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NFL must face antitrust suits, U.S. high court rules

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The U.S. Supreme Court opened the way for greater antitrust scrutiny of professional sports leagues, reviving a suit over the National Football League’s agreement with Adidas AG’s Reebok to sell clothing emblazoned with team insignias.

The justices, unanimously overturning a lower court ruling, said the NFL and its franchises aren’t automatically entitled to act as a group in licensing their trademark rights. The majority said judges instead should consider on a case-by-case basis how the league’s business practices affect competition.

“The teams compete in the market for intellectual property,” Justice John Paul Stevens wrote for the court. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks.”

The ruling is a blow to pro sports leagues, which had sought to win a broad shield from antitrust claims over video-game licenses, television rights, franchise relocation and even player salaries. Only Major League Baseball is exempt from antitrust laws now. The decision may reduce the NFL’s leverage as it tries to negotiate a new contract with its players’ union and avoid a work stoppage after next season.

The case centers on a suit by American Needle Inc., which lost its right to sell team caps in 2000 when the league reached its accord with Reebok, a Massachusetts-based company later acquired by Adidas. American Needle sued the NFL, its teams, their licensing arm and Reebok.

Reebok employs 950 people at a manufacturing plant on the east side of Indianapolis. The facility manufactures and distributes apparel for the National Football League, National Basketball Association, National Hockey League, Major League Baseball and the NCAA.

Retail sales of NFL-licensed merchandise in the U.S. and Canada topped $3.2 billion in 2007, according to the Licensing Letter’s Sports Licensing Report, published by EPM Communications Inc. in New York. Sales of pro football, baseball, basketball, hockey and soccer products combined were more than $9 billion.

The NFL asked the Supreme Court to declare that franchises operate as a single entity when licensing trademark rights to apparel makers and other vendors. That would have shielded the league and its teams from suits under the federal antitrust law provision that bars conspiracies to restrain trade. The league said trademark licensing helps promote that on-field product.

American Needle, based outside Chicago, said the league structure shouldn’t exempt teams from the usual rule that independently owned businesses face antitrust scrutiny when they act in concert. The company says the Reebok agreement led to price increases.

The Obama administration took a middle ground, saying the NFL is a single entity for only some of its activities.

The 7th U.S. Circuit Court of Appeals in Chicago threw out the suit, saying collective licensing would help teams “compete against other entertainment providers.” The NFL took the unusual step of joining American Needle in requesting Supreme Court review.

The NFL had backing from the National Basketball Association, National Hockey League, the National Collegiate Athletic Association and other leagues. Major League Baseball isn’t involved.

Electronic Arts Inc. also supported the NFL. The video-game publisher has an exclusive license to produce video games using NFL players, teams and logos.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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