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How a Supreme Court Decision Could Squash NBA Players in 2011

Jul 19, 2009 – 11:35 AM
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Tom Ziller

Tom Ziller %BloggerTitle%

LeBron JamesThree weeks ago, the Supreme Court of the United States agreed to hear an appeal in American Needle vs. NFL, a circuit court decision which ruled that, for the specific purposes of marketing intellectual property, the football league should be considered a single entity instead of 32 individual teams. This allows the NFL to escape antitrust liability on this matter.

The NFL, according to ESPN's Lester Munson, has found an opening: While American Needle (a hat manufacturer) needs the Supreme Court to reverse the circuit court's decision, the NFL wants the high court to expand it to cover all league activities. Effectively, that would remove any antitrust liability from the NFL, the NBA and the NHL. Munson and a number of sports law scholars believe that, due to the Supreme Court's make-up, the NFL could be victorious when the case is heard next year.

That could doom the NBA players union in its negotiations with the league in 2011.

As has been covered at NBA FanHouse, the league and union are on a crash course for heartbreak in 2011. The league has insisted that the current salary system -- in which players receive 57% of basketball-related income through salary and benefits -- cannot last as a handful of teams struggle to stay solvent. Word is that the NBA wants to shrink that figure, contract the maximum length of contracts (currently six years), increase the age minimum to 20 (from 19), and possibly more. The union doesn't really like any of those ideas.

The word "lock-out" has been bandied about, though the league has tried to soften worries in various ways. As the expiration of the current collective bargaining agreement approaches in July 2011, the worries will only grow in amplification. The NBA is projecting a steep decline in revenue this season, a good deal tied to attendance figures. The economy has set a bad situation for season ticket renewals, and league-wide parity is not particularly strong right now. (Last season saw three teams win less than 20 games for only the second time since 2000.)

Already, the union's position is seen as weak. The union will be arguing for the status quo, potentially along with stronger revenue sharing. The current CBA is working out for players, even though the union consented to some strong restriction in 2005 (particularly with regard to contract length and the age minimum). The league will be able to show the public very easily that the CBA is not working out for most teams. And while the negotiations might again look like "tall millionaires vs. short millionaires," the ramifications will affect fans. Greatly.

This is where American Needle vs. NFL comes in. If NFL can guide a seemingly pro-business SCOTUS toward ruling in the league's favor, the NBA suddenly becomes free and clear of antitrust liability. NBA players haven't sought major antitrust action against the league since 1995, when agent David Falk orchestrated a coup attempt in order to fight the league's attempts to limit top player salaries. (Falk represented a number of top players, including Michael Jordan and future union prez Patrick Ewing.)

Falk organized more than a dozen players to file a class action suit against the league on antitrust violations, and attempted to corral enough players to vote to "decertify" the union so that the antitrust suit could move forward. The vote was rejected overwhelmingly as union leaders (and other agents) bristled at Falk's hijack attempt, and the union and league eventually came to an agreement favorable to the players. (Many argue Falk executed a successful hijack in 1998, when his client, Ewing, took over the union. Players noted publicly at the time that Jordan and Ewing hadn't been too concerned with the league's labor issues until Falk became concerned. Of course, the 1998 crisis ended up with a canceled All-Star Game and hundreds of lost games. You tell me how positive Falk's involvement was. But that's another subject entirely. Where were we ... )

Because of the collective bargaining agreement, the union has not resorted to seeking justice through the antitrust courts often in recent times. But Munson warns that if the NBA gets this power boost via a SCOTUS decision for the NFL, the union will have their backs against the wall in future negotiations. The Supreme Court decision is expected to be handed down next spring, a year ahead of the most stern negotiations on the 2011 CBA.

The players would be down to just one bargaining tool: a strike.

Munson argues that the league could lose the CBA and install rules (a stricter salary cap, for starters) based upon the owners' wishes, knowing that the union no longer has antitrust law in its corner. Whatever the public opinion impact of that sort of power play (which would surely be dependent on the spin game), nothing would hurt fan attitudes toward one side like a strike would.

The players would be forced to cede concessions -- embarrassing, painful concessions -- or strike. No two ways about it. (And for anyone who'd argue the league would never press its power like that, I'd like to introduce you to the 1998 lock-out, the threatened 2005 lock-out, the already threatened 2011 lock-out, and the NBA's amicus brief on behalf of the NFL's Supreme Court certiorari request. In the brief, NBA lawyers argued that resolution on the "single-entity" question would erase limitations on the NBA's power to grow sensibly.
Mindful of that ever-present threat [of antitrust litigation], the league is therefore unfairly limited and constrained in its ability to develop business strategies that might enable it to compete more effectively in the larger entertainment marketplace.
"Business strategies that might enable the NBA to compete more effectively in the larger entertainment marketplace" could be anything from ... a stricter salary cap to a higher age minimum to a player dress code to a constriction of roster sizes, et cetera. A ruling in the NFL's favor would tell the NBA it can make whatever rules necessary to build the business of the NBA without fear of antitrust litigation. One year before the league's collective bargaining agreement with players ends.

This is what doom looks like at dawn. Munson reports that NBA Players Association has not yet hired a lawyer to get involved with the case, though it is expected to. The NBA will likely make an amicus brief for the NFL's case.
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