Wednesday, January 13, 2010

Let's talk about things we know nothing about

.... or maybe you do.  In which case, get in here.  I have become mired in the legal question of whether the NFL is (1) or (greater than 1) business entity.  As a logic puzzle/legal argument, that is.  I don't really have any skin in that game (hawnk hawnk). 

As a baseball fan, of course, I am familiar with the issue:  if an "industry" is defined by a closed alliance of limited "companies," and those companies meet to set the rules, is that industry acting under a conspiracy?

Let's Play.... follow that chain!
Contestants will identify where I know nothing about law, capitalism, football, or blogging, and attack my arguments.  I will have moved onto something else by then, so enjoy yourselves.

 Question #1:  What is "trust" what?
All the better to confuse 6th grade Civics Students - "sanctions" can be good or bad... and so can "trust."    Title 15 U.S.C (The Sherman Act)
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]"
We don't like monopolies - unless they belong to the phone company, cable, gas stations across the street from each other, Kablooms that muscle out local florists, PeeWee football, the public schools, computer operating systems, or NASA.  For example.
Question #2:  What's an example of anti-trust?
In 1894 the American Railway Union struck against the Pullman Palace Car company over reduced wages and carried out their strike by refusing to service trains with Pullman's cars.  Think of mechanics refusing to service Escorts because they (mechanics) are in a beef with the Ford company.  Pullman reacted by hitching his cars to the US Mail train, which slowed them down and made this, literally, a federal case.
Question #3: I can't tell who violated the Sherman Act in this scenario
Tricky, ain't it?  The court said the railway workers did -- for restraining trade -- not the Pullman company for monopolyzing the mail trains.
In 1981, the Air Traffic controllers' union staged a strike for better pay and working conditions.  The President fired them for life -- for interfering with interstate trade. 
Question #4: What about Microsoft?
Everyone's just afraid of them.  So U.S. settled.

Question #5: I thought we were going to talk about sports.
 let's recap:
it is OK to... standardize bidding, charge the same price (gas stations), control federal commerce
not OK -- bid rigging, price fixing (breakfast cereal), challenge the people who control federal commerce
You know who was against the Sherman Act?  Allan Greenspan.  well of course he was.

Ugh.  Who started this
In 1922 the US Supreme Court determined that "baseball," (which was not then known as Major League Baseball) was not subject to the Sherman Act because it did not qualify as "interstate commerce." 
In 1953, the Supreme Court further said that the Sherman act did not apply to baseball, because it just simply didn't. 
ESPN can break this down better from here.

(Dissenting view, Justice Burton, "In the light of organized baseball's well-known and widely distributed capital investments used in conducting competitions between teams constantly traveling between states, its receipts and expenditures of large sums transmitted between states, its numerous purchases of materials in interstate commerce, the attendance at its local exhibitions of large audiences often traveling across state lines, its radio and television activities which expand its audiences beyond state lines, its sponsorship of interstate advertising, and its highly organized "farm system" of minor league baseball clubs, coupled with restrictive contracts and understandings between individuals and among clubs or leagues playing for profit throughout the United States, and even in Canada, Mexico and Cuba, it is a contradiction in terms to say that the defendants in the cases before us are not now engaged in interstate trade or commerce as those terms are used in the Constitution of the United States and in the Sherman Act."   good point, that.)

Question Bazillion: So what's the football issue, then?
In 1957, on the heels of patting baseball's cute little behind, the Supreme Court ruled that the NFL did not enjoy the same exemptions as baseball because --- wait for this.  it's a good one -- they are different sports.

"Federal Baseball held the business of baseball outside the scope of the Act. No other business claiming the coverage of those cases has such an adjudication. "

Now, in 2009, the American Needle Company claims that the NFL blocked fair competition by giving Reebok an exclusive contract on team caps for all NFL teams.  NFL teams don't wear caps, you say?  No, fans do.  The fact that they are baseball caps is not a factor in the case, but it does make you miss George Carlin.

What is a factor in the case is whether "the NFL" is an entity or a collection of 32 teams.  Sports Illustrated calls this "the most important case in sports history," and I may have to spend some time coming up with that list before I can agree.  Columnist Michael McCann writes, "Whichever path the Supreme Court chooses, it would likely impact other leagues, including the NBA and NHL, both of which have filed amicus briefs in support of the NFL's position." 

Presuming that the current court carefully words their ruling to refer to the definition of "entity," and not "football," "baseball," or "cap," ... this very well could be true.

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