supreme court rules on this case the n f l may be able to claim that it acts as a single entity and not thirty two individual teams for any trust purposes in a broad variety of transactions running a league single entity status but it would be immune from any trust scrutiny with respect to internal business decisions not just negotiations with apparel matter of fact potentially also labor disputes the negotiation for television rights with respect to television rights the n f l currently makes use of the however given that the n f l players association and other professional sports where the wealthiest labor unions are around one wonders whether they need any extra leverage one particular wonders when other union united auto workers cannot fully integrate companies like general motors under the laws that they cannot get in the collective bargaining system this case could significantly impact the other sports including the national basketball association the national hockey league and to a lesser extent major league baseball as various amoco have argued the case could also implicate joint ventures this outcome could have dramatic effects on any trust and might well merit congressional response this case was argued just last week in the court's decision is not likely to come out for several months this is the third hearing in three months that the house judiciary committee has held on matters relating to the n f l the first two hearings are on the legal implications of while playing professional hearing that will also be the topic of another briefing in houston on february first while these are important issues they are not the only important issues that the committee should consider we should hold hearings on the attempted christmas day terrorist attack on a northwest airlines flight bound for detroit the department of justice to drop charges against black panther party members for voter intimidation and the question of comedy in the committee so i'll take his recommendations under consideration but  just who's going to make the caps for the football players the big question here and it may get into to consumer demand not about any other aspect of the business it is not about labor relations franchise relocation or broadcast policies indeed our collective bargaining most popular sport with over one hundred eighty million the n f l produces an annual integrated series of more than two hundred fifty football games leading to the playoffs and culminating in the super bowl is inherently incapable of generating on its own a single n f l game every member club is dependent upon every other member club to create what we know is n f l football the league controls all aspects of the production of n f l football it determines when and where the games are played the rules of the game the playing schedule and rules relating to how the entertainment product while the n f l clubs compete on the field they are partners in a business enterprise in fact approximately eighty percent of balance on the football field and made it possible for small market teams such as green bay and new orleans to compete effectively with large market teams very much consumers in the n f l has more clubs that play in more communities than any  name is bill daley and i'm the deputy commissioner of the national hockey league like the n f l the n h l is structured as a legitimate joint venture created by its members to produce and sell the fundamentally product professional hockey game and it constituent products including league and team intellectual property in competition with other sports leagues and entertainment providers significantly professional sports leagues such as the n h l and n f l compete against a large multitude of single firm entertainment providers however these leagues often cannot compete with one another and against other entertainment providers as vigorously as they otherwise would because of the threat of litigation under section one of the sherman act which  agreements among competitors that unreasonably restrained all league decisions on how best to produce promote and sell the league's product are inherently pro competitive because none of the leagues output would exist but for the league and the collaboration among the teams as with the n f l the economic value of an individual n h l member club as well as its intellectual property derives solely from its participation in the league and its role in producing collectively with the other twenty nine member clubs and if a particular club were not a member of the n h l venture as well as team related intellectual property and products would have no meaningful economic value because of this economic interdependence the collective efforts to market and sell n h l hockey and the ventures output are part of the very essence of the n h l enterprise under the n h l constitution and bylaws the affairs of the n l by the n h l board of governors which is comprised of one representative from each of the thirty member clubs over time the board of governors has made the business judgment that n h l hockey and its constituent output are best promoted and sold through a combination of one collective economic activity taken on behalf of all n h l member clubs by the league and to centralize individual economic operation by each club and its exclusive home territory story which rights are granted under the n constitution it must be emphasized that every decision regarding the structure and organization of the n h l venture including the delegation of certain economic operations to individual clubs emanates exclusively from the organic documents of the league h l constitution and bylaws which can only be modified by appropriate of the n h l board of governors the legitimate scope of the n h l joint venture necessarily includes the collective production and at times independent promotion and sa h l hockey and to chew on products all of which derive their value from the league venture as a whole consequently it defies economic reality for the courts to want to bring among the teams of a professional sports league such as the as representing the sudden joining of two independent sources of economic power previously pursuing separate interests the standard articulated by the supreme court in copper well the n h l seeks to promote demand for and fan interest in its product n h l hockey and to create market and sell n h l hockey and its constituent products in competition with other producers and marketers of sports and entertainment products to effectively compete in the broad entertainment marketplace the n h l member clubs must have the ability to jointly decide how best to market n h l hockey including when the centralized and when to decentralize their economic activities the specter of treble damages exposure significant litigation costs and discovery of reason scrutiny under section one of the sherman has the potential to create a chilling effect on the structural and innovative decision making a legitimate professional sports league joint ventures such as the n l risk looms in connection with literally every internal disagreement regarding how best to market promote and sell the league's ventures product consequently rather than serving the marketplace and responding to consumer demand and competition from vast array of other entertainment providers as with any single firm entertainment provider professional sports leagues are forced to calibrate their innovation and competitive vigor to account for the risk and costly rule of reason litigation in the n h l just spent more than a year in the midst of such litigation in the case that is described in my written statement the effects of this case on the n h l business were significant the broad ranging litigation resulted in a normal monetary and human resources disruption to normal business operations uncertainty for transactions with existing and potential business partners and adverse effects on the league's relationship with the litigation sought to have a federal court insert itself into the n h l boardroom in order every one of the clubs output related business decisions the vast majority of which are decades old now we don't believe such scrutiny is warranted and as a result we believe the american needle case was correctly among clubs would not apply and unless one could come up with that by putting it on the n f l network the n f l was somehow contributing to the monopolization broadcast or something like that it would be  products are made number one by a licensee that will sell to retail store number two the retail store and make a determination as to how much it wants to charge the consumer if you go online today you will see that n f l caps and we have found that the consumer has the ultimate the consumer believes the too expensive the consumer will not purchase the cap the consumer purchase a cap from a different sports entity in this town if products and the consumer has many many different options through the reebok agreement they were able to upgrade the quality of the products that consumers have responded well to that they have expanded the number of trucking business an example that would be one that would fall outside of the single entity or the national football league they want to add one other point on this from a wise response the union itself through their licensing affiliate has their own agreement with reebok they've supported him with reebok that we've had since the inception two thousand and one and they have granted reebok exclusivity for uniforms that the players wear and then are sold at retail decision they would be reviewing an important part of the n f l business and some of the principles and reason could well extend to other facets of our business but that's not what the court or does this case have a direct bearing on the upcoming collective bargaining agreement negotiation absolutely not indicated in my opening statement those negotiations are governed by the labor laws not the antitrust laws the n f l owners are committed to court disagree with the conclusion i don't know enough about the merits of the particular marketing to agree or disagree your opening statement was one of the best defenses under the really we're seeking is an affirmative the seventh circuit ruling focused on the aspect of the business that evidence was developed a trial namely intellectual property licensing involving a products to a lot of the opening statement for professor ross ross was focused on radical changes to the governance structure of sports and we don't think that's really proper subject matter for this particular hearing it's an interesting academic discussion but in real life i've worked at the n f l sixteen years i understand how these decisions are made and they're not made the progress of the owners the owners understand that the whole is greater than the sum of the parts and they do what's in the best interests of the league and in terms of the particular issue professor ross just said is well if the n right let's take it to a rule of reason analysis and i'm sure this sounds right it's pro competitive whether it's reebok made some valid points why don't we let it get to that point and if we do you're talking about over ten million dollars of litigation expenses the threat of travel damages uncertainty to our business partners and that is really not a good way to run a business it would put us at a competitive disadvantage is with other companies that we compete against opportunity to pursue action to claim they're not without an antitrust remedy ok third time yes or no i'm sorry i didn't understand the question do you remember what the question was should the n f l be a single entity in the in the courts right and i apologize i thought i answered the question that for purposes i said yes or no language so thanks no professor ross i hope would you consider somewhat enlightened by the friendly discussion issue and it's one of the reasons why we have separation of powers in our country i am quite sure that the members of this committee want to do what they think is best for the nation but push comes to shove they have a very difficult time what they might well be asked for the nation happens to be contrary to what might be best for the fourteenth congressional district of michigan or the rational district of north carolina  of our national responsibility do you do you know what the constitution says about the i don't mean to suggest i don't think you're putting your district in front of your national responsibilities mr chairman i would respectfully suggest that the reason the framers devised a house of representatives of people from district is so that they would have people from different areas in different perspectives who would bring the perspectives well but i get i'm sorry to have into an area that you have greater expertise than me the point is i think well what about what they said about your thinking on the subject matter for which  mr chairman i do not believe without regard to the particular facts of this case which i've tried to experts say i don't have an opinion in general when you think about the move of the montreal's expos to washington  i don't think there is a line there i think that you might want to say that on an aspect by aspect should have to show that the clubs are not acting in the strong business model that's been proven out by how successful we've been ok quick answer but a good answer the second question is this going back to american needle as i recall many years ago  they're complaining about the very structure that they benefited from for two decades they are also as i understand it currently a licensee of major league baseball which has a very similar structure to n f l properties where they have a license agreement for all thirty two teams what they didn't like is the nature of being a licensed professional sports and entertainment or any other field is good for licenses granted rights for a period of time and then when those licenses there was a negotiation session yesterday here been eleven of the sessions over the past few months and everyone is firmly committed to trying to reach a new deal a work stoppage does not benefit anyone does not benefit the owners does not benefit the players we've got a good thing going we want to continue it we've just got to find some common ground and the way to do that is at the negotiation table not at a court room do you think that's going to make  the question you will be more comfortable well i'll turn this over to congresswoman sheila jackson lee maybe she can help us feel better about this a number of for profit business units n f l ventures l p houses our commercial operations we could include broadcasting and of all properties licensed products our international business and our internet here and i thank you professor i'm getting ready to come and put you either in the hot seat of a cold first i'd like to thank the chairman for this hearing and thank chairman johnson for this hearing and just remind the n f l that and a nother hearing another subcommittee in f l engaging in anti violence activities that are somewhat different from anti violence out of the play of course on the field characterized it correctly working without you and many times you always say we do those kinds of programs this is somewhat different because i filed that in the n h l and others who have a certain person a of a lot of activity on the feel a lot of love string and maybe even have some  publicly that the media highlight on all the other guys that have been playing year after year that are individuals that young people should see hard working individuals who serve their community and many times don't get the glare of the media except for maybe when they're on the playing field but we wanted to give them an opportunity to be mentored i say that to say that i think the players are valuable and i compare it to a situation and nobody comes on the field a politician may go out and ask people to vote somebody else may come out and do a dance or two it might even be a major entertainer that will sing the star spangled banner but there are no players that's what this and i trust exemption represents to me as a question of whether or not the valuable aspect of this game the people who play every day the n h l players the n f l players  going to be hindered because of the approach that is being taken and the seemingly impenetrable exemption that the league happened to have  it's time to say goodbye i take a different perspective as to whether they're single relationship if we speak about job apparently american eagle is fighting for their life they apparently have  number of employees or had some employees who are gainfully employed providing for their family and in this context america is looking to hire people and to lower the unemployment and raise the employment what impact and what configuration could we actually substitute for this and i trust exemption which would balance the business interests of the n f l which are by the way protected enormously with a private entity in the bible one that's accurate to ensure that the product is a quality product but that there is diversity in the opportunity for businesses to do business with the n f l what is maybe it would not be american eagle i'm not here to argue their case but maybe american johnson american red white and blue that could stand along e provide the opportunity for quality decent prices and maybe even better prices for the consumer and a little bit of competition among the distributors is that too confusing a  concept it's not too confusing a concept i think we don't know enough because of the single entity decision by the district court and the court of appeals to to know what the real facts are now if you listen to mr  the particular issue as it arises in labor is relatively narrow but can be potentially important effect of the exemption would not the current collective bargaining relationship between ma'am sorry about that we're happy with where we're at right now right that's what i'm trying to do we are being asked to give a twenty percent rollback on without proof that they've lost twenty percent of revenue ok mr ross says that come about with the antitrust exemption the  antitrust exemption only comes into play in real life and the union are at such an impasse that the players decide to exercise their option to stop being a law law and then the economics and fairness of whatever the respective positions are going to be on whether the current thing works whether the players ought to have something that's really not an anti trust decision until and unless the players that their prospects are poor that we need to take this out of collective bargaining and the collective bargaining well i'd like to be an optimist but i think exemption is crucial and i would be interested in understanding how mr appeal is going to be narrowly drawn but how are you going to dictate what the supreme court may rule and the supreme court may give a broad ruling which in essence what would in essence implode the right players by way of the and i trust certainly we're not in a position to dictate the supreme court's ultimate decision so i agree with you on that it should be noted that there was seventy minutes of oral argument last wednesday before the supreme court it was not a single question by any to justice is regarding the impact on labor and this board unions from any idea of the thirty two entities which is partly labor law acting i'll just say as one of the question i posed in this my why which means that while they're locked out they can't go anywhere else and offer their services sometimes the law intertwines even though the antitrust distinction you made very clear in there are any and i trust implication i know you're speaking to the labor law does that exemption not allow then to look at the actions that are going on the labor side as being as undermining any competitiveness on the face it does not seem that way but but maybe there is something in my last point is the american needle i'm just seeing the whole crowd and cloud and my minority businesses need not knock on the door to me that's what it's what these things will distribution that means if i'm an african american business or small business business i probably would even know where the front door of the n because they would be looking for me frankly i think that is anti competitive i'd be remiss in not saying what a pleasure to talk to the whole committee and particularly know my father in law and you both went to jamaica high  are issues of minority access and diversity of viewpoints and things like that i think that's a serious public policy question whether sports leagues ought to be having exclusive contracts with single large multinational corporations especially if the socially responsible deals with other enterprises and things like that especially if they don't look for them i think i think that's a fair question but with all respect i think just quickly it does impact on consumers if they did not look to see whether or not smaller entities not multinational would provide a better deal i'm sure in their appeal they made the argument of the lower it made the argument that the better personal testimonies are just amazing so i think we're doing good here and i frankly believe me and i drugs question has to be continuously explored i don't know what the supreme court is going to do but ever since the supreme court can do anything they want to do they don't have to be narrowly defined and i would add that with respect to the ongoing negotiations with do include labor agreement i understand that but there is some oversight or what have we need to monitor this particular lockout potential which we don't want very closely because the product of the player is what the sports fan comes to see they don't want to see me singing or speaking we think great respect for all of the investors and invest into the sports but not too many of them could draw attention on the field and i don't know why in the words of rodney king we can all get along and i certainly hope that we'll have a steady watch of this and even though my great professor has interpreted very well the requirement the stricture rather of the end of trust laws the right i'm sort of moved around in this issue but i do think there is a way of trying to address this question and to get back to juxtapose that against the law and maybe do a little bit more research professor ross but i thank you