With the Ted Lasso Season 3 right around the corner, this is important stuff! A case involving the ability of high-level professional sports teams from non-US countries to play league matches in the US has re-emerged.
In a filing in 2019, Relevant Sports LLC sought to promote matches in the US between the top football (soccer) clubs from both Europe and South America. The United States Soccer Federation (USSF) denied their request and ultimately caused the two teams that had been scheduled to play (one from South America and one from Spain) to pull out of the match. Relevant sued USSF and FIFA alleging that their failure to adopt a promotion and relegation system was a violation of antitrust laws. FIFA and USSF argued that they had not engaged in anticompetitive behavior and that the promotion and relegation system was not necessary or practical for the United States soccer market. They also claimed that Relevant Sports LLC did not have standing to bring the lawsuit because they were not a direct competitor in the US soccer market. The case was dismissed in 2021, then appealed, the appeal denied, and then reheard and now, as of 2023, remanded in a 3-0 decision to the Federal District Court judge in Manhattan.
The crux of Relevant Sports’ argument was that the closed league system in the United States, which does not have promotion and relegation, is anti-competitive and prevents smaller teams from having a fair chance to compete at the highest levels of the sport. The closed system in MLS means that the same teams remain in the league each year, regardless of their performance, and new teams can only enter the league through a costly expansion process.
Relegation and promotion is a system used in many soccer leagues around the world to determine which teams will compete in the top division of the league and which teams will be relegated to a lower division. In a league with promotion and relegation, the teams at the bottom of the top division (usually one or two teams, depending on the league) are relegated to the next lower division at the end of the season. At the same time, the top teams in the lower division are promoted to the higher division.
For example, England’s Premier League (the one Ted Lasso’s AFC Richmond centered on winning) is like the major league in the United States. But the system is dramatically different. In the Premier League, the three teams at the bottom of the league at the end of the season are relegated (demoted) to the Championship league, the second division of English soccer (like minor league soccer in the US). At the same time, the top two teams in the Championship are promoted to the Premier League, while the teams finishing in third through sixth place compete in a playoff for the final promotion spot.
The purpose of promotion and relegation is to promote competitive balance in the league, giving lower-ranked teams a chance to work their way up through the ranks and compete at the highest level, while also holding higher-ranked teams accountable for their performance. This system can also help to prevent monopolies and ensure that a small number of wealthy teams do not dominate the league year after year.
In a closed league system in US soccer, the number of teams in a league is fixed and there is no promotion and relegation between leagues. This means that the same teams remain in the league each year, regardless of their performance, and new teams can only enter the league through a costly expansion process.
US soccer’s Major League Soccer (MLS) is a closed league that has a fixed number of teams and does not have promotion and relegation between its top division and lower divisions. Players can move between teams, and sometimes they add expansion teams, but the team stays in the leagues they are in. The league operates on a franchise model, meaning that teams are owned by investors who have paid a fee to own a team in the league. The league’s structure is designed to create a stable and profitable business model for team owners, but critics argue that it creates a lack of competition and limits opportunities for smaller clubs to rise to the top.
Relevant Sports argued that the closed league system was in violation of Section 1 of the Sherman Antitrust Act, which prohibits contracts, combinations, or conspiracies that unreasonably restrain trade. Relevant Sports argued that the USSF and FIFA had conspired to create a closed league system that excluded competition and prevented smaller teams from competing at the highest levels of the sport. USSF has argued that it is merely complying with its obligations as a member of FIFA.
The lawsuit seeks injunctive relief to force the USSF to adopt a promotion and relegation system, as well as damages for the harm caused by the anticompetitive behavior. In remanding the case the US 2nd Circuit Court of appeals said “Competitors do not avoid antitrust liability by hiding behind or acting through third-party intermediaries. . . . A binding association rule designed to prevent competition is direct evidence of concerted action. No further proof is necessary.”
See https://law.justia.com/cases/federal/appellate-courts/ca2/21-2088/21-2088-2023-03-07.html
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