Run to Glory and Profits: The Economic Rise of the NFL during the 1950s

6. Antitrust Adventures

120 6 ANTITRUST ADVENTURES A legacy of the nfl’s struggle with the aafc was the publicity surrounding player rights, territorial rights, and other antitrust issues. Prior to the aafc-nfl strife, the nfl attracted scant attention from Congress or from the Department of Justice. Professional football’s internecine strife and resulting prosperity came with an unanticipated cost: federal scrutiny. The congressional committee members were particularly interested in the owners’ territorial rights protection, the reserve clause, the reverse-order draft, and television policies. Were these potentially anticompetitive actions necessary to maintain the league? The owners argued that instead of being anticompetitive, these measures were needed to promote competitive parity ; a neat piece of logistical jujitsu . . . if true. The Unique Nature of Professional Sports Leagues Professional sports leagues have a unique feature in that, while there is competition among teams, there must also be cooperation. It takes two to tangle, to misquote an old bromide. Bell put it thus: “Professional teams in a league, however, must not compete too well with each other in a business way. On the playing field, of course, they must compete as hard as they can all the time. But it is not necessary and indeed it is unwise for all the teams to compete as hard as they can against each other in a business way.”1 Professional sports leagues are, therefore, mixtures of cooperation and competition. They are, in fact, cartels. Cartels normally run afoul of U.S. antitrust policies. Unlike a cartel of manufacturers, for example, the owners in a sports league must have minimal amounts of cooperation in setting schedules, standardizing playing rules, and establishing championships. Antitrust Adventures 121 These rules—known as single-entity cooperation—benefit owners and fans alike. Such cooperation is unlikely to trigger antitrust scrutiny. Most sports league owners, though, go beyond single-entity cooperation and into the realm of joint-venture cooperation. As Rodney Fort puts it, “Once owners act together in pro leagues to set the stage for competition on the field, they may also act together to raise profits for member owners. All cooperative actions that do not make play happen are called joint ventures.”2 The owners’ actions which are designed to boost their collective profits via price-fixing, territorial rights, the reserve clause, player drafts, and national tv contracts are violations, indeed blatant violations, of antitrust policies. The owners and their hired commissioners must step nimbly to persuade legislators to acquiesce to such shenanigans. nfl commissioner Bert Bell stressed to the congressional committees investigating professional team sports that the league rested upon what we could refer to as the “three R’s”: the reserve clause, the reverse-order draft, and revenue sharing. Of course, the owners also wanted territorial rights and were willing to give the league commissioner power to act unilaterally in some situations. With the growth of large-scale operations such as railroads and manufacturing , nineteenth-century Americans worried about the concentration of economic power in the hands of the few. The Sherman Antitrust Act of 1890 and the later Clayton Act (1914) created a framework for dealing with monopoly power, although such authority was only fitfully applied for decades after passage of the acts. In the wake of baseball’s Federal League battle with the entrenched National and American Leagues, the Baltimore club filed suit against the other two leagues. The Supreme Court argued that baseball wasn’t interstate commerce and, hence, did not fall under the antitrust laws. This antitrust exemption made baseball owners the envy of the professional sports world. Later legal scholars and justices have questioned the correctness of the Supreme Court’s ruling.3 Due to the popularity and publicity of professional sports, politicians quickly became fans, supporters, and, occasionally, foes. Congressional committees dealing with monopoly power began holding almost annual inquiries. While only occasional legislation ensued, the implicit threats contained in legislators’ remarks and advice caused team owners to react. 122 Antitrust Adventures Football, basketball, and hockey owners were hoping for at least a partial antitrust exemption. Their league presidents and commissioners employed a “Chicken Little” approach, claiming that without antitrust protection, the professional sports sky would fall. While baseball owners were sympathetic toward their fellow owners, they were also leery of being too involved in the legislation.4 Baseball owners worried that a strong legal challenge to their antitrust exemption, whether indirectly (through an assault on their interpretation of the reserve clause...