The National Football League this week will hear arguments over the league’s exclusive agreement with Adidas’ Reebok subsidiary to sell hats, jerseys and other apparel with team logos. Lawyers for the pro football owners will ask the justices to rule that the NFL should be shielded from antitrust laws because its teams, while competitive on the field, function in business as one entity.


The Supreme Court case centers on a suit by American Needle Inc., which lost its right to sell team caps in 2001 when the league reached its accord with Reebok, a company acquired by Adidas in 2005. In reaching its initial deal, the NFL determined that the 10-year, $250 million deal would generate more money than the agreements it had with American Needle and others.

American Needle sued the NFL, arguing that the Reebok deal violated antitrust statutes because the league conspired to stifle competition and inflate prices. All 32 NFL teams, their licensing arm and Reebok are also defendants in the lawsuit, which dates back to 2004. American Needle argues that the league structure shouldn’t exempt teams from the usual rule that independently-owned businesses face antitrust scrutiny when they act in concert.


“The teams are separately owned and controlled profit-making enterprises,” the company has argued. “They are actual and potential competitors in numerous areas, including the licensing of intellectual property.”For its part, Reebok says American Needle profited from the NFL’s collective licensing for more than two decades, objecting only after the league started dealing exclusively with one company.


If the court rules in favor of American Needle, the NFL may be forced to annul its exclusive contracts, opening the door for more competition and potentially lower prices.  Arguments in Supreme Court begin Jan. 13.


Word on the street is that the NFL is opening this deal to multiple licensees again when the Reebok deal expires in 2011.  Lack of a collective bargaining that could derail the season may play into it as well…