The Use and Misuse of the Term Consumer Welfare: Once More to the Mat on the Issue of Single Entity Status for Sports Leagues Under Section 1 of the Sherman Act

Article by Myron C. Grauer

Six years ago I published an article delineating in some detail the reasons why the National Football League (NFL) should be treated as a single entity for purposes of section 1 of the Sherman Act. The idea for such treatment of sports leagues in general, or the NFL in particular, did not originate with me. It had previously been noted as possibly the proper way to treat sports leagues for section 1 purposes, but the concept had received little more than passing notation in the scholarly literature. I was therefore more than mildly surprised that the appearance of my article coincided with the development of somewhat of a cottage industry of debating the merits (or demerits) of single entity treatment for sports leagues. I was even more surprised to find my article as a focal point in the debate with one commentator, Professor Daniel Lazaroff, attacking me directly and another, Professor Gary Roberts, coming to my defense. Meanwhile, I sat in a corner, wrote other articles totally unrelated to the intersection of sports leagues and antitrust, and watched the action in the ring with bemused detachment.

Now, however, a second attacker has entered the ring. Professor Lee Goldman, in a recent article in the Tulane Law Review, takes direct aim not only at me, but also at Professors Gary Roberts and John Weistart. As Professor Roberts has already defended me from the earlier attacks of Professor Lazaroff, it seems only appropriate that I now come out of the corner to assist him. This assistance is especially appropriate for two additional reasons. First, Professor Roberts is not only under attack from Professor Goldman; he is also simultaneously under attack from Professor Lazaroff from outside the ring. Second, Professor Goldman has entered the ring with so much oil on his body that he is almost too slippery for one person to catch. Thus, we now have the legal scholarship version of the typical tag team wrestling match.

My task in this match will be to strip the oil from Professor Goldman's body (argument) so that we can grasp what he is saying and expose the flaws in his thinking. Unlike most tag team wrestlers, however, Professor Roberts and I have not attempted to coordinate our moves. Therefore, inasmuch as Professor Roberts and I hold strikingly similar positions, the reader should not be surprised if some issues raised in this Article are identical to those raised in the article by Professor Roberts. Furthermore, because my position is so close to that of Professor Roberts, I will, of necessity, have to rebut some of Professor Goldman's charges against Professor Roberts in the process of defending my own position. However, as Professor Weistart's approach to the single entity issue is somewhat different from ours, I will not address Professor Goldman's attacks on the Weistart position. Nonetheless, my failure to defend the Weistart position should not be construed as an acceptance of Professor Goldman's attacks on it.

Professor Goldman accuses Professor Roberts and me of committing numerous analytical errors. His most salient accusations are as follows:

1. I am incorrect in stating that single entity status should be granted to sports leagues because they produce a product that each league member could not produce on its own.

2. I am wrong to analogize sports leagues (or the NFL in particular) to a law firm because the analogy is not a perfect one.

3. I improperly rely upon a Supreme Court opinion to support my approach to the single entity issue.

4. Our approach disregards and threatens the viability of years of impressive precedent and fails to follow traditional antitrust doctrine.

His most serious accusation is the first, and a large portion of this Article will be devoted to it. In responding to his first accusation, I shall present a more elaborate theoretical explanation for the relevance of a product that each actor could not produce on its own than I presented in my earlier article on single entity treatment for the NFL. The other three accusations are of less consequence and therefore will require less detailed responses.

Notwithstanding these accusations, the issue that I shall first address is the failure of Professor Goldman to define for the reader his analytical model. In so doing, I shall restate the analytical model that Professor Roberts and I use. This is the same model that Professor Goldman purports to use but which he fails to define. Because he has failed to define or explain his model, it apparently means whatever he wishes it to mean. Because he gives his model the same name as our model, he is able, almost with impunity, to accuse us of violating not only his undefined analytical model, but, more importantly, our own. Trying to respond to such an attack is almost as frustrating as trying to get a hold on a wrestler whose body is covered with oil. However, once our model is restated, the oil will come off of Professor Goldman's charges. After that is accomplished, we can examine the charges themselves to see how well they withstand scrutiny in the light of our analytical model.


About the Author

Myron C. Grauer. Associate Professor of Law, University of Cincinnati College of Law. B.A. 1971, University of Vermont; J.D. 1975, University of Pittsburgh; LL.M. 1980, Yale Law School.

Citation

64 Tul. L. Rev. 71 (1989)