By Christopher R. Deubert, Senior Writer
On March 7, 2023, the United States Court of Appeals for the Second Circuit vacated a district court’s dismissal of a complaint brought by Relevent Sports, a U.S.-based soccer promoter, against the United States Soccer Federation (USSF) and Fédération Internationale de Football Association (FIFA). While the case has been remanded to the district court for further proceedings that may take years, the Court’s decision seems likely to cause problems for Major League Soccer (MLS).
The case stems from Relevent’s efforts to host the regular season matches of international professional soccer leagues in the United States. Of most specific relevance to the lawsuit, Relevence and La Liga, the Spanish professional soccer league, agreed in 2018 to host a regular season La Liga match in Miami. However, after Relevent announced its intention to host La Liga matches in the United States, FIFA enacted a policy requiring “that official league matches must be played within the territory of the respective member association.” In other words, La Liga can only play its official matches in Spain, or risk penalties from FIFA.
Relevent alleges that this policy was enacted at the request of MLS Commissioner, Don Garber, and USSF officials. From a legal perspective, Relevant argues that FIFA’s policy constitutes an unlawful agreement to divide geographic markets among competitors (professional soccer leagues) with the particular purpose of protecting MLS and stifling competition in the United States. The Second Circuit found this claim colorable under antitrust law.
Before going further, it is important to first understand the structure of international and national soccer. FIFA, is a private organization that serves as the global governing body for the sport, and whose members consist of over 200 national associations which govern the sport in their respective countries. In the United States, the Ted Stevens Olympic and Amateur Sports Act created what is today known as the United States Olympic and Paralympic Committee (USOPC) for the purposes of organizing and regulating America’s participation in international sports. Pursuant to its authority under that law, the USOPC recognizes the USSF as the national governing body (NGB) for soccer in America. The USSF then has the authority to sanction and regulate soccer in the United States, in coordination with the policies of FIFA, of which it is a member.
The way that USSF has regulated soccer in the United States can be controversial. USSF policies dictate that there shall be three levels of men’s professional soccer (Divisions I, II, and III). The Divisions are separated by different standards for cities of play, stadium sizes, financial viability, television broadcasts and so forth. For example, a Division I league (such as MLS), requires at least fourteen teams and stadiums that hold a minimum of 15,000 fans. Division II stadiums are only required to hold 5,000 people.
While MLS is the only league ever certified as Division I, there has been a rotating cast of Division II and III leagues. Today, the USL Championship (USLC) is the sole Division II league and USL League 1 (USL1) and the National Independent Soccer Association are the two Division III leagues.
The current structure is the subject of ongoing litigation. The North American Soccer League (NASL), a Division II league from 2011 through 2017, has an ongoing lawsuit against USSF, MLS, and the USL, alleging that the three parties violated antitrust law by illegally conspiring to divide up the American soccer market. The NASL folded after it failed to obtain a preliminary injunction, but the suit is ongoing. The NASL’s departure paved the way for the USLC to move from Division III to Division II and for the creation of USL1.
The Relevent lawsuit tracks the complaints of the NASL. It argues that USSF and MLS, this time with FIFA, have conspired to prevent competition and protect MLS’ place as the top professional soccer league in the United States. Of note, both Relevant and the NASL are represented by Jeffrey Kessler of Winston & Strawn LLP.
MLS’ resistance to international soccer leagues hosting official matches in the United States is not surprising. While MLS and some news outlets discuss the rise of soccer fandom in the United States, such polls rarely if ever distinguish between leagues. Indeed, a significant portion of individuals identifying as soccer fans in the United States are fans of the better European leagues, but not necessarily MLS. For example, the English Premier League is popular in the United States, as evidenced by the $2.7 billion television deal with NBC Sports for the league’s American broadcast rights from 2022 to 2028. Similarly, La Liga sought to capitalize on the large and wealthy American market by playing matches there. But such matches would undoubtedly have drawn casual soccer fans away from MLS matches.
MLS’ reaction is thus understandable, but that does not mean it is legal. On remand, the case is likely to eventually be assessed pursuant to the rule of reason under antitrust law. To avoid legal liability (and related treble damages), FIFA and USSF (and realistically MLS) will need to show that the policy has a procompetitive rationale. Such a defense could be problematic for MLS from a public relations perspective. In essence, the soccer organizations may have to argue that without the territorial restrictions, MLS would struggle to exist as a product for American consumers. In other words, MLS is so unable to compete against the European leagues that the only way to ensure that America can have a high-level professional league is to prohibit European leagues from encroaching into the American soccer market.
Aside from the negative perception associated with such an argument, MLS would indeed have big problems if the policy was found to be illegal. If that were the case, one would expect several international soccer leagues to seek to host regular season matches in the United States. And one would expect that many soccer fans would indeed choose to spend their limited discretionary income to see matches from leagues with better talent and reputations than MLS.
Deubert is Senior Counsel at Constangy, Brooks, Smith & Prophete LLP.
Further Reading
Christopher R. Deubert & Brandon Wurl, Major League Soccer at Twenty-Five: Legal and Financial Considerations for the Next Quarter Century, 12 Ariz. St. Univ. Sport & Ent. L. J. 1 (2022).
