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Wednesday, March 15, 2006
 
Harlem Ambassadors Respond to Blog Debate

Last week, Professor Josh Wright (George Mason University School of Law & Truth on the Market) and I had a lively discussion on the Harlem Ambassadors' FTC complaint concerning the Harlem Globetrotters' arguably anti-competitive use of exclusivity windows, or "use of arena" clauses (Truth on the Market, 3/6/2006; 3/6/2006 (b), Sports Law Blog, 3/6/2006). In essence, Wright argued that there may be sufficient based on the competition for the clauses, while I argued that there doesn't appear to be real competition because the Globetrotters seem to be a monopoly.

Dale Moss, the founder, president, and general manager of the Harlem Ambassadors, e-mailed us with some follow-up comments and important clarifications. With Moss' permission, here is his e-mail:
It has been interesting to read the discussions [on the two blogs] concerning our complaint to the FTC's Bureau of Competition. However, these discussions seem to drift away from the central points of the complaint which deals with the practical realities of how the business practices of Harlem Globetrotters International (HGI) constrain our company, Harlem Ambassadors, Inc. within the interstate marketplace.

The complaint is over 20 pages and includes the history of "Harlem-style" sports entertainment (it doesn't begin and end with the Globetrotters as many might believe), the background of the Harlem Ambassadors (we do over 220 events annually in 46 states), and published accounts of HGI's long history of blocking competition.

The key points made in the Complaint are:

1.) HGI unreasonably restrains the business activities of the Harlem Ambassadors through the implementation of a specific "Use of Arena" restriction contained in a standard lease addendum applied to all of HGI's arena lease and/or co-promotion contracts.

2.) This "Use of Arena" restriction blocks the Harlem Ambassadors out of the affected arenas for a period of eight weeks prior and six weeks following the HGI event.

3.) In these situations, based upon HGI's own pre-event marketing patterns, this 14 week black out period is excessive.

4.) In total, the Harlem Ambassadors are blocked from over 20,000 potential performance nights in these arenas, even though the Globetrotters are only performing on about 210 of these nights.

5.) These restrictions impact over 200 arenas over a 46 state area (in 2003-2004 HGI season, the period used for the examples in the complaint).

6.) Virtually all of the facilities impacted are publicly-owned arenas, auditoriums, gymnasiums, and convention centers. These are facilities that have been built and are operated with municipal, county, and state funding.

7.) The "Use of Arena" restriction also limits the access to these major public arenas by the featured women performers of the Harlem Ambassadors. HGI employs no women performers and hasn't in over 13 years.

While Chris Isidore of CNN/Money did a good job of summarizing our issues, his statement that the restriction keeps us "from playing in the same venue around the same time the Globetrotters are scheduled to" doesn't accurately represent what is actually a 3 1/2 month period.

We appreciate the interest and discussion concerning our Complaint and would welcome any questions.

Very truly yours,

Dale Moss
President/General Manager
Harlem Ambassadors, Inc.

Phone 970-472-1000

Fax 970-472-9297

www.harlemambassadors.com

I found this comment especially interesting: "the Harlem Ambassadors are blocked from over 20,000 potential performance nights in these arenas, even though the Globetrotters are only performing on about 210 of these nights."

We'll see what the FTC does, but if accurate, the Ambassadors' argument appears promising, particularly if they can show that the 3 1/2 month window is unreasonable.





4 Comments:

The Ambassadors complaint will be dismissed at the summary judgment stage. "Competition for the contract" is the exact right argument. These types of clauses are entirely reasonable, and are very common -- the circus, Stars on Ice, WWE, etc. These businesses have a legitimate concern about having a competing event at the same arean around the same time. Is 8 weeks before and 6 weeks after unreasonable? I don't think so, but clearly some restrictive period is acceptable (as the Ambassadors appear to conceded). And again, nothing prevents the Ambassadors from outbiding the Globetrotters and getting an exclusive window for themselves.

Anonymous john -- 3/15/2006 4:17 PM  


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