National Football League v. North American Soccer League

Background

The dispute was brought by the North American Soccer League (NASL) and most of its teams against the National Football League (NFL). NASL argued that the NFL’s cross-ownership rule—which bars NFL owners from holding a controlling interest in other major-league teams—keeps NASL from accessing a share of “sports capital and entrepreneurial skill.” A District Court viewed the NFL as a single economic entity and found §1 of the Sherman Act did not apply. The Second Circuit reversed, found a market for sports capital and skill, applied the Rule of Reason, and enjoined the NFL from enforcing the rule. The Supreme Court denied review; Justice Rehnquist dissented.

Reasoning

The central question was whether the NFL’s cross-ownership rule unlawfully restrains competition under §1 of the Sherman Act. The appeals court concluded the rule excluded rivals from important owners and skills and that this anticompetitive effect outweighed claimed benefits. The District Court had earlier treated the league as a single economic entity and declined to apply the Rule of Reason. Justice Rehnquist’s dissent argued the appeals court substituted its own factual judgments, undervalued procompetitive benefits, and that covenants not to compete can be valid when ancillary and reasonable.

Real world impact

Because the Supreme Court refused to review the case, the Second Circuit’s injunction remains in effect, blocking the NFL from enforcing its cross-ownership ban for now. That outcome benefits rival leagues and prospective team owners who were excluded from that market. The denial is not a final ruling on the legal merits, so the rule could still be upheld or struck down in future review.

Dissents or concurrances

Justice Rehnquist would have granted review. He argued the cross-ownership rule is a narrowly drawn, ancillary restraint necessary to protect the league as a joint venture and that the appeals court gave too little weight to legitimate procompetitive effects.