Sports Law Blog
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Wednesday, May 30, 2007
Proposed UFL and Antitrust
From my FIU colleague and occasional guest blogger Andre Smith (who is the real sports law guru on our faculty):
Dallas Mavericks owner Mark Cuban is involved in creating another challenger to the NFL, dubbed for now the UFL. I’m not sure what the “U” stands for, but I am guessing United, with Universal being a slighter possibility.
According to NBCsports.com, “Each owner will put up $30 million, giving him an initial half-interest in the team; the league will own the other half. Eventually each team is going to sell shares to the public... Then the owner, the league and the fans will each own a third of every franchise.”
This ownership structure is novel in professional sports and begs a question relating to anti-trust: Which section of the Sherman Anti-Trust Act applies to a league constituted this way?
The major professional sports leagues and organizations in the United States (NFL, MLB, NBA, NHL, NASCAR) consist of individual team owners who establish league rules through a non-profit entity, i.e., the League Office. These teams can be sued under section 1 of the Sherman Act for combining or conspiring to restrain trade.
Teams in Major League Soccer, on the other hand, are owned by the league. They are managed by franchise operators, rather than team owners. Being a single entity, then, there can be no “combination” or “conspiracy” to restrain trade. Still, MLS can be sued under section 2 of the Sherman Act, which prohibits attempts to monopolize.
So the question becomes, can the UFL be sued under section 1, if the league owns 51% of all the franchises, 50% of all of them, 33% of them, or 51% of more than half of the teams and minority stakes in the rest? Often in federal taxation, a subsidiary is owned and controlled by its parent when the parent owns at least 80%; should there be a similar supermajority standard?