Relevent Ups Stakes With Federal Antitrust Lawsuit vs. U.S. Soccer
The legal battle between Relevent Sports and U.S. Soccer over competition barriers to the United States hosting foreign league soccer matches escalated on Monday. The soccer promotion company owned by Miami Dolphins owner Stephen Ross filed a 43-page federal antitrust lawsuit against U.S. Soccer, alleging conspiracy in the manner in which it grants approval for matches played on U.S. soil.
The lawsuit, which was submitted to the U.S. District Court for the Southern District of New York and obtained by SI.com, asserts that U.S. Soccer has unlawfully conspired with FIFA to boycott clubs and players that participate in matches in the U.S. that haven’t been sanctioned by U.S. Soccer, all in an effort to benefit the federation's economic partner, Soccer United Marketing. It also charges that U.S. Soccer and FIFA have illegally interfered with soccer promotion companies that wish to provide American fans with opportunities to watch top foreign teams play one another in the USA.
Famed sports litigator Jeffrey Kessler is representing Relevent. Kessler has been the lead attorney in other soccer cases. He represents 28 U.S. women soccer players who have sued U.S. Soccer over alleged gender-discrimination in pay and employment conditions. He also represents the NASL in its lawsuit against U.S. Soccer.
U.S. District Judge Valerie Caproni, a former Assistant U.S. Attorney who served as General Counsel of the FBI under then-Director Robert Mueller, has been assigned the case. Judge Caproni will preside over the litigation and potential trial, though a case of this nature is far more likely to settle long before a trial would take place.
Here's a closer look at the key aspects.
Understanding the key facts in the dispute
Although it is a private, not-for-profit entity, U.S. Soccer is the country’s official governing body of soccer. U.S. Soccer possesses this authority through the Ted Stevens Olympic and Amateur Sports Act of 1978. To that end, U.S. Soccer maintains ultimate authority over Major League Soccer and the National Women’s Soccer League. It also employs both the U.S. men’s and women’s national teams.
U.S. Soccer also enjoys certain powers through its contractual relationship with FIFA. U.S. Soccer is FIFA’s national affiliate in the U.S. Through this designation, U.S. Soccer functions as if it has the legal power to permit or deny—as Kessler puts it in Relevent’s complaint—“all professional soccer matches played in the U.S. by FIFA-affiliated professional soccer leagues and clubs.” U.S. Soccer thus sanctions various matches, including friendlies as well as matches that count in the standings, played between foreign clubs in U.S. soccer stadiums.
Relevent’s federal lawsuit adds to the lawsuit it filed in a New York trial court back in April. In that suit—which remains in litigation—Relevent invoked Article 78 of New York’s Civil Practice Act. Article 78 regulates U.S. Soccer and other not-for-profit entities in their internal review processes. Relevent maintains that U.S. Soccer engages in an arbitrary and capricious decision-making when determining which foreign clubs can play in the U.S.
Relevent highlights how U.S. Soccer “denied” the soccer promotion company’s application to host a May 5 match between two Ecuadorian clubs, Barcelona Sporting Club and its hometown rival, Guayaquil City FC, in Miami’s Hard Rock Stadium. Relevent insists that the rejection was premised on an anticompetitive conspiracy between U.S. Soccer and FIFA. Relevent also maintains it incurred substantial expenses for this cancelled match since it secured a stadium and received approval letters from Series A and other governing bodies.
In its attempt to host a sanctioned match on May 5, Relevent had to adhere to a multi-step process with U.S. Soccer. This process began weeks before the match would be played. The process included securing a FIFA match agent, who is a licensed representative on behalf of FIFA. This part of the process triggered a sensitive dispute between Relevent and U.S. Soccer since Relevent’s listed match agent, Charlie Stillitano, was not listed by FIFA as an authorized match agent. Relevent and U.S. Soccer have offered competing narratives over whether Stillitano, who is also Relevent's executive chairman, should have been authorized at that time; the argument relates to disagreements about agent insurance and related issues.
There is also a larger context to the Relevent and U.S. Soccer dispute. Relevent unsuccessfully attempted to host a Spanish league match between Barcelona and Girona at Hard Rock Stadium last January, meeting opposition from FIFA, UEFA, the Spanish federation and the Spanish players' union. That match was to be part of Relevent's 15-year North American partnership with La Liga but ultimately remained on Spanish soil. It seems the relationship between Relevent and U.S. Soccer has frayed to the point where litigation is their means of negotiation.
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Relevent’s core legal arguments in the federal lawsuit
Relevent’s federal lawsuit raises two claims.
The first is Section 1 of the Sherman Antitrust Act. Section 1 prohibits agreements between competing businesses when those agreements harm competition more than they enhance it. Agreements that tend to raise prices, stifle innovation or limit consumer options are most vulnerable to a finding of illegal conduct, which under antitrust law can carry “treble” damages—meaning the dollar amount of proven harm is multiplied by three.
Relevent asserts that U.S. Soccer, FIFA and associated confederations have conspired to limit the number and type of international soccer game events in the U.S. This alleged conspiracy consists of boycotting certain teams and players. It is an alleged boycott that financially harms Relevent and other soccer promotion companies.
To illustrate this point, Relevent highlights that between 2013 and 2018, it paid $20.5 million to U.S. Soccer in so-called “sanctioning fees” for friendlies between foreign clubs. Relevent asserts these fees harm competition since they increase expenses for organizing matches. The higher the costs the more Relevent and rival promotion companies are dissuaded from seeking to host matches. Put another way, consumers would see more foreign teams play on U.S. soil if U.S. Soccer didn’t require sanctioning fees.
Relevent places emphasis on the fact that American soccer fans are keenly interested in watching foreign clubs—rather than MLS clubs—play. It’s well-established that MLS clubs lack the same level of talent of other major soccer leagues. Relevent’s complaint provides data suggests that American soccer fans are keenly aware of this point. To that end, in July, over 60,000 fans attended the International Champions Cup match between Bayern Munich and Real Madrid at NRG Stadium in Houston. A few days later, nearly 53,000 fans paid to watch Real Madrid take on Arensal in Landover, Maryland. By comparison, the average attendance at MLS matches thus far in the 2019 season has been just over 21,000 fans.
Relevent contends that U.S. Soccer, as the FIFA-affiliated sanctioning authority in the U.S., has obtained illegal “monopoly power” to control access to the market for international soccer matches in the U.S. Relevent further maintains that U.S. Soccer is bound by FIFA’s restrictions on competition: FIFA membership rules require that national affiliates adhere to various FIFA rules that attempt to control the playing of games. This so-called conspiracy, then, is a byproduct of rules that Relevent charges should be viewed as illegal on their face.
Relevent also contrasts what it depicts as FIFA and U.S. Soccer’s aversion to permit foreign clubs to play in the U.S. with the willingness of U.S. pro sports leagues to play games abroad. The NHL, NFL, NBA and MLB have all played games in other countries in recent years. They do so in hopes of expanding their popularity with new fan bases. FIFA and U.S. Soccer, in contrast, allegedly deny American soccer fans of the chance to watch superior play. This denial arguably props up MLS and its games in a way that harms the consumer: American fans can only go to matches with MLS players rather than players from superior leagues.
Relevent also pleads a claim for tortious interference with business relationships. This type of claim refers to U.S. Soccer allegedly interfering with Relevent’s business contracts and prospective contracts with international soccer leagues, national associations, clubs and various soccer game event vendors.
Likely rebuttal by U.S. Soccer
U.S. Soccer will answer Relevent’s complaint and dispute Relevent’s depiction of facts.
U.S. Soccer previously clashed with Revelent’s portrayal of the May 5 match in the New York trial court by claiming that Relevent prematurely sued. U.S. Soccer insists it was in the middle of the review process. U.S. Soccer contends that while it reached out to the Ecuadorean Football Federation and CONMEBOL to ensure they approved the May 5 match, U.S. Soccer had not received a response.
U.S. Soccer will likely also highlight the matches between foreign clubs it has approved. This would serve as evidence that it welcomes foreign clubs, even if American fans might see that those clubs have much more talented players than MLS clubs. Further, to the extent U.S. Soccer followed its own rules in evaluating Relevent’s applications, U.S. Soccer can argue it acted logically and not arbitrarily.
U.S. Soccer will likely also argue that Relevent’s dispute is subject to a mandatory arbitration provision. Companies that apply for a match agent license are contractually bound by a mandatory arbitration in the event the company has a dispute with a national association. Here, Relevent and U.S. Soccer have disputed the license and match agent. Generally, when a party fails to exhaust its administrative remedies (including arbitration), a court is inclined to dismiss a lawsuit.
Relevent anticipates this type of rebuttal in its complaint by arguing, in so many words, that arbitration is not mandatory in disputes involving claims under U.S. antitrust law. Indeed, Relevent cites a ruling by the Court of Arbitration for Sport (a Lausanne, Switzerland-based arbitration entity that hears many types of sports arbitrations) that arbitration is only mandatory to the extent they implicate FIFA’s statutes and regulations. Relevent argues their claims exceed that scope by including antitrust issues.
Michael McCann is SI’s Legal Analyst. He is also an attorney and Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.
