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Earlier this week, the Supreme Court rejected the NFL's request for "broad antitrust law protection," deciding that each team must be considered separate when selling NFL branded items. This means that each team must be considered its own entity when it sells branded items like jerseys and caps.
The court's decision was unanimous, and it reversed a lower court's ruling that threw out an antitrust suit filed against the NFL by American Needle, which lost its contract for making official NFL hats to Reebok International.
American Needle's assertion was that it was frozen out of the NFL-licensed hat-making business when Reebok was given an exclusive 10-year apparel license by the NFL. The higher court's decision means that the case will go back to the Federal District Court in Chicago and will resume in the early stages.
Some believe that this decision could have some bearing on the NFL and the NFL Players' Association (NFLPA) when the two try to hammer out a collective bargaining agreement and avoid a strike later this year. The NFL noted that this decision has "no bearing on collective bargaining, which is governed by labor law." The NFLPA stated nearly the same, asserting that it hopes the decision will mark "a renewed effort by the NFL to bargain in good faith and avoid a lockout." Note that the NFLPA does not mention the antitrust decision.
What will be interesting is to see what each team would do if the courts eventually rule in the favor of American Needle. There was a time when several different companies would make jerseys, caps, and other clothing for teams. I remember that the Bengals used Puma to make their jerseys, I also believe that the Dallas Cowboys wore Nike (not 100% sure on that one), and there were some teams that wore Russell or Champion apparel.
Will it be good if every team can go out and strike their own apparel deals? No. Coming from a city with a notoriously cheap owner (Cincinnati), it would be difficult for the Bengals to compete financially with the likes of the Cowboys and Steelers and their legion of bandwagon fans. Some teams will benefit more than others in the apparel arena, and it could tilt the balance of power away from smaller-market teams. Of course, who am I to challenge the Supreme Court and its infinite wisdom?
Of course, this decision could benefit companies like Under Armour (UA). Perhaps the company will be able to make some bids and get in on designing some uniforms and apparel for some teams. I could see the Maryland-based company making quite a bit of money by making team-branded apparel. Such a move could help add to UA's bottom line.
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Reader Comments (Page 1 of 1)
5-28-2010 @ 4:20PM
Iridium said...
Actually any company can make accessory items for the NFL but they can't sell them as their own brand and can only use the NFL logo. The royalty rates go to the NFL and you have make the items and sell them to Reebok if the item is to go to retail channels.
Essentially you become a product vendor for Reebok. Complete restraint of trade. Only Reebok can have a visible corporate logo on any NFL merchandise even though they may not manufacture half of what is sold.
The decision is extremely good for small market teams. not bad. Small market teams can pick from hundreds of smaller vendors and get better deals on equipment.
The entire reason why a company pays a player to use its equipment is so the product will sell at retail. No company will endorse an athlete if they can't sell that product at retail because of an exclusive license bargain.
Next up for a court challenge will be Nike's exclusive deals with Universities and High Schools. How many of you Wall Streeters know that it is impossible for a small sporting goods company to sell anything to many of the top athletic colleges in the country now because they have exclusive deals with Nike.