FanPost

Layman's Guide to Anti-Trust Law as it applies to the Kings

The term "Anti-Trust" is being used like the "Bogeyman" was once used by exasperated mothers trying to get their young ones to stay in their bed.

"You better agree to sell to Hansen/Ballmer and let them move the Kings, or the Anti-trust lawsuit will get you!"

Now, I will say up front that I am not a lawyer (please consult an attorney before taking any of this before a court of law) but I don't mind digging into available research material in order to try to learn a few things rather than just believing what a media ranter from a town seeking a team at all costs might feed me as to the likelihood of a lawsuit being brought forth let alone won.

There may be a reason why David Stern seems so confident that the NBA would prevail in any lawsuit attempt.

There have been cases where the courts have seemed to indicate how a lawsuit might turn out based on what rules were in place at the time of the transaction. Unfortunately, the NBA keeps well locked up it's Bylaws and Constitution from us public folk. So assuming the NBA has learned a few things from the courts' decisions, here is what I was able to find. I will emphasize the parts that seem relevant to the Kings situation:

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First, a couple of court cases that speak toward the ability of a league to decide who it wants as owners, regardless of reasoning.

In Levin v. NBA , 385 F.Supp. 149 (S.D.N.Y. 1974), a potential buyer for the Boston Celtics was denied purchase of the franchise simply because the owners considered him to have a "shady" background. Levin sued the NBA based on anti-trust reasoning. The court found that the rejection of Levin was not an anti-trust issue because the denial had no anti-competitive impact. Basically they told Levin that he was free to form his own league and compete against the NBA.

Similarly in Mid-South Grizzlies v. NFL , 720 F.2d 772 (3rd Cir. 1983) an appeals court found that the NFL didn't have to allow a new team into it's league since the owner could compete against the NFL in forming his own league.

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The rest of these speak specifically to the ability of a team to move in opposition to league wishes.

In 1974 the San Francisco Seals sued the NHL for denying a move to Vancouver. The court granted a summary judgement for the NHL finding that there was no restraint of commerce or trade in the market. San Francisco Seals Ltd. v. National Hockey League, 379 F.Supp. 966 (C.D. Cal. 1974)

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After the 1976 season, the LA Rams moved from the LA Memorial Coliseum to Anaheim. The folks who ran the Coliseum began looking for another tenant. In 1980, Al Davis, angry at how negotiations with the Oakland Coliseum were going, decided to move to LA. The NFL's only rule at that time was that a move must be approved unanimously. NFL owners voted 22-0 against the move as it infringed on what they said was the Rams territory in Anaheim.

The LA Coliseum Commission sued the NFL on the basis that the NFL's unanimous decision rule was a violation of anti-trust laws. Los Angeles Memorial Coliseum Commission v. NFL , 726 F.2d 1381 (9th Cir.), cert. denied , 469 U.S. 990 (1984)

They won, and were upheld in the 9th Circuit. The court used the "rule of reason standard" saying the restriction on movement perpetuated local monopolies:

"[The] NFL made no showing that the transfer of the Raiders to Los Angeles would
have any harmful effect on the League
. Los Angeles is a market large enough for the
successful operation of two teams, there would be no scheduling difficulties, facilities
at the L.A. Coliseum are more than adequate, and no loss of future television revenue
was foreseen. Also, the NFL offered no evidence that its interest in maintaining regional
balance would be adversely affected
by a move of a northern California team
to southern California."

The total fine, once trebling was added in, amounted to $48.3M (in 1980's money) to be given combined to the LA Coliseum and the Raiders team. The NFL settled for $18M and let the Raiders move.

The key to this ruling, though, was the reasoning the court used. They ruled against the league not because relocation restrictions were inherently illegal under anti-trust law, but because the NFL did not at the time have reasonable relocation policies (the simple requiring of a unanimous vote was not sufficient.)

In 1994 the Raiders also sued the NFL for breach of contract for interfering and sabotaging a deal to move to Hollywood Park. The NFL argued the Raiders were using Hollywood Park as leverage in a deal to move to Oakland. The NFL won this time.

(As a tinfoil hat aside, this makes me wonder if the Maloofs never attempted a lawsuit against the NBA when they were denied the move to Anaheim because the league suspected the Maloofs were using Anaheim as a pawn because they were already in negotiations with Seattle.)

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In 1984 the Clippers attempted to move to LA without the NBA's approval. The Clippers cited the Raiders decision in suing to be allowed to move. A district court in a summary judgement agreed with the Clippers saying the NBA would lose a proposed lawsuit against the Clippers, but a 9th Circuit court disagreed saying the suit should go to trial. NBA v. SDC Basketball Club Inc. , 815 F.2d 562 (9th Cir), cert. denied , 484 U.S. 960 (1987)

However, at the time of the Clipper move the NBA had not yet strengthened their relocation rules in order to overcome the limiting factor cited by the court in the Raiders case. The NBA tried to amend the rule during the process, at the protest of the Clippers, but ultimately allowed the Clippers to move. Coming out of this, though, the NBA greatly refined and defined it's rules for franchise relocation.

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In 2009 the owner of the Phoenix Coyotes NHL team sued to be able to move the team to Ontario. They lost their suit with the court ruling the sale could not proceed without being subject to the NHL's relocation restrictions and other requirements of ownership. In re Dewey Ranch Hockey, LLC 414 B.R. 577 (Bkrtcy.D.Ariz. 2009)

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So basically, what I get from all of this, as far as anti-trust law is concerned, is that the NBA has to neither grant Hansen/Ballmer the sale of the Kings, nor allow the Kings to relocate since the NBA now has a fully fleshed out relocation policy it is allowed to use to restrict franchise movement. Whether or not Hansen/Ballmer or the Maloofs would attempt to bring suit under some other reasoning is anybody's guess.

Note: The case law mentioned here was found in:

Essentials of Sports Law / Glenn M. Wong. — 4th ed.

ISBN 978-0-313-35675-9

Many thanks to the author of that book.

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Dave Lack was the longtime webmaster of the Bleacher Mob and Kingsfanclub websites way-back-when before real life became too hectic.

You can follow him on Twitter at @davelack

Other Fanposts by Dave Lack:

Does Kings' future hinge on NBA's willingness to admit a mistake?

SAC or SEA, the choice that benefits ALL owners more

Why ROFO may actually now mean Kings ballgame

Sacramento Kings were making more money than the Seattle Sonics? Yup!

The Most Interesting Man in Sacramento...Suddenly

You think the NBA doesn't care about Sacramento? You are wrong!

"Vetting" the character of the potential Kings Owners

Sacramento Kings - Back to Yesterday Nostalgic Video

(This is a FanPost from a member of the Sactown Royalty community. The views expressed come from the member, and not Sactown Royalty staff.)

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