“I love to compete. That’s the essence of who I am.” – Tiger Woods
Competition is the essence of sports. It fuels the players and the thrill of it entices fans to cheer for their favorite players, purchase memorabilia, and watch games. Outside of the games, however, players and coaches are lobbing anticompetitive claims against the very sports’ governing bodies that bring the competition to the fans. Lately, it seems like no sport is safe from antitrust complaints about its governing rules.
Sports’ governing bodies establish rules for players and teams that set the guidelines for participation, but the competitiveness of those rules is increasingly coming under legal scrutiny. For example:
- Racing teams allege NASCAR violated the antitrust laws in its charter that require teams to use NASCAR’s selected source supplier for stock car parts, sign non-compete agreements, and waive anticompetitive challenges to the charter itself.
- Tennis professionals argue that the tennis governing bodies’ earnings caps, invasive investigations, and name, image, and likeness limitations violate the antitrust laws.
- Hockey players allege that the National Hockey League and Canadian Hockey League agreement impedes players’ ability to compete for teams freely.
- Division I volunteer baseball coaches allege that the NCAA and member schools agreed to a fixed number of assistant coaches on a school’s baseball team. The cap, the coaches allege, lead to a volunteer coaching program, at the expense of the coaches’ salaries.
The heart of the antitrust allegations in these matters is that the rules of each sport’s governing body restrict players’ or coaches’ ability to compete in the form of freedom to move teams, jointly bargain, and choose suppliers. These rules, the players and coaches argue, are a violation of Section 2 of the Sherman Act, which prohibits illegal monopolization. The allegations are that the governing body or league sets the rules in question to maintain its monopoly. The other argument is that the rules and related agreements are a violation of Section 1 of the Sherman Act, which prohibits agreements or conspiracies that unreasonably restrain trade.
The above cases are at various stages of litigation. Some, like the tennis matter, are at the complaint stage, while others, like the racing matter, are in discovery. In litigation, defendants will have the opportunity to argue that their rules are pro-competitive. Procompetitive justifications, including maintaining a level playing field, preserving innovation, and increasing output can be defenses for anticompetitive rules. The Supreme Court, however, rejected the NCAA’s justification that its rules protect amateurism as a defense in NCAA v. Alston.
Sports has a long history of antitrust matters, from Major League Baseball’s antitrust exemption in 1922 to modern NCAA challenges, but the recent challenges might result in a restructuring of the rules that govern the games’ participants, if courts agree that the rules are anticompetitive and reject the defendants’ procompetitive justifications.
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