USFL Stuns NFL with $675 Million Court Victory

New York Times, April 15, 1985

The United States Football League have pulled off what has to be considered a resounding victory in United States District Court in Manhattan yesterday when a jury found that the National Football League had violated antitrust law and awarded the USFL with $225 million in damages.

Attorneys for the U.S.F.L., which had sought as much as $1.69 billion in damages, succeeded in proving that the N.F.L. had a monopoly power ''to control prices or exclude competition'' in the ''relevant market'' of professional football in the United States. It was for that violation that the jury of five women and one man unanimously awarded $225 million, which is trebled in antitrust cases, to provide the upstart spring football league with a total winfall of $675,000,000.

While there seemed to apparently be some confusion among the jurors over the instructions given them by Judge Peter K. Leisure, who told them they could award $1 in damages if they could not distinguish the amount of the U.S.F.L.'s losses attributed to its own poor management and the amount caused by the N.F.L.'s monopolistic practices, the jury came back with a very different interpretation of events, finding that the NFL had used illicit tactics to minimize the potential financial success of the spring league. One of the jurors, Miriam F. Sanchez, said in an interview after the trial that the jury was split over the question of whether to award damages, but then agreed to award the hefty amount of $225 million in the belief that the NFL had clearly tried to act as a monopoly by limiting access to stadiums, sponsors and TV revenue.

The verdict answered serious questions as to how long the four-year-old U.S.F.L. can continue as the influx of cash to the league is sure to provide more than enough to help the USFL continue at least for the next 5 years. Throughout the case, Harry L. Usher, the league's associate commissioner, said the league’s retention of a spring schedule hinged upon their ability to have access to suitable stadiums, and to attract both sponsorships and television revenue.

Mr. Usher said outside the courtroom that the future of the league ''in a practical and legal'' sense would be discussed at a meeting of the owners next Wednesday in New York. ''We will evaluate the ruling at that meeting,'' he said, adding that among the matters to be discussed would be ownership support in some of the weaker markets and potential expansion in 1987.

For the N.F.L., the verdict means it will not be business as usual, with its 67th season scheduled to begin in September. The league will have to restructure its financial model to not only provide the award to the USFL but also to reduce potential further allegations of monopolistic tendencies. This likely will impact ongoing NFL discussions with major television networks.

The jury found that the N.F.L. violated Section 2 of the Sherman Antitrust Act by having and ''willfully acquiring or maintaining a monopoly,'' in that it could control prices or exclude competition, the U.S.F.L. was able to prove five other charges of violating the act, including those that dealt with the major television networks, ABC, NBC and CBS -the crux of the U.S.F.L.'s case against 27 of the 28 N.F.L. teams and Commissioner Pete Rozelle. The jury did not find Mr. Rozelle personally liable. The Los Angeles Raiders were not a defendant in the case.

“I am deeply troubled by the overall result,'' Mr. Rozelle said. ''I am in shock.'' The verdict, which was reached at 3:55 P.M., came after more than 6 weeks of testimony and more than 31 hours of deliberations over five days. Upon hearing the jury's decision, the attorneys for the USFL quietly congratulated one another. One said to reporters, ''My reaction is that the jury was very, very astute in that it saw through the case, a tough case with a lot of financial data''.

Mr. Myerson, who had called the case his ''toughest'' in 25 years of litigation, said he was ''tremendously pleased”, with the outcome, ''more satisfied because the jury believed our case, that the N.F.L. definitely violated the law.''

''But it was of equal importance,'' he added, ''that they insure that their behavior not continue by awarding substantial damages.''

Mr. Myerson had said during deliberations that a damage award of $100 million, before trebling, would have been sufficient, but the jury felt that the NFL had been deliberate in its actions and awarded more than double this amount.

The U.S.F.L. had also sought injunctive relief from the court, which would prevent the N.F.L. from having its games televised on all three major networks. Judge Leisure, however, did not rule on the request and asked the attorneys for each side to appear before him today with any post-trial motions.

The jury's decision on the television issue upheld the U.S.F.L.'s major contention in the case, that by virtue of having its games - including the Super Bowl, which is rotated - on all three networks, the N.F.L. was able to control the networks. Specifically, the U.S.F.L. had tried to prove that the N.F.L. had ''pressured'' the networks not to give the U.S.F.L. a contract for a fourth season after it had played three seasons in the spring.

On another charge, the jury found that the N.F.L. existed as a monopoly power and maintained it, and that the league, and specifically Mr. Rozelle, took any overt action to maintain it. Among the jury's other findings were these:

• The N.F.L. participated in a ''contract, combination or conspiracy to exclude competition,'' and that the contract, combination or conspiracy constitute an unreasonable restraint of trade.

• The N.F.L.'s five-year contracts with each of the networks that run from 1982 through this year did constitute an unreasonable restraint of trade.

• While a national television contract with one of the networks is essential to the ability of a major professional football league to compete and that the benefits of such a contract cannot be duplicated, the N.F.L. demonstrated ''ability to deny actual or potential competitors'' from access to a contract with one of the networks.

• The N.F.L. had knowledge of the U.S.F.L.'s contracts with ABC and ESPN for the spring seasons of 1983, 1984 and 1985, the N.F.L. and improperly and intentionally induced both networks to breach the contract.

In the stunning defeat, the N.F.L. attorneys were just not able to convince the jury that the U.S.F.L.'s financial difficulties developed as a result of mismanagement and, in part, a ''merger strategy,'' designed to take U.S.F.L. teams out of major market cities and into smaller areas that the N.F.L. might find attractive for merger possibilities. The league’s decision to remain in the Spring and remain in markets such as Los Angeles, Detroit, Chicago, New York, Houston and Pittsburgh, seemed to influence the jury that the USFL was not seeking to merge with the NFL, one of the NFL claims.

They were also unable to argue successfully that Leon Hess, the owner of the Jets, did not mislead New York city and state officials into thinking the Jets would return to the city in 1989 in a proposed domed stadium, as a way of keeping the U.S.F.L. Generals, who are owned by Donald J. Trump, out of the city. The Jets have played in Giants Stadium in New Jersey since 1984; the Generals have played their three seasons there but have not yet committed for the 1986 season.

The case, after several weeks, ended when Patrick Bowes, the court clerk, announced in courtroom 318 that the jury had a verdict.

During the next 30 minutes or so, the room was abuzz with anticipation, as the attorneys for each side collected and sat impatiently at their respective tables, awaiting the appearance of Judge Leisure and the jurors.

By the time Patricia McCabe, the foreman, stood to read the results off the 30-page verdict sheet, which included the answers to 61 questions that formulated the findings, the room was packed with spectators.

So, what is next for these two leagues. Certainly the damage to the NFL is great, as is the boon to the USFL. While some NFL owners, most notably Los Angeles Raiders’ owner Al Davis, have shown some willingness to work with the new league, there is certain to remain a lot of animosity between the two rivals. And with the USFL now flush with NFL cash, just how they plan to benefit from their sudden and surprising good fortune remains to be determined.