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Kickoff in Buffalo Grove Apparel Co. v. NFL

By Alexander Hough in News on Jan 13, 2010 8:10PM

2010_01_13_NFL.jpg As we told you about last June, American Needle, a Buffalo Grove clothing company that spent decades making hats for the NFL, finds itself in the middle of a U.S. Supreme Court antitrust case that may have far-reaching implications for how sports business is conducted. Oral arguments begin today in American Needle v. NFL, the culmination of a legal battle that began with American Needle's unsuccessful 2004 suit of the NFL and Reebok following their 2001 licensing agreement for all official NFL apparel, a contract that wiped out the previous agreements between the NFL and smaller companies like American Needle. The subsequent appeal with the Seventh Circuit Court was also unsuccessful, so now American Needle demans satisfaction with SCOTUS. So then why did the NFL also request SCOTUS hear the case?

The crux of the matter is whether the NFL is a single entity - in which case it wouldn't be subject to antitrust laws - or a collection of thirty-two competitors. Until American Needle sued and lost, courts have sided with the latter view (most notably in the 1993 suit that resulted in the addition of free agency). Emboldened by its lower-level victories and what may be a high water mark of pro-business decisions by SCOTUS now that Obama is picking justices, the NFL is striking while the iron is hot to fortify its position against antitrust laws.

The timing isn't accidental, nor is this about the price of hats (even though according a Washington Post editorial by Drew Brees, the New Orleans Saints quarterback and subject of the Fathead our editor creepily stuck on the ceiling above his bed (unconfirmed [Ed's Note: Nope, it's up there. - M.G.]), the price of NFL hats immediately jumped $10 following the Reebok agreement). At the end of the 2010 season, the current Collective Bargaining Agreement ends. Because the NFL could previously only gain exceptions to antitrust laws through the CBA, a significant victory for the NFL would strengthen its hand in the coming negotiations. The implications beyond the NFL are also significant, as underscored by the amicus briefs filed on behalf of the NFL by the NBA, NHL, NCAA, NASCAR, and MLS among other sports organizations, as well as MasterCard and Visa, which would also be affected by a new antitrust ruling.

But salary caps, free agency, and jerseys aside, let's not forget the small company in Buffalo Grove. This story is just an example of the troubling numbers Aaron reported this morning. [ABC7, Sports Illustrated]