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Friday, December 23, 2005
 
Ball Hog? Harlem Ambassadors File FTC Complaint Against Harlem Globetrotters for Unfair Business Practices

The Harlem Ambassadors, a barnstorming exhibition basketball team that was founded in 1998, have filed a complaint with the Federal Trade Commission concerning the business practices of the Harlem Globetrotters, also a barnstorming exhibition basketball team, yet one that was founded in 1926 and enjoys far-better name recognition. (Don Walker, "Ambassadors' Beef with Globetrotters is no Joke," Milwaukee Journal Sentinel, 12/01/2005). The Ambassadors' founder and president/GM, Dale Moss (pictured to left with star player Ladè Majic Prophète), was recently interviewed on David Frank and Scott Gilefsky's Sports Court on Sporting News Radio.

The Ambassadors--which, unlike the Globetrotters, feature male and female players--tend to play in smaller venues, while the Globetrotters often secure the larger arenas. The complaint specifically concerns the Globetrotters' contractual agreements with their host arenas: by rule, the Globetrotters require exclusivity windows, in this case meaning the host arena may not book "any basketball exhibition for a period of eight weeks prior to the performance and six weeks subsequent to the performance [about 3 and a half months all-together]." Consequently, the Ambassadors are greatly limited in their ability to schedule events with the larger arenas, leading the Ambassadors to allege that the Globetrotters "have unreasonably used its market position to initiate a conspiracy of contracts which unreasonably restrain the business activities of the Harlem Ambassadors."

So how do we analyze the complaint? Obviously, competition is a good thing, and the exclusivity windows appear to shutout the Ambassadors from competing with their well-established, name-brand competitor. On the other hand, the Globetrotters might argue that sufficient competition is already generated by the prevalence of other novelty acts, like circuses and feature shows: if the Globetrotters aren't generating fans, then arenas will presumably negotiate contracts with those other novelty acts or possibly even the Ambassadors. It thus seems that both the Ambassadors and Globetrotters have viable lines-of-reasoning in assessing "competition."

As to exclusivity windows, it is important to note that they are not unique: circuses and other novelty acts often secure them in their performance contracts with host arenas. But the Ambassadors might argue that those circuses and novelty acts do not, like the Globetrotters, enjoy a national monopoly on a particular business model. Moreover, exclusivity windows typically have to be "reasonable" in light of industry practices; if the industry features just two actors, with one dominant actor and one minor actor, courts are less likely to be tolerant of lengthy exclusivity contracts, particularly if only one of those actors benefits from the contracts.

Lastly, the Ambassadors may argue gender-discrimination, as only the Ambassadors feature female players and thus exclusivity contracts may (arguably) deny them the right to economically-compete with their male peers.

So which team is right? Is this merely a case of survival of the fittest, or is it one of a longstanding monopoly going too-far in trying to avoid competition?





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