American Needle, the NFL and the Players

American Needle won a Supreme Court case against the NFL today.  They wanted to negotiate with each team and make logo based clothes. The NFL said no, you have to negotiate with us for all teams. American Needle said each team is different and the NFL said all teams are part of the same business. American Needle doesn’t want to pay to make stuff for everyone, the NFL says you have to and pay big money to do so.

Sometimes each NFL team acts like it is a business by itself. The price of a team is different, the cost to see the team is different, the stadium deals are different. Team owners like this part of it.

Sometimes the NFL acts as one business. Television rights are sold as a package. The labor agreement is negotiated as a package. When the issue involves all teams, the NFL acts as one, otherwise teams are free to negotiate on their own. The Supreme Court said since you operate separate in some areas and together in others, we assume since you do act separate sometimes, in the case of team logos, you are different businesses.

What this means is that the NFL Owners don’t have to share revenue from team clothing anymore.  NFL Properties is at risk of existing.  Cleveland, Dallas, Pittsburgh all sell a lot of clothes. Jacksonville not so much. Jacksonville benefitted when a Romo jersey was sold. Unless the owners agree, that won’t happen anymore.

So how do the players come into this?  Well, a long time ago when the players didn’t get what they wanted, they sued the NFL for acting as one unit. They filed case after case arguing the NFL couldn’t act as one business, even though the players wanted them to.  They had a weapon, and the labor union “allowed” the NFL to act as one unit for labor agreements. They got concessions for this and for not suing. They agreed to let the owners act that way in exchange for….

If the NFL had a Supreme Court case saying they were one unit, they wouldn’t need the Players Union to “allow” them to be one unit.  That would take a major perceived bargaining chip away.  The Union thinks they have their chip back.

The truth is, the NFL is breaking up into 32 different businesses anyway. Stadium revenue was the start. Player salaries will be next. The floor of player salaries will be removed since all  revenue isn’t being shared. You can’t make player salaries a percentage of the league-wide revenue when each team has different revenue. The average doesn’t work anymore. It used to work but that thinking left the ownership a few years ago.

The players still won something but not as much as they think.  The laws of economics will prevail. The Washington Redskins can pay Albert Haynesworth $100 million if they want, Jacksonville can’t.   Any forced minimum team salary the Union wants will be hard to hold on to in negotiations.

What will be most interesting is if the draft is challenged by the Union. What if  the Players Union argues the NFL can’t restrict a person from negotiating with multiple employers before accepting an offer? Well, the entire notion of the draft could be gone. That is the hand grenade the Union has left, complete anarchy. The owners don’t want to go through that. There is still room for a deal between the NFL and the Players Union. My fear is the union is trying to play by 1970 rules and the NFL is long past that.  This labor agreement will be interesting, this Supreme Court ruling isn’t that big of a thing.