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Lockout Madness

March 14, 2011

Proving that there’s no situation a government official can’t try and make worse, Michigan Congressman John Conyers threatened to revoke the NFL’s limited antitrust exemption for television as punishment for “locking out” the players:

[T]he congressionally created antitrust exemption, dating from 1961, is a specially granted anomaly. No other business benefits from an antitrust exemption for television negotiations. Most professional sports do not have such an exemption – not soccer, not tennis, and not golf. And neither do any amateur sports – not the Olympics, not college football and not college basketball.

Notice Conyers omits a few notable sports — baseball, professional basketball, and hockey. The exemption he wants to revoke applies to all these sports in addition to professional football. Conyers’ proposal only revokes the exemption with respect to professional football. In other words, he’s punishing the NFL for doing something he doesn’t like. Which only reaffirms the notion that antitrust is little more than politics masquerading as law.

Conyers, of course, tries to spin his idea as a leftist blow for the little guy:

The lockout has been estimated to take at least $5.1 billion out of local economies around the nation. This will bring about significant economic harm in economically ravaged cities like Detroit, Indianapolis, Cincinnati, Cleveland, and Buffalo. In that context it is appropriate for Congress to revoke an exemption that serves to unbalance the playing field between the parties.

The exemption applies to television contracts, not labor negotiations. It has nothing to do with the lockout or the labor impasse. In fact, Congress originally adopted the exemption to remedy an unlevel playing field created by capricious antitrust enforcement. In the 1950s, the Justice Department sued the NFL over its restrictions on televising claims, arguing it deprived consumers of televised football. When the NFL changed course and signed a television contract with CBS that guaranteed every game would be televised, the judge from the original DOJ case said that was also illegal — even though the NFL’s newest rival, the American Football League, had just signed a similar single-network deal with NBC. That’s when Congress, with the support of the Kennedy administration, passed a narrow antitrust exemption to ensure a professional sports league could negotiate single-network contracts without interference from government regulators.

The result, as we see today, is that most NFL games remain available on free, over-the-air television. John Conyers apparently wants to take that away in order to…well, I’m not really sure why. Maybe he thinks this will force the NFL’s hand in labor negotiations. It’s still a remarkably stupid threat.

Consider what would happen if you remove the exemption. The Justice Department could sue the NFL to outlaw their current network contracts (because antitrust overrides freedom of contract). In its place, individual teams would negotiate their own TV deals. Which would be great for the large market teams like Washington and Dallas. They would no longer have to share any of their TV revenues with the other clubs. That would negatively impact smaller teams in struggling markets like Detroit, Cleveland, and Buffalo — the same places Conyers said would be “economically ravaged” by the NFL’s lockout.

Repealing the exemption could also endanger other popular consumer products, like the NFL’s Sunday Ticket, because even the threat of antitrust litigation might make them too costly to continue offering. For that matter, some NFL teams might abandon “free” television altogether and place their games on the NFL’s proprietary cable network, or even on pay-per-view channels like professional boxing does. I’m sure a progressive leftist like Conyers would have no problem with his constituents paying top dollar for a product that used to be available for free — because the important thing is we ensure no American business remains untouched by the “pro-consumer” antitrust laws.

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