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THE AWARD WAS ONLY TOKEN THE USFL PROVED PART OF ITS CASE AGAINST THE NFL ONLY TO SEE THE JURY THROW THE WINNERS FOR A LOSS

Aug. 11, 1986
Aug. 11, 1986

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Aug. 11, 1986

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THE AWARD WAS ONLY TOKEN THE USFL PROVED PART OF ITS CASE AGAINST THE NFL ONLY TO SEE THE JURY THROW THE WINNERS FOR A LOSS

One dollar,'' jury forewoman Patricia McCabe read in a flat voice
last Tuesday afternoon, and the crowd inside room 318 of the federal
courthouse in Manhattan gasped. The United States Football League had
just won its claim in its potential $1.69 billion antitrust case
against the National Football League that the league is a monopoly,
yet had been awarded barely enough in damages -- $3, when
automatically tripled under antitrust law -- to buy coffee and a
danish from the stand outside the courthouse. When McCabe then
pronounced the NFL cleared by the jury on all other counts, NFL
attorney Frank Rothman, who had been studiously unemotional
throughout the three-month-long trial, punched his fist in the air.
''Justice is wonderful,'' he declared, beaming.
So ended the trial that was to have changed pro football in
America -- and probably did, in ways that are yet to be defined. The
verdict was almost surely a landmark: a precut tombstone for the
young, money-losing USFL, which, according to several published
reports, needed at least $300 million in damages from the NFL if it
was to survive. On Monday, USFL owners met for seven hours with
commissioner Harry Usher in New York City and decided to suspend
operations for the season -- it was to have begun on Sept. 13 --
while pursuing their legal options regarding damages and network
television access. It was possible that the action might free such
USFL stars as Jim Kelly, Herschel Walker and Kelvin Bryant to sign
with NFL teams for this season.
According to legal experts interviewed by SI, the USFL's prospects
for a successful appeal are slim. The basis for the appeal
presumably would be posttrial statements to reporters by two jurors
who indicated they misunderstood the court's instructions on
damages.
The NFL crowed over the verdict. Rothman called it ''a total,
unequivocal victory'' for the league. Said Dolphins owner Joe Robbie,
''On the surface it gives the league even greater stability than in
the days before the World Football League.'' NFL commissioner Pete
Rozelle, who during his ride to the courthouse had heard a sobering
radio bulletin announcing only that the USFL had won, said that the
USFL had ''shot itself in the foot'' by overspending and shifting its
season from the spring to the fall. The USFL, Rozelle said, had tried
to ''blackmail'' the NFL into a merger by suing over ''baseless
claims.''
USFL attorney Harvey Myerson had presented those claims with
considerable flair (SI, July 7), but the jurors found legal heft in
the quiet, solid rebuttal by Rothman and colleague Robert Fiske. The
stakes were high. Had the USFL won full damages, several NFL teams
would have faced financial peril. ''This was the biggest threat we'd
ever faced,'' said Bengals owner and general manager Paul Brown.
''While I felt all along that we were in the right, I didn't have
that much faith in what the jury might decide.''
But as things turned out, it was the USFL that found itself deeper
than ever in financial trouble. ''Was that a jury or a bleeping
circus?'' thundered former USFL wide receiver Nolan Franz, now a
member of the NFL's Green Bay Packers, who had hoped to recover back
pay he says is owed him by the defunct Boston-New Orleans-Portland
Breakers. ''My 35,000 bucks just went down the tubes.'' Current USFL
players, some 300 of whom had already received either 30% of their
1986 salaries or $10,000, expressed concern about their future, while
NFL players, agents and union leaders feared the loss of bargaining
leverage.
The verdict raised both practical and philosophical questions.
Why, for example, was the NFL, although a monopoly controlling more
than 90% of pro football's revenues, allowed to get off so lightly?
''Everyone knows the NFL is a monopoly,'' said Tacoma, Wash.,
attorney Albert Malanca, an antitrust authority. ''It's as blatant as
the nose on your face. . . . The thing is, how was anyone hurt by
them?'' In this case the jury determined -- after 31 hours of stormy
deliberation -- that the NFL monopoly had not significantly injured
the USFL.
The jury left unclear exactly what the NFL had done wrong. On
eight specific antitrust and common-law claims (foremost among them a
charge that the league had monopolized pro football's television
market), the jurors absolved the NFL. As a result, NFL attorneys
will ask Judge Peter K. Leisure to overturn the jury's general
finding that the league did ''willfully acquire or maintain monopoly
power'' in the market of pro football. ''If we're not monopolizing
the (specific) parts of the business, then what are we a monopoly
of?'' asked Rozelle.
The NFL contended throughout the trial that it is a ''natural''
monopoly that achieved its dominant position because of sound
management and the unique nature of the pro sports industry, in which
one league usually wins out. But it is arguable whether the NFL's
monopoly is either natural or desirable. In fact, the NFL was able to
strengthen its competitive position at least partially because of
limited antitrust exemptions approved over the years by Congress.
Currently, for example, the NFL enjoys an antitrust exemption that
allows it to negotiate broadcast rights for all 28 of its teams,
which then share equally in the television revenue, accounting for
60% of the league's income. As Stephen Ross, a former antitrust
lawyer with the U.S. Justice Department and now a law professor at
the University of Illinois, points out, this hurts fans by removing
most of the financial incentive for owners to try to improve losing
teams -- why bother, if you receive as much money for going 0-16 as
for winning the Super Bowl?
Ross says that revenue sharing makes the NFL less willing to
expand to appealing markets like Phoenix, because ''that would only
mean a smaller piece of pie for everyone at the trough.'' Instead NFL
teams, sometimes with league acquiescence, shamelessly play cities
off against one another to get costly new stadiums built or existing
ones improved at taxpayer expense. Tennessee Senator Albert Gore, who
wants a franchise in Memphis, says the NFL has created ''an
artificial scarcity'' of teams. He asked the Justice Department to
look into the league's ''monopolistic behavior.''
Last week's verdict raised concerns that a newly emboldened NFL
may pressure Congress for even broader antitrust exemptions that
include the right to sell television rights to pay-cable outlets.
Legislation currently before Congress would give the NFL greater
power to control franchise movement and protect its current
revenue-sharing arrangement against an antitrust challenge in
exchange for a written policy governing future expansion. ''We don't
intend to press for that (legislation) now,'' insisted Rozelle last
week.
Besides all but killing the USFL, the verdict could have a
dramatic effect when the NFL begins negotiating a new collective
bargaining agreement with its players' union before the 1987 season.
''If the NFL really takes this (verdict) as a victory and gets cocky
about it, what they're really setting the stage for is a big union
strike next year,'' warned California-based agent Mike Blatt.
For now, however, the NFL is back to business as usual. Said Lions
general manager Russ Thomas, grinning after learning of the verdict,
''Another day, another dollar, isn't that right?'' END

This is an article from the Aug. 11, 1986 issue

Photo(s):ANDREW POPPER Usher smiled before the verdict, but his league won just enough -- $1 -- for a subway ride.ARMEN KACHATURIAN Rozelle proclaimed a major victory even though the court ruled the NFL a monopoly.