Yesterday’s ruling came out of an appeal on a narrow case brought by American Needle, Inc. who complained about exclusive licensing of apparel/logos to Reebok.  The league formed a single entity which centralized licensing for all teams.  The Supreme Court ruled that this constituted concerted action by separate profit-maximizing entities and therefore falls under the purview of Section 1 of Sherman Act.

Here are the main points from the decision, which is an interesting read.

  1. The ruling suggests a broader scope than just licensing.  The court notes that teams compete with one another not for just apparel sales but for gate receipts, to attract fans and managerial and player personnel.
  2. Rule of reason is suggested for determining which cooperative activities are permissible and which are not.
  3. For consideration of any activity, whether or not the teams should be considered competitors will be based not on legalistic distinctions like whatever contracts are in place.  Instead the judgment is made on the basis of “a functional consideration of how they actually operate.”

Its easy to interpret these as opening the door to challenges to the systems of collective bargaining in place in all professional sports leagues.