Other NFL Owners

So J-Lo, Marc Anthony, Gloria Estefan and (soon) Fergie are part owners of the Miami Dolphins? Guess Rush should consider going into the music business. As the Kansas City Star notes, "that's the kind of celebrity who brings glitz and glamour to the NFL." Hmm. . . .

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.