Antitrust and the NFL

September 16, 2019
 
Oakland Raiders Logo

Oakland Raiders Logo

Brandon Williams (CC BY-NC 4.0)

Typically the start of the fall football season is time for tailgates and fantasy leagues.  This year, it’s also time for litigation against the NFL.  Through an unusual interpretation of the antitrust laws, the city of Oakland is challenging the Raiders’ decision to move to Las Vegas for the start of the 2020 football season. Oakland is suing the Raiders, the NFL, and the league's other 31 teams for breach of contract through antitrust violations.  Oakland is seeking damages, estimated at over $240 million, claiming lost tax revenue and the diminished value of the Oakland Coliseum.  Under federal law, damages for injuries due to proven antitrust violations are tripled.

Catherine Stahl from the University of Illinois College of Law

Photo Credit:University of Illinois College of Law

The Raiders reached an agreement to move to Las Vegas after the Nevada legislature approved $750 million in public funds for a new football stadium.  The city claims the NFL boycotted Oakland as a location to continue to host the Raiders because Oakland would not provide public funds.  As a result of the NFL’s boycott, the city alleges that the NFL teams operated as a cartel by demanding public funds to enrich themselves.  Each individual team owner also had a financial incentive to approve relocation because when a team moves it pays a fee to the other owners. The city claims the relocation fees of over $370 million acted as “supra-competitive cartel payments” to the owners of the other NFL teams.

In a March 2019 motion to dismiss, attorneys for the Raiders and the NFL stated that Oakland’s suit was a "perversion" of antitrust law and “in a free market, a product or service flows from a willing seller to the willing buyer who values it most.  No one has impeded that competitive process here."  The United States Department of Justice filed a statement of interest, siding with the NFL against Oakland, stating that the current suit is an inappropriate use of antitrust laws.  The Department of Justice explained that the city’s interest in collecting taxes is a result of its governmental authority and is not part of the “business or property” that can be recovered in a claim under the Clayton Act.  In any event, the alleged lost tax revenue should not be used as a basis to grant Oakland standing to sue the Raiders and the NFL in federal court. 

After hearing arguments on the motion to dismiss, the Chief Magistrate Judge left Oakland a small opening to pursue its claims.  The judge indicated that restrictions on the number of NFL teams could provide a potential basis for an antitrust claim.  The judge cautioned that Oakland would have to demonstrate the current 32-team restriction is “an unreasonable constraint on trade” and that Oakland would be able to keep the Raiders or add a new franchise “but for” the NFL’s restrictions.  The judge granted the City of Oakland an extension to amend its complaint and provide additional documentation to defeat the motion to dismiss, but the play clock is running out…