United States v. National Football League

• Decision Date: 12 November 1953
• Docket Number: No. 12808.,12808.
• Citation: 116 F. Supp. 319
• Parties: UNITED STATES v. NATIONAL FOOTBALL LEAGUE et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

116 F. Supp. 319

UNITED STATES v. NATIONAL FOOTBALL LEAGUE et al.

No. 12808.

United States District Court, E. D. Pennsylvania.

November 12, 1953.

William L. Maher, W. Wilson White, U. S. Atty., Philadelphia, Pa., W. Perry Epes, Alexandria, Va., Walter D. Murphy, John A. S. Riles, Barbara J. Svedberg, Washington, D. C., and Leonard R. Posner, Hartford, Conn., Department of Justice, for plaintiff.

Francis J. Myers, Thomas Hart, Cornelius C. O'Brien, Alfred W. Putnam, Harry Shapiro, Hirsch W. Stalberg, Philadelphia, Pa., Milton W. King, Bernard I. Nordlinger, Washington, D. C., for defendants.

GRIM, District Judge.

Article X of the by-laws of the National Football League provides that no club shall cause or permit a game in which it is engaged to be telecast or broadcast by a station within 75 miles of another League City on the day that the home club of the other city is either playing a game in its home city or is playing away from home and broadcasting or televising its game by use of a station within 75 miles of its home city, unless permission for such broadcast or telecast is obtained from the home club.¹ The evidence is uncontradicted that it is the general policy of the clubs to refuse to permit the broadcasting or televising of "outside games"² in their home territories and that such permission has seldom been granted. Most League games, particularly regular season games, are played on Sundays, and since the teams, when they are not playing at home, almost always either broadcast or televise their "away games"³ in their home territories, the restrictions of Article X effectively prevent "live" broadcasts or telecasts⁴ of practically all outside games in all the home territories.

The government has filed this action seeking an injunction against the enforcement of the provisions of Article X, contending that they are illegal under the Sherman Act, 15 U.S.C.A. § 1 et seq., which provides:

"§ 1. Every contract, combination * * * or conspiracy in restraint of trade or commerce among the several states * * * is declared to be illegal * * *."

The by-laws have been agreed to by all the League members and are binding upon all of them. They clearly constitute a contract within the meaning of the word as it is used in the Sherman Act. Associated Press v. United States, 326 U.S. 1, 8, 65 S.Ct. 1416, 89 L.Ed. 2013.

An analysis of the provisions of Article X and of the evidence pertaining thereto shows that Article X contains four basic provisions material to this anti-trust suit. (1) It prevents the telecasting of outside games into the home territories of other teams on days when the other teams are playing at home. (2) It prevents the telecasting of outside games into the home territories of other teams on days when the other teams are playing away from home and permitting the telecast of their games into their home territories. (3) It prevents the broadcasting by radio of outside games into the home territories of other teams both on days when the other teams are playing at home and on days when the other teams are playing away from home and are permitting the games to be broadcast or televised into their home territories. (4) It gives the Football Commissioner an unlimited power to prevent any and all clubs from televising or broadcasting any or all of its or their games. Since the facts in reference to each of these provisions present somewhat different anti-trust law problems, they will be considered separately.

I.

Is the provision which prevents the telecasting of outside games into the home territories of other teams on days when the other teams are playing at home illegal?

There can be little doubt that this provision constitutes a contract in restraint of trade. The market for the public exhibition of football no longer is limited to the spectators who attend the games. Since the advent of television and radio, the visual and aural projections of football games can be marketed anywhere in the world where there are television or radio facilities to transmit and receive them. When a football team agrees to restrict the projection of its games in the home areas of other teams it thereby cuts itself off from this part of its potential market. Since the clubs of the National Football League have agreed at certain times not to project their games into the home territories of other clubs they have given that part of their market at those certain times exclusively to other teams. In return, each of them has been given the right to market its own games without competition in its own home area under the same circumstances. The purpose and effect of this is to restrict outside competition on the part of other teams in the home area of each club. This, therefore, is a clear case of allocating marketing territories among competitors, which is a practice generally held illegal under the anti-trust laws. United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271, affirmed 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 427.

An allocation of marketing territories for the purpose of restricting competition, however, is not always illegal. There is no simple formula "to displace the rule of reason by which breaches of the Sherman Law are determined. Nor is `division of territory' so self-operating a category of Sherman Law violations as to dispense with analysis of the practical consequences of what on paper is a geographic division of territory." Timken Roller Bearing Co. v. United States, 341 U.S. 593, 605, 71 S.Ct. 971, 978, 95 L.Ed. 1199 (dissenting opinion of Justice Frankfurter).

"The restrictions the act imposes are not mechanical or artificial. Its general phrases * * * call for vigilance in the detection and frustration of all efforts unduly to restrain the free course of interstate commerce, but they do not seek to establish a mere delusive liberty either by making impossible the normal and fair expansion of that commerce or the adoption of reasonable measures to protect it from injurious and destructive practices and to promote competition upon a sound basis. * * * Realities must dominate the judgment. The mere fact that the parties to an agreement eliminate competition between themselves is not enough to condemn it." Appalachian Coals, Inc. v. United States, 288 U.S. 344, 360, 53 S.Ct. 471, 474, 77 L.Ed. 825.

"The legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition. Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences." Chicago Board of Trade v. United States, 246 U.S. 231, 38 S. Ct. 242, 244, 62 L.Ed. 683.

An agreement may constitute a restraint of trade, but that does not necessarily mean that it is illegal. To be illegal a contract must cause both a restraint of trade and an unreasonable restraint of trade. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619; United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663; Appalachian Coals, Inc. v. United States, 288 U.S. 344, 53 S.Ct. 471, 77 L.Ed. 825; United States v. Columbia Steel Co., 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533.⁵

The principal question in the present case is whether the particular restraints imposed by Article X are reasonable or unreasonable.

Professional football is a unique type of business. Like other professional sports which are organized on a league basis it has problems which no other business has. The ordinary business makes every effort to sell as much of its product or services as it can. In the course of doing this it may and often does put many of its competitors out of business. The ordinary businessman is not troubled by the knowledge that he is doing so well that his competitors are being driven out of business.

Professional teams in a league, however, must not compete too well with each other in a business way. On the playing field, of course, they must compete as hard as they can all the time. But it is not necessary and indeed it is unwise for all the teams to compete as hard as they can against each other in a business way. If all the teams should compete as hard as they can in a business way, the stronger teams would be likely to drive the weaker ones into financial failure. If this should happen not only would the weaker teams fail, but eventually the whole league, both the weaker and the stronger teams, would fail, because without a league no team can operate profitably.

It is particularly true in the National Football League that the teams should not compete too strongly with each other in a business way. The evidence shows that in the National Football League less than half the clubs over a period of years are likely to be financially successful. There are always teams in the League which are close to financial failure. Under these circumstances it is both wise and essential that rules be passed to help the weaker clubs in their competition with the stronger ones and to keep the League in fairly even balance.

The winning teams usually are the...