Supreme Court Rules Against NFL Being Single Entity

by
Posted May 24th, 2010 at 12:36 pm

The case of American Needle v. NFL took an interesting turn today with the Supreme Court ruling that the league can not use the single entity argument in an antitrust lawsuit. American Needle has been suing after they lost the ability to create NFL licensed merchandise. They were able to produce official NFL hats with teams that they had individual agreements with until the league made a league-wide deal with Reebok that granted exclusive 10 year rights.

The lower courts had found that antitrust law did not prohibit teams from banding together for a single apparel license. American Needle had its case thrown out in the lower courts on those grounds but successfully appealed at the Supreme Court level. The NFL actually joined in the appeal in the hopes of establishing itself as a single entity had they gotten a successful ruling. Now the case will once again be heard at a lower court where it could very well lose again though this keeps American Needle’s hopes alive and raises questions for the future.

Currently EA Sports has the exclusive NFL license through 2012 (Madden 13). What could this mean for gamers? At this point it is too early to say. First off American Needle hasn’t won its case. What has happened is the Supreme Court has ruled that the NFL can not use the one-entity argument in its favor against American Needle. However in doing so it does seem to have opened a door for antitrust suits to be filed in other areas.

Could Comcast challenge the NFL’s exclusive deal with DirecTV? Could Take Two challenge the NFL license with EA? Too early to say whether those would be viable options for companies to consider. They could end up challenging and losing even with this ruling as it will be up to the lower courts to determine whether antitrust law is being broken in each particular instance. Whether this ruling is the start of something that could drastically change the sports gaming landscape is a complete uncertainty at this point.

The worst case scenario that could come from this would be for teams to negotiate their rights with different companies resulting in fractured games. Maybe EA Sports gets the Cowboys but 2K Sports gets the Giants. Maybe a company produces a game based solely on the NFC North division and no other football games contain those teams. Any number of possibilities would remain should teams take it upon themselves to sell their rights off individually.

With this ruling that could end up being the case, though I think such a scenario remains unlikely. It would be difficult to market fractured games and the costs would be high for companies to secure teams one by one. Other than the big market teams, which might be able to demand big money, all the others would lose out in this scenario. The NFL would find a way encourage teams to band together to get the best deal possible. It would be more lucrative to stick together in the manner of a full exclusive license or an open license where companies would need to pay a large sum but in return be able to offer the full NFL experience.

So this ruling is a step towards exclusive licenses being challenged but it does not mean the current deal is going away or that the NFL won’t find a way to extend the deal with EA Sports yet again. However it is definitely something to follow developments on over the coming months as a final resolution is still a long ways off and witnessing any effects from it could take years.

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  • Keith.

    It's funny…

    Backbreaker demo drops — and not a word out of Ian, Raczilla, Philly Cheese, etc.

    The Supreme Court says that exclusive licenses are bad, and again, all the tools at EA Tiburon are dead quiet today. I guess EA puts the muzzle on those girls anytime something bad happens to threaten EA's monopoly. If they keep their heads in the sand much longer, even their most loyal customers are going to begin to wonder what's going on.

  • I dont think it should be a surprise that a company's employees would not want to speak on a legal case. Do you expect Comcast employees to comment about this because it could open up the possibility of Sunday Ticket? Even though the case doesn't involve EA directly, obviously they aren't going to comment on it. Nor would they comment on a competitors game which would be a no win situation for them.

    Where do you get the Supreme Court saying “exclusive licenses are bad”? C'mon man you're trying to spin this into something its not.

  • don't get too happy 2k5 peeps

    i think in regards to gaming the EA monopoly should be broken but no way should Reebok make all the NFL Gear… also a fractured football game benefits no one in regards to gameplay. an open Gaming license is the way forward.

  • bob

    I dont know why pasta is so against having more football games or any sports games for that matter. Ive yet to hear him say exclusive deals are bad. Its bad for the consumer..only having once choice not to mention they quality goes down. Im not even saying madden, look at mlb 2k series… I just dont get why pasta is against having a 2k football game or giving sony a shot at making a game after they have made mlb the show series. I know pasta has made the argument about not being enough money for competion, but i think we all agree that football is the most popular sports title and mostly everyother sport has atleast 2 choices to choose from. I just want the days to go back when we had choices and companies..made real changes from year to year

  • Where do get that I'm against having more football games? I'm just a realist. My opinion on the matter isn't going to change whether we have more football games or not.

  • ideal situation

    EA buys the euphoria engine and we have real physics with authentic teams, good camera angles, great presentation, wonderful graphics and a deep franchise mode (online and offline) and superstar mode is also given depth. AI (in game and franchise) is fixed and no one whines about anything anymore. 2k make competitive NFL games but Madden still is the best and everyone is happy.

    we can bash EA as long as we want but Madden with improved AI and the euphoria engine would be perfect.

  • ideal situation

    pasta how likely is it EA buys up euphoria and integrates it into their sports titles? every game would be improved with realistic physics. FIFA, NHL, Madden all would be VASTLY improved with great physics.

    then all the new features would be something we can get excited about because the core of the game works perfect.

    the crux is, is how likely is it to happen and when?

  • replying to jose

    lol that's impressive… i'd hate to see Peyton's numbers… haha

  • bob

    Ive just never read saying you didnt like the exclusive sports deals. I apologize if you have and i have not noticed. I know you are a realist and i like that but i also am interested in your opinion at the same time.

  • john

    You're an idiot

  • Matt M.

    The real winner here is the NFLPA. In order to succeed, any NFL game needs both the teams AND players. Now that it appears that the NFL may no longer be able to offer an exclusive deal covering all teams at some point in the future, the value of the NFLPA license will go up considerably. After all, someone may be able to sign the Cowboys to an exclusive deal, but without the players that would be useless.

  • They had passed on it before, I think they like developing their own tech. I wouldn't rule it out though if reaction to Euphoria continues to be strong.

  • Wow; this story exploded fast!

    The funny thing here is that the connection to the discussion of the video game exclusivity deal is, at the moment, tenuous at best. This is an apparel argument between a hat-maker and the NFL, and it has the potential to turn into something bigger in terms of how the NFL can do business, but it doesn't automatically open the floodgates to wresting control of the NFL license for gaming from EA Sports.

    Even if it did automatically re-open business for sports video games, it seems a bit improbable to think that either 2KSports or NaturalMotion would be in position to put out a full NFL-licensed title within a reasonable timeframe.

    While 2KSports built up an engine for All-Pro Football 2K8, they were working on that in 2006-2007; since they weren't working with the NFL license going into that game and since they haven't had the license to work with since, it'd be a real stretch to imagine that 2KSports has their whole football team just lying in wait ready to churn out a new game as soon as the NFL license becomes available again. The team would have to build all of the stadiums in their engine again, as well as applying whatever features the NFL wanted from the game; the team has also only worked with football in one attempt on the current console generation, so they wouldn't be able to port things along from the PS2/Xbox development experience. Finally, as a PS3 owner, considering that APF2K8 ran at only 30 FPS means that would require the 2KSports football development team to work with the engine and figure out how to optimize it so that the game could run at equal FPS for both PS3 and Xbox 360 if they wanted to have any sort of PS3 consumer base.

    As far as NaturalMotion is concerned, I can't speak to any personal experience with the Backbreaker demo because I'm still waiting for word on when the PS3 demo will be out; part of me fears that it might not come out tomorrow, instead only coming out on Tuesday, June 1st, since no direct announcement has been made about its availability. That aside, it took the small team at NaturalMotion a whole 3 years to build the game from the ground up; even with that lengthy development time, people who have played the demo have cited large issues with the camera and the CPU AI that will need to be addressed. The game also features generic teams with wholly-generic players; the physics engine seems impressive with 22 players of essentially the same exact build and appearance, but the question remains whether or not NaturalMotion would be able to keep the engine running smoothly if the had to account for the unique personality and appearances of every player on the field. Even if NaturalMotion got the NFL license, it wouldn't be enough for die-hard NFL fans to have football player clones who all look the same wearing their favorite team's colors.

    There are people who do not like Madden or EA Sports, and I can understand that animosity because there were a good number of people who loved the 2KSports take on football and had that taken away from them when the NFL pushed for an exclusivity deal. I don't believe that having the NFL license be exclusive to a single company does any good for anyone. However, I also think that this ruling does not represent the major changes that some people think it does, and even if this ruling about a hat-maker DID have immediate effects on the video game license, neither 2KSports nor NaturalMotion would be in a good position to turn around and put out a title without some signifiant development time.

    For at least a little while longer now, the bitching will just have to continue about the status of the NFL license in video gaing.

  • Sidewinder57

    I would think that there's a difference between an article of clothing and Madden. American Needle is arguing that the NFL shouldn't have a power over a single team that the article of clothing is being made for. In the case of Madden, the game contains all 32 teams and markets the league as a whole. Therefore it would make sense for the NFL to be able to sign exclusive deals with companies like EA.

  • ideal situation

    do you buy the reasons for passing on it?
    could it just be the cost of it is too high?
    it's evident that euphoria is the future (look at gta iv) and the tech EA develops takes too long.
    Pro Tak was an improvement and this Locomotion system is an improvement but Backbreaker (looks dreadful I'm Madden all the way) seems to have the contact side perfect, players wrapping up tackles, good blocking, hits from multiple angles. EA's engine is stale and there are only so many times you can watch the same animations over and over. it's frustrating to see the more realistic animations be the rarer ones that often require you to hurdle into a tackler or throw the ball unnecessarily low just to see a good animation.

    do you know anything about the price of Euphoria in comparison to the development of EA's tech?
    also do you know if EA has reduced the production budget of Madden over the last few years? because it seems like as soon as a new feature is included another section loses something (normally superstar and franchise mode)

  • T. Daley

    You are all missing the point. No one is going to buy a game with team specific licenses. Whether it be team specific or player specific. APF2k8 had licensed ledgends of the game and it still sunk like a lead balloon.

    People want “Realism”. They don't want fake and they dont want “partial” realism. No one is buy Dallas Cowboys 2k12 or Vikings12.

    Do you really think that EA needs the exclusivity license at this stage of the game. They have such a developmental advantage over any competition both fiscally and experience, that it would be corporate suicide at this stage to go up against them for the long haul. Look how long Back Breaker has been in development. You cant compete with EA's annual releases when you take that long to develop a game.

    The only way to compete with EA, providing the license isn't renewed, is for a big name company fund a football project and give the team at least 2-3 years of developmental time to create the game. Its the only way for a dev team to be able to make up ground on EA. If they expect to compete with EA on a 1 year developmental schedule then it will be a one and done endeavor.

    With exception of the delusional 2k fanboys which are still living on Fantasy Island, the rest of us are conditioned to play Madden. Any game which tries to break that cycle would have to be one awesome spectacle of a game and I just don't think anyone can pull it off. EA is too big, too experienced, and has way too much access to the various sports and players it emulates.

  • Gamer

    What does Monday's ruling mean for the other three leagues and their contracts for hats, caps and other paraphernalia with team logos?

    It means that the other leagues must be very careful as they make these deals. Many of these contracts are leaguewide arrangements that could run afoul of the ruling in the American Needle case. If a manufacturing company feels it has been unfairly barred from a fraction of a paraphernalia contract, it now can file its antitrust lawsuit and put the league at the wrong end of expensive and lengthy litigation. But every lawyer in the sports industry has been watching this case and is now aware of the decision and its implications. Any profits that might result from an exclusive contract, the lawyers now know, must be balanced against the likelihood of an antitrust attack.

  • T. Daley

    Before all you nimrods that think Natural Motion could buy the rights to the NFL for backbreaker, remember one thing.

    http://www.naturalmotion.com/products.htm

    They are a software engine developer and not a game developer. All there products are software engines. They are not getting into the game development business and they are hardly big enough to purchase an NFL license.

  • Gamer

    Well it would go beyond a article of clothing that is just an example. Any product that makes a profit as result of an exclusive deal will be under scrutinty. If EA and their fans have so much faith in Madden there should be no hostility or fear about the possibility of losing the license right?

  • GNE

    Ive read about this in several places and its become clear there is nothing for the NFL or EA to worry about right now. Have to see if AN even can win their case with that ruling now in place.

  • Jose

    Anyone who thinks Backbreaker is going to be a “franchise” is dilusional. NaturalMotion is clearly using the game to showcase their Euphoria Engine so they can cash in BIG with EA. I personally, would not mind that. If EA did that and do some “reverse engineering” with 2K5 Football they (EA) could present a worthwhile Football Game, not Football Arcade Game.

  • jbl72

    Best…post…..ever

  • Jake

    Pata, so does this mean only one company can have madden still, or can we go back to the Madden and 2k competition, which could be by NFL 2K13 or 14 maybe?

  • donnytrimm

    Or how about BackBreaker or 2K sports signing the NFL Players Association, without the team and NFL logos?

  • Steven R

    a developmental advantage??? That being what….hoarding? For crying out loud, it took them about 5 years JUST to change the way madden plays and looks and nba Live is on the brink of extinction. These guys should come out on TLC showing their hoarding problems. Thats like saying a huge football player has an advantage over a smaller football player. If the heart and dedication is present in the smaller fella, i'm sure that he'd give everything he has to knock the son bitch down. and would. I havent seen any talent come out of EA since medal of honor first came out. Atleast then it was a breakthough. Look what happened there….they were king of WW2 games…until call of duty ass screwed them for good. Call of duty has 2 different developers….i think EA should give that a try. atleast we'd see some difference in gameplay.

    • shut up

      what do you guys not understand? WE DONT WANT MADDEN TO CHANGE!!!!!!! KEEP IT THE WAY IT IS AND ADD ON!! Difference in gameplay??? WE DONT WANT THAT!!!! 2 DEVELOPERS???? WE DONT WANT THAT!!!!! SHUT UP ABOUT CHANGE GODDAMN

  • Steven R

    Backbreaker was a dreadful failure…..wow….only a demo has been out for a couple of days…and its already a failure. I guess i can say you were already an idiot before you were born. Sucks for you man.

  • Steven R

    I'm sure EA would want euphoria just for themselves, making it unavailable for other developers. Rockstar being one of them. I dont think natural motion would sell out to just ONE company. With their software out to mutliple developers, EA wouldnt want euphoria if they couldnt have it all. Going by history…

  • Steven R

    you have no clue what you;re talking about. Just stop while you're ahead and stay in school

  • Keith.

    I sure wouldn't want to be the EA or NFL lawyer telling the CEO, board of directors and shareholders, “Don't worry, you have nothing to worry about with your exclusive contract.” I'm guessing those same lawyers just got punked by predicting wrong about what the Supreme Court was going to do. Sooner or later, those lawyers are going to have to play it safe (if they still have their jobs a year from now).

  • Keith.

    “If the jurors decide the restrictive contract was an unreasonable exercise of the league's power, the league will be forced to pay American Needle triple the amount of money it lost when it lost the contract.”

    I think this is THE biggest point that everyone is missing. There's no way the NFL doesn't settle this thing before trial.

  • I had read this whole article and it is really very interesting. Love to read this type of interesting and informative article. Government is taking appropriate decisions. I sure wouldn't want to be the EA or NFL lawyer telling the CEO, board of directors and shareholders.

  • Keith.

    As someone brightly noted on another board:

    “So this means 2K can go to court against the NFL and EA and cite this ruling as anti-trust and gain 3X the amount of money they lost over losing 2k5 to an exclusive deal? They were kind of in financial trouble, right? Wouldn't this be a great way for them to recover from that?”

    My answer is…Yep.

  • Chris Reys

    I believe it will revert to the way it was in the late-80's. Does anyone remember Joe montana football with all the other games having 49ers and a really good no-name quarterback? I could easily see T.O. selling his rights exclusively to a single game manufacturer and yes i could definitely see a Dallas Cowboys game selling exclusively. They have a fan-base that will eat that up. If you're a fan of the Chiefs, good luck getting an exclusive game but they will probably sell their likenesses to several games. So, if you want to be Dallas or the Raiders, go exclusive and get the other teams (minus the Raiders or Dallas).

  • We're not talking about players splintering off. This doesn't affect the NFLPA. This ruling would potentially just give teams the rights to negotiate their own deals.

  • jake

    you have no clue that i am destroying your mothers vagg right now

  • blondeviking64

    I love listening to 2k fan boys. They all say the same thing everytime. 2k was better…. EA stole it their chance…. And yet I see the NFL who decided they would have one video game company making their game. Just like all teams wear reebok jerseys, or whatever they will have this year, and players who have ANYTHING exposed that is the wrong company get fined. Perhaps some 2k fans boys have missed the picture. The NFL only wants one company makings its football games. EA was the nig kid on the block and they got the contract. Everyone acts like EA is the evil genius behind this. Write a letter to Goodell and deal with the actual culprits of the situation. I mean its not like the NFL CHOSE EA or anything.

  • blondeviking64

    Oh wait, they totally did. I stand corrected.

  • shut up

    SHUT UP YOU TROLL KEITH

  • It's not? Then how could it carry out suspensions on other players? The rule is nonsense.

  • donejerseys