Collective, collusive action is a wonderful thing.
Ben Fischer of Sports Business Journal reports that the league has adopted a rule prohibiting the giving of equity in the franchise to players or other employees.
The league cited eight reasons for prohibiting 32 independent businesses to make independent business decisions regarding the persons to whom equity will be given. Although it has not happened recently in the NFL, the memo authored by Chiefs owner Clark Hunt points out that “such arrangements may have been considered in the past” and “may exist in other sports leagues.”
The reasons given range from potential salary-cap complications to the potential depression of franchise value when an employee leaves the team for another club and must dispose of the equity quickly to a club employee who leaves under bad terms suing over the value of the interest to former employees with equity potentially becoming blabbermouths about club secrets to employees not being subject to capital calls like other limited partners to other issues aimed quite simply at protecting team owners from themselves.
It’s a strange situation, to say the least, to think that multi-billion-dollar businesses require the protection of a cartel to tell them how to properly make decisions regarding the distribution of equity. And it’s just another example of the antitrust issues that ooze from the entire structure of the NFL.
Really, why should any one owner of an independent business be told by other owners of other similar businesses how to run that business? Does Pepsi dictate how Coke should be run? Does McDonald’s tell Burger King what to do? That’s essentially what’s going on here.
Although the individuals owners have no viable alternatives when it comes to staging games involving their teams, the idea that captains of industry that own NFL franchises need to have their hands tied by their partners is just plain weird. And it also seems like something that one of them, if so motivated, could sue over.
