Wednesday, June 24, 2009

Sports And The Law: Does The New Women's Professional Soccer League Have A Business Model For Success?

In the late 1990s, sports consulting firms such as Game Plan LLC advised their clients to adopt centrally-planned league structures. Just ten years later, however, these structures have become relatively obsolete. Not only has the WNBA converted to a more traditional structure, but also the centrally-planned XFL, MISL and WUSA have gone entirely out of business.

On March 29, 2009, the WUSA's founders launched a new women's soccer league--Women's Professional Soccer. Not surprisingly, this new league has adopted a more traditional approach.

In a recent law review article, former professional soccer player Elizabeth Masterson and I argue that the new women's professional soccer league is more likely to succeed than its predecessor, the WUSA, because of the virtues intrinsic in the traditional league structure.

In addition to touting the business advantage of traditional sports leagues, Elizabeth and I explain three reasons why we believed the once perceived antitrust advantages of the centrally-planned league are no longer relevant today:
  • First, the 2002 First Circuit case Fraser v. Major League Soccer held that the single-entity defense to antitrust law is unlikely to apply to any centrally-planned sports league that allocates a share of specific team revenues to individual investor-operators.
  • Second, Fraser v. Major League Soccer also held that the labor practices of a professional sports league, irrespective of its structure, cannot violate antitrust law so long as the league competes in a worldwide market for player labor and thus lacks market power.
  • Finally, the more recent Seventh Circuit case American Needle v. National Football League extends the potential insulation from antitrust liability to certain business activities of even traditionally structured sports leagues (I believe this opinion is misguided).
For those interested in learning more about why the recent movement back to traditionally structured sports leagues makes sense, check out Elizabeth Masterson and my full article: Could the New Women's Professional Soccer League Survive in America? How Adopting a Traditional Legal Structure May Save More than Just a Game.

(Cross-posted on Sports Law Blog)

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