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ANTITRUST IMPLICATIONS OF 

AMERICAN NEEDLE v. NFL 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS AND 

COMPETITION POLICY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JANUARY 20, 2010 

Serial No. 111–126 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS AND COMPETITION POLICY

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

CHARLES A. GONZALEZ, Texas 

SHEILA JACKSON LEE, Texas 

MELVIN L. WATT, North Carolina 

MIKE QUIGLEY, Illinois 

DANIEL MAFFEI, New York 

[Vacant] 

HOWARD COBLE, North Carolina 

JASON CHAFFETZ, Utah 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BOB GOODLATTE, Virginia 

DARRELL ISSA, California 

GREGG HARPER, Mississippi 

CHRISTAL SHEPPARD, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

JANUARY 20, 2010 

Page 

OPENING STATEMENTS 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Chairman, Subcommittee on Courts and 

Competition Policy ............................................................................................... 1 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts and 

Competition Policy ............................................................................................... 2 

WITNESSES 

Mr. Gary Gertzog, Senior Vice President, National Football League, New 

York, NY 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 9 

Mr. Kevin James Mawae, President, National Football League Players Association, Washington, DC 

Oral Testimony ..................................................................................................... 17 

Prepared Statement ............................................................................................. 20 

Mr. William L. Daly, III, Deputy Commissioner, National Hockey League, 

New York, NY 

Oral Testimony ..................................................................................................... 24 

Prepared Statement ............................................................................................. 27 

Mr. Stephen F. Ross, Lewis H. Vovakis Distinguished Faculty Scholar, Professor of Law and Director for Sports Law, Policy and Research, Pennsylvania State University, University Park, PA 

Oral Testimony ..................................................................................................... 36 

Prepared Statement ............................................................................................. 38 

(1) 

ANTITRUST IMPLICATIONS OF 

AMERICAN NEEDLE v. NFL 

WEDNESDAY, JANUARY 20, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS AND

COMPETITION POLICY

COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:01 p.m., in room 

2141, Rayburn House Office Building, the Honorable Henry C. 

‘‘Hank’’ Johnson, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Johnson, Conyers, Jackson Lee, Watt, 

and Coble. 

Also present: Representatives Smith and Gohmert. 

Staff present: (Majority) Christal Sheppard, Subcommittee Chief 

Counsel; Anant Rant, Counsel; Rosalind Jackson, Professional Staff 

Member; (Minority) Stewart Jeffries, Counsel; and Tim Cook, Professional Staff Member. 

Mr. JOHNSON. This hearing of the Committee on the Judiciary, 

Subcommittee on Courts and Competition Policy will now come to 

order. 

Without objection, the Chair is authorized to declare a recess. 

Last week, the NFL went before the Supreme Court seeking immunity under the antitrust laws. 

It is a simple question. When the NFL and its 32 teams get together and make business decisions like apparel licensing, are they 

a group of competitors subject to the antitrust laws, or are they 

more like a board of directors incapable of illegally conspiring with 

themselves? 

Single-entity protection established by the Copperweld case 

would protect many of the business decisions made by the league 

and its 32 teams from challenges as illegal anticompetitive contracts and conspiracies. 

The NFL argues that it deserves this immunity because it acts 

as a single entity in promoting the ‘‘NFL product.’’ 

What is less clear is where the NFL product ends. What are the 

boundaries of single-entity status? As a single entity, could the 

NFL eliminate free agency? 

Could they impose a salary structure on coaches and personnel? 

Could they move teams whenever they did not get more local tax 

breaks? Would they be able to charge $400 for a jersey? 

Would they be able to move all of their games to the NFL network and turn playoff games into pay-per-view? Co-brand credit 

2 

cards and set rates and fees associated with those cards? And the 

list of possibilities is endless. 

Last week in front of the Supreme Court the NFL said that the 

league should be able to determine the price tag for each team. 

And this kind of unlimited control would not stop at the NFL, ladies and gentlemen. In the event of a pro-NFL decision by the U.S. 

Supreme Court, other sports leagues are likely to follow. 

Antitrust experts have also predicted a spillover effect into other 

markets. Credit card networks and real estate listing services, 

among others, might start claiming immunity from parts of the 

antitrust laws. 

What I want to know is why does the NFL need special antitrust 

immunity? The NFL has sought antitrust immunity from Congress 

multiple times over the past few decades. Time and time again, 

Congress has said no. The NFL is seeking indirectly from the 

courts what it could not get from Congress. 

The only thing that immunity would do would be to eliminate socalled ‘‘frivolous’’ antitrust litigation. Well just about everybody 

thinks that litigation is frivolous when they are the defendant. 

In recent years, the Supreme Court’s decision in Twombly, Credit 

Suisse and Trinko have raised the bar for plaintiff litigants in antitrust cases. A pro-NFL decision could raise that bar even higher. 

As a former judge, I can assure you there is no way to write a 

law that preserves only good cases and weeds out the bad ones. I 

look forward to what I am sure will be a lively debate on these 

issues. 

With that, I now recognize my colleague, Ranking Member Howard Coble, the distinguished Ranking Member of the Subcommittee, for his opening remarks. 

But before I do that, I would like to point out that votes are 

pending, or votes are soon to be announced. And at the appropriate 

point, we will recess the hearing to go take those votes. I think 

there is four of them. And then we shall come back and resume. 

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. Thank you for calling the 

hearing. 

Thank you all for being in attendance today. When it comes to 

protecting jobs, Mr. Chairman, particularly in the textile industry 

in my congressional district, pardon my modesty, but I will take a 

back seat to no one. 

The V.F. Corporation is located in Greensboro, North Carolina, 

which is in my district, and has a very significant interest in its 

business with NFL Properties, manufacturing NFL jerseys. As you 

can imagine, we are very interested in today’s hearing. 

It seems relatively clear to me that any sports league must act 

as a single entity in order to produce the sport. Without a schedule, 

rules, basic equipment or other guidelines, the sport would have no 

value. There would be chaos if the Carolina Panthers, for example, 

had to negotiate who they were playing and the rules for each 

game. 

The question of when it is rational for the NFL to act as a single 

entity for antitrust purposes gets a little murky beyond its product 

of games on the field. 

3 

However, to my mind, the question presented by the American 

Needle case, whether the NFL acts as a single economic entity for 

marketing purposes, is also pretty clear. 

The NFL would not function as a marketing entity if some or all 

of its teams refused to license their marks collectively. Fans would 

be damaged because they would not be able to get merchandise 

with their favorite team’s logo or could only purchase it at the price 

that their team was willing to sell its license. 

Manufacturers would be damaged because they would have to 

negotiate with individual teams for different products over different 

lengths of time, thereby dramatically raising their costs of production. 

And the league’s value would be diminished because not all the 

teams would be well marketed and because some teams might 

choose to license their products for goods that do not represent the 

best interest of the league and its brand. 

Finally, Mr. Chairman, the revenues and profits are shared 

equally throughout the league. Indeed, the plaintiff in this case, 

American Needle, seemed to enjoy contracting with the NFL and 

receiving all 32 team logos when it was an official licensee. 

But once the league opted to go with different—with a different 

hat manufacturer, American Needle decided to sue the league over 

its collective bargaining practices. 

It is apparent that the antitrust laws exist to protect competition, not competitors. The district court of the Court of Appeals felt 

that the NFL’s licensing practice was valid. I am inclined to agree. 

Having lost the benefit of that bargain, it appears that American 

Needle had a case of manufacturer’s remorse and attempted to obtain through litigation that which it could not obtain through normal negotiation. 

I recognize that the Supreme Court’s decision in this matter 

could have an impact beyond the instant set of facts. However, 

without the decision in hand, it is too early, it seems to me, to tell 

what Congress needs to be concerned about here, if anything. 

I am interested in ensuring that the NFL—or any other professional sports league, for that matter—does not abuse its power, but 

I am also concerned that stakeholders use today’s forum—hearing 

as a forum to speculate and draw conclusions about the NFL before 

the Supreme Court’s decision. 

That being said, I encourage all the witnesses to proceed with 

the requisite amount of caution, because there is clearly more at 

stake than the case at hand. 

I yield back the balance of my time, Mr. Chairman. 

Mr. JOHNSON. Thank you, Ranking Member Coble. 

We have about 7 minutes and 35 seconds left on this first vote, 

and I think what I would like to do, if it is okay—— 

Mr. COBLE. Sure. 

Mr. JOHNSON [continuing]. Is to just introduce the witnesses, and 

thereafter we can depart. 

Mr. COBLE. That would be fine. 

Mr. JOHNSON. All right. Thank you. 

I am now pleased to introduce the witnesses for today’s hearing. 

Our first witness is Mr. Gary Gertzog, senior vice president for 

4 

business affairs and general counsel to the National Football 

League. 

Mr. Gertzog oversees the league’s commercial operations and— 

including media broadcasting, consumer product licensing and intellectual property. 

Welcome, Mr. Gertzog. 

Our second witness is Mr. Kevin Mawae, and—actually, 

Mawae—starting center for the Tennessee Titans and current 

president of the National Football League Players Association. 

A 16-year veteran, this LSU grad was just named to his eighth 

pro bowl after helping running back Chris Johnson set the NFL 

record for yards from scrimmage this past season. 

Welcome, Mr. Mawae. And congratulations on how your team 

snapped back after so many disappointments prior to this season, 

a testament to the human spirit collectively as a team. 

Next we have Mr. Bill Daly, deputy commissioner of the National 

Hockey League. Mr. Daly worked previously at the law firm of 

Skadden Arps in New York before joining the National Hockey 

League as chief counsel. 

Welcome, Deputy Commissioner Daly. 

And finally, we have Professor Stephen Ross from Penn State. 

Professor Ross is one of the Nation’s most renowned and most accomplished sports antitrust experts. 

Mr. Ross worked previously as an antitrust attorney at the Federal Trade Commission and the Antitrust Division of the Department of Justice. He has also served as counsel to the Senate Judiciary Committee under Senator Metzenbaum. Mr. Ross—so that tells 

you about how—or gives you idea to date for this fine gentleman 

here. 

Mr. Ross serves as pro bono counsel to the American Antitrust 

Institute and the Consumer Federation of America on issues relating to sports antitrust. 

Welcome, Professor Ross. 

And I want to thank each one of you for your willingness to come 

and participate at today’s hearing. Without objection, your written 

statements will be placed into the record, and we would ask that 

you give us about 5 minutes before we come back. 

Actually, it is going to be a little longer than that, but about 20 

to 30 minutes. And when we come back we will begin with your— 

with testimony. Thank you very much. This hearing is recessed. 

[Recess.] 

Mr. JOHNSON. Ladies and gentlemen, we are waiting on one 

other very distinguished gentleman to arrive on our Subcommittee, 

so it shouldn’t be much longer. Thank you. 

This hearing is back in session, and before I turn it over to the 

witnesses for their opening statements, I want to extend the invitation to the Ranking Member of the full Committee, Mr. Lamar 

Smith of the great state of Texas, for his opening remarks. 

Mr. SMITH. Okay. Thank you, Mr. Chairman. I also want to 

thank you for your courtesies. 

When the vote came at 2 o’clock and that was the beginning of 

the hearing, I went to go vote, never thinking that you all would 

act so quickly. And I know you had the opening statements prior 

5 

to the votes, and I appreciate your, therefore, letting me add my 

opening statement after the votes. 

Mr. Chairman, the American Needle case involves a dispute involving an apparel manufacturer that lost a hot contract with the 

NFL because the NFL had entered into an exclusive apparel rights 

contract with Reebok. 

However, depending on how the Supreme Court rules on this 

case, the NFL may be able to claim that it acts as a single entity 

and not 32 individual teams for antitrust purposes in a broad variety of transactions. 

Granting the league single-entity status means that it would be 

immune from antitrust scrutiny with respect to internal business 

decisions, not just negotiations with apparel manufacturers but potentially also labor disputes or the negotiation for television rights. 

With respect to television rights, the NFL currently makes use 

of the Sports Broadcasting Act, which gives a limited antitrust immunity to sports leagues for the purposes of negotiating television 

packages. 

However, if the NFL is viewed as a single entity for all negotiation purposes, then the Sports Broadcasting Act could be rendered 

superfluous. A favorable ruling for the NFL could eliminate one 

tool, antitrust suits against the team owners, which the NFL Players Association has used to extract favorable terms from the 

league. 

Excuse me, Mr. Chairman. 

However, given that the NFL Players Association and other professional sports unions are the wealthiest labor unions around, one 

wonders whether they need any extra leverage. 

One particularly wonders this when other unions such as the 

United Auto Workers cannot sue fully integrated companies like 

General Motors under the antitrust laws to obtain relief that they 

cannot get from the collective bargaining system. 

This case could significantly impact the other sports leagues, including the National Basketball Association, the National Hockey 

League and, to a lesser extent, Major League Baseball. 

As various amicus briefs have argued, the case could also implicate all joint ventures. This outcome could have dramatic effects on 

antitrust law generally and might well merit congressional response. This case was argued just last week, and the court’s decision is not likely to come out for several months. 

This is the third hearing in 3 months that the House Judiciary 

Committee has held on matters relating to the NFL. The first two 

hearings were on the legal implications of head injuries suffered 

while playing professional football. That will also be the topic of another field briefing in Houston on February 1st. 

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’s decision to drop charges against New Black Panther Party 

members for voter intimidation, and the question of whether to 

close the Guantanamo Bay detention facility. All these are full 

Committee jurisdiction issues. 

6 

But the NFL and NFLPA are literally and figuratively big boys. 

They do not need Congress’ help to referee every business dispute. 

That is what the courts and the labor negotiation process are for. 

Mr. Chairman, again, thank you for your courtesies, letting me 

make an opening statement slightly late, and I will yield back the 

balance of my time. 

Mr. JOHNSON. You are quite welcome, my friend. 

And what I would like to do now is open it up for the written— 

excuse me, for the oral statements of the witnesses. You will each 

have 5 minutes. Okay. 

Well, I will tell you what. Before we go down that road, I would 

like to fulfill my duty and my obligation, which is to give my Chairman an opportunity to make a opening statement. 

Mr. Chairman? 

Mr. CONYERS. Thank you. I am happy to be here with you, and 

I always like to comment after the Ranking Member of the full 

Committee and listen to his instructions as to which hearings 

ought be given priority, because that is an important way that we 

keep comity in the Committee. So I will take his recommendations 

under consideration. 

But these hearings on sports I think are pretty important because, first of all, this is more than just who is going to make the 

caps for the football players’ league. 

The question here may get into antitrust considerations, and this 

is what we are here to learn more about today—is that this—the 

case that is pending—and I did a lot of work, Lamar—I didn’t do 

a lot of work, but my staff did the work. 

But I asked this question, how many cases—how many hearings 

have we had in which there was an anticipated ruling from the 

court that would have a profound effect on whatever the subject 

matter was, because I hadn’t been thinking that much along those 

lines. 

And I found out that there were plenty—namely, the civil rights 

cases, the Voter Rights Act, the—what were some of the others? 

Which? Oh, yes, the Jefferson case in Louisiana, in which the 

former Chairman of the Committee was active in getting into the 

court. 

And so what I am more worried about, rather than who makes 

caps, is—oh, affirmative action cases, voter rights cases—oh, is this 

the whole sheet? Why don’t I just put it in the record instead of 

reading it all? There is one, two, three, four, five—six cases. 

So this is what we do. As a matter of fact, that is why the Committee has its name, Judiciary Committee. There is a connection 

here. We are not the court, but we look—we oversee the court. 

Now, how will the players be affected by the ruling that is pending? Well, for one thing, the league could impose a uniform salary 

structure on players, coaches and other non-player personnel. I 

don’t say that that would automatically happen, but that is a direction that it might be going in. 

It could affect the free agency concept, as the only option would 

be a player strike. As we all know, those things are sometimes limited. As a matter of fact, one may be looming up now. I hope to 

get some insight from the witnesses on this. 

7 

And it is not apparent what actions would be preserved under 

the labor exemption itself if the Supreme Court happens to rule in 

favor of the league. 

And then what should the role of the legislature be if this singleentity concept prevails in the court? This will depend on the 

breadth or narrowness of the Supreme Court decision itself. 

But it seems to me that we must ensure the rights of the players 

to protect players as well as just look out for fans. And then we 

can have some unintended consequences applying joint ventures 

outside of the sports context. 

And I close with this observation, that both the Department of 

Justice and the Trade Commission have expressed reservations 

about treating integrated entities with less favor than single entities, the concern that such a decision might have far-reaching implications for joint ventures among, for example, credit card networks, health care agencies, and thus impairing those two—the 

DOJ and the Trade Commission’s ability to enforce antitrust laws. 

And so, witnesses, I look forward for your clarification and points 

of view on these several issues. 

I thank the Chairman for his indulgence. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

And without further ado, each of you all will have 5 minutes to 

make your opening statements. You will notice the lighting system 

down there. It is green when you start. At the end of 4 minutes, 

it turns yellow. And then at the end of the 5 minutes, it turns red, 

and—so keep a close eye on that. 

Anything that you don’t say will be in your written remarks, and 

those will be submitted for the record. 

And you will note that we will have—after each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions, subject to the 5-minute limit. 

Mr. Gertzog, please begin. 

TESTIMONY OF GARY GERTZOG, SENIOR VICE PRESIDENT, 

NATIONAL FOOTBALL LEAGUE, NEW YORK, NY 

Mr. GERTZOG. Good afternoon, Mr. Chairman, Ranking Member 

Coble—— 

Mr. JOHNSON. You may want to hit that microphone—— 

Mr. GERTZOG. Good afternoon, Mr. Chairman, Ranking Member 

Coble, Members of the Subcommittee. My name is Gary Gertzog. 

I am senior vice president, business affairs and general counsel of 

the National Football League. 

I appreciate the opportunity to testify before you this afternoon 

on the antitrust implications of American Needle v. NFL. 

Last week, the nine justices of the United States Supreme Court 

heard oral argument in a lawsuit brought by a former NFL 

headwear licensee challenging the NFL’s decision to grant an exclusive license to another company. 

The question in this case is whether the NFL, NFL Properties 

and the NFL’s 32 member clubs function as a single business entity when deciding how to promote NFL football through licensing of 

league and club trademarks on headwear products. 

8 

The district court and the Seventh Circuit Court of Appeals each 

agreed with our long-held position that the NFL is a single business entity for these purposes. 

In a previous case, the Seventh Circuit held that the question of 

whether a professional sports league acts as a single entity should 

be decided on a league-by-league, aspect-by-aspect basis. We believe that approach is the correct way to analyze the case before 

the Supreme Court. 

American Needle petitioned the court to review the Seventh Circuit ruling. The NFL chose to support the petition not because we 

agreed with American Needle’s position on the merits but, rather, 

in an attempt to obtain a national and uniform rule confirming 

that the Seventh Circuit’s decision was correct. 

The NFL should be treated like any other business in making decisions about how to best promote its product and how best to respond to consumer demand. This case is not about any other aspect 

of the NFL’s business. 

It is not about labor relations, franchise relocation or our broadcast policies. Indeed, our collective bargaining relationship with the 

NFL players is governed by Federal labor law, not by the antitrust 

laws. 

The American Needle case is simply about the NFL’s ability to 

license its trademarks like any other business. There are no other 

issues before the Supreme Court. 

The NFL’s mission is to produce a premier entertainment product that appeals to the broadest possible audience. As part of that 

effort, we encourage fans and potential fans to identify with the 

NFL and their favorite team in a variety of ways. 

Those efforts include ensuring that fans of all teams have access 

to a broad variety of high-quality, appealing consumer products 

that bear NFL and team marks and logos. Those promotional efforts have been successful. We are America’s most popular sport, 

with over 180 million fans. 

The NFL produces an annual integrated series of more than 250 

football games leading to the playoffs and culminating in the Super 

Bowl. Each team is inherently incapable of generating on its own 

a single NFL game. 

Every member club is dependent upon every other member club 

to create what we know as NFL football. The league controls all 

aspects of the production of NFL 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 is 

produced and presented to fans. 

While the NFL clubs compete on the field, they are partners in 

a business enterprise. In fact, approximately 80 percent of all 

league and club revenues are shared among the member clubs. 

They engage in extensive revenue-and cost-sharing. Revenues from 

licensing marks and logos are shared equally among the member 

clubs. 

Such economic integration has led to competitive 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. 

9 

This very much serves consumers’ interest. The NFL has more 

clubs that play in more communities than any other sports league 

in this country. Because of the league’s extensive revenue-sharing 

and promotion of all of its members, all clubs have a comparable 

chance at success on the playing field. 

For example, of the four teams that remain in the playoffs this 

year, three represent smaller markets. Fans in New Orleans, Indianapolis and Minnesota continue to root for their favorite teams 

this year. 

Mr. Chairman, antitrust lawsuits are complex, time-consuming 

and extremely costly. The NFL has spent millions of dollars defending suits like the one American Needle brought. Even the 

threat of such costly lawsuits is anticompetitive and inconsistent 

with consumer welfare because it chills competitive zeal to the detriment of consumers. 

Our business partners are entitled to know when they are doing 

business with us whether they are buying a license or whether 

they are buying a lawsuit. Since 1963 when NFL intellectual property was first marketed on a collective basis, NFL Properties has 

increased exponentially the volume, variety and quality of NFL-licensed products available to consumers. 

The centralized licensing and marketing structure of NFL Properties has served the interests of consumers and contributed to the 

success, popularity and growth of NFL football. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Gertzog follows:] 

PREPARED STATEMENT OF GARY GERTZOG


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Mr. JOHNSON. Thank you, Mr. Gertzog. 

Mr. Mawae? What—Mawoo? What is it, sir? 

Mr. MAWAE. It is Mawae. 

Mr. JOHNSON. Mawae. 

Mr. MAWAE. Yes, sir. 

Mr. JOHNSON. All right. Thank you. 


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17 

TESTIMONY OF KEVIN JAMES MAWAE, PRESIDENT, NATIONAL 

FOOTBALL LEAGUE PLAYERS ASSOCIATION, WASHINGTON, DC 

Mr. MAWAE. Thank you. Good afternoon, Chairman Johnson, 

Ranking Member Coble and other Members of the Committee for 

inviting me here today to take part in this important hearing. 

My name is Kevin Mawae, and I am the president of National 

Football League Players Association. I have played professional 

football for the last 16 years. I am the—currently the starting center for the Tennessee Titans. I have played for the New York Jets 

and for the Seattle Seahawks, where I was the 36th pick overall 

in the 1994 draft. 

I have had the privilege of being a seven-time Pro Bowl selection 

and just recently named to my eighth pro bowl, and I am a threetime All-Pro player. 

More importantly, my career has enabled me to focus on charitable endeavors with Children’s Cup, Feed the Children and Building Blocks for Kids. And twice with the New York Jets I was 

named Community Man of the Year. 

When I began my professional career, just 1 year had passed 

since the landmark settlement of the Reggie White case that led to 

the significant gains of players, giving me a unique perspective on 

an era of labor peace built upon the ability of players to bring and 

win antitrust claims. 

One of the greatest honors in my career is serving as president 

of the NFLPA, a position that I was elected to by players of all 32 

teams. As president of the NFLPA, I am tasked with ensuring the 

welfare of my peers, a job that I take extremely seriously, and one 

that brings me before you today. And some of our members are in 

this room and around the halls of Congress. 

American Needle v. NFL is a case that could change the sports 

world as we know it. There have been claims by some that this 

case has been over-hyped. There are those who say that this case 

is simply a small licensing dispute without broader ramifications. 

Put simply, this is an effort to deceive the Supreme Court, Congress and the general public. Why else would the NFL seek to review a case that it has already won not once but twice? 

Just last week, during the oral arguments at the Supreme Court, 

the NFL finally confirmed just how broad this case really is. In response to a question from Justice Scalia, the NFL stated that it 

should be allowed to unilaterally set the price for each team, 

prompting Justice Scalia to remark that his question was meant to 

be taken into the absurd. 

After hearing from the NFL, Justice Sotomayor stated the obvious. The NFL is seeking through this ruling what it has not gotten 

from Congress, an absolute bar to the antitrust claim. 

Indeed, Congress has repeatedly refused to grant the NFL a 

broad antitrust exemption. Even the exceptions only to prove this 

rule. The Sports Broadcasting Act, for example, only grants a limited antitrust exemption with certain requirements imposed upon 

the league. 

The NFL’s ideal post-American Needle world is indeed chilling. 

Sports leagues could set ticket prices and prevent teams in the 

same or adjacent markets from competing for fans; owners could 

force—could end free agency by restricting player movement from 

18 

team to team and imposing a salary schedule for coaches and players; leagues could transfer all television and radio rights of their 

games, including local rights, to their own, wholly-owned subscription cable and satellite networks; leagues could even require any 

stadium to be built be completely subsidized by local taxpayers. 

I think it is important to note that the NFL has unsuccessfully 

sought this blanket exemption for decades. It is the holy grail of 

would-be antitrust defendants. 

Recognizing the once-in-a-generation chance to find success 

through American Needle, the other three major professional sports 

joined the NFL by filing friends-of-the-courts briefs. 

It is clear that American Needle is just the latest attempt by 

sports leagues to find their vaunted holy grail. The case may be 

their best chance at success yet, due to the wolf-in-sheep’s-clothing 

approach of an apparel license case. 

Recognizing the imminent danger American Needle presents, it 

has sparked great interest from outside the sports world, with the 

Department of Justice, Federal Trade Commission, Merchant 

Trade Association, the American Antitrust Institute and an independent group of 20 prominent economists weighing in against the 

NFL. 

Despite the nuanced approach that the NFL is using in American 

Needle, an antitrust exemption must be resoundingly rejected. As 

I mentioned before, I have been a professional football player for 

16 years, starting the year after the 1993 collective bargaining 

agreement brought unrestricted free agency to players in the NFL 

for the first time in its history. 

In the past, players were subject to systems severely limiting 

their rights to market their services to other clubs when their contracts expired. It was a successful antitrust lawsuit that ended 

those restrictions. 

As a two-time free agent, and now one for the third time, I can 

personally attest to the fact that the 32 teams of the NFL do compete vigorously for players, coaches and fans. 

I am proud to be the president of an organization whose success 

has been built upon the likes of players like Bill Radovich, Freeman McNeil and Reggie White, who had the courage to sue their 

teams in order to secure rights for all players. 

Over the course of my career, I have seen firsthand how that 

antitrust lawsuit catapulted the league to unprecedented popularity by bringing parity to the league, free agency to the players, 

and a year-round football season where there is always hope for 

the season for the fans. 

It is not only fans and players that have benefited during the 17 

years. The league itself has experienced significant economic 

growth. NFL franchise values have increased by 550 percent since 

1993. 

Again, that is 550 percent, during this era of free agency and 

parity, built upon a foundation of labor peace. As I sit here today, 

I am not sure why anyone would want to tamper with such a profitable economic model. 

The league has also experienced unmatched growth in the past 

couple of seasons, even while the world’s worst economic crisis 

since the Great Depression raged. 

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In 2008, the NFL experienced its third most profitable year. Revenues rose to $7.6 billion, more than any other league. Average 

team profits increased 31 percent, and while labor costs increased 

only 4 percent. 

While regular folks and companies are cutting costs wherever 

they can, the NFL continues to renew lucrative agreements that 

guarantee revenue beyond the 2011 season, whether football is 

played or not. 

This year, fans watched NFL games in their largest number 

since 1990, with regular-season games being the highest-rated local 

program 89 percent of the time, up from 55 percent in 2001. 

Viewers did not come to the expense of ticket sales. League attendance declined a negligible percent—1 percent when the commissioner himself estimated that they would be over 100 percent— 

no, he was off by 100 percent. 

The NFL teams played in front of less-than-full stadiums less 

than 9 percent of the time in 2009. To be sure, this era of labor 

peace has benefited the league, owners and players alike. 

Our labor peace, which is secured by the antitrust laws, has also 

benefitted the hundreds of thousands of stadium workers, small 

business owners and their employees that derive significant revenue from my beloved sport—revenue and paychecks—this is the 

last one—and that means a great deal to many families in this current economic climate. 

And, sir, I am not a product. I am a person, and I am a player 

in the NFL. Thank you. 

[The prepared statement of Mr. Mawae follows:] 

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PREPARED STATEMENT OF KEVIN MAWAE


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Mr. JOHNSON. Mr. Daly, please proceed. 

TESTIMONY OF WILLIAM L. DALY, III, DEPUTY 

COMMISSIONER, NATIONAL HOCKEY LEAGUE, NEW YORK, NY 

Mr. DALY. Chairman Johnson, Ranking Member Coble and other 

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pear before the Subcommittee today to testify on the antitrust implications of American Needle v. The National Football League. 

My name is Bill Daly, and I am the deputy commissioner of the 

National Hockey League. Like the NFL, the NHL is structured as 

a legitimate joint venture created by its members to produce, promote and sell the fundamental league product, professional hockey 

games, and its constituent products, including league and team intellectual property, in competition with other sports leagues and 

entertainment providers. 

Significantly, professional sports leagues such as the NHL and 

NFL 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 1 of the Sherman Act, which prohibits agreements 

among competitors that unreasonably restrain trade. 

All league decisions on how best to produce, promote and sell the 

league’s products are inherently pro-competitive because none of 

the league’s output would exist but for the league and the collaboration among the teams. 

As with the NFL, the economic value of an individual NHL member club as well as its intellectual property derives solely from its 

joint participation in the league and its role in producing, collectively with the other 29 member clubs, NHL hockey. 

If a particular club were not a member of the NHL venture, its 

team, as well as its team-related intellectual property and products, would have no meaningful economic value. 

Because of this economic interdependence, the collective efforts to 

market and sell NHL hockey and the venture’s output are part of 

the very essence of the NHL enterprise. 

Under the NHL constitution and by-laws, the affairs of the NHL 

are governed by the NHL 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 NHL hockey and its constituent output are best promoted and sold through a combination of, one, collective economic 

activity taken on behalf of all NHL member clubs by the league; 

and two, decentralized, individual economic operation by each club 

in its exclusive home territory, which rights are granted under the 

NHL constitution. 

It must be emphasized that every decision regarding the structure and organization of the NHL venture, including the delegation 

of certain economic operations to individual clubs, emanates exclusively from the organic documents of the league—the NHL constitution and by-laws—which can only be modified by appropriate 

vote of the NHL Board of Governors. 

The legitimate scope of the NHL joint venture necessarily includes the collective production and, at times, independent promotion and sale of NHL hockey and its constituent products, all of 

which derive their value from the league venture as a whole. 

Consequently, it defies economic reality for the courts to view an 

agreement among the teams of a professional sports league such as 

the NHL as ‘‘representing a sudden joining of two independent 

26 

sources of economic power previously pursuing separate interests,’’ 

the standard articulated by the Supreme Court in Copperweld. 

NHL seeks to promote demand for, and fan interest in, its product, NHL hockey, and to create, market and sell NHL 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 NHL member clubs must have the ability to jointly decide how 

best to market NHL hockey, including when to centralize and when 

to decentralize their economic activities. 

The specter of treble damages exposure, significant litigation 

costs and burdensome discovery from rule of reason scrutiny under 

Section 1 of the Sherman Act has the potential to create a chilling 

effect on the structural and innovative decision-making of legitimate professional sports league joint ventures such as the NHL. 

This risk looms in connection with literally every internal disagreement regarding how best to make, promote and sell the 

league venture’s product. Consequently, rather than serving the 

marketplace and responding to consumer demand and competition 

from a vast array of other entertainment providers, as would any 

single-firm entertainment provider, professional sports leagues are 

forced to calibrate their innovation and competitive vigor to account 

for the risk of protracted and costly rule of reason litigation. 

Indeed, the NHL just spent more than a year in the midst of 

such litigation in the MSG case that is described in my written 

statement. The effects of this case on the NHL’s business were significant. 

The broad-ranging litigation results in an enormous expenditure 

of both monetary and human resources, a disruption to normal 

business operations, uncertainty for transactions with existing and 

potential business partners, and adverse effects on the league’s relationship with its fans. 

The litigation sought to have a Federal court insert itself into the 

NHL boardroom in order to review virtually 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 decided by the Seventh Circuit. 

I will be happy to answer any questions you have at the appropriate time. 

[The prepared statement of Mr. Daly follows:] 

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PREPARED STATEMENT OF WILLIAM L. DALY, III 


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Mr. JOHNSON. Thank you, Mr. Daly. 

Last but not least, Professor Ross? 


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TESTIMONY OF STEPHEN F. ROSS, LEWIS H. VOVAKIS DISTINGUISHED FACULTY SCHOLAR, PROFESSOR OF LAW AND DIRECTOR FOR SPORTS LAW, POLICY AND RESEARCH, PENNSYLVANIA STATE UNIVERSITY, UNIVERSITY PARK, PA 

Mr. ROSS. Mr. Chairman and Members of the Committee, I appreciate the invitation to speak to you today about the appropriate 

standards by which to judge antitrust claims against sports leagues 

controlled by club owners who operate the leagues in their own parochial self-interest, without any economic incentive or legal obligation to set league policy in the interests of the sport as a whole. 

Four key points dominate policy considerations regarding this 

issue. One, fans suffer from inefficiencies resulting from the control 

of sports leagues by club owners guided by their own selfish, parochial interests. 

Two, single-entity status would result in a significant shift of 

games to more expensive pay and cable media and would increase 

the risk of labor strife. 

Three, contrary to league claims, antitrust scrutiny of dominant 

sports leagues under the rule of reason has worked relatively well 

in protecting the public interest. 

Four, unless a pro-defendant Supreme Court decision is limited 

on an unprincipled and sui generis basis to sports leagues, it will 

likely create huge problems for antitrust treatment of competitor 

collaborations generally. 

Now, in a recent book called ‘‘Fans of the World, Unite!’’ a prominent British sports economist and I detailed numerous areas where 

the club-run structure of dominant North American sports leagues 

has harmed fans. 

Most prominent are policies that serve neither consumers nor the 

best interests of the league as a whole. These include anticompetitive franchise relocation policies, TV blackouts that actually reduce 

overall ratings, inefficient labor market rules, and a systemic lack 

of oversight of individual club mismanagement. 

My co-author and I conclude that sports leagues would be better 

off if they actually were single entities, where policies were adopted 

by a single economic driver. 

If Commissioners Selig, Goodell, Stern and Bettman worked for 

boards of directors with a fiduciary duty to the league as a whole, 

many of these inefficiencies would disappear. To answer Chairman 

Johnson’s question, the owners are not like a corporate board of directors. 

Now, the notion that sports leagues would benefit if leagues were 

controlled by a true single entity is not something we simply invented. Rather, in organizing NASCAR, founder Bill France recognized that ‘‘it would require a central racing organization whose 

authority outranked all drivers, car owners and track owners.’’ 

In contrast, pundit Bob Costas has acridly observed that baseball 

owners ‘‘couldn’t even agree on what to order for lunch.’’ 

Our study concluded that Bill France’s efforts on behalf of 

NASCAR to change engineering rules to attract auto company investment, develop a business model where clubs relied extensively 

on sponsorship income, expand the appeal of the sport from the 

south to the entire Nation, and increase national television appeal 

through the Chase for the Cup would all have been inhibited or 

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blocked if the sport were controlled by participating racing teams 

or racetrack owners. 

Around the world, the modern trend has been to keep league operations separate from control of self-interested club owners. If the 

NFL were considered a single entity, however, the Sports Broadcasting Act would be rendered a complete nullity and NFL need no 

longer abide by its limits. 

As a result, an NFL scheme to place most of their games on their 

own NFL network and then significantly increase the fees charged 

to watch the games would be perfectly lawful. 

By way of comparison, in 1992 the English Premier League 

signed a new contract assigning TV rights previously awarded to 

free-to-air networks to the Sky Sports cable network. Viewership 

declined from 7 million to 1 million a game, although clubs profited 

substantially from higher rights fees. 

Some of the sharp questioning at last week’s oral argument signaled concerns that some justices believe our basic structure of 

antitrust enforcement is flawed, and that defendants should not 

have to defend under the rule of reason legitimate agreements 

against meritless complaints. 

It is true that under our system of antitrust laws any agreement 

among competitors is subject to Section 1, and any decision by collaborating competitors is the potential target of a lawsuit. 

But it is also true, as many cases recent cases demonstrate, that 

these suits can be and are summarily dismissed when the plaintiff 

is unable to demonstrate any anticompetitive effect. 

And I add that the bipartisan Antitrust Modernization Commission appointed by President Bush, with a clear majority with unimpeachable Republican and pro-business credentials, rejected claims 

that our treble damage system of private litigation should be 

scrapped. 

Although surgical repairs on private antitrust litigation might be 

appropriate, the clumsy device of an unprincipled expansion of 

Copperweld to label self-interested, inefficient joint ventures as single entities is terrible competition policy. 

Ranking Member Coble is correct to want to protect legitimate 

ventures, but to protect against abuse. Calling leagues a single entity takes away any possibility that abusive actions can be remedied under the antitrust laws. If the Supreme Court so rules, Congress should overrule. 

Mr. Chairman, transforming a duck into a goose, I suggest, 

would be better for consumers. Simply calling a duck a goose, as 

the NFL wants, would not. Thank you for inviting me to testify. 

[The prepared statement of Mr. Ross follows:] 

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PREPARED STATEMENT OF STEPHEN F. ROSS


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Mr. JOHNSON. Thank you, Professor. 

We will now begin with questioning. I will start for my 5 minutes. 

I would like to ask Mr. Gertzog that, as a single entity, will it 

be easier for the league to shift more of its games from free overthe-air broadcasting to the NFL network cable channel? Will it be 

easier for the league to do that? 

Mr. GERTZOG. Mr. Chairman, as I indicated in the opening statement, what the NFL is seeking in the American Needle case is a 

ruling consistent with the Seventh Circuit decision that for purposes of one aspect of its business, licensing intellectual property 

which promotes its game, the NFL operates as a single entity. 

Mr. JOHNSON. Well, no, I understand that. I am just asking a 

simple question. Will it be easier for the league as a single entity 

to take most of its games or all of its games off of free broadcast 

TV and only allow the rich and the powerful to watch the games 

on cable or satellite? 

Mr. GERTZOG. Mr. Chairman, right now, as you are probably 

aware, 90 percent of the NFL games are broadcast on free over-theair television. 

Mr. JOHNSON. And are—— 

Mr. GERTZOG. The other 10 percent of the games are broadcast 

on cable, but the fans in the markets of the participating teams can 

watch those games. That is truly unique in all of sports. 

We have a longstanding commitment to free over-the-air television. We recently extended our television agreements through 

2013. So we don’t see any change. 

Mr. JOHNSON. Well, I mean, but it is possible that it will—well, 

I mean, it is going to be easier if you are granted single-entity status to shift more games to pay TV or NFL cable network, or whatever you would call the entity, at the expense of free broadcast 

games. Isn’t that true? 

Mr. GERTZOG. We don’t agree with that. We don’t see that being 

a function of a single-entity decision in the American Needle case. 

Mr. JOHNSON. All right. 

And now, Professor Ross, I am sure you would disagree with 

that. What would be your take on that, sir? 

Mr. ROSS. Mr. Chairman, in the first place, the NFLPA statement is absolutely correct. The NFL wouldn’t have asked the Supreme Court to grant cert if they just wanted to win this thing and 

make sure that this one narrow issue, which they already won 

would have been prevailed. 

If the Supreme Court rules aspect by aspect and simply says a 

very narrow ruling, then it is up to new rulings later, and it 

wouldn’t probably raise your fears. 

But if the Supreme Court broadly adopts what the NFL has been 

asking in their briefs, which is they are a single entity—if we accept Mr. Daly’s legal position as the law—then a decision to put all 

the games on NFL Network is the decision of a single entity. 

It would not be challengeable under Section 1 as an agreement 

among the clubs. The Sports Broadcasting Act, which only exempts 

agreements among clubs, and assumes that these things were 

agreements among clubs, would not apply. 

71 

And unless one could come up with a theory that by putting it 

on the NFL Network the NFL was somehow contributing to the 

monopolization of broadcast, or something like that, it would be 

completely immune from antitrust scrutiny. 

So the NFL can claim its commitment here. Perhaps of a greater 

concern of free market conservatives, the NFL could, if the ruling 

comes back, keep coming back and making political deals with 

your—you know, you could cut a deal with them yourself where 

they make a voluntary deal and they say, ‘‘We will keep 14 games 

on TV,’’ and then you could say, ‘‘Well, I am going to introduce legislation,’’ and then they go, ‘‘Okay, 13 games on TV.’’ They could 

do all that, and they could have a—but legally, your question is 

correct. 

Under Section 1, if they win, there is no antitrust remedy to 

moving the games to NFL Network. 

Mr. JOHNSON. All right. Thank you. 

And let me ask this question. A Reebok executive publicly stated 

that NFL-branded caps that used to cost $20 can now be priced at 

$30 because Reebok no longer has any competition in this market. 

How is the consumer better off when the league and the 32 teams 

act together in this way, Mr. Gertzog? 

Mr. GERTZOG. The consumer has been much better off since we 

entered into the agreement with Reebok. The consumer has found 

that the—— 

Mr. JOHNSON. The price has gone up or gone down for merchandise? 

Mr. GERTZOG. We have products priced at all different price 

points. 

Mr. JOHNSON. Well, I mean—— 

Mr. GERTZOG. If you go on—— 

Mr. JOHNSON [continuing]. New products come online and—— 

Mr. GERTZOG. Yes. If you—— 

Mr. JOHNSON [continuing]. That kind of thing, but—— 

Mr. GERTZOG. If you go—— 

Mr. JOHNSON [continuing]. But as far as the products that were 

already online at the time of the exclusive agreement with Reebok, 

isn’t it true that there will be no—well, there will be no breaks 

they can put on how—that can be put on the price of merchandise? 

Mr. GERTZOG. Mr. Chairman—— 

Mr. JOHNSON [continuing]. As you feel like you could get. 

Mr. GERTZOG. Mr. Chairman, I respectfully disagree with that. 

You know, number one, the NFL does not set the price for its products. Those decisions are made, number one, by a licensee that will 

sell to a retail store; number two, the retail store will make a determination as to how much it wants to charge to the consumer. 

If you go online today, you will see that NFL caps are priced 

competitively with caps from all of the other sports leagues, colleges, entertainment providers, branded companies like Nike. 

There are caps that are more expensive than NFL caps and there 

are caps of other companies that are less expensive. 

And we have found that the consumer has the ultimate vote. If 

the consumer believes the hat is too expensive, the consumer will 

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ferent sports entity. So in this town, if someone believes the Redskins cap is too high, they can go purchase a Capitals cap. 

Mr. JOHNSON. Well, but it just can’t say Redskins and have the 

trademark on there, the NFL and the—what is it? A arrow or 

something like that, with a redneck, or something—there is something of that nature. You can’t find an official NFL cap unless you 

do it through an authorized entity. 

And you would be able to control the price to—that that entity 

would sell the hat for. Is that true? 

Mr. GERTZOG. It is not true because we operate in a very competitive sports and entertainment marketplace. So as I said earlier, 

the consumer has the ultimate vote. 

If the consumer believes the cap is too expensive and they want 

an NFL item, they can buy a different item. We have thousands 

of licensed products, and the consumer has many, many different 

options. 

Through the Reebok agreement, they were able to, over the past 

few years, upgrade the quality of the products. The consumers have 

responded quite well to that. They have extended the number of 

products to our fans—women’s products that didn’t exist before, 

many different products for kids. 

So we think this is—— 

Mr. JOHNSON. So it is better for—— 

Mr. GERTZOG [continuing]. Very pro-consumer. 

Mr. JOHNSON [continuing]. Consumers. Yes, okay. 

Well, let me interrupt you and just ask for your comment about 

that, Professor Ross. 

Mr. ROSS. Mr. Chairman, I would like to offer you my expertise 

when I have expertise and not when I don’t, and I have no idea 

if Mr. Gertzog is correct or not. 

He made two key statements, though. The consumer has the ultimate vote and, relatedly, we operate in a competitive merchandise 

market. If that is so, this case is dismissed summarily under the 

rule of reason with the NFL not being a single entity because they 

are in a competitive marketplace. 

Under the rule of reason, it is only when firms have market 

power or, as Judge Posner wrote, it is only when firms, if they err, 

will not face swift market retribution that the antitrust law needs 

to be concerned. 

So if, in this particular case, the merchandise case, Mr. Gertzog 

is correct, then the proper result in this case is summary dismissal 

of American Needle’s claim under the antitrust laws. 

Mr. JOHNSON. Thank you, Professor. 

Next I am going to call upon the Ranking Member, Mr. Lamar 

Smith—I am sorry, the Ranking Member of the Subcommittee, Mr. 

Howard Coble. 

Mr. COBLE. Thank you, Mr. Chairman. 

Gentlemen, thank you all for being with us this afternoon. 

Mr. Daly, to what extent do you think that the NHL teams act 

as a single entity? And when do the teams not act as a single entity? 

Mr. DALY. Well, I think, clearly, Mr. Congressman, that the NHL 

clubs act as a single entity—they acted when they formed the 

73 

league to become a single entity to produce, promote and sell NHL 

hockey and NHL hockey games and products. 

And all the decisions they make in the production, promotion and 

sale of those products—as decisions made by a single entity under 

the antitrust laws. 

You know, to maybe go back to Chairman Johnson’s question a 

little bit, I think sports leagues generally—but the NFL also—are 

constrained by the marketplace in those decisions, and they can’t 

willy-nilly make decisions that aren’t responsive to the competition 

in the marketplace. 

And we compete with other professional sports leagues and other 

entertainment providers, many of whom are single-firm and make 

those pricing decisions all the time without any concerns about Section 1 scrutiny. 

And so our activities within that marketplace are constrained by 

our competition within that marketplace. And to the extent there 

is a dominant position or, as Professor Ross indicated, a market 

power position in the marketplace, there are other competition 

laws that protect consumers in those circumstances, not Section 1 

of the Sherman Act. 

Mr. COBLE. Thank you, Mr. Daly. 

Mr. Mawae, let me put a two-part question to you. Do you have 

any objection to the operation of NFL Properties, A? And B, is it 

your contention that apparel and merchandise revenues sold under 

this single-entity theory are distributed evenly throughout the 

league? 

Mr. MAWAE. To answer your second question first, are they 

sold—do you mean sold separately as—or sold as a single entity? 

Can you repeat the question again, the second one, first? 

Mr. COBLE. Yes. Is it your contention that apparel and merchandise revenues or revenues resulting from the sale sold under this 

single entity theory are distributed evenly throughout the league? 

Mr. MAWAE. Well, I think, first of all, the limited amount I know 

about how the NFL shares their revenues—there is a portion of 

their revenues that are shared equally, but then there is a portion 

that is not. 

Every team has an ability to set prices on certain things. Some 

of that could be merchandise, and some of it could be ticket sales, 

concessions or whatever. But I know there is a portion that does 

go into the shared profits of the NFL. 

But when an NFL team has the ability to market their own products, make their own merchandise, then that puts more pockets in 

that single owner’s—more money in that single owner’s pocket, 

with a percentage of it due—having to go back to the NFL. 

I don’t know how much. We are in the process through our CBA 

negotiation of finding out how much they are making, how much 

they are sharing and how much they are not sharing. And that is 

information that we will get to receive. 

To answer your other question, I cannot answer that. It is not 

my case. It is not my expertise or my knowledge to be able to answer that question. 

Mr. COBLE. I thank you for that. 

Mr. Gertzog, are there areas that you would concede that the 

NFL could or would never assert single-entity status? 

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Mr. GERTZOG. Yes. At the moment, there was an example that 

was used during the Supreme Court argument that if the NFL 

clubs decided to go into a new venture, in the trucking business as 

an example, that would be one that would fall outside of the single 

entity for the National Football League. 

I may want to add, you know, one other point on Mr. Mawae’s 

response. You know, the union itself, through their licensing affiliates, has their own agreement with Reebok. 

They have supported the agreement with Reebok that we have 

had since the inception in 2001. And they have granted Reebok exclusivity for uniforms that the players wear and that are sold at 

retail. 

Mr. COBLE. Thank you, sir. 

Mr. Gertzog, I am going to put another question to you. Would 

you prefer that your single-entity status be affirmed by the Supreme Court or that the law explicitly lists aspects of professional 

sports league that should qualify? What would be your preference? 

Mr. GERTZOG. Yes, our preference is the one that was adopted by 

the Seventh Circuit where you look at it league by league and each 

facet of its business. And certainly, with the Supreme Court decision, they would be reviewing an important part of the NFL’s business. 

And some of the principles and reasoning of that case could well 

extend to other facets of our business, but that is not what we 

asked the court for. 

Mr. COBLE. Does this case have any direct bearing on the upcoming collective bargaining agreement negotiations? 

Mr. GERTZOG. Absolutely not. 

Mr. COBLE. Okay. 

Mr. GERTZOG. As I indicated in my opening statement, those negotiations are governed by the labor laws, not the antitrust laws. 

The NFL owners are committed to working as hard as possible to 

reach a new agreement with the union. We think we will reach a 

new agreement. It is just a question of when. 

Mr. COBLE. Thank you, sir. 

Professor Ross, I hadn’t forgotten you. 

One final question, if I may, Mr. Chairman. 

Professor, the V.F. Corporation argues that the current arrangement by NFL Properties is the best deal for consumers, manufacturers and the NFL. Their views are detailed in an amicus brief 

filed with the Supreme Court. Do you concur or disagree with the 

V.F.’s conclusion? 

Mr. ROSS. Mr. Coble, 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 rule of reason of a reasonable restraint that I have heard in quite a while. 

But my answer is if what you said in your opening statement 

was true, the correct legal response ought to be that under the rule 

of reason the restraint is reasonable. 

But you can imagine a licensing scheme—for example, suppose 

somebody like Jerry Jones of the Cowboys provided an innovative 

marketing scheme, offered to share a lot of revenue with the rest 

of the league, but Ralph Wilson of the Buffalo Bills decided, ‘‘I don’t 

75 

want to compete with Jones because he is so aggressive, so let’s not 

let any of our members do any licensing of the sort.’’ 

And if he got one-fourth plus one of his fellow owners to go along 

with them, he could block that deal. That would be, in my opinion, 

one of the abuses you talked about. 

So the real question for American Needle is not whether the contract with Reebok is a reasonable contract. It may well be. The 

question is whether courts ought to look at it to decide whether it 

is an abuse, as you were worried about, or whether it is something 

reasonable. 

The position that the leagues want to take is that the antitrust 

courts should not look at that at all, and I would be interested to 

hear what possible protections exist for consumers other than the 

FTC act if the leagues win big in the Supreme Court. 

Mr. COBLE. Thank you, Professor. 

I see my red light is illuminated so I yield back, Mr. Chairman. 

Mr. JOHNSON. Thank you, Mr. Coble. 

And next we will have—what I would like to do—there is a important meeting that I need to attend with the speaker, and so I 

am going to go ahead and depart at this time. 

I have asked the Chairman of the full Committee, Mr. Conyers, 

to—whether or not he would be so kind as to continue to Chair the 

Committee, and he has said that he would. 

Mr. CONYERS. [Presiding.] I wanted to ask Mel Watt—because he 

is the only jock on this Committee—or ex-jock on this Committee. 

I don’t know which, but—oh, I don’t want to do this without him 

being in the room. 

But let me ask Mr. Gertzog, what is it that Professor Ross 

doesn’t quite get about this whole subject matter that we are discussing, from your friendly point of view? 

Mr. GERTZOG. I think there is a few things, Congressman. You 

know, number one, the relief that we are seeking is an affirmance 

of the Seventh Circuit ruling focused on the aspect of the business 

that evidence was developed at trial—namely, intellectual property 

licensing involving—products. 

Two, a lot of the opening statement for Professor Ross was focused on radical changes to the governing structure of a sports 

league, and we don’t think that is really proper subject matter for 

this particular hearing. 

It is an interesting academic discussion, but in real life—I have 

worked at the NFL 16 years. I understand how these decisions are 

made. And they are not made in the parochial interest of the owners. The owners understand that the whole is greater than the sum 

of the parts, and they do what is in the best interest of the league. 

And in terms of this particular issue, what Professor Ross has 

said is, ‘‘Well, if the NFL is right, let’s take it to a rule of reason 

analysis, and I am sure this sounds right. It is pro-competitive. 

Whether it is Reebok, V.F., they have made some valid points. Why 

don’t we let it get to that point?’’ 

And if we do, you are talking about over $10 million of litigation 

expenses, the threat of treble damages, uncertainty to our business 

partners, and that is really not a good way to run a business. 

76 

It would put us at competitive disadvantages with other companies that we compete against that are single entities and do not 

have to be faced with these sort of threats and lawsuits. 

Mr. CONYERS. Well, Mr. Daly, what do you think that Professor 

Ross could be enlightened on in a friendly hearing like this this 

afternoon? 

Mr. DALY. I think one of the theories of Professor Ross is that 

sports leagues in their current structure act irrationally and, again, 

protecting parochial interests of the members. 

I can speak for the National Hockey League, and I believe I can 

speak for most other professional sports leagues—that we have in 

our constitution voting rules that generally produce, if not all the 

time produce, rational business decisions that are made, so that 

the interests of a few owners who may have parochial points of 

view on certain subject matters are overruled by a majority and, 

in some cases, super-majority of other owners who are looking out 

for the benefit of the league. 

So I would say that business decisions made by the league are 

economically rational, in the best interests of the league and the 

league’s business, and not made for parochial interests. 

The other thing I would reinforce is Mr. Gertzog’s point that 

while there are defenses to rule of reason and, as professor Ross 

said, some cases may be summarily dismissed, they are not summarily dismissed under the rule of reason until the parties have 

engaged in many months, and sometimes years, of very expensive 

discovery on rule of reason issues, on such things as market definition and market power, before you get to the point where they can 

be summarily dismissed. 

So it is an enormous waste of resources for professional sports 

leagues but also for plaintiffs in those circumstances, and a waste 

of money. 

Mr. CONYERS. Now, Mr. Gertzog, you—it is your suggestion that 

NFL should be a single entity—should be regarded as a single entity in the court proceedings? 

Mr. GERTZOG. What we are asking is as part of the American 

Needle case, which we are discussing here today, the Supreme 

Court should affirm the Seventh Circuit decision which held that 

for purposes of the NFL’s licensing business for apparel, the NFL 

constitutes a single entity. 

Mr. CONYERS. So yes or no? 

Mr. GERTZOG. In that part of the business, the NFL constitutes 

a single entity. It also gives plaintiffs the opportunity to pursue a 

Section 2 claim. They are not without an antitrust remedy. 

Mr. CONYERS. Okay. Third time. Yes or no? 

Mr. GERTZOG. I am sorry, maybe I didn’t understand the question. 

Mr. CONYERS. Do you remember what the question was? 

Mr. GERTZOG. Should the NFL be a single entity in the courts? 

Mr. CONYERS. Right. 

Mr. GERTZOG. And I apologize. I thought I answered the question 

that for purposes—— 

Mr. CONYERS. I said yes or no. 

Mr. GERTZOG. The answer would be yes, for some purposes. 

77 

Mr. CONYERS. Wow, this was quite a—all right. It is important 

that we all stay in the same understanding of the usage of the 

English language. So thanks. 

Now, Professor Ross, I hope that you consider yourself somewhat 

enlightened by the friendly discussion that we have had so far. Do 

you have anything to say for yourself? 

Mr. ROSS. I am always enlightened when I hear from real-life 

people in the business. The Members of this Committee are familiar with this issue, and it is 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 if what they—what might well be 

best for the Nation happens to be contrary to what might be best 

for the 14th Congressional District of Michigan or the 6th Congressional District of North Carolina, et cetera. 

And in that case, not always but often, the Members of this body 

are going to vote the interests of their district first. And that is not 

economically irrational. It is not political irrational. 

Similarly, there are going to be times when members of sports 

leagues act in the best interest of their club because that is what 

they are responsible for. 

Mr. CONYERS. Lamar, we are not supposed to do that, are we? 

Mr. SMITH. Mr. Chairman, I didn’t—— 

Mr. CONYERS. Oh. Well, I don’t know how this question got 

turned onto the Members of the Committee, but here we are. 

Mr. ROSS. It is just an illustration, Mr. Chairman, that any time 

somebody is a representative of a particular group, there are interests—they have two interests. There is a conflict of interest in that 

sense between things that might be good for the parochial self-interest and things that might be good for the general interest. 

Being at Penn State, we honor Dan Rooney, the former owner of 

the Pittsburgh Steelers and now ambassador to Ireland. And if you 

read his book and look at the prologue by Commissioner Goodell, 

they rave about what a great owner Mr. Rooney is because he puts 

the interests of the league first. That is what everybody talks 

about. 

Now, I would suggest, Mr. Chairman, that if Dan Rooney was 

just like every other person, if the owners were like the way Mr. 

Daly describes them, Dan Rooney would be nothing special. Wellington Mara would be nothing special. Jerry Colangelo in the NBA 

would be nothing special. 

All these owners who put the league first are hailed, but the implicit reason is because many of their other colleagues are not so 

league-oriented. 

Mr. CONYERS. Well, I thought you were going to give a profound 

response to the two fellow witnesses who were—well, you look it 

up, how about? 

And now you are responding to my questions by propounding 

that we sometimes or frequently—I forgot which you said—— 

Mr. ROSS. Sometimes. 

Mr. CONYERS [continuing]. That we put the interests of our district over our national responsibilities. Do you know what the Constitution says about that? 

78 

Mr. ROSS. I don’t mean to suggest—I don’t think you are 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 districts is so that 

they would have people from different areas and different perspectives who would bring the perspectives of their districts to bear on 

the national interest. 

That is the Madisonian genius, I would suggest, Mr. Chairman. 

But it is also one of the reasons why we have an executive branch 

as well. But I am sorry to have digressed into an area that you 

have greater expertise than me. 

The point is I think—and—— 

Mr. CONYERS. But what about what they said about your thinking on the subject matter for which we are gathered today? 

Mr. ROSS. Mr. Chairman, I do not believe, without regard to the 

particular facts of this case, which I have tried to say I don’t have 

an opinion on. In general, when you think about the move of the 

Montreal Expos to Washington and how that was held up by the 

veto of the Baltimore Orioles, when you think about other franchise 

relocation issues, when you think about the Bulls litigation which 

I have detailed in my statement. 

I think there are a number of examples of where sports leagues 

have acted in the best interest of individual owners and have not 

behaved in the way that Mr. Daly would like sports league owners 

to behave when they sit around the table. 

Mr. CONYERS. Well, let me ask you this. Did you hear what Mr. 

Gertzog said—— 

Mr. ROSS. Yes. 

Mr. CONYERS [continuing]. When he responded to my question of 

helping you understand things from a different point of view? And 

is what you said to me your answer to him? 

Mr. ROSS. I disagree with his factual characterization that the 

National Football League owners invariably act in the best interests of the league. 

I think there are many cases where the National Football League 

owners do not act in the best interest of the league and require 

leadership from the commissioner’s office or others, which is sometimes successful and sometimes not. 

Mr. CONYERS. Okay. Did you hear Mr. Daly make some—what 

he thinks as positive suggestions about your views on the subject 

matter that brings us here today? 

Mr. ROSS. Yes, Mr. Chairman. 

Mr. CONYERS. Do you have any response for him, or do you think 

that they were fairly accurate? 

Mr. ROSS. Mr. Daly and I disagree about whether the frequency 

of owner behavior that is self-interested justifies having continuing 

antitrust treatment of sports league decisions. 

Mr. CONYERS. So do you consider yourself far apart in your views 

from Mr. Gertzog and Mr. Daly, or are they relatively close? 

Mr. ROSS. In terms of what is the subject of this hearing, which 

is the single entity status of sports leagues, I would say that my 

views are fairly far apart from Mr. Daly’s and Mr. Gertzog’s. 

Mr. CONYERS. Well, let me turn to Lamar Smith, the Ranking 

Member, to—— 

79 

Mr. SMITH. Thank you, Mr—— 

Mr. CONYERS [continuing]. See if he can throw some light on 

this. 

Mr. SMITH. Thank you, Mr. Chairman. I do have a couple of 

questions. But let me also confess at the outset that my only connection to professional sports, which isn’t necessarily bad, is—and 

I am proud of them—is the San Antonio Spurs, of course, and then 

I happen to represent the University of Texas, so the other professional athletes I would have to say are the front line of the University of Texas football team, or at least soon to be, probably. 

Mr. Ross, let me address my first question to you, and you have 

already responded in part to it, but it is this. In so many issues, 

particularly the ones we are facing today, the real question is 

where do you draw the line. 

And in the case of the National Football League, there are instances where it does act as a single entity—for example, in the 

schedule of games and in the setting of the rules of play and so 

forth. 

So obviously, there are instances where it acts as a single entity 

and other instances where it does not. Where would you draw the 

line beyond what you have already said? 

Mr. ROSS. Yes, that is the position of the government, and it has 

some merit. I have to say, I don’t think that there is a line there 

per se. I think that you might want to say that on an aspect-byaspect basis, a plaintiff should have to show that the clubs are not 

acting in the best interests of the league. 

But let me give you a law professor example of rules. As you may 

know if you are a baseball fan, the strike zone basically got distorted by umpires and then got changed by Major League Baseball 

about 5 years ago. 

And the rule that got changed happened to favor the Atlanta 

Braves because they had great pitching. Now, I would argue that 

if the Braves’ owner had gotten a minority of the fellow owners to 

block a change in the rules purely to favor their own self-interest, 

and you could show some competitive harm—I don’t know how you 

could about that, but you could show some competitive harm, then 

that might be something where single-entity status should not be 

applied. 

So even in scheduling and rules, I would say that the focus ought 

to be is this a single economic driver or not. And in some cases, 

you are right, the league is operating as a single economic driver. 

In point of fact, the NHL and their labor dispute was completely 

united, and Mr. Daly and Mr. Bettman did a great job there. 

But in other cases, although he would prefer it not to be, quite 

frankly, Mr. Daly is not leading the single economic driver, but he 

is basically being dictated to by a committee of horses. And when 

that is happening, I think they are not a—then the league is not 

a single entity. 

Mr. SMITH. Okay. Thank you, Mr. Ross. 

Mr. Gertzog, a couple of questions for you. Some of the professional sports—I think soccer is one—constituted themselves as a 

single entity when they formed. 

80 

Why didn’t the NFL do the same thing? And in any case, why 

haven’t they sort of reconstituted themselves as a single entity 

even if they didn’t do it originally? 

Mr. GERTZOG. Well, in terms of the NFL’s structure, our league 

dates back many years prior to MLS, which I think is the league 

that you are referring to. 

We believe that there are many benefits—— 

Mr. SMITH. Major League Soccer, yes. 

Mr. GERTZOG. Correct. We believe that there are many benefits 

to having local ownership. It helps make the league stronger. There 

is an identification in the marketplace with an owner and executives, and we think we have a very strong business model that has 

been proven out by how successful we have been. 

Mr. SMITH. Okay. Quick answer, but a good answer. 

The second question is this. Going back to American Needle, as 

I recall many years ago before NFL gave Reebok the contract, 

American Needle was the licensee and, I think, the licensee for all 

30 teams. 

And it sort of looks like they are complaining now because they 

didn’t get the contract, even though they themselves were in a very 

similar favorable position years ago. Do you have any comment on 

that? 

Mr. GERTZOG. Yes. It is ironic that they are complaining about 

the very structure that they benefitted from for two decades. 

Mr. SMITH. Right. 

Mr. GERTZOG. They are also, as I understand it, currently a licensee of Major League Baseball, which has a very similar structure to NFL Properties, where they have a license agreement for 

all 32 teams. 

What they didn’t like is the nature of being a licensee in professional sports and entertainment, or any other field, is you bid for 

licenses. You are granted rights for a period of time, and then 

when those licenses expire, you have to re-bid. They re-bid. The 

NFL made a different decision. And after two decades of being an 

NFL licensee, they sued us because they didn’t—— 

Mr. SMITH. So is this—— 

Mr. GERTZOG [continuing]. Like the decision. 

Mr. SMITH [continuing]. A case of what is good for the goose is 

good for the gander, or is it a case of what is good for the goose 

one time should be just as well for the goose another time? 

Mr. GERTZOG. I like your goose analogy better than the professor’s. [Laughter.] 

Mr. SMITH. Okay. Thank you, Mr. Gertzog. 

Thank you, Mr. Chairman. I don’t have any other questions. 

Mr. CONYERS. Mr. Mawae, do you want the last response before 

we adjourn? 

Oh, wait a minute. I didn’t see you come back in. Wait a minute. 

Well, I will yield to you now before I yield to the gentlelady from 

Texas. 

Mr. MAWAE. You will let me—my comments on this? You know, 

I can’t sit here and speak from a legal standpoint with legal lexicon. I don’t know contracts. I am not an educated professor. But 

I am a pretty smart football player, and I know the business of 

football. 

81 

And what I do know and what American Needle represents to us 

is a possibility that the NFL could be recognized as one single entity, in which term would give them the power to oversee every aspect of the game, including what happens with the players. 

As a player, I have been on the free agent market three times. 

I have benefitted by the broadcasting act because in 1998 the NFL 

signed a new agreement with the broadcasters for $17 billion. 

I hit the free agent market that year and became the highestpaid center in the history of the league. So in that sense, I benefitted from the NFL and the deals that they have struck. 

But the issue goes further than that, that in the case—or in the 

event that the NFL gets recognized as a single entity, then they 

control player markets. They control player salaries and player 

movement. 

It would not be beneficial to the players for the owners to take— 

say and dictate which teams that each player should go to, dictate 

the cost of ticket sales, which drives up the revenue, and things 

like that. 

It is a free agent market for the owners. It is a free agent market 

for the players. And it is a free agent market for the NFL, because 

they compete against all the other major league sports. 

As it pertains to the players in general, we are concerned because we have fought so hard over the years to have labor peace. 

That has been protected through the antitrust legislation and has 

not allowed them full exemption. 

And we are concerned, especially in this decade or this era of our 

organization, that if the NFL does, indeed, get what they want out 

of this American Needle case that we could lose much of what we 

have fought for over the course of these last 30 or 40 years. 

That is my statement. I am here to represent the 1,900 guys. 

And, sir, I just appreciate your time and just for me to give my 

very quick and brief opinion. Thank you. 

Mr. CONYERS. Thank you. 

Mr. Gertzog, is there anything that you could leave the head of 

the football players association with that would make him feel 

more comfortable this evening as he reflects on what we did here? 

Mr. GERTZOG. I appreciate the promotion to commissioner, but I 

am just a mere senior vice president of the National Football 

League. But in any event, in terms of that question, as I said earlier, the NFL owners are firmly committed to reaching a new deal 

through the collective bargaining process. 

As Mr. Mawae knows, there was a negotiation session yesterday. 

There have been 11 of these 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. It does not benefit the owners. It does not benefit players. 

We have got a good thing going. We want to continue it. We have 

just got to find some common ground. And the way to do that is 

at the negotiation table, not at a courtroom. 

Mr. CONYERS. You think that is going to make him rest more 

comfortably this evening? 

Mr. GERTZOG. I hope so. 

Mr. CONYERS. I do, too. 

82 

Well, are you? I said well, are you going to be more comfortable 

now that you have had his response to my question. 

Mr. MAWAE. No, sir, we will not be more comfortable. 

Mr. CONYERS. You won’t be more comfortable. Well, I will turn 

this over to Congresswoman Sheila Jackson Lee. Maybe she can 

help us feel better about this. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. 

Let me ask Mr. Daly, are you a nonprofit, the NHL? 

Mr. DALY. The league itself is a not-for-profit association, that is 

correct. 

Ms. JACKSON LEE. Not-for-profit. Is that a 501(c)(3), or what is 

the configuration? 

Mr. DALY. I probably—— 

VOICE. Six. 

Mr. DALY.—I should know the answer to that question. 

VOICE. Six. 

Ms. JACKSON LEE. 501(c)(6)? 

Mr. DALY. Thank you, Joe. 

Ms. JACKSON LEE. Okay. 

And, Mr. Gertzog, what is the NFL? 

Mr. GERTZOG. It is similar. It is an unincorporated association 

not-for-profit, and—but the league has a number of for-profit business units. 

NFL Ventures L.P. houses our commercial operations, which 

would include broadcasting, NFL Properties licensed products, our 

international business and our Internet and satellite business. 

Ms. JACKSON LEE. What is the name of it that houses it? 

Mr. GERTZOG. NFL Ventures L.P. 

Ms. JACKSON LEE. And I assume the value of that is public. 

What is the approximate value of the NFL Ventures L.P.? 

Mr. GERTZOG. It is not public. 

Ms. JACKSON LEE. Those numbers are not public? 

Mr. GERTZOG. No. 

Ms. JACKSON LEE. I thought it was for profit. 

Mr. GERTZOG. It is for profit. 

Ms. JACKSON LEE. So is it public on your tax returns? 

Mr. GERTZOG. It is a private corporation. 

Ms. JACKSON LEE. It is a private corporation, so in essence—— 

Mr. GERTZOG. Owned by the members of the National Football 

League. 

Ms. JACKSON LEE. So in essence, you still have a certain degree 

of protection, so the public cannot access what the NFL Ventures 

L.P. profits are. Is that correct? 

Mr. GERTZOG. Not to my knowledge. 

Ms. JACKSON LEE. All right. And the—— 

Mr. GERTZOG. One of our teams, the Packers, is a public team, 

and you can track through their public filings some of the revenue 

streams that come from NFL Ventures. 

Ms. JACKSON LEE. The NFL, then, is a 501(c)—the one that is 

a not-for-profit—what is that, 501(c) what? 

Mr. GERTZOG. I think it is six, but I would have to check on that 

for you. 

Ms. JACKSON LEE. And your guess would be that the NHL would 

be a six as well? Is that my understanding? 

83 

Mr. GERTZOG. Yes. 

Ms. JACKSON LEE. Okay. Let me try to give the approach that 

I would like to take. And I thank you gentlemen for being here. 

And I thank you, Professor. I am getting ready to come and put 

you either in the hot seat or the cold seat. 

First, I would like to thank the Chairman for this hearing and 

thank Chairman Johnson for this hearing and just remind the NFL 

that in another hearing in another Subcommittee where our Chairman Bobby Scott had passed out of Committee the Promise Act, we 

were able to include language in the bill that spoke about the NHL, 

the MLB, the NBA and the NFL engaging in antiviolence activities 

that are somewhat different from antiviolence not of the players, 

of course, on the field—let me characterize it correctly—working 

with our youth. 

And many times you always say we do those kinds of programs. 

This is somewhat different, because I found that in the NHL and 

others who have a certain persona of a lot of activity on the field, 

a lot of blustering, and may even have some persona of some 

missteps publicly that the media will 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 are on the playing field. 

So we wanted to give them an opportunity to be mentors. I say 

that to say that I think the players are valuable. And I compare 

it to a situation of a teeming stadium. The big one in Texas, of 

course, is up north, so we are very proud of the Reliance Stadium 

in Houston. This, of course, is the NFL. We are proud of our—all 

of our teams. 

But we would have this teeming team, the big stadium in Texas 

up north, and then the great stadium in Houston, the Reliance Stadium for the Houston Texans. And it would be teeming with excitement and noise, and we are all sitting there with bated breath, 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, absolutely no players. Do we have anything? 

Are we going to have a audience sitting there smiling and say, 

‘‘I am so excited to be here today, I am just going to sit here in 

silence watching an empty field?’’ That is what this antitrust exemption represents to me. 

It is a question of whether or not the valuable aspect of this 

game, the people who play every day, whether it is the NHL players, the NFL players, are going to be hindered because of the approach that is being taken and the seemingly impenetrable exemption that the leagues happen to have. 

Mr. Mawae, if I have it correct, let me just ask you, do you expect a lockout in 2011? 

Mr. MAWAE. Ma’am, we are fully anticipating a lockout, and we 

are preparing all 1,900 of our players to do so. We have done 

them—we have educated them in terms of saving financially, on 

what to do in case there is a lockout and things like that. 

84 

Obviously, we don’t want that to happen. We have been to the 

table a number of times. But right this moment, we are anticipating that, because that is all the indications are showing, that 

that is where we are headed. 

Ms. JACKSON LEE. And tell me, what—and thank you for qualifying that you do not represent yourself as a person providing legal 

advice, counsel or information, but you are a player, and you do— 

you are the president. 

So let me try to ask this question. What is a lockout? And what 

gives the league the authority to lock you out? 

Mr. MAWAE. Over the history of our league, the work stoppages 

that we face have been strikes by players where we have refused 

to go to work. This is not the case. We are not fighting for anything. We are not wanting anything extra. We don’t want another 

percentage point. 

We like the system the way it is, and we think it works well for 

both sides. A lockout would be a sense where the owners are not 

willing to participate in the collective bargaining agreement that 

we have at place. 

They have already opted out of our dill 2 years in advance, which 

would make us go into a season of uncertainty prior to the 2011 

season. Players would be ready to come to training camp with the 

gates locked and the locker rooms shut and us not having a place 

to go to work. 

That is what a lockout is. That is the way our players understand it. 

Ms. JACKSON LEE. And with the entity being a ‘‘single entity,’’ 

which is what will be affirmed possibly if the Needle case, the 

American Needle case, goes up on appeal, which is, in actuality, the 

league’s desire to reaffirm the lower court’s decision—they already 

won, as I understand it, but they want to put it in blood. 

But as a single entity, that means that you are—if you are a 

player, couldn’t skip over to Green Bay if you are playing for the 

Saints. You would be locked out. 

Mr. MAWAE. I would be locked out because all—— 

Ms. JACKSON LEE. You would have no movement to say, ‘‘Okay, 

I am going to go to——’’ 

Mr. MAWAE [continuing]. All 32 teams’ doors would be shut. 

Ms. JACKSON LEE. ‘‘—the Giants and take my chances.’’ Pardon 

me? 

Mr. MAWAE. All 32 teams would be shut. 

Ms. JACKSON LEE. All 32 teams—— 

Mr. MAWAE. And there is no comparable league. 

Ms. JACKSON LEE [continuing]. Would shut down on workers, 

and workers could not go onto the field to work. 

Mr. MAWAE. Yes, ma’am. 

Ms. JACKSON LEE. Is that my understanding? 

Mr. MAWAE. Yes, ma’am. 

Ms. JACKSON LEE. Professor Ross, with the American Needle 

case—and I think Mr. Gertzog made an eloquent case that American Needle had a relationship for 20 years, and I am sure they 

were celebrating that relationship. And so one could argue you had 

yours for a period of time, and it is time to say goodbye. 

85 

I take a different perspective as to whether their single relationship was healthy. If we speak about jobs, apparently American 

Needle is fighting for their life. They apparently have a number of 

employees, or had some employees, who are gainfully employed, 

providing for their families. 

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 antitrust exemption which would balance the business interests of the 

NFL—which are, by the way, protected enormously with the private entity and the 501(c)(6), if that is accurate—to ensure that the 

product is a quality product but that there is diversity in the opportunities for businesses to do business with the NFL? 

Maybe it would not be American Needle. I am not here to argue 

their case. But maybe it would be American Johnson, American 

Red White & Blue, that could stand alongside Reebok, provide the 

opportunity for good 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? 

Mr. ROSS. Congresswoman, it is not too confusing a concept. I 

think we don’t know enough because of this single entity decision 

by the district court and the Court of Appeals to know what the 

real facts are. 

Now, if you listen to Mr. Gertzog’s testimony, the answer is that 

the efficient result is to give the business exclusively to Reebok, 

they can do a better job, hire more workers, produce a better-quality product that will appeal to consumers, and because, after all, 

what they are really doing is they are selling NFL hats in competition with other merchandise, and the idea is you—if the Redskins 

hat gets too pricey, somebody is going to buy a Washington Capitals hat—makes Mr. Daly happy, and Mr. Gertzog unhappy. 

And if that would—— 

Ms. JACKSON LEE. Or off-brand somewhere. 

Mr. ROSS. Or off-brand. And if that is what is going on, what the 

antitrust laws say is that is fine. Now, if this Committee wants to 

deal with the important social issues you raise about diversity in 

various forms of industries, that is a separate question that certainly would warrant the attention of the Committee. 

But that is not what the antitrust laws look at. The antitrust 

laws—— 

Ms. JACKSON LEE. Oh, I am fully aware of that, but I am looking 

at the impact. But then characterizing—I am fully aware of your 

argument, but then what is the value of the antitrust exemption 

when it reaches into the quality of life and the ability for Mr. 

Mawae to be compensated appropriately for his work? 

Mr. ROSS. Well, the particular issue as it arises in labor is relatively narrow but can be potentially important. The effect of the 

exemption would not change the current collective bargaining relationship between the NFL Management Council and the NFL Players Association. 

What an American Needle victory would do—a big victory would 

do—would be to take away an option that the NFL players were 

able to exercise in the 1990’s, which is in the face of a labor imVerDate Aug 31 2005 13:49 Nov 12, 2010 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\012010\54536.000 HJUD1 PsN: DOUGA
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passe, they could decertify as a union and then continue to offer 

to play and have the issue decided by the courts while the season 

was going on. 

So to go back to the sort of battle days of labor strike and the 

NFL—and during the 1980’s we had a couple of strikes. We had 

some work stoppages. 

Ms. JACKSON LEE. Absolutely. 

Mr. ROSS. And then in the 1990’s, the NFL players kept playing 

the whole time that case was being litigated. Fans continued to 

enjoy NFL football. And then there was antitrust litigation. That 

option, the decertify and sue option, would be precluded if the Supreme Court’s decision is a very broad decision. 

Now, if the Supreme Court’s decision is as narrow as Mr. Gertzog 

now says he wants it to be, only deciding what—the impact on licensing issues, then that issue would not arise and you wouldn’t 

necessarily have that difficulty. 

And if the players think that they are—and this would only be 

a last resort for the players, because I am sure that the NFL players would prefer to reach an agreement through collective bargaining and stay organized as a union under the National Labor 

Relations Act, as opposed to simply becoming a trade association, 

as they did for a brief period in the 1990’s. 

I note, for example, in hockey, during the NHL lockout the players did not choose to decertify but continued to use their—well, 

they didn’t do it too well, but continued to fight the issues under 

the labor law. 

So even having that option isn’t necessarily one that would prevent a strike or a lockout. But it would at least give the union the 

option of continuing to play and taking it to the courts if that was 

the option that they chose to pursue. 

Ms. JACKSON LEE. Well, my understanding is what the unions 

have gained are the ability to—I think it is a 51—or 60-40 breakdown of the revenue. Is that accurate? And that part of this ongoing negotiation is to break that and have the owners go up and you 

go down. 

Mr. MAWAE. Well, initially, on the surface of it, it looks like a 60- 

40 percent in the total revenue, but we know now that it is more 

of a 54 percent to the players because of cost credits already given 

off the top before you take into account the percentage that we 

split between the—— 

Ms. JACKSON LEE. So are you happy with that? 

Mr. MAWAE. No, ma’am. 

Ms. JACKSON LEE. You think it should get—— 

Mr. MAWAE. Well, I am sorry about that. We are happy with 

where we are at right now. 

Ms. JACKSON LEE. Right, that is what I am trying to understand. 

Mr. MAWAE. We are being asked to give a 20 percent rollback on 

player salaries without proof that they have lost 20 percent in revenue. 

Ms. JACKSON LEE. Okay. 

Mr. Ross, does that come about with the antitrust exemption? 

Mr. ROSS. The antitrust exemption only comes into play in real 

life if the leagues and the union are at such an impasse that the 

87 

players decide to exercise their option to stop being a union and 

take their chances in court. 

As long as there is any opportunity for the deal to be worked 

out—and there was a whole series of failures in the of the NFLPA 

to get the owners to move at all on free agency, which was a huge 

psychological, I think, threshold, until their successful McNeil litigation. 

But the current dispute is really one of labor law between—law 

and then the economics and fairness of whatever the two respective 

positions are going to be on whether the current thing works, 

whether the players ought to have give-backs or something. 

That is really not an antitrust decision until and unless the players feel that their prospects are so poor that we need to take this 

out of collective bargaining and end the collective bargaining relationship. 

Ms. JACKSON LEE. Well, I would like to be an optimist, but I 

think the antitrust exemption may come into being because every 

player that I have informally polled believes that a lockout is looming and that the option that they have to decertify, which would 

be thwarted by the antitrust exemption, is crucial. 

And I would be interested in understanding how Mr. Gertzog believes—I guess his 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, would, in essence, implode the rights that the players have 

by way of the antitrust exemption. 

Mr. GERTZOG. Certainly we are 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 were 70 minutes of oral argument 

last Wednesday before the Supreme Court. There was not a single 

question by any of the justices regarding the impact on labor, and 

the sports unions from many different leagues had submitted amicus briefs on that point, pointing out some of what we will call the 

doomsday scenarios. 

And eight of the nine justices asked questions, many of them 

multiple questions—not a single question on that point. So we don’t 

expect that a ruling in our favor will cover labor. 

Ms. JACKSON LEE. Okay. 

Mr. Chairman, I will conclude with this question, I guess, to Mr. 

Ross. 

The idea of the 32 entities, which is partly labor law, acting, I 

will just say, as one—the question I posed to Mr. Mawae, which 

means that while they are locked out, they can’t go anywhere else 

and offer their services. 

Sometimes the law intertwines, even though the antitrust distinctions you have made very clear. In and of itself, it appears that 

you are denying a person’s worth and that the antitrust exemption 

gives less oversight as to whether or not there are any antitrust 

implications. 

I know you are speaking to labor law, but does that exemption 

not allow, then, to look at the actions that are going on on the 

labor side as being—as undermining any competitiveness? On the 

face, it does not seem that way, but maybe there is something. 

88 

And my last point is the American Needle case—I am just seeing 

the whole crowd and cloud, and my question would be when you 

have these single entities like Reebok, could they not subcontract 

or joint venture with American Needle? Does that mean that small 

minority businesses need not knock on the door? 

To me, that is what it says. These single distribution—that 

means if I am an African American business, or a small business 

or Hispanic business, I probably wouldn’t even know where the 

front door of the NFL is, because they wouldn’t be looking for me. 

Frankly, I think that is anticompetitive. 

Mr. ROSS. Congresswoman, I would be remiss in not saying what 

a pleasure it is to talk to the whole Committee and particularly 

note my father-in-law and you both went to Jamaica High, so I am 

particularly pleased to answer your question in that regard. 

The antitrust laws are focused primarily on consumer choice. If, 

as Mr. Gertzog claims, the Reebok deal is good for consumers in 

a lower cost or more quality, then that is really only what the antitrust laws are concerned about. 

There are a lot of reasons for economic diversity. But I would use 

the example of the Federal Communications Act which separates 

the issues, so that there are competition law issues, say, in a merger, and then there are issues of minority access and diversity of 

viewpoints and things like that. 

Now, I think it is a serious public policy question whether sports 

leagues ought to be having exclusive contracts with single large 

multinational corporations, especially if there aren’t some socially 

responsible deals with other enterprises and things like that. 

Ms. JACKSON LEE. And especially if they don’t look for them. 

Mr. ROSS. And I think that is a fair question. But with all respect, I think that is a very useful topic for another hearing, because that is really not an antitrust question. 

That is really a question of social justice and the economic power 

that really doesn’t impact on consumer. 

Ms. JACKSON LEE. So just quickly, it does impact on consumers 

if they did not look to see whether or not smaller entities, non-multinationals, would provide a better deal. 

I am sure in their appeal they have made the argument, or the 

lower case they made the argument, that the better deal was with 

Reebok, but you made—Reebok, but you made the point. It is a 

multinational company and others are left outside the door. 

And because of the antitrust exemption, the NFL can do that. 

Mr. ROSS. Actually, let me make one other clarification to that. 

If, in fact, the—sports was such a driver for merchandise as it is 

for television, for example, that small and minority business enterprises could not compete in the marketplace without getting a 

sports contract—I have no idea if that is true, but if that were true, 

then that would be an antitrust violation. 

But the single-entity status doesn’t really matter there. The contract, the Section 1 agreement, that you would challenge if you 

were, say, a small minority business enterprises would be the 

agreement between the National Football League and Reebok. 

There is no question that that is still an agreement—or the National Hockey League and whoever you happen to have as your 

agreement. 

89 

If, in fact, these sorts of agreements really do exclude small and 

medium apparel manufacturers and others from the marketplace, 

that is an antitrust question, and I think that is actually one that 

maybe the Federal Trade Commission or the Justice Department 

should take a look at. 

But that really is not affected by this—the American Needle case. 

Whether they are a single entity or a group of clubs, it is the agreement with Reebok that—— 

Ms. JACKSON LEE. Right. 

Mr. ROSS [continuing]. You would be looking at, and that is a 

very legitimate question that you raise. 

Ms. JACKSON LEE. Mr. Chairman, thank you. I think that this 

hearing, once again, is vital, as the hearings that you have taken 

leadership on, and we have joined you, on the NFL brain injuries, 

one to be held in Houston on February 1st, one held in Washington, one held in Detroit. 

I think it has made enormous difference. I had the chance to 

visit with some of my players—and when I say ‘‘my,’’ we take ownership and have great respect for you all—and the testimonies, not 

in front of a hearing, Mr. Chairman, but just personal testimonies, 

are just amazing. 

So I think we are doing good here, and I, frankly, believe the 

antitrust question has to be continuously explored. I don’t know 

what the Supreme Court is going to do, but I have a sense 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— 

but do include labor agreements—I understand that—but there is 

some oversight that Judiciary would 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. Great respect for 

all of the investors that 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’t all get along. 

And I certainly hope that we will have a steady watch of this. 

And even though my great professor has interpreted very well the 

requirements—or the stricture, rather, of the antitrust laws, I see 

a little creeping over. And I am going to be exploring that, doing 

research, to see how this unity of the 32 is also impacting both 

antitrust and NLRB on the workers’ rights. 

So I have sort of moved around in this issue, but I do think there 

is a way of trying to address this question and to get the facts and 

to juxtapose it against the law, and maybe do a little bit more research, Professor Ross. 

But I thank you, Mr. Chairman, and I thank Mr. Gertzog for his 

presentation. 

Mr. Daly, we have left you alone a little bit but hope you will 

participate in this antiviolence effort. We will get your card. 

And, Mr. Mawae, you need to keep us all apprised of these negotiations. Got some good Texans down there. 

I will acknowledge, Mr. Chairman, that you had a chance, as I 

understand, to meet one of our very fine Houston Texans, a Mr. 

Chester Pitt, who was here and was very impressed with your leadVerDate Aug 31 2005 13:49 Nov 12, 2010 Jkt 000000 PO 00000 Frm 00093 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\012010\54536.000 HJUD1 PsN: DOUGA
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ership. I think he might have been in a group meeting that you 

may have had with these players. 

And I want you to know that they are fine civic citizens, and we 

really do appreciate what they do for our communities. 

I thank you, Mr. Chairman, and I yield back. 

Mr. CONYERS. Thank you all very, very much. This was a very 

instructive and beneficial hearing. 

The Subcommittee stands adjourned. 

[Whereupon, at 4:42 p.m., the Subcommittee was adjourned.] 

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