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American Needle Won! NFL Exclusive Deals May Be A Thing Of The Past

  11:13 AM - May 24, 2010 by aholbert32

Check out the coverage at ESPN.

Quote:
"WASHINGTON -- The Supreme Court on Monday turned away the National Football League's request for broad antitrust law protection, ruling that the league can be considered 32 separate teams -- not one big business -- when it comes to selling branded items like jerseys and caps.
The high court unanimously reversed a lower court ruling throwing out an antitrust suit brought against the league by one of its former hat makers, who was upset that it lost its contract for making official NFL hats to Reebok.

American Needle, Inc. sued, claiming the league violated antitrust law because all 32 teams worked together to freeze it out of the NFL-licensed hatmaking business. The company lost and appealed to the Supreme Court but the NFL did as well, hoping to get broader protection from antitrust lawsuits.

Major League Baseball is the only professional sports league with broad antitrust protection. The National Basketball Association, the National Hockey League, the NCAA, NASCAR, professional tennis and Major League Soccer supported the NFL in this case, hoping the high court would expand broad antitrust exemption to other sports.

The Supreme Court turned away the league's theory that its 32 teams operate as one business, and sent American Needle's antitrust lawsuit back to the lower court.

"Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that 'deprive the marketplace of independent centers of decisionmaking ... and therefore of actual or potential competition," said the retiring Justice John Paul Stevens, writing for the court."

Member Comments
# 61 aholbert32 @ 05/24/10 01:51 PM
Quote:
Originally Posted by thudias
All this gives companies is the ability to negotiate separate deals..All NFL teams can and probably still will collude to lockout companies that give "The Shield" any issues (legal or otherwise). How many teams are going to negotiate with American Needle now? Probably none!
Then those teams run the risk of being sued.
 
# 62 thudias @ 05/24/10 01:57 PM
Quote:
Originally Posted by aholbert32
Then those teams run the risk of being sued.

They run the risk anyway..And..you would have to sue them all. it will all become hearsay (he said..she said)..no actually proof unless one team caves. Which they will all be represented by high priced lawyers so thats not going to happen. The league will become more unified because of this ruling on items they want to protect like TV contracts..Hats and Jersey maybe not so tightly protected.
 
# 63 spit_bubble @ 05/24/10 02:00 PM
Quote:
Originally Posted by aholbert32
Actually it does. If the NFL reups its exclusive deal it runs the risk of a antitrust lawsuit from 2k, Microsoft, Sony etc.
Yup...

You're not going to see the NFL do any more exclusive deals if the lower courts rule in favor of American Needle...

But they haven't won anything yet. Even though the Supreme Court's decision to send it back to the lower court appears like a victory of sorts, nothing has actually been decided.
 
# 64 doctorhay53 @ 05/24/10 02:01 PM
Quote:
Originally Posted by Sigma4Life
So your saying we'd be better off if the NFL was legally allowed to do exclusive deals? Any way you look at it we are much more likely to have multiple NFL games today than we were yesterday. If nothing else, the NFL and EA have to take notice and think twice about renewing their exclusive deal. The government is obligated to at least take a look at any big exclusive deals the NFL is involved in because of this ruling.
That is a huge leap from what I actually said. I don't understand why people need to do things like that.

The title of this thread is that NFL exclusivity deals may be a thing of the past. I don't agree that this ruling will necessarily affect football gamers by giving us a bunch of options back. It might, I understand that, but I'm just not convinced it will.

I don't agree that any way we look at it we are more likely to have more games.

Quote:
Had the Supreme Court ruled that the league was allowed negotiate as a single entity (rather than as 32 separate businesses) for purposes beyond those for which it is currently allowed to do so (broadcasting rights), it's conceivable that the league could have just imposed its own salary structure without the agreement of the players. The union -- and other sports league unions that shared in its concern -- feared a precedent-setting ruling that would have crippled its bargaining power.
Where do video games fall under this? Broadcasting? apparel and team merchandise? This court ruling only applies to branded items like hats and jerseys. It seems probable that on the precedence set by this case, video game makers could have a legit shot at winning in court. But how long will it take to affect gamers? 5 years? 10 years? I'm not excited yet. There is a long way to go to have real competition in the NFL gaming market. This ruling MAY be a step in that direction, but it may not. Time will tell. In one sense I am happy the NFL lost. But I'm still worried about alot of aspects of this.

For those of you who say the Cowboys wouldn't make their own game because people wouldn't buy it....I'm not sure that's true. I think you underestimate the sense of entitlement many sports fans (and owners like Jerry Jones) have. Ultimately I don't think those types of games are bad for sports gamers though.

A huge problem here is that EA also has exclusivity with the NFLPA. I don't see many developers trying to jump into a market that EA has fully controlled for (by the time this is over) nearly a decade, without rights to the teams, stadiums, games, AND players.

I'm just suggesting we should step back and think; how does this REALLY affect NFL gamers right now? The answer I come to is 'not much'.
 
# 65 aholbert32 @ 05/24/10 02:01 PM
Quote:
Originally Posted by thudias
They run the risk anyway..And..you would have to sue them all. it will all become hearsay (he said..she said)..no actually proof unless one team caves. Which they will all be represented by high priced lawyers so thats not going to happen. The league will become more unified because of this ruling on items they want to protect like TV contracts..Hats and Jersey maybe not so tightly protected.
LOL. The proof will be in each teams actions. If all 32 teams decided to ban together and not work with anyone but EA or Reebok....they will get sued again and lose. If they decide to only license to select vendors like Nike and Reebok, the court will ask why AN is being excluded and they wont have a sufficient response to avoid an antitrust case.

The only way to get around this is if the NFL raises the license fee so high that only a select number of companies can afford to purchase one. The problem with that is most companies wont pay a ridiculous amount for a license if there isnt any exclusivity attached to it.
 
# 66 aholbert32 @ 05/24/10 02:03 PM
Quote:
Originally Posted by doctorhay53

Where do video games fall under this? Broadcasting? apparel and team merchandise? This court ruling only applies to branded items like hats and jerseys. It seems probable that on the precedence set by this case, video game makers could have a legit shot at winning in court. But how long will it take to affect gamers? 5 years? 10 years? I'm not excited yet. There is a long way to go to have real competition in the NFL gaming market. This ruling MAY be a step in that direction, but it may not. Time will tell. In one sense I am happy the NFL lost. But I'm still worried about alot of aspects of this.

Video games fall under merchandise. The NFL itself calls Madden NFL merchandise.
 
# 67 doctorhay53 @ 05/24/10 02:08 PM
Quote:
Originally Posted by aholbert32
I'm sorry but you are just flat out wrong. This case focuses on two things: exclusive deals and merchandise. AN is arguing that the exclusive deal with Reebok is an antitrust violation. The high court just held thatThat exclusive deals of this sort violate the Sherman Act and should be held under antitrust scrutiny.

Video games are considered merchandise and all the NFL is doing is licensing their trademarks to a video game company (logos, helmets, names, uniforms). The high court clearly states that:

" Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that 'deprive the marketplace of independent centers of decisionmaking ... and therefore of actual or potential competition."

Thats as clear as it gets. The NFL would be foolish to continue an exclusive licensing practice when the SC has clearly stated its a potential antitrust violation.
Your logic is perfect....except one of your assumptions I'm not certain is correct. Are video games team merchandise? Even if this ruling applies directly to video games, there are significant problems for game DEVELOPERS trying to jump into this market without 32 teams and the NFLPA support. I don't believe there is any antitrust situation that can force the NFLPA to sell it's license to anyone. And what if there are 4 developers wanting to make games, but they can't get more than 20 teams to sign on? Do you really think they will all just make a game with 20 teams and 12 fake ones, with no real players? Realistically I see a small chance that this ruling leads to 2K (only) getting back in on the market 5 years or more from now. Maybe.
 
# 68 thudias @ 05/24/10 02:10 PM
Quote:
Originally Posted by aholbert32
LOL. The proof will be in each teams actions. If all 32 teams decided to ban together and not work with anyone but EA or Reebok....they will get sued again and lose. If they decide to only license to select vendors like Nike and Reebok, the court will ask why AN is being excluded and they wont have a sufficient response to avoid an antitrust case.

The only way to get around this is if the NFL raises the license fee so high that only a select number of companies can afford to purchase one. The problem with that is most companies wont pay a ridiculous amount for a license if there isnt any exclusivity attached to it.
Ok fine so they make it appear like they tried to work with "other" companies..still tough to prove. They will not be as blatant as they were against American Needles. So a few companies will sue the NFL (all 32 teams) will show they tried to negotiate other deals on the best efforts basis but in the end the company they colluded to go with all along will win the bid. After a while companies will stop suing.
 
# 69 ODogg @ 05/24/10 02:17 PM
The question now is do we run the risk of seeing so many NFL video games that the products become garbage and the license means much less. We as consumers may go from one extreme to the other.
 
# 70 doctorhay53 @ 05/24/10 02:18 PM
Quote:
Originally Posted by Nintari
Five years or more? What? At the latest it would be at the end of the current contract. At the earliest, next year though that would all depend on whether or not they could develop their game in time (something I doubt but who knows).

See, the thing here is, if it's now illegal for exclusive deals, I believe all current exclusive deals would be nullified under the law. But even if I'm wrong, it won't last past this current deal which means at the latest, we'll see a new game at the end of the this one.
I was accounting for court time, as I believe the NFL and EA will try to renew their deal before 2012 is over.
 
# 71 Tyrant8RDFL @ 05/24/10 02:21 PM
Quote:
Originally Posted by King_B_Mack
This could be one of those bittersweet things. The only thing that would make it sweet would be seeing the elimination of exclusive licenses on these games. The bitter part would be that a company would have to seperately negotiate with each team in order to get them into their game. If I'm not mistaken about this, which I don't think I'am. We could all get what we want, but get something much worse at the same time.
Maybe it will be something were royalties will be divided evenly to all 32 teams.

Exactly how was it done iin the past, before the exclusive deal came into play, maybe it will just go back to that format.

That would be great, and we can now have choices in which NFL game to buy.
 
# 72 aholbert32 @ 05/24/10 02:21 PM
Quote:
Originally Posted by doctorhay53
Your logic is perfect....except one of your assumptions I'm not certain is correct. Are video games team merchandise? Even if this ruling applies directly to video games, there are significant problems for game DEVELOPERS trying to jump into this market without 32 teams and the NFLPA support. I don't believe there is any antitrust situation that can force the NFLPA to sell it's license to anyone. And what if there are 4 developers wanting to make games, but they can't get more than 20 teams to sign on? Do you really think they will all just make a game with 20 teams and 12 fake ones, with no real players? Realistically I see a small chance that this ruling leads to 2K (only) getting back in on the market 5 years or more from now. Maybe.
1) Yes, Video games are considered team merchandise. The NFL promotes it as such and it features team trademarks.

2) Teams are not going refuse money from a license fee so you arent going to have games where only 20 teams agree to be in a game. Lets say for arguments sake that the license fee is 2 million per team. There isnt a team in the league that would leave that money on the table.

Same thing goes for the NFLPA. The NFLPA would be insane to leave licensee money on the table. Video game companies have made games with only the NFL license in the past. With all the customizatiojn options that come with games, I wouldnt be shocked to see an NFL game with out the NFLPA.

The only reason the Madden exclusive deal was done was because EA was willing to pay a ridiculous amount and those deals were permitted in the eyes of the law. Now that the SC has ruled against those deals, its doubtful tha EA would agree to pay that amount again.
 
# 73 doctorhay53 @ 05/24/10 02:22 PM
Quote:
Originally Posted by Nintari
Five years or more? What? At the latest it would be at the end of the current contract. At the earliest, next year though that would all depend on whether or not they could develop their game in time (something I doubt but who knows).

See, the thing here is, if it's now illegal for exclusive deals, I believe all current exclusive deals would be nullified under the law. But even if I'm wrong, it won't last past this current deal which means at the latest, we'll see a new game at the end of the this one.
This is a good point, and I wonder if we'll see a story at least discussing this sometime in the near future. However, if it doesn't immediately nullify the deal with EA, you shouldn't assume unwaveringly that there will be a new game when the current deal runs out just because of this ruling.
 
# 74 spit_bubble @ 05/24/10 02:22 PM
Quote:
Originally Posted by aholbert32
...The only way to get around this is if the NFL raises the license fee so high that only a select number of companies can afford to purchase one...
Quote:
Originally Posted by thudias
Ok fine so they make it appear like they tried to work with "other" companies..still tough to prove. They will not be as blatant as they were against American Needles. So a few companies will sue the NFL (all 32 teams) will show they tried to negotiate other deals on the best efforts basis but in the end the company they colluded to go with all along will win the bid. After a while companies will stop suing.
Ummm... If the ruling goes against the NFL I really don't see them trying to circumvent a court decision in any way.

The NFL has been vying for broad antitrust protection so they can have firm control over their league. This falls in line with pretty much everything you see out of the league and the actions they take... Having control and the ability to dictate the terms of their product...

But they won't for a minute try to weasel their way around law. For a league that stands on fairness and being upright, it just wouldn't make any sense for them to do so, nor would it be in line with what they are about.
 
# 75 sportzbro @ 05/24/10 02:24 PM
Ok, say this goes to the lower courts, get passed/AN wins again or whatever in the next couple months...

Does that mean that sony, 2k Sports, Nike, etc. can start filing lawsuits immediately following that ruling? Or do any pre-existing exclusivity deals remain in affect until they run out?
 
# 76 aholbert32 @ 05/24/10 02:25 PM
Quote:
Originally Posted by thudias
Ok fine so they make it appear like they tried to work with "other" companies..still tough to prove. They will not be as blatant as they were against American Needles. So a few companies will sue the NFL (all 32 teams) will show they tried to negotiate other deals on the best efforts basis but in the end the company they colluded to go with all along will win the bid. After a while companies will stop suing.
You dont understand how licensing works. There is no bidding. Its a licensing deal.

I work for a major cable company with hundreds of trademarks. I spent a year doing noting but these deals. We license them out to hundreds of companies a year. There are only three requirements: 1) That the merchandise reaches our standard of quality. (a list of requirements provided to each potential licensee) 2) We get final approval over the product and 3) the licensee pays the license fee plus royalties. Thats it.
 
# 77 aholbert32 @ 05/24/10 02:26 PM
Quote:
Originally Posted by BORN4CORN
Ok, say this goes to the lower courts, get passed/AN wins again or whatever in the next couple months...

Does that mean that sony, 2k Sports, Nike, etc. can start filing lawsuits immediately following that ruling? Or do any pre-existing exclusivity deals remain in affect until they run out?
Depends on what the NFL decides to do. If they choose to extend the deal, 2k or others may file suit immmediately.
 
# 78 tktnuri @ 05/24/10 02:27 PM
I would like an updated Starter jacket.....anyway hope this does make room for more competition in the jersey and apparel market. Having Reebok and their prices really limits what I buy each season.

Maybe this ruling will bring on lower prices and officially licensed apparel and other products.

Had EA ever broke even from the exclusive deal, or has it profited so greatly that the deal was good? Last I remember the profits compared to cost wasn't so great and the league benefited more.
 
# 79 doctorhay53 @ 05/24/10 02:35 PM
Quote:
Originally Posted by aholbert32
1) Yes, Video games are considered team merchandise. The NFL promotes it as such and it features team trademarks.

2) Teams are not going refuse money from a license fee so you arent going to have games where only 20 teams agree to be in a game. Lets say for arguments sake that the license fee is 2 million per team. There isnt a team in the league that would leave that money on the table.

Same thing goes for the NFLPA. The NFLPA would be insane to leave licensee money on the table. Video game companies have made games with only the NFL license in the past. With all the customizatiojn options that come with games, I wouldnt be shocked to see an NFL game with out the NFLPA.

The only reason the Madden exclusive deal was done was because EA was willing to pay a ridiculous amount and those deals were permitted in the eyes of the law. Now that the SC has ruled against those deals, its doubtful tha EA would agree to pay that amount again.
You're right about the merchandise thing, however I am skeptical that the courts would rule the same way about video game merchandise simply because individual teams won't benefit from signing individual agreements with game developers, and game developers wouldn't necessarily benefit from signing individual teams.

Assuming that every NFL team will only care about the license fee is a fatal flaw. Owners/teams have other agendas. Besides, don't you think the Cowboys/Steelers/Patriots etc. of the world could make a LOT more than 2 million by making their own game? I don't think you can make the argument that if they could, they would do it right now because the league acting together stops them from doing it.

Just because you think it would be logically insane for individual teams or the NFLPA to leave licensing money on the table doesn't mean it's true. There are many other agendas out there to be considered.

I'm not saying everything is going to happen exactly the way I'm laying it out, but we should at least consider the possibility and discuss it. I'm just not ready to jump for joy about football video gaming yet, because I'm not 100% certain how this ruling will affect it. The right to college football bowls is still exclusively owned by EA, and for at least a few years, so is the NFL. There is alot of work to be done out there before this can be labeled a positive outcome for football gamers.
 
# 80 doctorhay53 @ 05/24/10 02:39 PM
Quote:
Originally Posted by spit_bubble
Ummm... If the ruling goes against the NFL I really don't see them trying to circumvent a court decision in any way.

The NFL has been vying for broad antitrust protection so they can have firm control over their league. This falls in line with pretty much everything you see out of the league and the actions they take... Having control and the ability to dictate the terms of their product...

But they won't for a minute try to weasel their way around law. For a league that stands on fairness and being upright, it just wouldn't make any sense for them to do so, nor would it be in line with what they are about.
Is this a joke?

A league that forgets about it's retirees to the point that they are crippled and living on the streets? A league that labels juicing as 'substance abuse' which directly leads to the fact that fans are JUST NOW getting angered by steroid use 2 decades after baseball?

I'm not ready to give the NFL credit for being fair and upright just yet, though I think Goodell is generally moving in the right direction.
 


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