superscoutken
08-10-2005, 07:10 PM
Officially, the USFL was asking the courts to declare illegal the NFL's long-standing relationships with the three major television networks, NBC, CBS, and ABC. The NFL, so claims the USFL, has an "influence" over the networks that precludes the new loop from competing as a "major league" in professional football.
As a remedy to the problem, the USFL had asked the Federal Courts to divide the NFL into two separate and competing 14-member leagues, with each league limited to a contract with one major network. Or, the USFL asked, limit the NFL to maintaining contracts with no more than two major networks in any case. The USFL was also seeking to prohibit the NFL from making future service contract offers to players under contract to the USFL and ban exclusive use pacts for the use of stadiums while prohibiting the NFL from signing football officials to contracts that keep them from working in the USFL as well.
The USFL's legal action was born in the league's decision to challenge the NFL head-on via a fall schedule beginning in 1986, the USFL said it would move it's games from the spring to the fall, banging heads with the more established and respected NFL.
Reasoning was based on finances. With losses over the $100 Million Dollar mark for the first two seasons as a spring time venture, USFL owners decided to wage War with their big brothers. The legal challenge alleged negotiating a lucrative television contract had been extremely difficult. The NFL, suit charges, in order to protect it's own five year, $2.1 billion dollar contract with the three networks, had exerted sufficient influence upon the networks to minimize their interests in the USFL.
Given the NFL's tendency to have come out losers in the courts back then, the USFL was banking on the NFL coming to terms with them rather than battling the antitrust suit in the courts or waiting for the USFL to die a death attributable to dollar anemia.
The USFL's brass firmly believed it was in the best interest of the NFL to accept eight or so USFL teams into the NFL for perhaps the 1986 season. It was an action on those terms that would give the NFL control of virtually every major television market in the nation, a factor that would all but doom any other attempt to ever start a new league and begin a merger to end all other possible future competition that was the USFL's strategy.
The USFL's suit couldn't have come at a worse time for the NFL. Don't forget that the league owners were under a court order to pay $50 Million Dollars in damages to Al Davis, owner of the Oakland Raiders, after a successful antitrust suit over the move of his club from Oakland to Los Angeles.
Let us also remember what history has taught us. up to that time, about the world of Professional football. That nearly 40 years ago, 1966 to be exact, the NFL reluctantly opened it's doors to the American Football League, and action that some believed saved the NFL from and untimely death of it's own back then.
This was setting leading up to the Trial......
__________________________________________________ ___
The Setting
The USFL planed a new look for its 1986 campaign. Eight of last year’s 14 teams would remain, and they have been realigned into two divisions, the Liberty (Baltimore, Birmingham, New Jersey, and the Memphis Showboats) and the Independence (the Arizona Outlaws, Jacksonville Bulls, Orlando Renegades, and Tampa Bay Bandits). The schedule was to consist of 18 games with the two division winners and three wild cards qualifying for the playoffs. The title game would be played in Jacksonville, FL.
On August 22, 1984, the owners of the USFL franchises announced plans to shift their league’s playing schedule to the fall of 1986, following a third spring season in ’85.
On October 17, 1984, the USFL filed a $1.32 billion antitrust lawsuit against the National Football League, charging that the NFL engaged in monopolistic acts and practices. The USFL claimed that the NFL’s contracts with ABC, CBS, and NBC had made it impossible for it to obtain a network television contract for its first fall season, and that the NFL had exerted pressure on three major networks not to negotiate with the USFL.
The NFL had denied the charges and contended that the suit was an attempt by the USFL to force a merger (it was revealed in court that in USFL commissioner Harry Usher’s contract is a provision that he receive $400,000 for each USFL team absorbed into the NFL in a merger) and thus help the USFL to recover from its financial losses. The NFL claims that those losses were self-inflicted, brought about by the USFL’s failure to adhere to its original concept: namely, a league of competitive though lesser (and lesser-priced) talents which would provide an exciting game to those fans for whom, apparently, five months of football was inadequate.
Attorney Harvey Myerson presented “smoking guns,” that is, evidence he believed supported the USFL charges. On February 29, 1984, Harvard professor Michael Porter conducted a seminar titled “How to Conquer the USFL,” which was arranged by the National Football League Management Council for a group of NFL executives. But Porter said the purpose of the seminar was not to conquer but to recommend ideas on how to deal with the new league. A letter from NFL counsel Jay Moyer on March 13 of that same year to Jack Donlan, the executive director of the Management Council, stated that the Porter presentation “offers approaches that are largely impractical or legally impermissible.” And NFL commissioner Pete Rozelle rejected the idea of letting Porter address the owners of the league teams when they convened.
Myerson also introduced a memo, dated August 4, 1983, from Donlan on “Spending the USFL Dollar,” which instructed his staff members to investigate the contracts of USFL players and perhaps look into the possibility of offering higher NFL pacts to some of them, thereby forcing the USFL to match or increase the NFL’s price in order to keep those players.
The issue was simply this: Did the NFL prevent the USFL from getting a network contract television for the fall, or were the networks simply not interested in the USFL product?
The NFL pointed to its contracts with CBS and NBC, which televised games on Sunday afternoons. Accordingly, that would leave any other days or nights available for USFL games, or other entertainment, to be picked up. There was also the NFL contract with ABC, which televises games on Monday (and selected Sunday and Thursday) nights. Likewise, any other days and nights would then be available for other programming. In pretrial depositions, Jim Spence, the former vice president of sports at ABC, and Neal Pilson, the vice president of sports at CBS, denied that the NFL put pressure on them not to televise USFL contests. They said their decisions were made for economic reasons.
In his opening statement Myerson asked the six-member jury to keep in mind during the trial the name of Austrian writer Franz Kafka, who said, “wrote that people look at things an say the opposite.”
If the United States Football League was to survive, it was going to take a major metamorphosis of its current condition. It would take a victory in the trial.
This is how the trial and it's subsequent appeals went......
__________________________________________________ ___
The Trial
The judge: Peter K. Leisure, Southern District of New York
The jury: Patricia McCabe (foreperson), Steven Ziegler, Margaret Lilienfeld (replaced Wendell James), Bernez Stephens, Patricia Sibilia, Miriam Sanchez
Following the USFL's second season, its owners decided to file a lawsuit against the National Football League for violation of the Sherman Antitrust Act. Also named as a defendant was Pete Rozelle, commissioner of the NFL, while Al Davis and his Los Angeles Raiders were excluded from the suit in exchange for Davis's testimony for the USFL. The league sought actual damages of $567 million dollars which, when trebled, would amount to more than $1.7 billion.
Chief among the USFL's arguments was that the NFL, which had contracts with ABC, NBC and CBS, had pressured the networks to not televise the USFL in the fall. The league also claimed that the NFL had followed the practices outlined in the Porter Presentation, a package compiled by a Harvard professor to show the NFL how to conquer its new competitor. In particular, the USFL maintained that the NFL had conspired to harm the Oakland Invaders and New Jersey Generals.
The trial, which lasted 48 days, produced more than 7100 pages of transcripts and thousands of pages of exhibits. Among those testifying were Rozelle, USFL commissioner Harry Usher, Howard Cosell, Davis, Donald Trump and a litany of television executives. Additionally, team owners from both leagues, including the late owner of the Tampa Bay Bandits, John Bassett, via videotape, were called to testify.
On July 29, 1986, the United States Football League won the battle but lost its war against the National Football League. After five days of deliberation, the jury that heard the USFL's case against the NFL found the older league guilty of monopolizing professional football and of using predatory tactics but awarded the USFL just $1 in damages. The fact that the antitrust award was trebled to $3 was of little solace to the struggling owners of the eight remaining USFL teams.
While the jury found that the NFL had willfully acquired and maintained a monopolization of professional football, it ruled against the rest of the USFL's claims. It did not find that the NFL controlled or attempted to control the television market. The vital claims were those based on television revenues, and those were the ones that the jury did not accept.
The jury felt that the USFL had abandoned its original plan to patiently build fan support while containing costs and had instead pursued a merger strategy. Moreover, the announced move to the fall also caused the abandonment of major markets and led to further fan skepticism. In essence, the jury ruled that although the USFL was harmed by the NFL's monopolization of pro football, most of the upstart league's problems were the result of its own mismanagement. Statements reflecting jury confusion were subsequently ignored.
On August 4, 1986, the USFL decided to suspend operations for the upcoming season. The league released most of its remaining players to look for employment in the NFL or Canadian Football League shortly thereafter. The league would not play another game.
The USFL's request for a new trial on damages was rejected, and subsequent appeals were unsuccessful. The league was able to win its court costs back, but this amounted to just $6-10 million.
__________________________________________________ ________________
The Appeal
USFL denied request for NFL retrial
(c) USA TODAY - FINAL EDITION - SPORTS - FRIDAY THROUGH SUNDAY
MARCH 11, 1988
The United States Football League lost its hope for a new trial Thursday when a federal appeals court upheld the $3 damage award it got in an antitrust suit against the National Football League.
The USFL, which lost $163 million from 1983-85, included four requests - all denied - in its appeal: an overturned verdict, a new damages trial, a new trial in the case, or a new finding on damages.
The ruling by the Second Circuit Court of Appeals in New York is unlikely to affect the NFL's expansion plans. Commissioner Pete Rozelle had tied expansion to a new TV pact, the USFL suit and a new labor agreement. ``But then the commissioner updated it,'' said NFL spokesman Joe Browne. ``He said, barring unforeseen developments, he hoped there would be two expansion teams two years after a new CBA (collective bargaining agreement) was signed.''
Judge Ralph K. Winter wrote in the 91-page opinion on the USFL's appeal: ``There was ample evidence that the USFL failed because it did not make the painstaking investment and patient efforts that bring credibility, stability and public recognition to a sports league.''
As a remedy to the problem, the USFL had asked the Federal Courts to divide the NFL into two separate and competing 14-member leagues, with each league limited to a contract with one major network. Or, the USFL asked, limit the NFL to maintaining contracts with no more than two major networks in any case. The USFL was also seeking to prohibit the NFL from making future service contract offers to players under contract to the USFL and ban exclusive use pacts for the use of stadiums while prohibiting the NFL from signing football officials to contracts that keep them from working in the USFL as well.
The USFL's legal action was born in the league's decision to challenge the NFL head-on via a fall schedule beginning in 1986, the USFL said it would move it's games from the spring to the fall, banging heads with the more established and respected NFL.
Reasoning was based on finances. With losses over the $100 Million Dollar mark for the first two seasons as a spring time venture, USFL owners decided to wage War with their big brothers. The legal challenge alleged negotiating a lucrative television contract had been extremely difficult. The NFL, suit charges, in order to protect it's own five year, $2.1 billion dollar contract with the three networks, had exerted sufficient influence upon the networks to minimize their interests in the USFL.
Given the NFL's tendency to have come out losers in the courts back then, the USFL was banking on the NFL coming to terms with them rather than battling the antitrust suit in the courts or waiting for the USFL to die a death attributable to dollar anemia.
The USFL's brass firmly believed it was in the best interest of the NFL to accept eight or so USFL teams into the NFL for perhaps the 1986 season. It was an action on those terms that would give the NFL control of virtually every major television market in the nation, a factor that would all but doom any other attempt to ever start a new league and begin a merger to end all other possible future competition that was the USFL's strategy.
The USFL's suit couldn't have come at a worse time for the NFL. Don't forget that the league owners were under a court order to pay $50 Million Dollars in damages to Al Davis, owner of the Oakland Raiders, after a successful antitrust suit over the move of his club from Oakland to Los Angeles.
Let us also remember what history has taught us. up to that time, about the world of Professional football. That nearly 40 years ago, 1966 to be exact, the NFL reluctantly opened it's doors to the American Football League, and action that some believed saved the NFL from and untimely death of it's own back then.
This was setting leading up to the Trial......
__________________________________________________ ___
The Setting
The USFL planed a new look for its 1986 campaign. Eight of last year’s 14 teams would remain, and they have been realigned into two divisions, the Liberty (Baltimore, Birmingham, New Jersey, and the Memphis Showboats) and the Independence (the Arizona Outlaws, Jacksonville Bulls, Orlando Renegades, and Tampa Bay Bandits). The schedule was to consist of 18 games with the two division winners and three wild cards qualifying for the playoffs. The title game would be played in Jacksonville, FL.
On August 22, 1984, the owners of the USFL franchises announced plans to shift their league’s playing schedule to the fall of 1986, following a third spring season in ’85.
On October 17, 1984, the USFL filed a $1.32 billion antitrust lawsuit against the National Football League, charging that the NFL engaged in monopolistic acts and practices. The USFL claimed that the NFL’s contracts with ABC, CBS, and NBC had made it impossible for it to obtain a network television contract for its first fall season, and that the NFL had exerted pressure on three major networks not to negotiate with the USFL.
The NFL had denied the charges and contended that the suit was an attempt by the USFL to force a merger (it was revealed in court that in USFL commissioner Harry Usher’s contract is a provision that he receive $400,000 for each USFL team absorbed into the NFL in a merger) and thus help the USFL to recover from its financial losses. The NFL claims that those losses were self-inflicted, brought about by the USFL’s failure to adhere to its original concept: namely, a league of competitive though lesser (and lesser-priced) talents which would provide an exciting game to those fans for whom, apparently, five months of football was inadequate.
Attorney Harvey Myerson presented “smoking guns,” that is, evidence he believed supported the USFL charges. On February 29, 1984, Harvard professor Michael Porter conducted a seminar titled “How to Conquer the USFL,” which was arranged by the National Football League Management Council for a group of NFL executives. But Porter said the purpose of the seminar was not to conquer but to recommend ideas on how to deal with the new league. A letter from NFL counsel Jay Moyer on March 13 of that same year to Jack Donlan, the executive director of the Management Council, stated that the Porter presentation “offers approaches that are largely impractical or legally impermissible.” And NFL commissioner Pete Rozelle rejected the idea of letting Porter address the owners of the league teams when they convened.
Myerson also introduced a memo, dated August 4, 1983, from Donlan on “Spending the USFL Dollar,” which instructed his staff members to investigate the contracts of USFL players and perhaps look into the possibility of offering higher NFL pacts to some of them, thereby forcing the USFL to match or increase the NFL’s price in order to keep those players.
The issue was simply this: Did the NFL prevent the USFL from getting a network contract television for the fall, or were the networks simply not interested in the USFL product?
The NFL pointed to its contracts with CBS and NBC, which televised games on Sunday afternoons. Accordingly, that would leave any other days or nights available for USFL games, or other entertainment, to be picked up. There was also the NFL contract with ABC, which televises games on Monday (and selected Sunday and Thursday) nights. Likewise, any other days and nights would then be available for other programming. In pretrial depositions, Jim Spence, the former vice president of sports at ABC, and Neal Pilson, the vice president of sports at CBS, denied that the NFL put pressure on them not to televise USFL contests. They said their decisions were made for economic reasons.
In his opening statement Myerson asked the six-member jury to keep in mind during the trial the name of Austrian writer Franz Kafka, who said, “wrote that people look at things an say the opposite.”
If the United States Football League was to survive, it was going to take a major metamorphosis of its current condition. It would take a victory in the trial.
This is how the trial and it's subsequent appeals went......
__________________________________________________ ___
The Trial
The judge: Peter K. Leisure, Southern District of New York
The jury: Patricia McCabe (foreperson), Steven Ziegler, Margaret Lilienfeld (replaced Wendell James), Bernez Stephens, Patricia Sibilia, Miriam Sanchez
Following the USFL's second season, its owners decided to file a lawsuit against the National Football League for violation of the Sherman Antitrust Act. Also named as a defendant was Pete Rozelle, commissioner of the NFL, while Al Davis and his Los Angeles Raiders were excluded from the suit in exchange for Davis's testimony for the USFL. The league sought actual damages of $567 million dollars which, when trebled, would amount to more than $1.7 billion.
Chief among the USFL's arguments was that the NFL, which had contracts with ABC, NBC and CBS, had pressured the networks to not televise the USFL in the fall. The league also claimed that the NFL had followed the practices outlined in the Porter Presentation, a package compiled by a Harvard professor to show the NFL how to conquer its new competitor. In particular, the USFL maintained that the NFL had conspired to harm the Oakland Invaders and New Jersey Generals.
The trial, which lasted 48 days, produced more than 7100 pages of transcripts and thousands of pages of exhibits. Among those testifying were Rozelle, USFL commissioner Harry Usher, Howard Cosell, Davis, Donald Trump and a litany of television executives. Additionally, team owners from both leagues, including the late owner of the Tampa Bay Bandits, John Bassett, via videotape, were called to testify.
On July 29, 1986, the United States Football League won the battle but lost its war against the National Football League. After five days of deliberation, the jury that heard the USFL's case against the NFL found the older league guilty of monopolizing professional football and of using predatory tactics but awarded the USFL just $1 in damages. The fact that the antitrust award was trebled to $3 was of little solace to the struggling owners of the eight remaining USFL teams.
While the jury found that the NFL had willfully acquired and maintained a monopolization of professional football, it ruled against the rest of the USFL's claims. It did not find that the NFL controlled or attempted to control the television market. The vital claims were those based on television revenues, and those were the ones that the jury did not accept.
The jury felt that the USFL had abandoned its original plan to patiently build fan support while containing costs and had instead pursued a merger strategy. Moreover, the announced move to the fall also caused the abandonment of major markets and led to further fan skepticism. In essence, the jury ruled that although the USFL was harmed by the NFL's monopolization of pro football, most of the upstart league's problems were the result of its own mismanagement. Statements reflecting jury confusion were subsequently ignored.
On August 4, 1986, the USFL decided to suspend operations for the upcoming season. The league released most of its remaining players to look for employment in the NFL or Canadian Football League shortly thereafter. The league would not play another game.
The USFL's request for a new trial on damages was rejected, and subsequent appeals were unsuccessful. The league was able to win its court costs back, but this amounted to just $6-10 million.
__________________________________________________ ________________
The Appeal
USFL denied request for NFL retrial
(c) USA TODAY - FINAL EDITION - SPORTS - FRIDAY THROUGH SUNDAY
MARCH 11, 1988
The United States Football League lost its hope for a new trial Thursday when a federal appeals court upheld the $3 damage award it got in an antitrust suit against the National Football League.
The USFL, which lost $163 million from 1983-85, included four requests - all denied - in its appeal: an overturned verdict, a new damages trial, a new trial in the case, or a new finding on damages.
The ruling by the Second Circuit Court of Appeals in New York is unlikely to affect the NFL's expansion plans. Commissioner Pete Rozelle had tied expansion to a new TV pact, the USFL suit and a new labor agreement. ``But then the commissioner updated it,'' said NFL spokesman Joe Browne. ``He said, barring unforeseen developments, he hoped there would be two expansion teams two years after a new CBA (collective bargaining agreement) was signed.''
Judge Ralph K. Winter wrote in the 91-page opinion on the USFL's appeal: ``There was ample evidence that the USFL failed because it did not make the painstaking investment and patient efforts that bring credibility, stability and public recognition to a sports league.''