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Stan Kroenke Wins Leverage with Supreme Court Ruling

Armen DacityCorrespondent IMay 25, 2010

On May 24, 2010, the United States Supreme Court ruled in American Needle, Inc. v. NFL, et al. that the NFL, a collection of 32 separate businesses, is not immune from the coverage of the anti-trust law.

 

One day later, the St. Louis Post-Dispatch’s Jim Thomas published an article reporting that Stan Kroenke is gaining ground in his bid to buy the Rams, quoting Saints owner Tom Benson as stating that, “Everybody wants him as an owner.”

 

Coincidence? I don’t think so.

 

Thomas’ article also suggests that the cross-ownership concerns will likely be resolved through an agreement that would provide Kroenke a grace period to address the issue. 

This type of solution was previously employed when Wayne Huizenga purchased the Miami Dolphins.  According to Thomas’ report, Kroenke might receive an even longer period of time to transfer ownership of his Denver franchises.

 

Why would the NFL make concessions of this type and, more notably, why now?

 

The answer may, in part, lie with the American Needle decision. 

 

Under this decision, any action of the NFL that impedes free trade is subject to anti-trust scrutiny. 

While, as the Court stated, there may be “sensible justifications for making a host of collective decisions,” it cannot be presumed that all rules of the collective are lawful.  Rather, a case-by-case analysis is necessary.

 

Could this decision be used to attack the cross-ownership rule, which clearly impedes the free transfer of NFL franchises to otherwise qualified purchasers?

 

I’m betting that Kroenke’s negotiating team has already raised this specter.

 

And why not? Certainly, the NFL would wish to avoid such a legal battle. 

While a court might ultimately conclude that there is a “sensible justification” for the cross-ownership rule, the league can’t afford the risk of a contrary finding that would further erode the existing anti-trust exceptions.

 

So, rather than subjecting itself to a dangerous legal challenge, why not simply give Kroenke a grace period? 

 

As Sun Tzu once wrote, "The supreme art of war" is often realized by avoiding a battle. 

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