Sunday, July 19, 2009

Read this story NFL fans

The NFL, and by extension other U.S. professional sports leagues, is looking to gain mammoth power over its players and vendors. And it could mean dramatic increases in ticket, T-shirt, and jersey prices for fans, lower salaries and possibly huge changes in the free agency rules.

Read this story by Lester Munson. It likely won't be decided for another year, but I have to believe it eventually will make it into the daily news cycle.

A case to be heard by the U.S. Supreme Court pits the NFL against American Needle Corp., a company that made hats with NFL team logos on them. American Needle lost its league contract when the league gave Reebok exclusive rights to make NFL hats.

American Needle sued, arguing antitrust infractions, and now the Supreme Court is going to hear the case. The NFL, despite winning in the lower courts, wants a broad ruling over all antitrust issues. The league could be ruled a single entity, competing with other sports leagues, rather than 32 teams competing against each other.

A favorable ruling would mean antitrust judgement against the NFL would become nearly impossible. It could spell disaster for the NFL Players Association, which gained free-agency and many other concessions through antitrust rulings. Only if, say the NFL, NHL, NBA and MLB colluded to set hat or T-shirt prices, could an antitrust case be filed.

It's easy to see why the league wants this. It is a chance to make lots more money, put the brakes on rising player salaries, likely its biggest expense. Munson argues the owners also could cut into the free-agency rules as well as limit coaches' and coordinators' salaries.

More control could be placed over TV broadcasts as well, meaning the NFL Network could become the sole provider of all regular- and/or post-season broadcasts. Anyone who doesn't get that station in their cable subscription would lose out.

This sounds to me like putting the old Bell phone monopoly, which was broken-up in the 1984, back together because it was simpler when everyone paid their phone bill to the same place.

Any NFL, MLB, NBA, or NHL fan will tell you the leagues do not act together. Teams in a league offer different products and chase the best player talent. Why did we cheer when the Bears traded for quarterback Jay Cutler? Because it was the Bears' front office that made that decision, not the NFL dictating it.

The NFL has been successful because it created a system where franchises in large and small markets could thrive. While it allows all 32 teams to be competitive, it does not force them to be competitive. That is left to each individual front office. Look how many years the Arizona Cardinals were mediocre or worse before advancing to the Super Bowl this year. That wasn't a league decision, it was the franchise operator's decision.

McDonald's and Burger King franchises may offer the same food, but each individual restaurant is unique. Does that mean McDonald's and Burger King should be allowed to control the price of hamburgers and french fries?

Based on Munson's piece, this sounds like a bad idea for the NFL and other pro-sports leagues. The U.S. thrives on fair competition and spends a lot of time pushing that idea around the world. A decision making the NFL essentially a legal monopoly is not going to produce a better brand of football.

It likely is going to produce a more expensive brand of football, at least for fans.

8 comments:

T.J. said...

Why is it a bad idea? The NFL is a single entity, and they revenue so that teams can afford the same kind of talent across the board. The league also can decide who plays and doesn't play for its league. Not eligible for the NFL but want to play pro football? Try the UFL or Arenaball or the CFL.

The NFL is right to pursue this, because otherwise the salary cap, revenue sharing, etc. could all be violations of Anti-Trust laws.

Derrick said...

I'm not in favor of increasing prices because you have no other competition. And that's what's potentially at stake. To some extent it's already happening.

T.J. said...

You DO have competition. You have other forms of entertainment and other leagues.

The NFL already protects its franchises by granting them exclusive rights to various territories (i.e., good luck putting another NFL team in Chicago). If I want to watch NFL football live, what are my options? Drive to Green Bay/Detroit/Indy?

Should the NFL lose, get ready for the Steelers to resemble the Pirates.

Derrick said...

Do you want the NFL to change its player contract system? Because that also could happen. Instead of signing with the Bears, Jay Cutler signs a contract to play in the NFL. And then what's to stop the league from saying something like: We prefer parity and the Bears are too good. Cutler is moving to the Packers.

The key issue is the other sports leagues don't compete with football because the games are structured differently, even played at different times.

You can't compare an MLB ticket value to an NFL ticket value. NFL tickets are worth more because there are 16 games rather than 162. It's apples and oranges.

T.J. said...

Do you want the NFL to change its player contract system? Because that also could happen. Instead of signing with the Bears, Jay Cutler signs a contract to play in the NFL. And then what's to stop the league from saying something like: We prefer parity and the Bears are too good. Cutler is moving to the Packers.


Sure, they can do that, but why would they? You want to be good to your customers, don't you? If nothing else, this would allow smaller-market teams (one that plays in Western PA comes to mind) be able to compete on the playing field with large market teams. Because, remember: the franchises are partners with each other, not competitors beyond the action on the field. The Bears won't sell a seat playing 16 intrasquad games.

These guys have always been partners. George Halas made multiple low-cost loans to the Green Bay Packers to keep them up in Wisconsin. If the Pack moved to LA back then, would the Bears mystique have been different? Yes. The NFL wasn't happy when Al Davis moved to LA or when he moved back to Oakland or when he murmurs about moving to San Jose. That's to protect the Rams and the Niners. McDonald's won't sell a franchise to me to operate next to an established franchise, especially if they think I'll aggressively pursue the other's customers.

The key issue is the other sports leagues don't compete with football because the games are structured differently, even played at different times.

Oh, really? The World Series plays Sunday nights. The playoffs and regular season games go Sunday afternoons, Sunday nights and Monday nights. The NHL plays matinees on Sunday. The NBA and NHL will play throughout the week. Some really weird people will skip watching the Super Bowl and go to a play instead. Some people will spend all day Saturday following college football and not give too much a damn about pro football. Some people will watch the Simpsons on FOX on Sunday night instead of FOOTBALL NIGHT IN AMERICA.


You can't compare an MLB ticket value to an NFL ticket value. NFL tickets are worth more because there are 16 games rather than 162. It's apples and oranges.

Why can't you? You get 3 hours of professional sports. One game is roughly equal to 10 games of the other sport, but some people would say that if they could choose between a huge football game and a relatively meaningless baseball game in September, they'd choose the baseball game.

You can't compare Morton's to McDonald's either, beyond the fact they have a national network of franchises and sell beef. But they are both in the market, and sometimes compete for the same people. Example: there are nights my wife and I don't want to cook. We mull over the options, and our range can run from the Morton's on Skokie Rd. to McDonald's. If the mood strikes us, maybe it's the once-in-a-blue-moon trip to Morton's. Maybe we're going to McDonald's instead. Even worse, maybe we're just grazing on cheese and olives from the fridge. Some days I prefer the cheap, and sometimes money has nothing to do with it. Either way, Morton's loses.

Derrick said...

TJ,

Al Davis only proves my point that the franchises compete with each other. Davis sued the NFL to move the team from Oakland to L.A. He was exercising his right as a team owner, competing with other team owners, to take his franchise to another city. Did you see the Oakland As or LA Angels protesting the move? No. Because the baseball teams did not see themselves as competitors.

The fact that the NFL didn't let Davis move the team and forced the issue into court was an incredibly anti-competitive move.

The structure of the NFL as a sort-of hub-and-spoke system is why it has been so successful, even in small markets. But that doesn't mean the teams are all in it for the same goal and move in lock-step all the time.

Teams compete for jersey sales, sponsors and just about everything else, including players. If the teams didn't compete with each other, the league wouldn't be as great as it is.

T.J. said...

The A's, Angels, Giants, Dodgers, Clippers, Kings, Sharks, Warriors, Ducks, Galaxy, Cardinal, Trojans, Bruins, Golden Bears didn't protest because they WERE competitors. They can't do anything except provide an alternative product. They have no recourse in the courts.

I could open a business weekly in Fort Wayne and your bosses could deem me to be a big threat, but there's not a court in the world that would prevent me from opening up in your town.

Now, distributors and frachisees play by certain rules as dictated by an agreement between frachiser and franchisee (or company and distributor).

I say the NFL is similar to a franchiser. Franchisees have sued franchisers for reneging on various terms of their agreements. So, if you are running a frachise, and the franchiser (the corporation) introduces another franchise to part of your pre-determined territory, you do fight it.

When the Raiders went to LA from Oakland, it encroached on the Rams' territory. It turned out that when the 12 year stint in LA was over, the market for NFL football cannibalized itself. In Oakland, the Raiders were able to carve out a niche as the "renegade team" in the East Bay opposite the 49ers. Even though the Bay Area is not the size of the LA market, its appetite for football might be that much greater, allowing for two franchises.

Each time a new franchise is created, the new owner pays a fee that is equally distributed among the other owners. When a team is sold, the new owner must pay a team transfer fee that is distributed equally among the other owners.

Now you could say the Bears are an "authorized distributor" of NFL football. I don't buy it, but why not? Even then, the distributor is bound by agreements vis a vis its distribution agreement. Want to sell for more (or less) than what the distribution agreement allows? Fine, you can operate as a business, but you cannot distribute our products. Want to misappropriate use of the logo? Fine, you can no longer distribute our products. Want to market and sell our materials to customers outside your particular market? Fine, but you're not distributing our product.

But again, the NFL is a franchise in the traditional sense, and thus the NFL is its own entities with franchisees investing and having some (but not much) freedom to deviate from corporate standards.

(I could also argue the salary cap violates anti-trust law, but I'm sure you don't want to hear that.)

Jenifer said...

Foot ball it's a nice game with nice players..


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Jenifer
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