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The Award Was Only Token
Craig Neff
August 11, 1986
The USFL proved part of its case against the NFL only to see the jury throw the winners for a loss
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August 11, 1986

The Award Was Only Token

The USFL proved part of its case against the NFL only to see the jury throw the winners for a loss

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One dollar," jury forewoman Patricia McCabe read in a flat voice last Tuesday afternoon, and the crowd inside room 318 of the federal courthouse in Manhattan gasped. The United States Football League had just won its claim in its potential $1.69 billion antitrust case against the National Football League that the league is a monopoly, yet had been awarded barely enough in damages—$3, when automatically tripled under antitrust law—to buy coffee and a danish from the stand outside the courthouse. When McCabe then pronounced the NFL cleared by the jury on all other counts, NFL attorney Frank Rothman, who had been studiously unemotional throughout the three-month-long trial, punched his fist in the air. "Justice is wonderful," he declared, beaming.

So ended the trial that was to have changed pro football in America—and probably did, in ways that are yet to be defined. The verdict was almost surely a landmark: a precut tombstone for the young, money-losing USFL, which, according to several published reports, needed at least $300 million in damages from the NFL if it was to survive. On Monday, USFL owners met for seven hours with commissioner Harry Usher in New York City and decided to suspend operations for the season—it was to have begun on Sept. 13—while pursuing their legal options regarding damages and network television access. It was possible that the action might free such USFL stars as Jim Kelly, Herschel Walker and Kelvin Bryant to sign with NFL teams for this season.

According to legal experts interviewed by SI, the USFL's prospects for a successful appeal are slim. The basis for the appeal presumably would be posttrial statements to reporters by two jurors who indicated they misunderstood the court's instructions on damages.

The NFL crowed over the verdict. Rothman called it "a total, unequivocal victory" for the league. Said Dolphins owner Joe Robbie, "On the surface it gives the league even greater stability than in the days before the World Football League." NFL commissioner Pete Rozelle, who during his ride to the courthouse had heard a sobering radio bulletin announcing only that the USFL had won, said that the USFL had "shot itself in the foot" by overspending and shifting its season from the spring to the fall. The USFL, Rozelle said, had tried to "blackmail" the NFL into a merger by suing over "baseless claims."

USFL attorney Harvey Myerson had presented those claims with considerable flair (SI, July 7), but the jurors found legal heft in the quiet, solid rebuttal by Rothman and colleague Robert Fiske. The stakes were high. Had the USFL won full damages, several NFL teams would have faced financial peril. "This was the biggest threat we'd ever faced," said Bengals owner and general manager Paul Brown. "While I felt all along that we were in the right, I didn't have that much faith in what the jury might decide."

But as things turned out, it was the USFL that found itself deeper than ever in financial trouble. "Was that a jury or a bleeping circus?" thundered former USFL wide receiver Nolan Franz, now a member of the NFL's Green Bay Packers, who had hoped to recover back pay he says is owed him by the defunct Boston- New Orleans-Portland Breakers. "My 35,000 bucks just went down the tubes." Current USFL players, some 300 of whom had already received either 30% of their 1986 salaries or $10,000, expressed concern about their future, while NFL players, agents and union leaders feared the loss of bargaining leverage.

The verdict raised both practical and philosophical questions. Why, for example, was the NFL, although a monopoly controlling more than 90% of pro football's revenues, allowed to get off so lightly? "Everyone knows the NFL is a monopoly," said Tacoma, Wash., attorney Albert Malanca, an antitrust authority. "It's as blatant as the nose on your face.... The thing is, how was anyone hurt by them?" In this case the jury determined—after 31 hours of stormy deliberation—that the NFL monopoly had not significantly injured the USFL.

The jury left unclear exactly what the NFL had done wrong. On eight specific antitrust and common-law claims (foremost among them a charge that the league had monopolized pro football's television market), the jurors absolved the NFL. As a result, NFL attorneys will ask Judge Peter K. Leisure to overturn the jury's general finding that the league did "willfully acquire or maintain monopoly power" in the market of pro football. "If we're not monopolizing the [specific] parts of the business, then what are we a monopoly of?" asked Rozelle.

The NFL contended throughout the trial that it is a "natural" monopoly that achieved its dominant position because of sound management and the unique nature of the pro sports industry, in which one league usually wins out. But it is arguable whether the NFL's monopoly is either natural or desirable. In fact, the NFL was able to strengthen its competitive position at least partially because of limited antitrust exemptions approved over the years by Congress. Currently, for example, the NFL enjoys an antitrust exemption that allows it to negotiate broadcast rights for all 28 of its teams, which then share equally in the television revenue, accounting for 60% of the league's income. As Stephen Ross, a former antitrust lawyer with the U.S. Justice Department and now a law professor at the University of Illinois, points out, this hurts fans by removing most of the financial incentive for owners to try to improve losing teams—why bother, if you receive as much money for going 0-16 as for winning the Super Bowl?

Ross says that revenue sharing makes the NFL less willing to expand to appealing markets like Phoenix, because "that would only mean a smaller piece of pie for everyone at the trough." Instead NFL teams, sometimes with league acquiescence, shamelessly play cities off against one another to get costly new stadiums built or existing ones improved at taxpayer expense. Tennessee Senator Albert Gore, who wants a franchise in Memphis, says the NFL has created "an artificial scarcity" of teams. He asked the Justice Department to look into the league's "monopolistic behavior."

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