Answers to 5 Key Questions in NASL's Lawsuit vs. U.S. Soccer
Last week the North American Soccer League took its gloves off and readied for a battle. The NASL filed an antitrust lawsuit against the U.S. Soccer Federation in the U.S. District Court for the Eastern District of New York, insisting that its survival hinges on this case.
NASL’s complaint invokes federal antitrust law to argue that USSF is breaking the law. To that end, NASL contends that USSF and three alleged co-conspirators—Major League Soccer, Soccer United Marketing and United Soccer League—have unlawfully prevented NASL from competing with MLS as a Division I pro soccer league. Further, NASL asserts, USSF has sought to illegally strip NASL of its placement as a Division II league. It has done so, NASL maintains, so that MLS's favored minor league, USL, can become the sole Division II league.
NASL demands a preliminary injunction that would block USSF from revoking NASL’s Division II status. It also requests a permanent injunction that would prevent USSF from classifying leagues by division.
NASL warns that unless it obtains these remedies it could be driven out of existence. In such a scenario, NASL asserts, soccer fans would be the real victims. Their choice in men’s professional soccer in the U.S. and Canada would be greatly diminished.
Below are answers to five key legal questions in the case, with the help of SI's Brian Straus.
NASL claims that it is a victim of a “conspiracy.” Could you explain the legal significance of that assertion?
NASL raises two claims in its complaint. The first is under Section 1 of the Sherman Act and it concerns the so-called soccer “conspiracy” theorized by NASL.
Section 1 makes it illegal for competing businesses and other entities—including non-profit organizations like USSF—to conspire in ways that unreasonably harm economic competition. Such harm is normally shown through higher prices, fewer choices of a product or service or diminished quality in a given marketplace.
Here, NASL argues that USSF—a national governing body under FIFA—has taken steps with the help of its co-conspirators to damage competition across men’s professional soccer in the U.S. and Canada. NASL charges that USSF has effectively made it impossible for NASL to compete with MLS as a top-tier league. Also, NASL insists, USSF now seeks to bar NASL from competing with USL as a second-tier league. These arguments directly relate to competition. One less competing league, so the logic goes, means that the remaining league becomes a monopoly over a particular level of pro soccer. With that status, the remaining league—in this case MLS for Division I and USL for Division II—theoretically has fewer incentives to innovate. Likewise, the remaining league can charge consumers (fans) higher prices and pay labor (players) less.
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In order to prevail, NASL will need to convince a court that its depiction of competition fits relevant markets. NASL’s complaint expends considerable energy distinguishing top tier/Division I soccer teams from second tier/Division II teams. Likewise, NASL insists that Division I and Division II are not substitutes for one another. For instance, NASL highlights the existence of higher-value sponsorships and more national associations for Division I teams than are typically found among Division II teams.
NASL also maintains that fans of professional soccer do not consider other pro sports leagues, such as the NFL and NBA, to be viable substitutes for Division I and Division II men’s professional soccer. Those leagues “have different rules of play” and appeal to fans with different kinds of interest.
NASL’s desire to describe top-tier and second-tier soccer as unique carries significance under antitrust law. NASL is more likely to prove that USSF is unlawfully harming competition if NASL can show that the relevant market for competition analysis is limited to these two soccer leagues. USSF, in contrast, will be poised to argue the relevant markets are less fixed and more dispersed. Along those lines, USSF will claim the relevant markets span across the sports and entertainment industries—and thus any USSF rules that limit competition in soccer are not especially impactful when considering the totality of sports and entertainment offerings for consumers.
Under the relevant standard, Rule of Reason, NASL will need to show that USSF’s rules harm competition more than they help it. With that in mind, expect USSF to argue that in the absence of USSF rules that limit competition, it would be difficult, if not impossible, to organize men’s pro soccer in economically beneficial ways. USSF could stress that soccer leagues across the world are designed as pyramid structures with multiple divisions—albeit with promotion and relegation, which does not exist in the U.S. and Canada. Further, given the volatility in professional soccer in the U.S. and Canada over the years, USSF may be able to persuade a court that its structure is essential to ensuring that U.S. soccer fans receive a reliable product and one in which sponsors will invest.
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NASL also raises a monopoly claim. How strong is that claim?
NASL’s monopoly claim invokes Section 2 of the Sherman Act. Section 2 prohibits an entity from intentionally acting as an unlawful monopoly in a relevant market. Here, NASL charges that USSF has ensured that MLS enjoys monopoly status for Division I soccer in the U.S. and Canada. USSF has done so, NASL contends, by trying to destroy NASL and thus wipe out any competition. NASL also asserts that USSF desires to see USL become a monopoly of Division II soccer.
Whether NASL can prove its monopoly claim will depend on whether MLS and USL’s market positions reflect willful acquisitions of power rather than simply being good at what they do. In other words, if MLS has enjoyed full control over top tier men’s pro soccer because of its organizational strengths, then it would be more difficult for NASL to prove the existence of an illegal monopoly.
How does FIFA fit into this dispute?
NASL is a member of USSF and USSF is a member of FIFA. Statutes promulgated by FIFA require that “disputes affecting leagues, clubs, members of clubs, players officials” go first to arbitration before they can be heard in a court. FIFA uses the Court of Arbitration for Sport in Lausanne, Switzerland as a forum for arbitration matters.
Instead of seeking a remedy through arbitration, NASL has sought relief through a U.S. federal court. To be sure, USSF will argue that the court should dismiss NASL’s lawsuit as not yet “ripe”—meaning, NASL is contractually obligated to first try arbitration before seeking court intervention.
In response, expect NASL to contend that it should not be obligated to arbitrate matters that pose an immediate threat to its existence. If NASL were forced to arbitrate, it may not be able to obtain the kind of remedy it seeks—a preliminary injunction.
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Why is NASL’s chief lawyer an important part of this controversy?
NASL has retained arguably the most prominent sports litigator in America: Jeffrey Kessler of the law firm Winston & Strawn. Kessler has long and distinguished career in sports law. He has represented NBA and NFL players, as well as their respective players’ associations, in numerous antitrust and labor challenges. Two of his clients have been New England Patriots quarterback Tom Brady and Dallas Cowboys running back Ezekiel Elliott. Kessler is also very familiar with pro soccer legal matters. He has litigated on behalf of five players from the U.S. women’s national team in their wage discrimination matter.
By hiring Kessler, NASL sends a firm message to USSF that NASL intends to play the long game. Kessler certainly doesn’t need the work—he is a lawyer who can pick and choose his cases carefully. Kessler wouldn’t take on the NASL’s cause unless he genuinely believed in that cause and felt that NASL will give him an opportunity to prevail. To the extent USSF hopes to secure an early dismissal of the case, Kessler’s presence complicates that analysis.
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How long will this controversy play out?
The case is now in the hands of U.S. District Judge Margo Brodie, who has been on the federal bench since the U.S. Senate confirmed her in 2012.
On Friday, Kessler filed a letter with Judge Brodie in which he requested that she adopt an expedited schedule for reviewing of NASL’s motion for a preliminary injunction. In his letter, Kessler contends that “without a preliminary injunction by mid-October to prevent Defendant U.S. Soccer Federation from revoking the NASL’s Division II sanction for the 2018 season, NASL clubs, including the New York Cosmos, face a serious risk of being unable to conduct necessary preparations for the 2018 season, such as renewing sponsorship and season-ticket holders, retaining players, and securing or renewing leases of stadiums in which to play, and the very existence of the NASL will be in jeopardy.” Kessler further asserts that NASL would “barely” be able to avoid irreparable harm if Judge Brodie renders a decision by Oct. 20. Judge Brodie has not yet responded in a filing.
Kessler’s letter highlights the speed at which NASL wants to litigate. It also suggests that a court decision on the preliminary injunction could arrive next month.
In terms of NASL’s additional demand for a permanent injunction, expect that process to take months, if not years. Antitrust lawsuits tend to take a long time, particularly when they involve defendants who are armed with considerable resources and who can afford to retain high-powered expert witnesses and commission economic studies.
In other words, don’t expect a swift conclusion to this legal challenge.
