The Supreme Court agreed Monday to decide whether the National Football League and its 32 teams can enter an exclusive licensing deal with a maker of team jerseys and other gear without violating federal antitrust law. The court said it will hear an appeal from American Needle Inc., of Buffalo Grove, Ill., that challenges an agreement the NFL struck with Reebok International Ltd. A federal appeals court had ruled in favor of the NFL last year.
American Needle had been one of many firms that manufactured NFL headgear until the league granted an exclusive contract to Reebok in 2001.
The NFL won the case in the federal appeals court last year in Chicago. But it also asked the Supreme Court to hear the case in a quest for a more sweeping decision that could put an end to what the league considers costly, frivolous antitrust lawsuits.
Said NFL spokesman Brian McCarthy in a statement, “We look forward to the opportunity to explain why the court should confirm and extend on a nationwide basis the favorable rulings of the Court of Appeals on the application of the antitrust laws to the unique structure of a sports league.”
The case concerns whether the league is essentially a “single entity” that can act collectively or 32 distinct businesses that must be careful about running afoul of antitrust laws by working too closely together.
In its original lawsuit, American Needle had charged the NFL with unlawful restraint of trade and monopolizing the team products licensing, manufacturing and wholesale markets by violating antitrust laws by working too closely together, according to court documents. The cost of basic fitted caps jumped to $30 from $19.99, American Needle said in court documents. American Needle lost the case in U.S. District Court as well as in the federal appeals court in Chicago in 2008.
The National Basketball Association and the National Hockey League filed briefs supporting the NFL with the Supreme Court, while Major league Baseball, which has an antitrust exemption on many issues, did not.
“We look forward to the Supreme Court finally resolving what has become an oft-litigated, contentious issue in litigation involving professional sports leagues,” said NHL Deputy Commissioner Bill Daly in a statement. “We are hopeful that that resolution will ultimately result in less litigation and will allow professional sports leagues to operate in a less costly and more efficient manner.”
Reebok was acquired by Adidas AG in 2006 in a $3.8 billion deal that helped the German company expand in the United States.
The case will be argued late this year or early in 2010.
The case is American Needle v. National Football League, 08-661.
