedent and mistakenly characterize league operations. The recommendation, however, will leave open the door for leagues to pursue, and for Congress to consider, targeted exemptions from Section 1.
Keywords: American Needle v. NFL, Single Entity, Sherman Act, Antitrust, National Football League, American Needle, Seventh Circuit, Congress
JEL Classification: K10, K20, K21, K31, L22, L4, L40, L41, L82, L83
Suggested Citation: Suggested Citation
McCann, Michael, American Needle v. NFL: An Opportunity to Reshape Sports Law (January 15, 2010). Yale Law Journal, Vol. 119, p. 726, 2010. Available at SSRN: https://ssrn.com/abstract=1471515