Passage of Football Fairness Act Could Highlight Interesting Antitrust Issues

Jan 19, 2007

The fact that NFL franchises can move from city to city in search of the best deal is a foregone conclusion.
 
Or is it?
 
U.S. Senator Dianne Feinstein (D-Cal.) challenged that assumption recently with the introduction of the Football Fairness Act of 2007, which would require that owners of NFL teams get approval from other NFL owners before they can move their franchise. The act was modeled after the same rules Major League Baseball follows.
 
“This legislation is designed to slow the movement of NFL teams and prevent communities from suffering the financial and intangible costs of these moves,” said Feinstein, who is hoping to keep the San Francisco 49ers from moving out of San Francisco to nearby Santa Clara.
 
Speaking about NFL teams in general, she added that “our football teams are more than just businesses. They are a common denominator that cuts across class, race and gender to bond the people of a city. They are a key component of a city’s culture and identity.”
 
At least one expert — Jeffrey Harrison, the Stephen C. O’Connell Chair for the College of Law at the University of Florida – believes her observation about the relationship of a city and a franchise may have some merit. Coupled with passage of the act, it could introduce some interesting sports law challenges.
 
“While Baseball is completely exempt from antitrust laws, football and other major sports must find narrow case by case ‘exemptions,’” Harrison told Sports Litigation Alert. “What is interesting is that it is possible – even without the legislation – to make an argument that a decision not to allow a team to move is pro-competitive. For example, let’s say a team moves from one location. That location, as far as the entertainment market, becomes less competitive. To the extent the owners are behind the proposed legislation, they have been advised that the pro-competitive justification will not work. I think that is probably correct.
 
“The other larger implication is that we are beginning to take the view that communities are ‘stakeholders’ in sport franchises. In effect, after a certain period of time, a quasi property interest arises so that fans and, primarily, businesses become ‘part owners.’ There is a related concept in antitrust called the ‘essential facilities doctrine.’
 
“It works differently in that it restricts what a firm manufacturing an essential facility can do. But the theme is the same in that at some point a business becomes so important that it takes on ‘public’ obligations.”
 


 

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