Quarterback Drew Brees Explains Why Supreme Court Should Block NFL From Having Exclusive Licensing Deals
from the worth-reading dept
We were recently discussing how the idea of "officially licensed" gear for professional sports teams is a relatively new phenomenon. In the past, anyone could produce gear for fans. However, there's a Supreme Court case looking at this issue, involving the NFL's exclusive license deal with Reebok, and reader Fitz points us to a quite well argued op-ed by New Orleans Saints quarterback Drew Brees explaining the harm that such exclusive deals do, noting that it seems like a clear violation of antitrust rules, in that all of the different NFL teams are effectively teaming up to exclude competition:The NFL originally won the case because the lower courts decided that, when it comes to marketing hats and gear, the 32 teams in the league act like one big company, a "single entity," and such an entity can't illegally conspire with itself to restrain trade. The NFL-Reebok deal is worth a lot of money, and fans pay for it: If you want to show support for your team by buying an official hat, it now costs $10 more than before the exclusive arrangement.Brees rips apart that argument by noting the competition he, himself, faced as a free agent -- a right that players only got after a series of court battles. This isn't a huge surprise. Like plenty of other businesses, sports leagues have a keen understanding of what monopoly rents are, and do everything possible to profit from them.
Amazingly, after the NFL won the case, it asked the Supreme Court to dramatically expand the ruling and determine that the teams act as a single entity not only for marketing hats and gear, but for pretty much everything the league does. It was an odd request -- as if I asked an official to review an 80-yard pass of mine that had already been ruled a touchdown. The notion that the teams function as a single entity is absurd; the 32 organizations composing the NFL and the business people who run them compete with unrelenting intensity for players, coaches and, most of all, the loyalty of fans.
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Filed Under: competition, drew brees, football, licensing, monopolies
Companies: nfl
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I think he better check out which hand is feeding him again.
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GreenBay's pretax profits for the year are 20 million:
http://www.nfl.com/news/story?id=09000d5d810ec974&template=without-video-with-commen ts&confirm=true
However, as a commenter below the article notes, "The Packers' operating profit was $20.1 million, but after deducting their investment loss and taxes, their net income was only $4 million, for a profit margin (net income divided by gross sales) of 1.61%, which is minuscule."
The Packers are the only publically owned franchise, which makes it hard to find solid numbers. Their profits dropped 50% year over year. Pretty much every set of numbers I could find that estimated pre-tax profits, there was always at least one team below 10 million.
Please, carry on.
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Without looking closely at the numbers its difficult to see if there was anything else which would contribute to such a low net profit.
There is no denying though (as the Anti-Mike pointed out) that the wage bill is enormous and clearly has a detrimental effect on the team's profits as a whole which will of course be a concern for the owners of the team.
Could I just take a second to urge commentators who want to criticise Anti-Mike to save their criticism for when he does say something dumb and not just to spit bile at every opportunity. Save it for when its worthwhile.
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The 127 million is a very good number, Green Bay is certainly an exception case in many ways. I can't help but wondering though what their net profits are each year on merchandising. I wonder if that has anything to do with at least some of that 127 million, as GB gear is pretty darn popular all over the place (especially from the time of Favre being there).
In the end, exclusive licensing deals are often the best way to profit from this sort of situation. It allows the merchandise maker to sell a higher end product (quality wise), and to sell it for a price in line with quality and desirablity. It allows them to take the risk without worrying about a flood of cheap knockoffs in the market place that would hurt their ability to invest in product and inventory. There is no reason that the teams should not be allowed to enter into such an agreement.
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Does it make sense that the players should get less and the owners should get more?
I think bringing in an extra $4 mil beyond paying your players and staff and various other contracts is a pretty sweet deal. And since these teams arent public, there are no shareholders to reap the benefits. That money goes straight into the pocket of the owner, or gets reinvested into the team next year in one form or another.
Plus, in an economy where companies are folding left and right, ANY profit at all is a windfall.
As a side note: This is actually a pretty perfect analogy to all the music discussions on this site: players = musicians. Teams/owners = record labels.
I used to be of the opinion that players were overpaid primadonnas, and in a lot of ways they are. But, they are paid what the market says they are worth. The alternative is akin to Gladiators in ancient Rome - owners getting rich off the blood and sweat of underpaid serfs. I like the current system better.
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Also, while his contract is 5 years, they can cut Brees at any time and void his contract. NFL Players usually sign big contracts with big signing bonuses, cause the players/agents/teams know they can cut the player at anytime.
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They are pricing the scarcities to the levels that concert ticket prices are reaching, and you feel locked out an angry. How long before you feel the same about concerts?
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how much will he be fined?
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quite whining
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The owner is to blame.
The owner or club have all the cards to play to get people to sign off they could easily not accept those terms no?
And people should stay away from over bearing people who want to create monopolies(exclusive contracts) those people are destroying the U.S.
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Why should some freeloaded be able to make T-shirts (to sell for a profit) and not pay the owner of the team?
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If My Team is Just a Sock Puppet then Count Me Out
It's very short sighted of them. But then I guess the average fan won't care.
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Kool-Aid
(rant)
Athletes make money just like movie stars. Actors play dress-up and Football Players play with a ball. We pay for it and love it. As long as we are willing to pay we should not complain.
One thing I would like to mention is the relatively high ratio of profit share that the NFL players get. The NFL is not allowing for competition, making poor business decisions, just like any other poorly run Corporation.
Thursday night games? Only hurts what made the NFL big (Fantasy football). Exclusive deals with EA, and DirecTv only hurt the quality and perception of the NFL.
The NBA, which does not have the luxury of having weekly games that lend it self to a Fantasy Game, but manages to keep the Exclusivity to a minimum, contracts guaranteed.
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