By Michael McCann
Legal Analyst and Senior Sports Legal Reporter
It’s been eight years since the North American Soccer League—which operated between 2011 and 2017—sued the U.S. Soccer Federation, accusing it of violating antitrust law and demanding an injunction that would have forced U.S. Soccer to recognize NASL as a Division II league. The case, which has grown to include Major League Soccer as a co-defendant, will head to trial this week in a Brooklyn federal court following jury selection.
High-profile figures, including retired NBA all-star Carmelo Anthony (who owned Puerto Rico FC in the NASL) and Kansas City Chiefs CEO and co-owner Clark Hunt (a founder of MLS), could be called to testify. With an all-star list of sports attorneys representing the two sides, potential damages of more than $500 million are at stake.
The case centers on U.S. Soccer’s oversight of pro soccer leagues and how U.S. Soccer applies standards to determine whether a league has earned recognition as a Division I, II or III league.
As NASL sees it, U.S. Soccer and MLS illegally conspired to insulate MLS (Division I) and the USL (Division II) from competing with NASL in ways that harmed the relevant markets for sanctioning soccer in the U.S. and Canada. NASL blames U.S. Soccer and MLS for “driving it out of business” and “preventing it from obtaining the profits it would have received as a league competing in Division I or II.”
NASL opted to cease operations rather than compete in the lowest level, Division III.
Whether and how a league is sanctioned impacts how players, fans, consumers, broadcasters and media view the league’s legitimacy and choices of leagues available to them. Players have the added consideration of whether a sanctioned team makes them eligible to play in FIFA-sanctioned games and tournaments, as well as for the U.S. National Team.
U.S. Soccer and MLS offer a very different portrayal of what happened. U.S. Soccer says the case is “overreach” considering NASL “never turned a profit, never had a broadcasting deal that paid it money, never signed a sponsorship agreement that generated any meaningful revenue and had a history of frequent team failures.”
The sport’s national governing body also contends it appropriately and objectively applied standards, such as minimum stadium seating capacity, number of teams, time zone coverage and other benchmarks, in assessing NASL’s credentials. These standards are intended to ensure there is what U.S. Soccer calls a “healthy ecosystem” for pro soccer and its fans.
Further, U.S. Soccer maintains there was no agreement between MLS and U.S. Soccer’s board of directors, whom U.S. Soccer depicts as disinterested and fair, to deny NASL. From the vantage point of U.S. Soccer, the denials occurred because NASL was unable and/or unwilling to comply with standards and failed to make sufficient progress toward meeting those standards. U.S. Soccer also attributes NASL’s problems in part to its “association” with figures implicated in the FIFA corruption scandal. NASL, of course, contests these descriptions.
The trial is expected to last a couple of weeks, with U.S. District Judge Hector Gonzalez of the Eastern District of New York presiding. Other possible witnesses include U.S. Soccer president Cindy Cone, MLS commissioner Don Garber and former MLS commissioner Sunil Gulati. Each could provide testimony on the economics of soccer and how the market for the sport has evolved in North America.
According to court documents, if NASL succeeds in proving antitrust violations, potential damages could be tripled under antitrust law’s trebling feature to $516 million (damages could also end up much lower, especially if NASL is found to have failed to mitigate damages). The loser of the trial could appeal to the U.S. Court of Appeals for the Second Circuit, meaning the litigation might remain on the docket for additional years.
The two sides have assembled legal teams that include familiar and respected names. Jeffrey Kessler of Winston & Strawn is one of NASL’s attorneys. Kessler has represented plaintiffs in major sports litigations, including the Alston and House antitrust cases against the NCAA, the U.S. Women’s National Team players in the (now settled) equal pay case against U.S. Soccer, and the 23XI Racing, which is owned by Michael Jordan and Denny Hamlin, in the antitrust case against NASCAR.
Meanwhile, Christopher S. Yates of Latham & Watkins is one of U.S. Soccer’s attorneys. He’s no stranger to Kessler, as Yates is representing NASCAR in the aforementioned antitrust dispute. Yates has also represented UFC, the NWSL, the ACC and other major sports clients in litigation matters. As for MLS, it has retained Bradley I. Ruskin of Proskauer Rose. Ruskin has represented such prominent sports clients as the NFL, NBA, NHL, MLB, the Washington Nationals and Philadelphia Eagles in litigation matters.
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