Chi. Prof'l Sports Ltd. Pshp. v. NBA - 95 F.3d 593 (7th Cir. 1996)

Rule:

Lower court cases are split as to whether professional sports leagues are best characterized as single firms or joint ventures. These cases do not yield a clear principle about the proper characterization of sports leagues -- and the United States Supreme Court does not impose one "right" characterization in determining a business entity's status under antitrust law. Sports are sufficiently diverse that it is essential to investigate their organization and ask the functional question used to determine whether an entity's status under antitrust law one league at a time--and perhaps one facet of a league at a time.

Facts:

In the six years since they filed this antitrust suit, the Chicago Bulls have won four National Basketball Association titles and an equal number of legal victories. Suit and titles are connected. The Bulls want to broadcast more of their games over WGN television, a "superstation" carried on cable systems nationwide. The Bulls' popularity makes WGN attractive to these cable systems; the large audience makes WGN attractive to the Bulls. Since 1991 the Bulls and WGN have been authorized by injunction to broadcast 25 or 30 games per year. The injunction was affirmed in 1992, and the district court proceeded to determine whether WGN could carry even more games--and whether the NBA could impose a "tax" on the games broadcast to a national audience, for which other superstations have paid a pretty penny to the league. The district court made a 30-game allowance permanent and held the NBA's fee excessive. Both sides appealed. The Bulls wanted to broadcast 41 games per year over WGN; the NBA contended that the antitrust laws allow it to fix a lower number (15 or 20) and to collect the tax it proposed. The trial court invalidated the restrictive fees and held that the NBA could not be considered a single firm because the NBA and its member teams did not have a complete unity of interest.

Issue:

Was the reasoning that the NBA could not be considered a single firm because the NBA and its member teams did not have a complete unity of interest proper?

Answer:

No.

Conclusion:

The court held that the reasoning that the NBA could not be considered a single firm because the NBA and its member teams did not have a complete unity of interest was erroneous because complete unity of interest was not a legal requirement of a single entity operation under antitrust law. The court refused to determine the NBA’s status, holding its power was only to review a district court's determination for its propriety. However, the court held that the NBA’s integration of operations warranted full application of the Rule of Reason inquiry on remand.