Sportslaw Jargon: Single Entity

"Single Entity" refers to a type of sports league governance that evolved so that the organization is not privy to antitrust law attack. Antitrust actions against leagues have arisen in cases involving salary restrictions and limitations imposed upon team owners from moving to another city without permission from other owners. These collective rules, may violate Section 1 of the Sherman Antitrust law which prohibits agreements of two or more that restrain trade in interstate commerce.

If a league is composed of 30 autonomous teams, such group decisions may be illegal (unless they are part of a union agreement). In the past 25 years, players have challenged league rules that affect their mobility, such as restrictions on free agency and salary caps. Also, they have challenged the legality of the player draft.

Owners of teams and municipalities who wish to benefit from the presence of professional sports franchises, have challenged league decisions restricting franchise expansion and relocation. In recent years, teams have sought to move to other locales, in part lured by lucrative stadium deals. If deemed a "single entity" the league would win the antitrust suit.

The NFL thought it had all the ingredients for a "single entity" defense, when it challenged the Oakland Raiders' move to Los Angeles in the mid-1980s. The NFL shares just about all its broadcasting and merchandising revenues equally. It argued that as a unique business, it had with an unusual but needed mix of interparticipant competition and cooperation not found in any other kind of partnership or joint venture. Unfortunately for the NFL, the courts concluded that the NFL was not a "single entity" because each team had a separate identity independent from the league. They owners could not effectively stop the Raiders' move, nor moves by different teams since then.

Because of the Raiders case, some newer leagues have been organized in a more centralized manner. Major League Soccer does not have independent owners, but shareholders (known as investor operators) in the league. Certain trades and staffing must be approved by the League. The now-defunct American Basketball League had a similar make-up. Both of these leagues imposed player salary restrictions to their non-unionized players. At this time, an antitrust lawsuit is being considered against MLS.