The NFL Finance Committee expressed its disapproval of Las Vegas Raiders majority owner Mark Davis’ plan to sell a minority stake in his team to Tom Brady at a discount. This raises potential antitrust issues that go to the heart of how professional leagues operate.
this Washington post Reports last week suggested that NFL team owners were unlikely to approve a Brady trade at a meeting on Tuesday.Brady plans to buy up to 10% of Raiders sports Most recently valued at $5.77 billion, Davis offered Brady a discount of around 70%. Brady would need at least 24 of the 32 ownership groups to approve a trade, and team owners typically follow the finance committee’s recommendations.
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The possibility of the NFL passing up Brady, one of the greatest players in league history, is shocking. Brady, a seven-time Super Bowl champion and five-time Super Bowl MVP, retired from the NFL in February. Next year he will join Fox Sports as an NFL color commentator.
As the Raiders’ primary owner, Davis has a lot of discretion in running the team. He can hire who he wants and have final say on player trades. But like other owners, Davis contractually ceded some autonomy to the league for the common good. All teams must present a certain image, compete fairly and accept the authority of Commissioner Roger Goodell.
So bosses control their teams, A bit.
Sports leagues are sometimes likened to franchises, such as fast food chains, where franchisees must ensure product and marketing consistency. Courts generally view leagues as joint ventures that maximize the collective interests of the teams, even at the expense of individual teams or owners. Judges are also generally very respectful of how they operate.
But the NFL and its teams must still abide by laws that limit individual teams’ decisions. They are vulnerable to antitrust charges under Sections 1 and 2 of the Sherman Antitrust Act. Section 1 prevents competing businesses (including competing teams in the same league) from colluding to unreasonably restrict competition. Article 2 prohibits monopoly and conspiracy to monopolize.
The finance committee’s threat to block the Raiders’ sale to Brady could be considered a boycott or price fixing under antitrust laws. The Finance Committee is composed of seven participating team owners and its operations are supported by the NFL. Davis and Brady might argue that the owners coordinated with the league in an anti-competitive effort to hurt them. Davis can assert that he and Brady are free to work out the terms of the deal. Davis will likely insist that the discounted price reflects the additional cachet or celebrity value Brady will bring to the Raiders.
The NFL will have defenses. The league contends Davis agreed in his contract to follow a review process for potential buyers and accepted through the league’s bylaws that Goodell has arbitration authority for grievances involving the team and owners. The NFL will try to convince a judge to throw out Goodell’s case in arbitration.
If this tactic sounds familiar, that’s because the NFL has successfully used it to dismiss some of Brian Flores’ claims of racial discrimination and retaliation. The NFL also believes that maximizing team value is in the collective interest of teams, an argument that would be strengthened if the league had a track record of pursuing this goal with evidence.
The NFL is no stranger to defending against antitrust lawsuits, including those filed by the Raiders and Brady.
In the early 1980s, Mark’s father, Al Davis, launched a years-long antitrust battle with the NFL after other team owners rejected his plan to move the Raiders from Oakland to Los Angeles. . Davis accused the league and teams of illegally conspiring to prevent teams from moving to larger, more economically prosperous markets. Davis ultimately won and moved the team.
Brady was involved in two historic lawsuits against the NFL. Although Brady’s lawsuit against Deflategate in 2015-16 attracted the most attention, Brady, along with Peyton Manning and several other prominent players, sued the NFL and its teams in 2011, alleging antitrust violations. The players argued that the league’s lockout amounted to a collective boycott and a price-fixing agreement that violated Article 1. The U.S. Court of Appeals for the Eighth Circuit sided with the NFL, but only if Brady & Co. prevailed in district court.
The NFL is currently facing a class-action antitrust lawsuit filed by Sunday Ticket subscribers. They maintain that the league and its teams violated antitrust laws by concentrating television rights and then licensing out-of-town games exclusively to DirecTV (now YouTube TV), and that teams should compete more vigorously with each other in negotiating broadcast deals.
The NFL (and other major leagues) have long maintained that the league is a single entity, meaning that the league and its teams are functionally one and the same as a parent company and wholly owned subsidiaries or different brands produced by the same company.
They make this argument for legal purposes: A single entity is not subject to Section 1 of the Sherman Act because there are no competing businesses—they are all one.Unfortunately for the NFL, the U.S. Supreme Court America’s Needles v.National Football League (2009), all nine judges run the NFL, and teams are individually owned (unlike parent companies and wholly owned subsidiaries) and not a single entity.
Could Davis and Brady team up to sue the NFL if their deal is rejected? Unlikely, but remember, this is the NFL, which is no stranger to dramatic legal disputes.
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