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Thursday, March 11, 2010
Practical Effects of American Needle v. NFL on a Minor League Baseball Team

American Needle v. NFL, which has been discussed in detail on Sports Law Blog, is currently under review by the Supreme Court. As a brief overview, the NFL signed a contract with Reebok International, making the company the official supplier of on-field caps, for all players and personnel. American Needle, out of Illinois, argued that this is a violation of anti-trust law because the NFL's member teams are acting in a concerted effort to eliminate any competition in the market. How this plays out for other sports remains to be seen, but one possible impact is discussed here.

Minor league baseball players, just like their Major League counterparts, dawn New Era caps on the field. It seems as though they always have, and perhaps they always will. However, if American Needle prevails in the Supreme Court, this long standing baseball tradition might just get turned upside down at our cozy little ballpark.

I work for the Single-A Visalia Rawhide, a Diamondbacks affiliate in the California League. A full stadium for us is 2,500 people, making it the smallest full-season ballpark in the country. So what does the American Needle case mean to us? Surprisingly more than you might think.

Like every other affiliated professional baseball team, we have to buy our on-filed caps from New Era. We are one of over 250 teams that are required to purchase caps from this supplier. Like any vendor, they have minimum order quantities; in our case it's 144 caps per order with a six to eight week lag time. Thus, if we run out of a size four weeks into our season, we have to place at least a minimum order, and wait up to eight weeks to receive it. From a practical standpoint, we would go over half of our season without a particular cap size or style in stock. Of course the reason for the long wait time is New Era has over 250 clients whose seasons all start and end at approximately the same time. It would take any company a fair amount of time to develop product for that many clients.

In addition to the long wait time, pricing has gone up about $.50 per cap over the last two years; and not just on fitted caps, but the adjustable and batting practice hats as well, which are made of lower quality materials. These hats now all cost us the same. Add on the fact that the caps are now made in two different countries which causes the sizes to be inconsistent and it becomes easy to see why a team like us would want a little more competition in the market place.

These comments are not meant to be an attack on New Era as a company or supplier to Major or Minor Leauge Baseball. The relationship between these entities is well established and has been from all accounts successful. Rather, this is meant to provide an example of how a landmark decision in the Supreme Court could have a lasting impact on daily operations at a small ballpark in California.


To put some perspective on this, Minor League Baseball, like its major counterpart, is a cartel, of which the Visalia Rawhide is one member. The decision to grant New Era a monopoly was granted by this cartel, presumably in return for consideration. It is entirely likely that the Visalia Rawhide's cut of this consideration is outweighed by the problems inherent in dealing with a monopoly. If so, the underlying problem is that you are being screwed by your business partners.

This is another argument for independent league baseball.

Anonymous Richard Hershberger -- 3/13/2010 4:15 PM  

i really like the Hershberger analysis!!

Anonymous dom -- 3/13/2010 9:26 PM  

Article on the practical effects of American Needle Vs. NFL is really good analysis. Thanks to Richard Hershberger.


Anonymous Blog Of Sport -- 3/13/2010 11:53 PM  

A very good analysis. True that affiliate marketing have taken the sports world by storm, now that they are emerging superstars.

Anonymous Blog Of Sport -- 3/15/2010 3:36 AM  

It is entirely likely that the Visalia Rawhide's cut of this consideration is outweighed by the problems inherent in dealing with a monopoly.

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Anonymous Marypierce -- 3/15/2010 4:53 AM  

It seems that you need to have Minor League Baseball create the competition by having more sources for hats. But that means New Era won't pay monopolist prices for the exclusivity it now enjoys. Furthermore, no matter which way the court goes on ANI, you are part of the JV and you would have a hard time showing antitrust injury. The Minor League lawyers would plead the Antitrust exemption and would have your case dismissed.

Anonymous Clark Griffith -- 3/16/2010 4:28 PM  

I would like to say this is very good analysis

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Anonymous Julieandrews -- 3/18/2010 3:47 AM  

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