Tuesday, October 13, 2009

The NFL and Rush Limbaugh

Pro-football fans and political pundits alike have been talking about Rush Limbaugh's proposed bid to buy the St. Louis Rams football franchise, but many in the NFL are not too happy with the prospect of Mr. Limbaugh owning a team. In fact, the bid "ran into opposition within the NFL on Tuesday as [Indianapolis] Colts owner Jim Irsay vowed to vote against him, and commissioner Roger Goodell said . . . [his] 'divisive' comments would not be tolerated from any NFL insider." This got me thinking preemptively of the antitrust problems the NFL may run into if an effort to stall Mr. Limbaugh's bid is successful. (For details on the basic antitrust principles I omit for brevity, click here).

Congress granted the NFL an antitrust exemption by passing the Sports Broadcasting Act of 1961. See 15 U.S.C. §§ 1291-95. Sparing a detailed explanation, the Act essentially permits NFL teams to jointly agree to, and negotiate, television deals. Id. § 1291. Yet the provision further states that it does not otherwise limit "the applicability or nonapplicability of the antitrust laws to any act, contract, agreement, rule, course of conduct, or other activity by, between, or among persons engaging in, conducting, or participating in . . . organized professional . . . football." Id. § 1294. Thus, unless I am missing something, general antitrust principles such as the prohibition on anticompetitive group boycotts could ostensibly still apply to many business aspects of the NFL. It must also be noted, of course, that the Supreme Court will soon hear arguments clarifying the latter issue in American Needle, Inc. v. NFL, 538 F.3d 736 (7th Cir. 2008), cert. granted 2009 U.S. LEXIS 4899 (June 29, 2009), where it will review the Seventh Circuit's recent decision that the NFL is a single entity which is fully immune from antitrust liability under § 1 of the Sherman Act. Until this question is conclusively resolved, however, let's discuss the potential implications in this case.

In the modern approach to group boycotts, courts subject defendants who concertedly refuse to deal with a plaintiff to per se condemnation only if the plaintiff can show that the conduct simply has no redeeming merit, and that the group possessed market power or exclusive access to a critical competitive element--otherwise, the conduct should be judged under the sliding scale approach of the rule of reason. See Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 293-95 (1985) (distinguishing cases holding group boycotts subject to per se condemnation to be limited to their facts as concerted refusals to deal “[which] are so likely to restrict competition without any offsetting efficiency gains. . . .”); cf. FTC v. Indiana Federation of Dentists, 476 U.S. 447, 459 (1986) (applying the rule of reason approach because the Northwest factors were not met in a case where members of a dentists’ federation agreed to collectively refuse to provide patient x-rays to insurance companies, preventing them from evaluating the reasonableness of insurance charges, and from implementing other cost containment measures).

Commentators have analyzed whether some of the NFL's current policies would implicate the boycott rules under § 1 of the Sherman Act. But could a boycott of Mr. Limbaugh's bid to purchase the Rams--be it through a players' joint refusal to deal with him, an owners' boycott or otherwise--be subject to antitrust scrutiny? My hunch is that a boycott could be problematic, even under a favorable rule of reason analysis, because it does not seem to have much of an economic motivation. From current rhetoric--and perhaps understandably--the boycott would be based almost entirely on the controversial statements Mr. Limbaugh made regarding Donovan McNabb several years ago.

I invite our readers to chime in on this matter. I am not too sure how a court would resolve it, particularly given the uncertainty in the federal courts on the scope of the NFL's antitrust immunity. Perhaps the forthcoming Supreme Court decision will obviate the need for speculation.

59 comments:

  1. there is an economic reason: NO ONE WOULD GO TO RAMS GAMES

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  2. Limbaugh is really pathetic. He needs to stick to his hate-spewing, and stay out of sports

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  3. Just want to say that you guys do a great job here. Keep up the good work!

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  4. You should disallow anonymous commenting. Really.

    (Yes, the irony.)

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  5. So let's see if I've got this straight:

    Dogfighting (Mike Vick)? No problem.
    Manslaughter (Leonard Little)? No problem.
    Domestic abuse (Jerome Mathis)? No problem.
    Drug dealing (Jamal Lewis)? No problem.
    Stomping on an opposing player's head (Albert Haynesworth)? No problem.

    Conservative political views? Problem.

    Funny values system in the NFL. And, of course, on the political left.

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  6. Pathetic? Maybe you'd rather have the Rev.Al become an owner. Well, he's busy trying to find the people who did all that to Tawanna Brawley. You still have Jesse "Keep Hope Alive" Jackson.

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  7. Hate? Only hate I've seen with regards to Limbaugh is from those against him.

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  8. Would the fact that the ``quotes` are completely facbricated play any role in this matter?

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  9. Woo, Rush Limbaugh gets over 20 million listeners, but "NO ONE WOULD GO TO RAMS GAMES" if he was part owner?

    What sort of delusional universe does the first commenter live in?

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  10. "there is an economic reason: NO ONE WOULD GO TO RAMS GAMES"

    Right, because no one would listen to such a blowhard's radio show either, or buy his books, or watch his TV program, or visit his website. It stands to reason then that no one would tolerate going to a Ram's game if he was a part owner.

    I believe the quote here is, "No one I know voted for Nixon."

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  11. "Hate-spewing"? You are right, let's put your man Al Sharpton in there instead. Of course, first he would have to shake more corporations to find the money. There, my good friend, is a master of race-baiting hate-spewing. Take a hike, you clown!

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  12. Don't pay any attention to "Anonymous." It's just Roger Goodell drunk-posting again.

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  13. Well, no one goes to Rams games now. That's what losing 14 (or is it 16?) games in a row will do for you.

    Still, St. Louis is sort of a split city. It's a big union area, but a lot of the middle class is Republican. However, the entire St. Louis media is basically liberal (there's only one paper and it's about as liberal as it gets).

    I think a lot of Rams fans probably are. That's part of the reason Kurt Warner and Isaac Bruce got run out of town, because they were too religious for Rams fans taste.

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  14. Limbaugh has every right to an NFL team....he's smarter than most of these owners, and would bring the Rams a super bowl victory.

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  15. Interesting twist is Fox News anchor babe Jane Skinner is married to Roger Goodell.

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  16. Very thorough job on this - I think that it is very likely the Supreme Court will side with the 7th Circuit in American Needle. But articles like this will (hopefully) illuminate the injustice of the anticompetitive catalyst that is sports immunity. It is patently unfair.

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  17. The other NFL owners have an economic interest in seeing the Rams remain a doormat because the weakness of the Rams makes every other team look better, especially the other lousy teams. The individual interests of the team owners comes at the expense of the league, however.

    As for divisiveness, Al Davis and Jim Irsay, among others, have certainly created enough of their own over the years.

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  18. "Limbaugh is really pathetic. He needs to stick to his hate-spewing, and stay out of sports"

    Rush spews so much hate that you guys need to attribute fake quotes to him. Wait...don't tell me you're actually a big enough idiot to believe that Rush said he wanted to give a medal to MLK's murderer.

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  19. Racism appears to be alive and well among sports writers. Jason Whitlock appears to hate a white guy, Rush Limbaugh, because of the color of his skin. In support of his hate he quotes the modern equivalent of the Protocols of the Elders of Zion.

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  20. Moneyrunner....Al Sharpton & co. appear to hate limbaugh because of his race as well.. but they seem to hate everyone

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  21. First, love the legal analysis. I'm not a lawyer (sorry), but I do find the anti-trust issues here quite interesting.

    Second, the NFL is missing something. There are a heck of a lot of conservatives in this country. If the NFL (owners or players association) now takes the position the it's OK for conservatives to be customers, but not owners, they'll have a real problem. The players union isn't the only place a boycott can start. (Yes, I realize that there are plenty of conservative owners. My point is that it appears Limbaugh is hung out to dry solely for his outspoken political views - views shared by quite a few NFL customers.)

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  22. It's sad that Rush had to drop out. He loves the game, he loves the players, Missouri is his home state. I'm sure he would have made a fabulous owner. I hope he fights back and files libel suits all over the place. It's time for the media to be able to back up their story.

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  23. 10:53, not only can he file libel suits, but as Nima cogently notes, he can file an antitrust suit

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  24. What's hilarious about the whole episode is that the commentary Rush made with regards to McNabb was not in any way racist towards McNabb, but rather he was calling out prejudicial (i.e. pro-black) opinions by sports media. His comments did not attack McNabb or African-Americans, but rather the sports media's approach to him because of the color of his skin. Unfortunately for the media, Rush was entirely accurate.

    Sports team ownership is, unfortunately, full of scum you wouldn't want to associate with except to curry favors and get tickets. Those criticizing Limbaugh had better look at the mirrors first.

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  25. Rush should just start a UFL team and help grow a dominate league to rival and pehaps surpase the NFL.

    If you can't join 'em, beat 'em.

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  26. I have a hard time even believing this is a law student effort. Very good work.

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  27. Since Rush has 20 million listeners (I'm guessing most of them actually work)and they probably make enough to pay for the outrageous ticket prices for the NFL games, I think an NFL boycott on his behalf might reach farther than most people believe. I'm not an internet expert but I'm sure someone out there can get this started. As he Rush said, this is not about Rush, and it's really not about conservatism, it IS about being able to state your opinions and beliefs about conservatism without being silenced and called a racist because you believe in individual responsibilty. Political correctness running amok.

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  28. Limbaugh did this for political purposes .... just so he could say that the "media" is out to get him. He never had any interest in buying the team

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  29. Keep politics out of sports.. This is America. It's a free country.. Rush can own a NFL team if he can afford. Why do liberals mix politics with everything?

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  30. As far as I can tell the media IS out to get him. I'm not really much of a fan of his, but how else can you read this?

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  31. Typical liberal and Democratic response, if you can't beat them, smear them.

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  32. Isn't it ironic that the first owner to object is the son of an owner who conducted press conferences while drunk and outright lied about his dealings with Phoenix before sneaking out of
    Baltimore in the middle of the night. Jet and Limbaugh fan

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  33. So, regarding a possible antitrust case: Would the eventual sale price of the team have any bearing? For instance, say the current Rams ownership eventually sells the team to another group for $50M. If Rush's group was planning to offer $75M, and they could offer up evidence (emails, etc.) that that was the number that was discussed, would this be material? Another thought that occurs to me: in this case, would Rush's group have standing to sue? Or would that have to be done by the Rams' current ownership?

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  34. Limbaugh was actually dropped from the group, but has still expressed interest in purchasing. At this point, he'd have to do so on his own (unlikely) or get another group. Given what has happened, it's hard to believe another group would pick him up.

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  35. Rush will be on at Noon, and will announce a private bid to buy the team. You heard it hear first.

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  36. This comment has been removed by a blog administrator.

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  37. I am boycotting the NFL
    I've got a post in my blog about how I feel about this whole situation as a fan and an independant.

    I am livid!
    http://artfreedomandhappiness.blogspot.com/

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  38. If the courts rule that the NFL is a "single entity". Wouldn't that single entity be a monopoly? They obviously have the market power to crush any competitive alternatives (WFL, USFL, the XFL). Right now they are a Cartel, pretty much like all of the pro sports leagues in the US (and the NCAA, by the way).

    My understanding is that MLB enjoys an exemption from anti-trust laws based on a Supreme Court ruling from the Learned Hand days. The Court ruled that Baseball was a game and not a business, which was pretty silly even back then. I am not aware of any similar exemption for the NFL.

    Americans and Congress seem to like it that way and prefer to ignore the issue. Can you imagine the reaction if all the owners in any other industry were allowed to get together and vote on who would be allowed to become a competitor? It would be seen as unamerican in the extreme. Somehow we just accept it when it comes to sports.

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  39. Those who have posited that Limbaugh's racism is taken out of context or misquoted: Get a brain Morans. You can access his shows, so match the quotes to the shows. Don't be lazy, find out for yourselves by matching the audio with the quotes you allege are wrong. It will end up with more FAIL on your parts, but I know you are too lazy to actually research. That is precisely why you believe Limbaugh or Beck's crazy ass ramblings.

    To the rest of you who would defend that bloviating pile of excrement: NFL owners are not lefties, nor are they PC. They have a valuable thing going, and letting a drug addled, misogynistic, racist join their ranks would be a very bad BUSINESS decision.

    As far as anti-trust: are you kidding me? Out of fantasyland. Just stop it.

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  40. Lets remember, all sides on this are getting what they really wanted, publicity. Rev AL and Jessie get to be relevant for the first time since Obama and Rush gets some ink to help him step over Beck, who is selling crazy in his neighbourhood.

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  41. This comment has been removed by a blog administrator.

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  42. Who the hell cares about Al Sharpton? Nobody cares about Al Sharpton! He has next to no influence. He's a boogey-man talked about 100X more on the Right then the Left.

    Al Sharpton is not the reason Rush can't own a football team. Rush makes a living pissing people off and trying to get them to hate one another. It's a lucrative profession and one that's opened many doors for him. But it comes with other consequences and among those are the inability to own a football team if the other owners think you're a liability. Bummer for Rush.

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  43. There is not much of an antitrust case here. The NFL and other sports leagues are obviously joint ventures (i.e. single entities) for some purposes, however American Needle comes out. Is it a restraint of trade for the owners to agree to schedules that hamper competition by, for example, preventing the most popular teams from playing each other every week and keeping the TV revenues? They revenue share. They have salary caps to maintain competitive parity. Are those all antitrust violations? Per se?

    MLB has moved a little bit in the same direction, and arguably should move more so, but isn't it up to the owners of the venture to decide what's best for their product? Isn't that more "American" than allowing an unelected federal judge to tell them how they have to run their business? It's a product that requires a good deal of cooperative effort. (Maybe not 100% cooperative; that's why American Needle is a real case, but a lot.) To suggest this is a "group boycott," as if these were all independent economic actors sounds like, well, the analysis of a law student.

    So can they vote on who owns a team? Don't they have a right to maintain the image of their league, and not to let in a controversial figure who will alienate a significant portion of their fan base? Surely they could prevent Charles Manson from buying in. How about Hugo Chavez? There are people who like Rush Limbaugh, many of whom have posted here, but many who think he's a bad guy who's bad for America (wants Obama to fail, etc.), and would think less of the league if they let him in. Plenty of African-Americans support the NFL, and have an understandable beef about someone who said, and meant, that Donovan McNabb is overrated because he's black and Brad Johnson was better but underrated because he's white.

    So another question: does Limbaugh know anything about football? Anyone know off the top of their head where Brad Johnson is now? McNabb is kind of easy to spot. He's the guy who had a 157.2 QB rating last week, is one passing TD away from becoming the 8th player in the history of the league with 200 passing and 25 rushing TDs, and has a career passing rating higher than Brett Favre's.

    How many people really know what's going on Iraq day to day, or understand what it takes to fix health care, or know if the stimulus is good or bad macroeconomic policy? Are there even demonstrably right and wrong answers on those issues? Most are far more likely to have notions about these issues that fit their values, prejudices, views of peers, etc. Rush can cater to those all day long and who can really prove him wrong? But lots of people know about football, follow it, watch it with their own eyes. In that environment, it took about one week for Limbaugh to say something not only offensive to many, but ludicrously, and objectively, stupid.

    If you really don't like him, let him buy the the team and trade McNabb for Brad Johnson. That will put a dent in his popularity pretty quick.

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  44. Correction to the last post: faulty memory. Limbaugh didn't bring up Brad Johnson; one of his apologists did here:
    http://www.slate.com/id/2089193/

    The apologist was then taken down quite nicely in, of all places, the Weekly Standard here:
    http://www.weeklystandard.com/Content/Public/Articles/000/000/003/476zlybd.asp

    So he was less stupid than I remembered (though his supporter wasn't). Anyway, the McNabb comment was bad enough on its own.

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  45. Yeah, Limbaugh's a facsist! Let's use the government to stop him from buying a business!

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  46. 2:27: you're completley wrong that the NFL is a joint venture. It's not. In case you forgot, there have been cases specifically dealing with that question.

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  47. Rush Limbaugh is an idiot. That hasn't kept Jerry Jones or Mike Brown from owning teams in the NFL.

    That said, this post seems to be pretty ignorant of sports law. If the Commissioner of baseball can suspend players for life suspend Marge Schott for racist comments and suspend George Steinbrenner, exactly what's different about just pre-empting the sale? Or, for that matter, the fact that owners in major sports leagues get to vote to approve owners, which is why the sale of the Phoenix Coyotes just got blocked in bankruptcy court. While the Coyotes' owner is trying his own antitrust suit, it's not going to be successful unless it ends up before Shira Scheindlin (at which point it will be reversed by the 2nd Circuit, because that's how such things work).

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  48. 8:16. You'd not be safe relying on those cases. When the 7th Circuit says the "the NFL teams share a vital economic interest in
    collectively promoting NFL football," that cannot be sensibly understood except as a joint venture analysis.

    Or as the SG's brief put it, in my view indisputably correctly, "The NFL is a legitimate joint venture of 32 separately owned and operated teams that compete vigorously in many respects but, out of reasonable necessity to create and sustain the league, cooperate in others. Although lower courts generally have applied rule-ofreason analysis when challenges to the conduct of sports leagues have been brought under Section 1 of the Sherman Act, this Court has not definitively addressed whether or when such a hybrid organization may be considered a “single entity” for purposes of Section 1."

    Or as Lyle Denniston put it in SCOTUSBLOG
    "The case raises a core question of antitrust law: what kind of joint ventures, perhaps including pro sports leagues, are immune to the Sherman Act because they may qualify as “single entities”?"

    Under JV analysis the NFL can engage in some restraints that further the venture (salary caps, determining who can join the venture) but may not be able to engage in others that restrain trade and are not necessary to the venture (not "ancillary" to the venture as Taft put it in an 1898 opinion Bork liked so much in his book). Agreeing all clubs will license only to one company may be in the latter category.

    The Supreme Court used JV analysis a few years ago in Texaco v Dagher. It will and should surely figure in American Needle. It would be unfortunate if the court instead took an all or nothing approach that the NFL is either a single entity for all purposes or, in essence, an ongoing conspiracy of 32 independent economic actors.

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  49. "but isn't it up to the owners of the venture to decide what's best for their product? "

    I would have more sympathy for that position if in fact the majority of the money invested were the owners' own money. However, there are billions of dollars of taxpayer money invested in building facilities for the near-exclusive use of these sports teams. To a considerable extent, these leagues are dependent on direct taxpayer subsidies. I think that changes the equation.

    "You'd not be safe relying on those cases. When the 7th Circuit says the 'the NFL teams share a vital economic interest in
    collectively promoting NFL football,' that cannot be sensibly understood except as a joint venture analysis."

    Maybe I'm reading this too literally, but... having a common interest in promoting a line of business does not in itself make the entities a joint venture. Farmers who grow peanuts have a common interest in promoting the use of peanuts, and in many states they are permitted to establish self-taxation zones to do things like support research on peanuts. This, however, does not grant them the right to determine who may and may not engage in the peanut-growing business.

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  50. Given the decision by Roger Goodell, I am now boycotting the NFL, and I encourage like-minded freedom of speech and constitutional advocates to do the same. When a person such as Rush Limbaugh is slandered and when the NFL accepts the slander as fact based on the unabashed comments on Wikipedia, from unknown and unverified sources, then the NFL gets a vote of no confidence from me. My principles stand far above my need to watch football on Sunday.

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  51. I will also be boycotting NFL and all sponsors

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