The Supreme Court discusses expensive team gear

January, 13, 2010
1/13/10
10:06
AM ET
Abbott By Henry Abbott
ESPN.com
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In the U.S., we're not really into monopolies. If one company controls all of any market, that's bad for consumers in a mess of ways.

And, I think it's fair to say that in the U.S., sports fans wouldn't mind it if official team gear was a little cheaper.

That's what the Supreme Court will be discussing today, in a case that has been on TrueHoop before, called American Needle vs. the NFL.

If a league like the NBA or the NFL cuts a deal that lets a company like Adidas or Reebok be the exclusive creator of official gear for all of the League's teams, are they giving those companies a monopoly? Or, if Reebok has a deal to sell every NFL hat, are NFL hats going to get more expensive, and/or have other troubles associated with monopolies?

Seems like it means very little to us NBA fans, right? But I assure you it means plenty to the NBA, because it speaks to an important question: Who gets how much of our money when we buy NBA gear?

At the heart of the case is a question of whether a sports league is one business entity, or many businesses. My first thought: Duh, every team has a different owner. They're different businesses. If a League is made of many ostensibly competing businesses, they would presumably not be allowed to work together, or collude, to see to it that hats with logos of all their teams are sold by just one company (in the NFL's case being discussed, that's Reebok).

It used to be that the NFL had all kinds of different companies, including one called American Needle, making its hats, and back then, reportedly, hats were cheaper.

As Nina Totenberg explains on NPR, though, there is a case to be made defending Reebok and the NFL -- and the NBA's lawyer is making it -- that the teams do not, in fact, compete with each other in selling this kind of gear:

Nobody from the NFL would speak on the record, but lawyers for other big sports leagues were less reticent. Jeff Mishkin filed a brief on behalf of the NBA. Football, he notes, can only be produced through the cooperation of the teams. And when it comes to merchandising agreements, the competition is not between the teams but between the NFL and other sports and entertainment.

"NFL football competes against NBA basketball, Major League Baseball, the National Hockey League -- lots of other entertainment products," says Mishkin.

So the price competition for a hat, he argues, is not between the teams but between a football hat and a hat for basketball, hockey, baseball or even a rock group. If the price of a football hat gets too high, he maintains, the consumer will buy a hat for another sport.

[Jeff Carey, American Needle's general counsel] finds that theory laughable. People who want a Washington Redskins hat aren't going to be satisfied with a Washington Nationals hat, he says. A hat is not an NFL hat, it's a team hat.



I'll be honest, I don't know that I really buy that either kind of competition -- between teams, or between leagues -- is going to inspire cheaper gear.

Do people shop competitively between NFL and NBA hats? Perhaps if you take your kid to an Eagles game and blow a ton of cash on team gear, you'd be less likely to do the same again at a 76ers game. If one gets cheaper, there might be pressure on the other to do the same.

But to me if the Supreme Court is really worried about introducing competition to keep prices down for sports fans, the competition can't be just between leagues. It can't even just be between teams. No Sixers fan is going to buy a Mavericks hat, you know?

The competition that would matter is between different manufacturers of the same hat, with the same team logo on it. If Reebok were willing to sell you a Sixers hat for $20, American Needle or Adidas might feel the pressure to make one available for $18, you know?

As far as I can tell, however, that's not even being discussed.

UPDATE: In a paper, sports lawyer and professor Michael McCann writes that there is much more at stake in this case than just hat prices. If the Supreme Court agrees with the NFL that leagues are single entities, writes McCann, "other organized associations of sports, including the National Basketball Association (NBA), Major League Baseball (MLB), and the National Collegiate Athletic Association (NCAA)" may have new powers when they "negotiate television contracts, restrain players’ salaries and employment autonomy, and execute exclusive contracts with sponsors and licensees."

Leagues, McCann writes, "could become uniquely sovereign and commanding."

UPDATE: Reading the tea leaves of the Supreme Court hearing, it sounds like the justices did not catch on to the NFL's argument in a major way.

Henry Abbott | email

TrueHoop, NBA

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