Ownership Restrictions

10
Ownership Restrictions

description

Ownership Restrictions. NFL Cross-Ownership Rule. Key factual findings: 1) Growing inter-sport competition between football and soccer concerning TV and local live gate 2) Limited availability of investors 3) No evidence of "confidential" information or of abuse of position by cross-owners - PowerPoint PPT Presentation

Transcript of Ownership Restrictions

Page 1: Ownership Restrictions

Ownership Restrictions

Page 2: Ownership Restrictions

NFL Cross-Ownership Rule

• Key factual findings:

1) Growing inter-sport competition between football and soccer concerning TV and local live gate

2) Limited availability of investors

3) No evidence of "confidential" information or of abuse of position by cross-owners

4) rule overly restrictive

Page 3: Ownership Restrictions

2/ NASL v NFL

• Restraint of trade– Do you agree with 2nd Circuit’s

factual finding of a slim market for sports investors?

• Why do other NFL owners have a legitimate interest in approving sale of teams to new owners?

Page 4: Ownership Restrictions

3/ NASL v NFL

• NFL response to MLS – allowing owners to own MLS teams in own city but not someone else’s – further illustrates the antitrust complexities of the issue

• Why did the league create these exceptions?– Horizontal agreement to protect selves from

competition– Vertical agreement to limit animosity and reprisals

among ‘partners’– ad hoc for Paul Allen

Page 5: Ownership Restrictions

Ban on Public Stock Offering

• In what market does the NFL rule restrain trade?

• What is the effect on the rule on the price/ value of NFL stock?

Page 6: Ownership Restrictions

/2 Sullivan

• Would corporate owners behave differently than family owners? In what ways?

• Are the NFL owners really concerned that co-owners are smart entrepreneurs committed to long-term success?

Page 7: Ownership Restrictions

/3 Sullivan

• Parties agree that price for ownership interests is depressed, rather than artificially raised, by this rule– So why would owners adopt a rule that reduces

the overall value of their franchise?• According to the plaintiffs’ theory, who is harmed

by the NFL rule?

Page 8: Ownership Restrictions

Problems with 1st Circuit’s Reasoning

• Court accepts NFL claim that its rule contributes to efficiency by precluding owners who will place short-term dividend interests of individual club s-holders instead of long-term interests of league [597]

– but court still finds rule overbroad b/c NFL has a LRA: it could allow corporate minority ownership while protecting long-term interest by insisting on majority control by non-corporate owner

• Do you agree with this reasoning?• In what market is trade restrained if league allows minority

ownership?• Real problem: unwillingness of league to get rid of incompetent

owner, the way a separate competition organizer would if not controlled by the owners

Page 9: Ownership Restrictions

Ironies in Sports Law

• Benefits to Steelers of going public

Page 10: Ownership Restrictions

Who Should Own Sports Teams?

• Member-owned teams• Capital investment or

leveraged debt• Refuse highest bid unless

owner is civic-minded• Member /private

partnership