A federal jury has found in favor of the U.S. Soccer Federation and MLS in the antitrust lawsuit filed against the two entities by the North American Soccer League.
The verdict, which the NASL will likely appeal, amounts to a significant victory for the USSF and MLS, and is the culmination of a seven-year process that began in September of 2017, when the USSF denied the NASL’s application to be classified as a Division 2 league. The NASL filed its lawsuit shortly thereafter.
The NASL, the second American league to use that name, operated from 2011-17 as a second tier league underneath MLS. But it went on hiatus in 2018 following the USSF’s aforementioned decision.
The verdict was decided after three weeks of testimony that included appearances by former USSF president Sunil Gulati, MLS commissioner Don Garber, former Puerto Rico Islanders owner and NBA star Carmelo Anthony, New York Cosmos owner Rocco Commisso — who personally provided much of the funding for the litigation — as well as former Traffic Sports executive Aaron Davidson.
The NASL’s complaint alleged that the USSF violated federal antitrust laws through its anticompetitive “Division” structure that divides men’s professional soccer for U.S.-based leagues on what an NASL press release described as “arbitrary criteria that the USSF has manipulated to favor Major League Soccer (MLS), which is the commercial business partner of the USSF.” At the time, Soccer United Marketing, the marketing arm of MLS was in charge of managing the USSF’s media rights.
The division structure, via the application of the USSF’s Professional League Standards (PLS), is intended to provide a set of minimum requirements for a league, including number of teams, geographic distribution of teams, market size of a team’s city, stadium capacity, as well as the minimum financial requirements for team owners. The NASL argued that the PLS were modified so as to consistently fall just short of the requirements needed for a Division 1 — and later, Division 2 — designation.
“We are pleased the jury has recognized the lack of merit in NASL’s claims and ruled in our favor, bringing this unfounded litigation to a close,” the USSF said in a statement. “This decision validates U.S. Soccer’s commitment to fostering a broad and healthy ecosystem of professional soccer leagues across all divisions.
“This is also an important victory for the broader sports landscape in the U.S., especially the individuals, leagues, and other organizations committed to enabling healthy competition, player development, and enjoyment for fans. As we look ahead, we are excited to celebrate the incredible progress of soccer in the U.S. and we will continue to work diligently to grow the game at all levels.”
MLS said in a statement that it “is pleased that the jury found for the U.S. Soccer Federation and Major League Soccer in dismissing the meritless claims filed by the NASL. The jury’s verdict confirms that this case was nothing more than an attempt by NASL to deflect blame for its own failures. Since our inception in 1996, MLS has been dedicated to making the necessary investments to elevate the sport of soccer and provide an exceptional experience for players and fans.”
In a statement to ESPN, Jeffrey Kessler of the law firm Winston & Strawn, who was the NASL’s lead attorney, said: “We have great respect for the jury process, but there were some fundamental legal errors made which prevented the jurors from receiving important evidence or being instructed on the correct legal standards and claims. Our client accordingly expects to appeal.”
The complaint alleged that the USSF and MLS engaged in a conspiracy to selectively apply and waive the PLS criteria to suppress competition from the NASL, and benefit MLS and the United Soccer League (USL). The USSF granted the NASL provisional Division 2 status for the 2017 season, but in September of that year, the USSF announced it had denied the NASL’s application to be sanctioned as a Division 2 league due to the fact that it could not guarantee that it would field at least eight teams in 2018.
Per the instructions from the judge, the jury was asked to decide four claims from the NASL. First, that in 2016, the USSF and MLS conspired with each other to restrain trade by denying the NASL a Division 1 sanction, and later in 2017 the USSF and MLS conspired with the United Soccer League to deny the NASL a Division 2 designation. Second, that these efforts reflected an attempt to monopolize the markets for Division 1 and Division 2 soccer leagues. The third and fourth claims center on the harm NASL received by the alleged attempt of the USSF, MLS, and USL to monopolize the markets for Division 1 and Division 2 leagues.
While the NASL offered no direct evidence of a conspiracy between the USSF and MLS, Kessler, attempted to knit together a series of events in an effort to accumulate enough circumstantial evidence to convince the jury that there was a conspiracy. These included separate statements made by Gulati and Garber to the USSF Board the night before the vote on the NASL’s Division 2 designation. Even as both Gulati and Garber recused themselves from the actual vote, Gulati recommended that the NASL not be given the designation, while Garber said the vote needed to have “teeth.”
Garber’s explanation was that he was merely pushing for good governance.
The Defendants’ case rested on the theory that the NASL was so poorly managed that the league failed of its own accord and struggled to attract and hold onto teams. This included having Traffic Sports, which was found to have been heavily involved in the FIFA corruption scandal, being one of the league’s main investors. The defense argued that the members of the USSF Board who voted on the sanctioning decisions weren’t unduly influenced by Gulati’s and Garber’s statements. It later argued that a conflict of interest isn’t sufficient to prove an anticompetitive conspiracy.
