Stan Chesley is used to being the underdog.
This summer it will be no different for the well-known plaintiff’s attorney as he leads Hamilton County (Ohio) in its bid to prove the Cincinnati Bengals and the NFL violated antitrust laws.
As detailed in the last issue of Sports Litigation Alert, the county is alleging that the Bengals and the NFL unduly used their influence as a monopoly to secure a favorable stadium lease.
On the surface, the county appears to be facing an uphill battle, according to Gary Roberts, Deputy Dean and Director of the Sports Law program at the Tulane University Law School.
“You can call a monopolist greedy, a pig, or whatever, but if he/she/it possesses substantial market power and they acquired it lawfully, then they are legally entitled to exploit the hell out of it and gouge the public all they want,” Roberts told Sports Litigation Alert.
Chesley, however, told SLA that his case is different. “This is about an abuse of monopoly power,” he said. Indeed, there is a line, where an antitrust claim has validity, said Camelia Mazard of Sheppard, Mullin, Richter and Hampton in Washington, D.C.
“A monopolist, even though its monopoly was acquired lawfully, cannot seek to maintain, preserve or expand its monopoly in a predatory, exclusionary or otherwise unlawful manner,” Mazard said.
In fact, there is some question about whether the instant claim crosses that line. U.S. District Judge S. Arthur Spiegel denied a motion to dismiss filed by the defendants. Specifically, he wrote that the lawsuit “clearly alleges — in substantial detail with numerous supporting facts — that the defendants were able to coerce the construction of a new stadium and negotiate unjustifiably favorable lease terms solely because of the monopoly that they enjoy over professional football.”
A number of observers are clearly baffled by the court’s reasoning. “I’m surprised that it would get off the ground,” said Jeffrey Harrsion, a University of Florida law school professor and recognized expert in antitrust law. “It doesn’t fit the pattern. Usually, the claim is, ‘If you want this product, which we have monopoly power over, than you have to buy something else that we have.’ But the Tying Theory appears to be absent in this case.”
Adam Heller, Vice President of BDB Sports & Entertainment, believes the county will be hard-pressed to define a market that “the NFL is monopolizing. Plaintiffs will argue the market in question includes professional football teams, and under this narrow definition, the NFL wields considerable power and influence. However, the NFL views itself as merely one competitor in a much larger ‘entertainment’ market that includes other events — concerts, other sporting events, etc. — all fighting over consumer dollars. In this market definition, the NFL would not have monopoly power.”
Chesley may try to paint the NFL as negatively influencing the rest of the “entertainment market.”
“The Bengals and the NFL inserted a right to veto in the contract,” Chesley told SLA. “Look, the stadium is the only venue of its kind in Cincinnati and could be a tremendous benefit to the community. But the Bengals have control, not the city. So when the city wanted to host the high school football championship games for example, the Bengals vetoed it. And even if they do allow an event to come to the stadium, as they did with (evangelist) Billy Graham recently, they take half the money from every hot dog.”
Chesley’s argument remains a stretch to most.
“There does not appear to be a second market in which the NFL is seeking to gain a competitive advantage in an unfair manner, or thrust upon the city a good or service that it would not otherwise want,” said Mazard. “If, for example, the NFL used its market power in football in Cincinnati to anti-competitively enter the local cable business to the exclusion of other incumbent or potential local cable companies, which may create an antitrust problem.”
Using words like “conspiracy” to describe the activities of the defendants, Chesley will pursue other arguments. For example, he will claim the NFL failed to let the Bengals know of an $80 million low-interest loan program that could that could have helped finance the stadium
Chesley, who successfully represented several pre-season college basketball tournaments in their antitrust suit against the NCAA, is clearly excited about getting to discovery in his current case so that he can expose some of the NFL’s practices.
And if Chesley can somehow get the case to a jury, all bets are off.
“The key is getting a jury trial in the aggrieved city,” said Scot Powe, a sports law professor at the University of Texas at Austin. “Look at what it did in the Raiders move
to Los Angeles.”