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London Bridges Falling Down: HowConflicts Between U.S. and European LawMay Derail the NBA's Move to Europe

Timothy J. BucherI. INTRODUCTION

Prior to labor strife dominating the attention of the National BasketballAssociation (NBA),' the push to globalize the league through the creation ofinternational franchises had been one of the NBA's top priorities and stillpromises to be among the league's goals in the near future. In February 2008,NBA Commissioner David Stern announced the league's plans to establish fiveEuropean franchises within the decade, 2 with a specific focus on bringing a teamto London.3 In 2007, prior to the announcement, the NBA opened aninternational league office in London to focus on basketball's developmentalefforts in Britain and throughout Europe.' Adding further credence to the NBA'saspirations of a London-based franchise is that the city contains the modem,20,000-seat 02 Arena, easily capable of housing a NBA franchise.5 To helpshowcase its NBA-readiness, London hosted its first NBA regular season game,on March 3, 2011, when the New Jersey Nets and Toronto Raptors faced off at

602 Arena. Th e arena will also host the basketball finals for the 2012 Olympic

In early 2011, NBA owners locked out the NBA players, which prevented the players from takingpart in any aspect of employment with the league. See Complaint, Butler v. Nat'l Basketball Ass'n,No. 11-3352,% 35 , 54 (D.Minn. Nov. 15, 2011); Neil Hayes, NBA Joins Lockout Brigade; LeagueCould Lose Months ofGames, Chi. Sun-Times, July 1,2011, at 50 . The NBA lockout ended when theowners and players reached a principal deal on November 26 , 2011. Mike Wells, NBA Talks BearFruit, Indianapolis Star, Nov. 27 , 2011, at Al. The lockout lasted a total of 149 days and caused theNBA to cancel 16 of its 82 regular season games, the first time since the 1998-99 regular season that awork stoppage caused the cancellation ofgames. Id.2 Marc Edelman & Brian Doyle, Antitrust and "Free Movement" Risks of Expanding U.S.Professional Sports Leagues into Europe, 29 Nw. J. Int'l L. & Bus. 403, 403 (2009); lan Thomason,Have Game, Will Travel: NBA Mulling Idea of Five-Team Expansion in Europe, SI.com (Feb. 13,2008), http://sportsillustrated.cnn.com/2008/writers/ian-thomsen/02/13/international.expansion.Sec Michael Lee, Has the Time Come for NBA in London?; Olympics in 2012 Part of Stem Plan,

Wash. Post, Dec. 12, 2008, at E5 .4NBA Announces OpeningofOffice in London, NBA.com (July 10, 2007),http://www.nba.com/global/uk/nbalondon-office070516.htmi.s Lee, supra note 3.6 Art Garcia, Nets, Raptors to Play Pair of Regular-Season Games in London, NBA.com (Aug. 9,2010), http://www.nba.com/2010/news/08/09/london.newser/index.html. Due to the shortened 2011 -12 regular season, the NBA cancelled games planned for March 7 an d 8, 2012 at the 02 Arenabetween the Nets and the Orlando Magic. NBA Confirm Cancellation of Games at the 02 Arena, TheHerald (Glasgow), Dec. 8,2011, at 13.

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Games in London 7 further adding to the appeal of the city. As CommissionerStem stated, "[t]he [United Kingdom] is on e of the most important markets inthe world .... I think the NBA, coming out of 2012, is going to take a huge leapwith the recognition of our game."' However, as Commissioner Stern has alsoadmitted, such a move requires considering many factors and would be a"tremendous undertaking." 9

Of the potential legal issues surrounding a NB A move to London, thecompatibility of the NBA's collective bargaining agreement (CBA)'0 and theUnited Kingdom's antitrust and labor laws make for some of the most interestingand complex. It took the NB A nearly half a century of piecemeal legislation andjurisprudence to obtain the necessary exceptions and exemptions from U.S.antitrust and labor law to legally operate within North America. Within the nextdecade, the NB A wants to move to London-a foreign jurisdiction whoseprofessional sports have a substantially different organizational makeup and aregoverned by laws different from those of the United States. No matter howprofitable a move to London may be, the NBA's international aspirations mustbe kept in check by the legal realities that go along with expanding aprofessional sports league to a foreign country governed by foreign laws.

This Article will discuss the legal makeup of the United States and theUnited Kingdom, examining the labor laws and antitrust laws of both countries,and how the NBA's potential move to London may be stalled because of thedifferent legal doctrines. Specifically, Part 11 of this Article discusses theapplicable laws that govern the NBA's operation of a team in a foreigncountry-in this case, the laws of the United States and the United Kingdom. Formeans of comparative background between the countries' applicable legaldoctrines, Part Il l discusses American labor law as it relates to professional

Owen Gibson, Olympic Games: Basketball Team Target Medal on Return to Olympic Action, TheGuardian (London), Aug. 16, 2011, at 6.Lee, supra note 3.

Bill Wilson, NBA Boss Reveals Business Game Plan, BBC News.uk, Oct. 6, 2009,http://news.bbc.co.uk/go/pr/fr/-/2/hilbusiness/8290359.stm.0oThe owners and players ratified a ten-year CBA on December 8, 2011. K.C. Johnson, Business Setto Resume After Sides Ratify New CBA, Chi. Tribune, Dec. 9, 2011, at 6. Still, at the time of this

Article's writing, neither side had publicly released a copy of the new CBA. The sides did, however,release a "Summary of Principal Deal Terms," which highlighted the main components of the newagreement. See generally, NBAINBPA Tentative Agreement, Summary of Principal Deal Terms, Nov.26, 2011, available athttps://docs.google.com/viewer?a=v&pid=cxplorer&chrome-true&srcid=OB JqVMjKAfLYNzU3YzVINDAtMDBIOSOOY2UwLWE5ZTItM2RkZTdjN2FmMzl4&hl=cn_US hereinafter 2011 TentativeAgreement]. Because the changes to the NBA CBA, as noted in 2011 Tentative Agreement, arerelatively insignificant to this Article's analysis, all references to the NBA CBA will be to the 2005agreement, as they will remain unchanged in the new CBA, unless otherwise noted herein. Seegenerally NBA Collective Bargaining Agreement July 2005, (2005), available athttp://www.nbpa.org/cba/2005 hereinafter NBA CBA].

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sports and the specific labor exemptions that remove the industry from the scopeof antitrust law. Part III further narrows the discussion of American law andfocuses on labor law and antitrust law in the NBA. Part IV shifts the analysisfrom American law to the laws that would affect the operation of a professionalsports league in the United Kingdom. Specifically, Part IV analyzes the laws ofthe United Kingdom and the European Community Treaty" (EC Treaty), both ofwhich will greatly influence the NBA's proposal of bringing a franchise toLondon. Part V applies those laws to three topical components of the league'sCBA-the draft system, the age requirement, and the salary cap-and discusseswhether the aforementioned laws will conflict with those provisions. 2 Finally, asa corollary to Part V, Part VI proposes a solution that the NB A may follow toremedy any legal conflicts that may arise from its proposed expansion toLondon.

II. PROPER JURISDICTION

In determining whether the NB A can legally operate within a foreigncountry, it is imperative to first define which countries can exercise jurisdictionover the league's operations. Take, for instance, Major League Baseball (MLB),an American sports league with a foreign team-the Toronto BlueJays-operating in Canada." Although Canadian law governs the Blue Jays,baseball's exemption from U.S. antitrust laws has been applied extraterritoriallyto remove baseball and the Blue Jays from Canada's antitrust laws.14

Still, the foreign application of baseball's antitrust exemption is theexception, not the rule. As the United States Supreme Court has stated,"Congress has the authority to enforce its laws beyond the territorial boundariesof the United States [;]" however, "[ilt is a longstanding principle of American

1 Treaty Establishing the European Community, Nov. 10 , 1997, 1997 O.J. (C 340) hereinafter ECTreaty].2 The three CBA provisions detailing the practices discussed herein-the draft system, the age

requirement, and the salary cap-though slightly altered from the 2005 NBA CBA in the 2011Tentative Agreement, remain unchanged so as any mention of the 2005 NBA CBA is reflected in asimilar, if not identical manner, in the new agreement, unless otherwise mentioned herein.13See James A.R. Nafziger, International Sports Law 19 9 (2d ed . 2004); The Official Site of theToronto Blue Jays, BlueJays.com, http://toronto.blujays.mlb.com/index.jsp?cid=tor (last visitedDec. 23, 2011).1See Nafziger, supra note 13, at 199. Baseball's antitrust exemption is a "judicial construction andapplication of the nonstatutory labor exemption to baseball players' antitrust claims brought againstprofessional baseball organizations." See Matthew Mitten et al., Sports Law and Regulation: Cases,Materials, and Problems(2005). In Flood v. Kuhn, 407 U.S. 258 (1972), the Supreme Court utilized theSupremacy Clause and dormant Commerce Clause to hold that antitrust regulation could not beapplied to organized baseball as a result of the sport's prior common law exemption from federalantitrust laws. Id.at 284.

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law 'that legislation of Congress, unless a contrary intent appears, is meant toapply only within the territorial jurisdiction of the United States."" 5 Courts abideby this so-called "presumption against extraterritoriality" as long as Congressha s not expressed any intent to enlarge the scope of legislation to foreigncountries or if failure to do so would adversely affect the United States.16Additionally, the general principle is that when the laws of two countries are inconflict, the country with the lesser interest in exercising its jurisdiction shoulddefer its governing authority to the other country. 17This is seemingly the caseregarding baseball's antitrust exemption. Th e exemption is given effect inCanada, because failing to apply it would threaten the livelihood of theexemption in the United States, stare decisis of the United States Supreme Court,and the sustainability of a Canadian MLB franchise.

This principle, however, does not seem to apply to all Americanprofessional leagues. Specifically, the NBA must deal with the applicability ofAmerican legal standards to its lone foreign franchise-the Toronto Raptors.5The issue of which laws apply to the Raptors is addressed in part by the NBACBA, which states that the Raptors' players are protected under Canadianjudicial and legislative authority on matters related to labor law, such as theCBA.' 9 Further, in 1995, the Ontario Labor Relations Board asserted jurisdictionover the lockouts of both NBA referees and MLB umpires.20 Although bothgroups' employment in Canada was "sporadic," the Board recognized theoccasional need for "fragmented collective bargaining."

21 Even so, thesimilarities of labor laws in the United States and Canada eased the dual-application of the two countries' legal doctrines.2 2

Also relevant to the NBA's move to London, is that American23extraterritoriality has, to some degree, already reached the United Kingdom. In

the 1970s, British unions rejected attempts to bring the United States' Taft-Hartley Act to the United Kingdom, when the Conservative Party-led

'5 EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (citing Foley Bros., Inc. v. Filardo, 336U.S. 281, 285 (1949)).6 See id.; Envtl. Def. Fund v. Massey, 986 F.2d 528, 530-32 (D.C. Cir. 1993); Kevin Fritz, Note,Going to the Bullpcn: Using Uncle Sam to Strike Out Professional Sports Violence, 20 Cardozo Arts& Ent. L.J. 189, 224 (2002).7Restatement (Third) of Foreign Relations Law 403(3) (1987); Fritz, supra note 16 , at 225." The Official Site of Canada's Team, The Official Site of the Toronto Raptors,http://www.nba.com/raptors/index-main.html (last visited Dec. 23, 2011).'9 NBA CBA, supra note 10 , at art. 29, 11.20William Gould, International Labor Standards: Labor Law Beyond U.S. Borders: Does WhatHappens Outside of America Stay Outside of America?, 21 Stan. L. & Pol'y Rev. 401, 406-07 (2010).21 Id.22Matthew Epps, Comment, Full Court Press: How Collective Bargaining Weakened the NBA'sCompetitive Edge ina Globalized Sport, 16 Vill. Sports & Ent. L.J. 343, 346 n.15 (2009).23 ee Gould, supra note 20, at 406.

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government tried to institute aspects of American labor law domestically. 2 4 Byrejecting the "Americanization" of its legal system, the United Kingdom hasmaintained and developed its own domestic labor laws and antitrust laws. Thus,determining the feasibility of a NBA franchise in London requires acomprehensive legal analysis of the similarities and differences of governinglaw, in both the United States and the United Kingdom.

III. LABOR AND ANTITRUST LA W INTHE NBA AND AMERICAN PROFESSIONALSPORTS

In the United States, unions exert significant influence on the shape andnature of employment in many industries, including professional sports.25 In aneffort to limit the reach of unions and employers, Congress has enacted federal

26laws to guide labor relations. Because the NBA directly and indirectly affectsinterstate commerce, the manner in which it employs its players is subject tofederal regulation and is therefore governed by the National Labor Relations Act(NLRA), regardless of whether a player belongs to a union.27 Determining theNBA's compatibility with the laws that would apply to a London franchise turnsthe analysis to the most important legal instrument in American professionalsports-the CBA.

A. Collective Bargaining in American Professional SportsCBAs are binding resolutions between an employer and its employees

(represented by a union), that outline the parties' business relationship. 28 In aprofessional sports league, the players' association represents the employee-players' bargaining interests,29 while team owners join together as a multi-employer bargaining unit to ensure that the CB A has a uniform effect throughoutthe league.3 0 Upon agreement, a CB A will usually last for several years andapply to all players, even those who were not ye t in the league at the time theagreement was reached or those who chose not to be represented by the players'24See id.25Gil Fried & Lori Miller, Employment Law: A Guide for Sport, Recreation, and Fitness Industries393-94 (1998).26See Mitten, supra note 14, at 515; The Business of Sports 199, 202 (Scott R. Rosner & Kenneth L.Shropshire eds., 2004).27National Labor Relations Act, 29 U.S.C. 151-169 (2006); Mitten, supra note 14 , at 513-14.28Mitten, supra note 14, at 513-14.29Fried &Miller, supra note 25, at 393.30 Paul D. Staudohar, Playing for Dollars: Labor Relations and the Sports Business 10-11 (1996).Even outside of professional sports, this type of multi-employer bargaining is widely recognized. Id. tI3I.

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association.3 ' Although the players and teams collectively negotiate for a CB A togovern the generic functions of the respective sports league, professional athletesalso maintain a degree of at-will employment, by which players independentlynegotiate salaries and specific contractual terms, which are absent from theuniform player contract and the rest of the CBA.32

Like most American sports leagues, labor and antitrust laws primarilygovern the terms of the NBA CBA, which includes its negotiation andenforcement. In the labor context, the NLRA makes unions more accessible toemployees to ensure that their interests are properly addressed within the CBA. 33Specifically, section 7 of the NLRA gives employees the right to self-organize,the right to autonomously and collectively bargain, and the right to engage inconcerted activities for mutual aid or protection. 34 To ensure the legitimacy ofsuch agreements, Congress, in 1947, amended the NLRA with the Taft-HartleyAct, 3Swhich authorized the legal enforcement of a CBA. 3 6 ThuS, once employeesand employers agree to a CBA, either party may seek to enforce the agreement incourt; however, if the parties cannot reach an agreement, the NLRA allowsunionized employees to strike or employers to initiate a lockout,37 a term thatbecame ubiquitous for American professional sports fans during 2011."

Although both parties possess various means to obtain better terms at thebargaining table, each party must be sure not to abuse its power and engage in anunfair labor practice.3 9 Most unfair labor practice claims are derived from aparty's violation of activities prescribed in section 8(d) of the NLRA.40Specifically, section 8(d) obligates both employers and employees to bargain ingood faith, meet at reasonable times, negotiate on mandatory collectivebargaining terms, and make a sincere attempt to reach an agreement. 4 1 Failure ofa party to meet any of the aforementioned obligations may subject it to an unfairlabor practice sanction, caused by the other party filing a complaint with theNational Labor Relations Board (NLRB) within six months of the allegedviolation.4 2 If the NLRB finds that a party has committed an unfair labor

31Fried & Miller, supra note 25 , at 398 (noting that a CBA that limits rookie salaries will still hurtfuture NBA players although the players are not aparty to the negotiations).32 he Business of Sports, supra note 26, at 199; Staudohar, supra note 30, at I1.33Mark Conrad, Blue-Collar and Basketball, in The Business of Sports, supra note 26, at 202.3 National Labor Relations Act, 29 U.S.C. 157.3 Taft-Hartley Act, 29 U.S.C. 141-144 (2006).36Anthony Bartlett, Labor Arbitration in the United States, 14 Case W. Res. J. Int'l L. 299, 310 (1982).37National Labor Relations Act, 29 U.S.C. 157, 158(a)(3), 163.3 See NFL, NBA Solve Labor Issues, USA Today, Dec. 28, 2011, at 5C.3 Conrad, supra note 33, at 202.40NatiOnal Labor Relations Act, 29 U.S.C. 158(d).41 Id.42 ried & Miller, supra note 25, at 402.

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practice, the Board may impose back pay and reinstatement, mandatenegotiations, or issue cease and desist orders.4 3

The most basic terms of the CBA are mandatory in collective bargaining,which again, both parties must bargain for in good faith. Generally speaking,mandatory subjects of collective bargaining include salaries, hours, andworkplace terms and conditions. In professional sports, some topics maydirectly or indirectly invoke a mandatory subject, which then must be bargainedfor in good faith. Examples include season length; drug testing; protectiveequipment; uniform requirements; team and commissioner discipline; non-injuryand injury grievances; amateur drafts; rules about player salaries; players accessto personal files, medical rights, retirement plans, and insurance policies;revenue sharing; and the CBA's expiration date.45 Alternatively, any term that isnot mandatory is considered permissive, and parties may refuse to bargain for

46these terms in good faith or refuse to bargain for them at all.Although the NLRA mandates good faith bargaining-a willingness to

reasonably negotiate on mandatory subjects-the parties must bargain only inpursuitof an agreement. 47 Still, this good faith obligation prohibits leagues fromunilaterally altering or enforcing mandatory bargaining subjects.4 8 In NationalFootballLeague Players' Association v. NationalLabor Relations Board,9 theEighth Circuit found that the National Football League (NFL) acted in bad faithwhen it unilaterally imposed a rule affecting game activities, thus implicatingplayer salaries and terms and conditions of their employment-mandatorysubjects of bargaining.50

In addition to the NLRA, the Sherman Act--the foundation for allAmerican antitrust laws-also regulates labor relations. Th e Sherman Actprevents a party from restraining trade through "contract, combination, orconspiracy"' and from "monopoliz[ing] or attempt[ing] or conspir[ing] tomonopolize trade."5 By their very nature, CBAs are a concerted attempt torestrain competition in the employment market.53 This led Congress to add

43 Id.4 National Labor Relations Act, 29 U.S.C. 158(d).4s Fried & Miller, supra note 25 , at 396-98; Walter T. Champion, Jr., Sports Law in a Nut Shell 63(4th ed. 2009).46 ried & Miller, supra note 25, at 397.47d.48d.; Matthew C.McKinnon et al., Sports Law 4: 56 (1999).49 ee generally Nat'l Football League Players Ass'n. v. NLRB, 503 F.2d 12 (8th Cir. 1974).so Id.at 14 ; Fried & Miller, supra note 25, at 396.5'Sherman Act, 15 U.S.C. 1 2006).52 d. at 2.s3Fried & Miller, supra note 25 , at 400; Peter A. Carfagna, Sports and the Law: Examining the LegalEvolution ofAmerica's Three Major Leagues 51 (2009).

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statutory labor exemptions in the Norris-LaGuardia Act 5 4 and the Clayton Act. 5sBoth acts removed various union-related activities from the purview of antitrustlaws and courts.56 Th e exemptions were a significant coup for unions and, in thewords of the Supreme Court, placed "equality before the law."57 The Norris-LaGuardia Act exempts conduct arising from a labor dispute from beingenjoined by federal courts, protects unionized activity, and acknowledges theimportance of collective bargaining.5 8 The Clayton Act similarly prevents courtsfrom enjoining parties and exempts CBAs from federal antitrust laws. 9Similarly, U.S. courts have constructed a nonstatutory labor exemption, which60removes the terms of a CB A from the scope of antitrust laws.

B. Collective Bargaining in the NB ASince its inception, the NB A has seen various internal employment

disputes implicating American labor laws. In 1954, the NBA's first players'association (NBPA) 61was formed by Boston Celtics player Bob Cousy. 6 2 COUSysuccessfully challenged the NBA's restraint on player salaries under the reservesystem, which allowed teams to exercise exclusive contractual rights over itsplayers.6 3 However, it was not until 1964 that the players collectively unitedagainst team owners, when several players threatened to boycott the All-StarGame unless owners agreed to a player-pension fund.6 It took three more yearsfor the NBPA and owners to officially reach a CBA, the first CB A in American65professional sports, under which team owners agreed to increase the player-

' Norris-LaGuardia Act, 29 U.S.C. 101-115 (2006); Michael Tannenbaum, A ComprehensiveAnalysis of Recent Antitrust and Labor Litigation Affecting the NBA and NFL, 3 Sports Law J.205,217 (1996).ss Clayton Act, 15 U.S.C. 17 (2006); Carfagna, supra note 53, at 51 .56Tannenbaum, supra note 54, at 217.5 Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921); Carfagna, supra note 53, at 52.5sTannenbaum, supra note 54, at 216.5 Id. t 217.6 Id. t 219-20. See infra Part 11.B for a thorough discussion on the nonstatutory labor exemption.61The players' association maintains a website detailing player news and events and also contains acopy of the 2005 NBA CBA. NBPA Homepage, National Basketball Player's Association,http://www.nbpa.org/ (last visited Jan. 8, 2011).62Conrad, supra note 33, at 202-03.63 Id.64See Robert C. Berry et al., Labor Relations in Professional Sports 158-59 (1986).65 Staudohar, supra note 30, at 107; but see Jeffrey S. Moorad, Major League Baseball's LaborTurmoil: The Failure of the Counter-Revolution, in The Business of Sports, supra note 26, at 209(stating that the Major League Baseball Player Association and the Player Relations Committeereached the first CBA in 1968).

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pension plan, to establish new insurance programs, and to reduce the amount ofgames played each season.

As the NBA continued to operate in the United States, it faced several legalchallenges to provisions within its CBA. Although the bargaining aspect ofcollective bargaining was removed from the scope of antitrust law as a result ofthe Clayton Act's statutory labor exemption, the Clayton Act was silent about the

67most important aspect of collective bargaining, the terms of the CBA. That wasuntil the Second Circuit Court of Appeals in Wood v. National BasketballAssociation extended the nonstatutory labor exemption to CBAs in professionalbasketball.68 In Wood, NBA player Leon Wood filed suit against the NBA,alleging that terms of the NBA CBA-4he salary cap, amateur draft system, andprohibition on player corporations-violated the Sherman Act as anunreasonable restraint on trade. However, the court of appeals upheld thevalidity of the NBA CBA and further exempted it from antitrust laws finding thatit was reached through good faith and bona fide arms length bargaining andfollowed the requirements of the NLRA. 70 Although the court applied thenonstatutory labor exemption to the CBA, 7 Wood's claim was representative ofthe growing consternation between American professional athletes and CBAs.

NBA players are not the only athletes to have challenged the terms of theirleague's CBA. As a result of two challenges by NFL players, United Statescircuit courts have established two separate tests by which to apply thenonstatutory labor exemption to CBAs in professional sports. One test wasestablished in the Eighth Circuit's holding in Mackey v. National FootballLeague,7 2 in which a restrictive condition must: (1) have an effect only on theparties to the agreement, (2) deal only with mandatory subjects of collectivebargaining, and (3) be the result of bona-fide collective bargaining with partiesmaintaining equal bargaining power.

Twenty years after Mackey, the Supreme Court ruled on the nonstatutorylabor exemption in Brown v. ProFootball,Inc.74 There, NFL players brought anantitrust action against the NFL, challenging the league's unilateralimplementation of fixed wages for developmental players after the league's CBA

66Staudohar, supra note 30 , at 106-07.67Carfagna, supra note 53, at 52 .68Wood v. Nat'l Basketball Ass'n, 809 F.2d 954, 961-63 (2d Cir. 1987).69 Id. at 956 (citing 15 U.S.C. 1(1982)).70 See id. at 961-63 (citing 29 U.S.C. 159(a) (1982)).71See id. at 959.72 See generally Mackey v. NFL, 543 F.2d 606 (8th Cir. 1976).73 d. t 614.74See generally Brown v. Pro Football, Inc, 518 U.S. 231 (1996).

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expired and negotiations with the players' association reached impasse.75 Th eCourt ultimately held that the nonstatutory exemption-which was inferred fromfederal labor law76 pecifically removed "some restraints on competitionimposed through the bargaining process" from the scope of antitrustscrutiny 7 -- in this case, the unilateral implementation of mandatory subjects ofbargaining following the impasse.78 In its decision, the Court refined the scope ofthe exemption to include only conduct that "grew out of, and was directly relatedto, the lawful operation of the bargaining process, . . . involved a matter that theparties were required to negotiate collectively[, a]nd . . . concerned only theparties to the collective bargaining relationship." 79 Thus, "an agreement amongemployers" that is "sufficiently distant in time and in circumstances from thecollective bargaining process" is not insulated from antitrust review.80

Years later, the Second Circuit interpreted the Court's holding in Brownwhen it upheld the NFL's minimum age requirement in Clarett v. NationalFootball League.81 Under the Second Circuit's inclusive interpretation, anycondition that is potentially derived from collective bargaining maintains anexemption from antitrust regulation. 8 2 Although American courts have clearlydefined the role of CBAs in professional sports, the interpretation of CBAs inforeign courts is less defined.

IV. COMPETITION AND LABOR LAW WITHIN BRITISH PROFESSIONAL SPORTS

In addition to American law, the NBA's aspirations to bring a franchise toLondon will implicate a significant amount of foreign law. The NBA will haveto comply with the national laws of the United Kingdom and potentially those ofthe EC Treaty. Thus, it is necessary to analyze the background behind eachrespective legal doctrine.

Great Britain and Northern Ireland form the unitary state of the UnitedKingdom. The United Kingdom, together with twenty-seven other countries,make up the European Union (referred to as the European Community (EC)), ade facto political organization. British professional sports leagues that competeboth inside and outside of England, within EC Member States, are subject to tw olevels of legal authority: the EC Treaty and the domestic laws of the United

" Id.at 234-35.76See id. at 236.n Id.at 237.7 Id.at 240-42." Id. t 250.so Id.8'See generally Clarett v. NFL, 369 F.3d 124 (2d Cir. 2004).82 d. at 142.

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Kingdom.8 3 As the NB A would likely seek to establish more than on e Europeanfranchise, measuring the feasibility of a NB A franchise in London requires ananalysis based on the prospect that the NB A would establish an additional NB Afranchise in an EC Member State, thus invoking the EC Treaty.

Th e EC Treaty is the culmination of efforts among European countriesfollowing World War II to remove the possibility of another mutually destructivewar.84 In 1992 member states signed the Treaty on European Union to establishcommon foreign policy and a coalition within Europe.85 Most recently, memberstates, including the United Kingdom, amended the Treaty on European Unionwith the Treaty of Lisbon.

A feasibility study of a NBA franchise in London, and ultimately the EC,will primarily implicate tw o general fields of law: labor law and competitionlaw. Although the EC's labor laws in professional sports are not as defined asthose in the United States, British case law and policy may reveal how the NB Awould be received if it were to bring a franchise to London.

A. United KingdomAlthough a signatory to the EC Treaty,8 7 the United Kingdom has

notoriously demonstrated a persistent resistance to complete accession. Britainhas traditionally refrained from modeling its domestic regulations after Europeanlaws, namely the EC Treaty.89 However, since 1998, Britain's laws governingeconomic competition have begun to more closely resemble the EC Treaty.90 Butwhen the laws of the EC and the United Kingdom do conflict, EC lawssupersede.9 1 Even with a movement toward uniformity, in recent negotiationswith the Union of European Football Associations (UEFA), the EC has accepted

Andreas Joklik, The Legal Status of Professional Athletes: Differences Between the United Statesand the European Union Concerning Free Agency, II Sports Law J. 223, 228 (2004). For the purposeof this Article, reference to the United Kingdom and Britain will refer to the same governing entity.The use of England or English, however, will refer only to the country and domestic laws of England.Still, all of these geographic locations and references thereto affect the feasibility of a operating aNBA franchise inLondon.8 Philip Raworth, Introduction to the Legal System of the European Union 1 (2001).' Sec id. at 10 .8 Treaty of Lisbon Amending the Treaty on European Union and the Treat establishing the EuropeanCommunity, Dec. 17 , 2007, 2007 O.J. (CI 15 ) 1hereinafter Treaty of Lisbon].8 The United Kingdom joined the EC on January 1, 1973. Greg Friedholm, The United Kingdom andEuropean Union Labor Policy: Inevitable Participation and the Social Chapter Opportunity, 22 B.C.Int'l &Comp. L. Rev. 229, 231 (1999).88Id. at 231.89David Griffith-Jones, Law and the Business of Sport 80 (1997).9 Adam Lewis & Jonathan Taylor, Sports: Law and Practice 385 B2.12, 387 B2.20 (2d ed. 2008).9'Joklik, supra note 83, at 228.

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that some aspects of professional sports, namely player contracts, should bebased on national labor law,9 2 which may be distinguishable from the EC Treaty.

93In England, laws governing professional sports are relatively limited, but thelaws of the United Kingdom, on a broader scale, have developed at a muchhigher rate. 94 Generally speaking, advancements in British labor law havefocused on the protection of employees and allowing employees to utilizecollective bargaining as a means to achieve better terms of employment.9 5

Labor law plays a large role in the governance of Britain's professionalsports; however, the genesis of government intervention within professionalsports was marked by restraints on player movement via the retain-and-transfersystem. Th e early rise of such restraints led to a significant development in thelaws of the United Kingdom governing professional sports. Although Britishlaws pertaining to professional sports are more advanced than most Europeancountries,9 the United Kingdom still employs aspects of the common law systemby which courts exert significant control over disputes.99 With the CompetitionAct of 1998, only in the last fifteen years has the United Kingdom begun todevelop laws that rival the antitrust laws of the United States.99 That is not tosay, however, that the United Kingdom does not have a history of prohibitingrestraint of trade within professional sports leagues.' 00

a. Th e Competition Act, Enterprise Act, and Common LawStatutorily speaking, British law regulates activities that have an adverse

effect on trade through the Competition Act of 1998'o' and the Enterprise Act of2002.102 Chapter 1 of the Competition Act specifically prohibits "agreementsbetween undertakings, decisions by associations of undertakings or concertedpractices which may [a]ffect trade within the United Kingdom and [which] haveas their object or effect the prevention, restriction or distortion of competitionwithin the United Kingdom."' 0 3 Such impermissible agreements include price92 au l Staudohar, The European and U.S. Sports Labor Markets, in International Sports EconomicsComparisons 72 (Rodney Fort & John Fizel eds., 2004).93 oklik, supra note 83 , at 229.9 Id.at 230.9 Friedholm, supra note 87 , at 232.96Staudohar, supra note 92 , at 66.9 Joklik, supra note 83 , at 230.

Peter Katz, Comment, A History of Free Agency in the United States and Great Britain: Who'sLeading the Charge?, 15 Comp. Lab. L.J. 371, 416 (1994).9 See Lewis &Taylor, supra note 90, at 38 5 B2.8.1lKatz, supra note 98, at 403 n.21 1.1o1ee generally Competition Act, 1998, c.41.102 ee generally Enterprise Act, 2002, c.40; see Lewis &Taylor, supra note 90 , at 38 5 B2.8.103ompetition Act, 1998, 2(1)(a)-(b); Lewis & Taylor, supra note 90 , at 385 B2.1 1.

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fixing, limiting production, or sharing markets.'0 In the context of the NBA,provisions of its CBA and the agreement overall likely meet the definition of"agreements between undertakings" or "concerted practices" that affect trade inthe United Kingdom.

For the actions of a sports league operating exclusively in the UnitedKingdom to violate the Competition Act, there must be a restrictive agreementthat produces an appreciable adverse effect on competition.'05 Based upon theamount of market shares owned by the parties to the agreement, the Office ofFair Trading (OFT) determines whether the restrictive agreement in question hasan appreciable effect on the applicable market.'06 If the OFT finds an appreciableeffect on the market, the restrictive agreement is null and void.107 But anagreement that is partially anticompetitive does not necessarily void the entireagreement. Rather, in a narrower context, with specific applicability to London,English law allows the severability of an agreement's anticompetitive provisionsand for the remainder of the agreement to apply to the parties.'

Chapter 1, section 9 of the Competition Act exempts certain agreementsfrom the scope of Chapter 1.' But to meet the exemption, section 9 requires theagreement to:

(a ) contribute[] to . . . (i) improving production or distribution,or (ii) promot~e] technical or economic progress, whileallowing consumers a fair share of the resulting benefit; bu t(b) does not (i) impose on the undertakings concernedrestrictions which are not indispensable to the attainment ofthose objectives; or (ii) afford the undertakings concerned thepossibility of eliminating competition in respect of asubstantial part of the products in question."10

Thus, under section 9, the NBA needs to show provisions of its CBA have noanticompetitive effect on trade, that the agreement is not restrictive, or, even ifthe provision is restrictive, that the effect on the market is minimal. "Chapter 2 of the Competition Act prohibits a party from abusing its dominantposition to affect trade within a relevant British market." 2 Some of these

104ewis & Taylor, supra note 90, at 385 B2.12.0sId. at 386 B2.15.10 Id.07d.'0 Id.10See Competition Act, 1998, c.41, ; Lewis & Taylor, supra note 90, at 386-87 B2.16.to ompetition Act 9(a)-(b); see Lewis & Taylor, supra note 90, at 386-87 B2.16.1 See Lewis & Taylor, supra note 90, at 255 A4.135 n.5.

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impermissible activities include "imposing . . . unfair trading conditions . . .[and] limiting production . . . to the prejudice of consumers."' However, if asports league engages in restrictive conduct domestically, that violates Chapter 2,the league may justify its conduct by showing that the conduct is proportionatelyapplied to the situation at hand, especially considering the relative economicstrengths of the parties within that specific market."14

In a private context, such as the NBA, for any of the aforementionedstatutory provisions to take effect, an injured party must bring an action throughthe courts.'1 5 If a court finds that an agreement violates any part of theCompetition Act, it has the authority to invalidate the agreement." From aplayer's perspective, if he can demonstrate that the NBA, or on e of its EC-basedteams, violated the Competition Act, he may also be able to recovercompensatory or exemplary damages from the profits that the player wasdeprived as a result of the NBA's wrongful conduct. 17

As a means to apply and enforce appropriate penalties fo r violations of theCompetition Act, Th e Restrictive Trade Practices Act of 1976,"' which wassuperseded by the Competition Act, established the OFT, the current and premieranticompetitive investigative body." 9 In addition to its aforementionedfunctions, the OFT has the authority to impose fines against parties who haveviolated the Competition Act.120 Also, the Enterprise Act of 2002 authorizes theOFT to investigate mergers that may hinder competition within Britain and torefer such situations to the Competition Commission (CC),' 2 ' which wasestablished by the Competition Act to monitor mergers and takeovers. 12heOFT may choose not to refer a matter to the CC if the market impact isinsufficient or if the consumer and the market benefits outweigh the potentialanticompetitive effect.12 3 But once the matter is referred to the CC, the CCdecides what action is necessary to prevent or remedy the anticompetitivebehavior.124 Recently, in applying the Competition Act, the OFT inspectedsuspected cartels among soccer apparel manufacturers, sports apparel retailers,112 ee generally Competition Act 18; see Lewis & Taylor, supra note 90, at 387 B2.20.113 ompetition Act, 18(2)(a), (b); Lewis & Taylor, supra note 90, at 387 B2.21.114Lewis & Taylor, supra note 90, at 388 B2.24.'1 Id. t 397 B2.59.116Id. at 398 B2.60." Id. at 398 B2.61, 399 B2.66.11s ee generally Restrictive Trade Practices Act, 1976, c. 34 (Eng.), repealed by Competition Act, I b)."19 Simon Gardiner et al., Sports Law 376-77 (3d ed. 2006).120Id. at 377.121Lewis & Taylor, supra note 90, at 390 B2.31.122 ardiner, supra note 119, at 376.123Lewis &Taylor, supra note 90, at 390 B2.32.124Id. at 390 B2.33.

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and various soccer clubs and also investigated the dissemination of pre-race datain British horse racing.' 25 Providing evidence that the OFT does not hesitate toscrutinize the legality of a professional sports league.

Presumably, a professional sports league engaged in an action that restrainstrade must justify its actions in a manner similar to the common law restraint oftrade doctrine. Under common law, restraining trade is no t per se illegal.12 6Instead, the party restraining trade may demonstrate reasonable policyjustifications, either for the immediate parties or the public at large. 127 Areasonable policy justification requires the restraining party to have a legitimateinterest (e.g., a league's financial sustainability), and the restraint must notexceed what the court deems necessary to protect that legitimate interest (e.g.,limiting player salaries). 128

b. British Football Association

An empirical demonstration of how British courts deal with the restraint oftrade is quite telling for how they would treat the NBA CBA. Th e BritishFootball Association (FA), a soccer league,129 restricted its players' bargainingpower by utilizing a retain-and-transfer system. After the expiration of a player'scontract and during an option period, the player's team could unilaterally renewthat player's contract under the same terms as the original agreement, sign theplayer to a larger contract, or choose no t to offer the player a contractaltogether.130

In 1960, in response to the retain-and-transfer system, a soccer playernamed George Eastham challenged his contract with an English Football Leagueteam, Newcastle United, after the team denied his request for transfer."' At thetime, league rules allowed Newcastle to retain Eastham, even after his contractexpired. Eastham challenged the rule as an impermissible restraint of tradeunder Britain's common law, as it prevented him from seeking employment with

125 delman &Doyle, supra note 2, at 411.126 ordenfelt v. Maxim Nordenfelt Guns &Ammunition Co., 19841 A.C. 535, 565; Stephen Hornsby,The Harder the Cap, the Softer the Law, 10(2) Sport & L. J. 142, 143 12 (2002), available athttp://www.britishsportslaw.org/joumal/default.asp?item=35; James Johnson, Restraint of Trade LawinSport, Sports L. eJoumal 2, July 1,2009,http://cpublications.bond.edu.au/cgi/viewcontent.cgi?article= I009&context-slej.127Id.128 ohnson, supra note 126, at 2.129ee Katz, supra note 98, at 398.30 Id. at 401-02."3 Eastham v Newcastle United Football Club 1964 1Ch. 413 (U.K.); Johnson, supra note 126, at 6.132 Id.

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another team. 3 3 The court ultimately ruled that the retention system was asubstantial interference with a player's freedom to choose his employment.134However, the court recognized some need for player restraint and upheld theunderlying concept of the transfer system, as a player could still appeal to theleague or choose to play on a team outside of that league.' 3 5 Nonetheless, thecourt's ruled that a transfer system could be considered an impermissiblerestraint on trade when combined with a retention system.136 Although Eastham'scase demonstrates how British courts have used competition law to regulateprofessional sports, their attempt to do so via labor law have not been aseffective.

2. British labor law has not had a significant effect on professional sports.It is very difficult to apply and transfer another country's laws, specifically

labor laws that govern collective bargaining. Comparative law theorist OttoKahn-Freund said it best: "Standards of protection and rules on substantive termsof employment can be imitated -- rules on collective bargaining . . . cannot." 37Thus, the collective bargaining laws of the United Kingdom, however similar tothose of the United States, differ in a manner that will affect the compatibility ofthe NBA CBA's terms with the laws that govern London.

Collective bargaining developed in the United Kingdom much differentlythan it did in other countries.138 Instead of the British legislature conferringpositive rights to its employees and unions, traditional common law bansprohibited certain labor practices. ' To enable employees to engage in laborpractices, the British Parliament had to limit courts' anti-labor authority.140 Overtime, political turmoil resulted in mixed support for unions, which ultimatelycaused a significant decline in collective bargaining within Britain's privatesector. 141

113Eastham, 1964] 1Ch. at 430-31; Katz, supra note 98, at 403; Johnson, supra note 126, at 6.mEastham, 1964] I Ch. at 430-31; Katz, supra note 98, at 403.1s Id.; Katz, supra note 98, at 404.136Id.37Otto Kahn-Fruend, On Uses and Misuses of Comparative Law, 37 Mod. L. Rev. 1, 21 (1974).13 Richard Hyman, The Rise and Decline of Collective Bargaining as a Mechanism of Employment

Regulation in Britain, in Collective Bargaining and the Social Construction of Employment 190(2001).13 Id.140 d.141d. at 197.

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In an effort to regulate its labor industry, Britain tried to emulate Americanlabor laws, beginning with the Industrial Relations Act of 1971 (IR Act).142Taking a cue from American labor law as a means to protect unions andemployees, the IR Act upheld the right to collectively bargain and otheremployment-related rights.143 However, the IR Act was repealed in 1974.'44 Theyears that followed were of significant political tension and change, and, as aresult, Britain's labor laws became very volatile, changing each time a newpolitical regime took power.145 Nonetheless, with each political regime,employee and union rights increased.146

Significant for the NB A and the operation of a London franchise, pursuantto Britain's labor reforms in the 1980s, parties found to have engaged in unfairlabor practices are liable under common law and subject to civil courts, insteadof legislatively-created bodies like the NLRB in the United States.147 Thus, in theUnited Kingdom, if a party can demonstrate an unfair labor practice, the courtsare authorized to enjoin the other party and may impose forfeitures or seizeassets. 148

British courts have been consistently reluctant to subject the actions ofprofessional sports leagues' governing bodies to judicial review. 49 Instead,government intrusion in professional sports is limited to matters that implicatepublic health, order, or safety, leaving matters of a private nature to the leaguesthemselves. 1o Even though British courts defer private matters to sports leagues,if a league engages in anticompetitive restraints, players may initiate governmentintervention. Nonetheless, courts' deference to professional sports leagues wouldbe a significant obstacle for a players' union.

Moreover, changes in England's social climate have significantly reducedthe power once wielded by unions. For example, the transient nature ofEngland's leading political regimes has led to an erosion of pro-union and, thus,pro-employee sentiment."sI Also, England's economic crises in the late 1970s142ndustrial Relations Act, 1971, c. 72 (Eng.), repealed by Trade Union and Labor Relations Act,1974, c. 52 (Eng.).143 orraine McDonough, Comment, The Transferability of Labor Law: Can an American TransplantTake Root in British Soil?, 13 Comp. Lab. L.J. 504, 515 (1992).

See Trade Union and Labor Relations Act, 1974, c. 52; McDonough, supra note 143, at 519-20,522.145 See Jon S. Greenwood, Note, What Major League Baseball Can Learn From its InternationalCounterparts: Building a Model Collective Bargaining Agreement for Major League Baseball, 29 Geo.Wash. J. Int'l L. & Econ. 259, 269-70 (1995).146 d. at 269-71.147 ee McDonough, supra note 143, at 526.141Id. at 527-28.149 ichard Parrish & Samuli Miettinen, The Sporting Exception in European Union Law 11 (2008).Isod.1s Friedholm, supra note 87 , at 242-43; Greenwood, supra note 145, at 283.

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and early 1990s have caused support for unions to wane.152 As a result, in thecontext of professional sports, collective bargaining and unions have broughtlittle benefit to players, who instead turn to the courts for help. Because Britishlegal doctrines are no longer as receptive to collective bargaining and unions asthey once were, the NBA's draft system, age requirement, and salary cap maydirectly conflict with the legal and public policies of Britain and lackgovernmental and public support to operate in London.

B. European Community Treaty

As the supreme and controlling authority of the United Kingdom, the ECTreaty has had a significant impact on the development of modern sportsgovernance in the United Kingdom.154 Since the inception of the EC, memberstates have established a number of coalitions and treaties to govern certainEuropean industries. However, until recently, no treaty has referenced sports.Instead, member states had merely acknowledged the autonomy of sportsorganizations and advised fellow member states to treat sports organizations withsignificant deference.156 However, policymakers believe that recent revisions tothe Treaty of Lisbon' 7 now authorize the EC to "promot[e] neutrality andtransparency in sporting competitions and cooperation between sportingbodies."' 58 But even with this added dimension, the European Commission hasconcluded that sports organizations do not warrant an exemption from the ECTreaty, specifically the Treaty's provisions on competition law.

Competition law, the EC's version of American antitrust law, deals withthe commercial aspect of sport. 1o Both the United States' and EC's policies arein place to ensure evenhanded market competition. 6 Still, the regulations differin content and scope, likely because each country has unique motives forenacting laws pertaining to professional sports.162 For example, to promote on -field competitive balance, American professional sports utilize various

152 reenwood, supra note 145, at 269-70.1 Katz, supra note 98 , at 416.15 Gardiner, supra note 119, at 351.155 U, Sport, Law and Policy: Regulation, Re-regulation and Representation I (Simon Gardiner et al.eds., 2009).156 Id.1 Treaty of Lisbon, supra note 86 , art. 165.158 reaty of Lisbon - Policies for aBetter Life: Sport, Europa,http://europa.eulisbon treaty/glance/better life/index en.htm (last visited Feb. 26, 2011).'s9 EU , Sport, Law an d Policy, supra note 155, at 2.'6oGardiner, supra note 119, at 351.161 d. at 351-52.162ndrew T. Guzman, is International Antitrust Possible?, 73 N.Y.U. L. Rev. 1501, 1539 (1998).

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mechanisms of restraint, such as "reserve clauses, draft rules, roster limits, salarycaps, [and] collective bargaining [agreements] . . . ." However, in Europe,such mechanisms are not predominantly used and may violate European lawsand be without exemption.'6 For the NBA, the applicability of the EC Treatywill depend on the degree of its aspirations to expand throughout Europe. If theNB A limits its expansion to London, aspects of the EC Treaty may not apply,specifically the EC Treaty's provisions on competition law and the freedom ofmovement. But if the NBA chooses to expand among EC Member States theleague's practices will face increased scrutiny.

1.Competition law in the EC Treaty is a source of regulatory law forprofessional sports.

Although Commissioner Stern wants to bring a franchise to London, hisinternational aspirations extend throughout Europe, increasing the likelihood thatthe NB A would have multiple franchises within the EC. In that case, the NB Awould qualify as an inter-member state and would invoke the EC Treaty'scompetition laws.

Th e EC's competition laws were enacted to address competition concernsand the policy goals of European economic integration, not merely to counteractthe emerging, unrestricted growth of businesses, as was the purpose behindAmerican antitrust laws.'

6 5Many commentators have long maintained that theEC may only govern matters explicitly mentioned in the EC Treaty, which is

silent on the governance of professional sports. Nonetheless, the EuropeanCourt of Justice (ECJ) ruled in Walrave & Koch v. Association Union CyclisteInternational 7 that professional sports are subject to the EC Treaty as long asthe sport equates to an economic activity under Article 2 of the EC Treaty.Thus, the ECJ reasoned that sports, which act as a form of employment orservice requiring payment, are in fact subject to the EC Treaty.1

Chapter 1, section 9 of the United Kingdom's Competition Act, Article 81of the EC Treaty restricts agreements between commercial entities that impedecompetition among Member States in any form. 7e Specifically, Article 81(1)

163 arrish &Micttinen, supra note 149, at 21 .'6 See id.65Edelman &Doyle, supra note 2, at 411.1 Joklik, supra note 83, at 228.67See generally C-36/74, Walrave &Koch v. Ass'n Union Cycliste Int'l, 1974 E.C.R 1405.168 oklik, supra note 83, at 228; Comparative Labour Law and Industrial Relations in Industrialized

Market Economies 171 (Roger Blanpain ed., 9th ed. 2007).169 oklik, supra note 83, at 246-47.17oC Treaty, supra note I1, at art. 81(1); Gardiner, supra note 119, at 357.

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prohibits "agreements[,] . . . decisions by associations[,] . . . and concertedpractices which may affect trade between Member States an d which have as theirobject or effect the prevention, restriction or distortion of competition with thecommon market .... Impermissible activities, as proscribed by Article 81(1),include the creation of market limits or market control. 17 2 Although all Article 81violations are per se illegal, the ECJ has held that some competitive restraintsmay be "necessary in order to make that competition possible in the first place . .

,,173

Similarly, some anticompetitive activities, although violations of Articles81 and 82, may be exempt under Articles 81(3) or 86(2).174 A practice may beexempt from violating Article 81(1) if, pursuant to Article 81(3), it provides aneconomic benefit, for instance, by improving the production or distribution ofgoods or services.'s However, the practice must not disproportionately depriveconsumers of the benefit, eliminate market competition, or impose unnecessaryrestrictions.17 6 Only the European Commission can determine if Article 81(3)'sexemption applies, but, in doing so, it may consider the economic and socialbenefits of removing a practice from the scope of Article 81(1).171 Thus, theCommission may exempt an anticompetitive activity if it finds that it is anattempt to improve competition or is necessary for the functionality of a specificmarket." 8

If a particular practice lacks justification under Article 81(3), the practicemay still be exempted under Article 86(2).'7 Specifically, Article 86(2) exempts'services of general economic interest or [undertakings] having the character of arevenue-producing monopoly" as long as the "rules do not obstruct theperformance" of the service. so The Independent European Sport Review hasadvocated that sports organizations should be treated as "services of generaleconomic interest."18 1 To be a service of general economic interest, therespective member state must have imposed an obligated form of public service

1 EC Treaty, supra note 1, at art. 81(1).72 Id. at art. 81(1)(b).73 Case C-415/93, Union Royale Beige de s Socidtds de Football Ass'n ASBL v. Bosman, 1995,

E.C.R. 4837,1265.174 Victoria White, Sports Law: Playing Fair, legalweek.com, Dec. 14, 2006,http://www.legalweek.com/legal-week/analysis/l 160852/sports-law-playing-fair.1s Id.176Id.17 Edelman & Doyle, supra note 2, at 418-19.17 Parrish &Miettinen, supra note 149, at 108."7 White, supra note 174.1soEC Treaty, supra note I1, at art. 86(2).mi Parrish &Miettinen, supra note 149, at 133.

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for that undertaking, an unlikely role to be assumed by professional sportsorganizations,' 82 especially the NBA.

Additionally, Article 82 of the EC Treaty seeks to check monopolies andprevent the abuse of market dominance.'8 3 Specifically, Article 82 prohibits an"undertaking[] of a dominant position within the common market or insubstantial part of it" from abusing its power if the abuse affects trade betweenmember states.184 In some instances, a sports organization like the NB A may bein violation of Article 82 if it uses its monopolistic power to maintaincommercial strength.'85 In addition to competition law, the freedom ofmovement in the EC Treaty also serves as a form of regulation.

2. Freedom of movement in the EC Treaty is a source of regulatory law forprofessional sports.

Article 39 guarantees citizens of member states the right of free movementfor economic purposes, a right national courts must protect.' 86 Specifically, itgives workers the right to look for a job, work, reside, and remain in anothermember state' 87 by prohibiting direct or indirect nationality-baseddiscrimination.i8 In a sporting context, players who are citizens of a memberstate cannot have their movement restricted by any of the member states;however, member states may adopt rules to exclude foreign players fromparticipating for non-economic reasons as long as the exclusion is related to therules of the game.

Th e applicability of Article 39 is generally limited to citizens of ECmember states and to the movement within those States. Article 39 applies onlyto citizens of non-member states-and may be applied in a national court-ifthat non-EC country has reached an international agreement with the EC.'90

In terms of professional and amateur sports, both the EC and EC J have leftit up to sports leagues and associations to promulgate "game rules" of a puresports interest, including rules of the game, team and championship structure, or

182d. at 134.183ardiner, supra note 119, at 359-60.1 EC Treaty, supra note I1, t art. 82.'8sSee Parrish & Miettinen, supra note 149, at 214-15 (explaining how the European Commissionfound the Federation Internationale de l'Automobile had violated Article 82 by abusing its dominantposition within the Formula One market).86Comparative Labour Law and Industrial Relations in Industrialized Market Economics, supra note

168, at 170.187d.'88oklik, supra note 83, at 246.'8 Comparative Labour Law, supra note 168, at 172.'9 Parrish &Miettinen, supra note 149, at 193.

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doping procedures.' 9 ' However, the ECJ will interfere to protect athletes fromrestrictive practices that violate the EC Treaty.

For example, in the landmark Bosman decision,' 9 2 the ECJ applied thefreedom of movement provision in the EC Treaty to strike down a transfer rulebetween clubs as a restraint on player mobility.9 Th e court prohibited soccerteams in the UEFA, and ultimately the EC, from requiring each other to pay atransfer fee after agreeing to employ a player placed on his former team'stransfer list following the termination of his contract.19 4

After Bosman, European sports leagues, including the UEFA and theFid6ration Internationale de Football Association, revised their transfer systemsto provide a prohibition on the transfer of minors under the age of eighteen;educational compensation for players under twenty-three; five-year maximumcontracts, in accordance with national law; an d a "sporting just cause"stipulation, which allows for conditions in which a player may unilaterallyterminate his contract.' Thus, if the NBA or any sports league violates the ECTreaty, it must make necessary changes or seek an exemption from the ECJ,remedies available for only certain CBA provisions.3.Th e European Court of Justice exempts aspects of collective bargaining from

the EC Treaty.Like the absence of sports in the EC Treaty, the Treaty also lacks a

provision that directly pertains to collective bargaining.' 9 6 Generally speaking,the degree to which labor negotiations and collective bargaining are utilizedthroughout the EC vastly differ from that of the United States and the UnitedKingdom, as CBAs are not highly regarded throughout Europe..' In someinstances, such as the case with European basketball in the Euroleague,' 9 8 theremay be no unified agreement by which players and teams abide.'99 However,when a CBA does exist, as in the NBA, its terms are subject to applicableprovisions of the EC Treaty.200 Because collective bargaining between employers

191 afziger, supra note 13, at 130; White, supra note 174.192 Case C-415/93, Union Royale Belge des Socidt6s de Football Ass'n ASBL v. Bosman, 1995 E.C.R.4837.Nafziger, supra note 13 , at 129.194Id.'95 Gardiner, supra note 119, at 371-72.196 oklik, supra note 83, at 252.'9 Id.VyShaney Mitchell, Comment, Will NBA Players go to Europe?, 6 DePaul J. Sports L. Contemp.Probs. 221, 229 (2010).'99 Id. at 222.2oooklik, supra note 83 , at 252.

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and employees inherently involves concerted efforts to restrict competition in theemployment market, CBAs ostensibly violate EC competition laws. 2 01 Moreover,labor relations in the EC are governed by the Article 39 right to free movementof workers in Member States.2 0 2 Thus, for the NB A to legally operate withinmultiple EC Member States, it must ensure that its draft, age requirement, andsalary cap do not violate the EC Treaty.

After its ruling in Bosman, the ECJ began to recognize the potential forapplying a variation of the nonstatutory labor exemption in certaincircumstances. In HandelsondernemingBV v. Stichting,203 the ECJ exemptedCB A terms from Article 81 because they improved working conditions.204

205Further, in Albany InternationalB V v. Stichting, the ECJ se t forth a standardfor applying the nonstatutory exemption to collective bargaining.206 The EC Jheld that collective agreements "between management and labour in pursuit of[recognized objectives] must, by virtue of their nature and purpose, be regardedas falling outside the scope" of Article 81(1).207 Th e ECJ affirmed its Albanyholding in Van der Woude v. Stichting Beatrixoord.0 8 There, the ECJ se t forththe general standard for the nonstatutory labor exemption and applied it to aspecific labor agreement. 09 The court held that the nonstatutory labor exemptionwas applicable in that instance because the agreement was collectively reachedby an employer and employees, was conducted in good faith, involved the EC'sversion of mandatory subjects of bargaining, and affected only the partiesinvolved in the agreement,

2 10 all similar to the requirements of the NLRA in theUnited States.However, reigning in the application of the exemption in the 2006

landmark Meca-Medina & Majcen v. Commission decision, the ECJ held that"the mere fact that a rule is purely sporting in nature does not have the effect ofremoving from the scope of the Treaty the person engaging in the activitygoverned by that rule or the body which has laid it down."2t The ECJ'sinterpretation ambiguously narrowed the scope of the "sporting exception" bu t

201ee Fried &Miller, supra note 25, at 400; Carfagna, supra note 53, at 51.202 Richard Williams & Alex Haffner, FIFA Quotas Ruled Offside?, 158 New L.J. 1017, July 18 ,2008, available at http://www.newlawjoumal.co.uk/nlj/content/fifa-quotas-ruled-offside.203 ee generally Case C- 1 15/97 to C-1 17/97, Handelsondememing BV v. Stichting, 1999 E.C.R. I-6025.204ee id; Edelman &Doyle, supra note 2,at 420.205 See generally Case C-67/96, Albany Int'l BV v. Stichting, 1999 E.C.R. 1-5751.206 delman &Doyle, supra note 2, at 420-21.207 Albany Int'l BV, 1999 E.C.R. 1-575 1,In 59-60.208ee generally Case C-222/98, Van der Woude v. Stichting Beatrixoord, 2000 E.C.R. 1-711.209 Id. at 22-27.210 Id.211 Case C-519/04, Meca-Medina &Majen v. Comm'n, 2006 E.C.R. 1-6991, 127.

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reaffirmed the notion that a sporting activity that is not an economic activity212generally falls outside of the scope of the EC Treaty. The European

Commission subsequently interpreted the Meca-Medina decision to mean thatthe ECJ must hear challenges to sporting rules pursuant to Articles 81 and 82 ona case-by-case basis. 2 13 Thus, the ECJ left open the possibility that if ananticompetitive restriction is inherent to the sport,214 the league imposing therestriction has the opportunity to justify the restraint to the Court.215

Also worth discussing are the EC Treaty provisions that indirectly confer aright of collective bargaining and that may exempt provisions of the NBA CBAfrom contravening EC laws. Although the tradition of collective bargaining inEurope is limited,21 6 the European Commission has encouraged teams andplayers to engage in quasi-collective bargaining through social dialogue. Thisencouragement is seemingly a push to have CBAs, instead of traditionalgovernment entities, control the parties' relationship. 2 17 Such a notion is reflectedby the objective of Article 136 of the EC Treaty, of which is the "promotion ofemployment" through "dialogue between management and labour." 218 To obtainsuch an objective, the EC Treaty directs the EC and its member states toimplement and promote dialogical measures, such as contractual agreementsbetween employers and employees.219 To this end, Article 137 of the EC Treatyallows a member state to authorize employers and employees to mutuallyimplement self-directive measure,22 0 presumably through the means of acontractual agreement.

Furthermore, Articles 138 and 139 of the EC Treaty seem to promotecollective bargaining within Member States. 221 Article 138 gives employers andemployees the right to speak out and influence social policy proposals by theEuropean Commission that may impact the respective parties in the employment

222context. Moreover, Article 139 allows employees and employers to codify223social dialogue into a contractual agreement, independent of the European

212 d. at 99.213 d. at 106.214 d. at 21.215 Id .216 d. at 222.217Meca-Medina & Majeen v. Comm'n, 2006 E.C.R. 1-6991, at 46.218EC Treaty, supra note I1, at art. 136.219 Id.220 Id. at art. 137.221Parrish & Miettinen, supra note 149, at 22.222 C Treaty, supra note 11, t art. 138.223 d. at art. 139.

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Commission, with such agreements imposed either domestically or via theEuropean Council. 224

Similar to the NLRA's directive on mandatory subjects of bargaining,social dialogue under Article 139 requires that the agreement pertain to theparties' specific employment relationship. 225 Such topics may include"contractual terms, transfer windows, the transfer system, salary capping, imagerights, pension funds and doping rules."226 However, Article 137 explicitlyrefrains from assuring employers and employees the respective right to strike orimpose a lockout, 227 different from American labor laws.

Moreover, parties may not use a CBA to screen practices that violate ECcompetition law, specifically imposing illicit restraints on players. 228 As ameasure to ensure compliance with the EC Treaty, an agreement must besubmitted to the European Commission and the European Council forimplementation.229 As the ECJ said in Brentjens, 230 the underlying concept ofencouraging social dialogue among employers and employees would be

231subverted if the agreements ultimately violated competition law. This conceptis entirely contrary to the labor exemptions within the United States, which allowCBAs to include competitive restraints contrary to antitrust laws.

Although CBAs may be permissible on some level within the EC, theEuropean Commission's comments suggest that the right to enter into suchagreements may be inapplicable to foreign organizations, such as the NBA. TheCommission has stated that the validity of such CBAs relies on whether theorganizations are "organized at a European level; . . . consist of organizationswhich are themselves an integral and recognized part of the Member States'social partner structures and with the capacity to negotiate ; ... [and] represent[]all Member States." 232 Thus, based on this description, the NBA CBA would notfit within the confines of social dialogue to invoke such protections. Neither theNBA nor the NBPA is organized at a European level, nor are they integral orrecognized aspects of the United Kingdom's social partner structures. TheNBA's potential legal incompatibilities do not end here. Th e league and

224 arrish &Miettinen, supra note 149, at 46.225 Id. at 46.226 Id.227 C Treaty, supra note I1,at art. 137.228Parrish &Miettinen, supra note 149, at 46.229 Id.230Case C- 1 15, Brentjens, 117/97 1999) E.C.R. 1-6025.231 arrish &Micttinen, supra note 149, at 22.232Commission of the European Communities, Promoting and Adapting the Social Dialogue,COM(98) 322 Final (1998), J 1.2.

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provisions of its CB A potentially conflict with both the laws of the UnitedKingdom and the EC Treaty in other aspects.

V. POTENTIAL LEGAL CONFLICTS IN BRINGING THE NBA To LONDON

Similar to the tensions that exist between American labor and antitrustlaws, the laws that would govern the NB A in London are likewise contrary. TheUnited Kingdom's labor laws create a means to protect employees while itscompetition laws prevent any attempts to adversely affect the marketplace. Toreconcile these tensions, which are inherent in professional sports, both theUnited Kingdom and the EC Treaty maintain exemptions to protectanticompetitive actions of professional sports leagues, primarily those emanatingfrom a CBA.

Specifically, various components of the NBA CBA, which are privy to thenonstatutory labor exemption in the United States, directly violate aspects of U.Klaw and the EC Treaty. As a result, determining the feasibility of operating aLondon-based NBA franchise requires an analysis of the specific practiceswithin the CBA, whether they are restrictive in nature so as to violate U.K. lawor the EC Treaty, and whether such practices are otherwise exempted fromviolating the applicable laws.

A. NB A Draft

One example of a clearly restrictive practice within the NBA CBA is thedraft system.23 3 In the NB A draft, each team selects players from a pool of thoseplaying in college, abroad, or domestically, all of whom must meet variousrequirements,2 34 one being that the player has not yet played in the NBA. 235 Oncea team drafts a player, the team obtains the exclusive right to negotiate with that

236player for a specified time period. Moreover, pursuant to the CBA, contractnegotiations with that player are subject to a standardized rookie wage scale,which was implemented to control the growth of player salaries and the marketfor players' services.3 Although the length of time in which a team holds233NBA CBA, supra note 10, at art. 10, 2-4.234 See generally id. at art. 10, 1.235 Id. at art. 10, 1(b)(ii)(E).236 d. at art. 10 , 4(a).237See generally id. at art. 8; 2011 Tentative Agreement, supra note 10, 10; see Richard A. Kaplan,Note, The NB A Luxury Tax Model: A Misguided Regulatory Regime, 104 Colum. L. Rev. 1615, 1633(2004). In the 2011 Tentative Agreement, the owners and players agreed to freeze the rookie wagescale for first round picks at their levels for the 2010-11 regular season until the scale is reducedproportionate to the reduction of the wage system overall, approximately twelve percent lower thanunder the 2005 NB A CBA. 2011 Tentative Agreement, supra note 10, at 10.

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exclusive rights to a player is limited,23 8 the draft still has similarities to thereserve system that American courts have found to be an impermissible restrainton competition fo r a player's services.239

Alternatively, most European professional sports leagues allow theirplayers to avoid a draft and, instead, sign with the team of his or her choosing.240Theoretically, the draft system is meant to maintain competitive balance bylimiting the wealthy and successful teams' ability to monopolize all of thetalent.241 However, by requiring a player to sign a contract with a team he did no tchoose to play for, the NBA's draft system may be deemed a "barrier to entryinto the labor market," thus violating the Competition Act.242

1.The NBA draft may violate Chapters I and 2 of the Competition Act.British sports do not have a draft system, though there have been proposals

in favor of their implementation.2 43 Yet, the ECJ's ruling in Bosman andBritain's ruling in Eastham have undermined such efforts, as leagues haveseriously questioned the legitimacy of a draft.244 The NBA's presence in Londonand the introduction of the American draft system to the United Kingdom mayhelp achieve competitive balance in British sports; that is, however, if the draftsystem is in fact permissible under U.K. laws.

Th e NBA's draft system likely falls within the scope of Chapter 1 of theCompetition Act as an "agreement[] between undertakings, decision[] byassociations of undertakings or concerted practice[] which may [a]ffect tradewithin the United Kingdom; and which have as their object or effect theprevention, restriction or distortion of competition within the [UnitedKingdom]."24 5 Additionally, the NBA's imposition of a draft may violateChapter 2 as an abuse of its dominant position to affect trade within the UnitedKingdom.2m238NBA CBA, supra note 10, at art. 10, 4(a); see Kaplan, supra note 238, at 1622-23.239 See Robertson v. NBA, 389 F.Supp. 867, 891-896 (1975).240Edelman & Doyle, supra note 2, at 409.241 ohnson, supra note 126, at 10.242 ean-Francois Bourg, Professional Team Sports in Europe: Which Economic Model? InternationalSports Economics Comparisons 13 (Rodney Fort &John Fizel eds., 2004).243 wenty20 Needs to Draft in NFL System, Says Bracewell, Bristol Evening Post (UK), June 4,2010, at 46. There has been a recent proposal among Britain's cricket leagues to adopt a draft systemthat resembles those in U.S. professional sports as a means to balance competition throughout theleague. Lawrence Booth, Cricket: Draft May be Used to Even up Counties in New Premier League,The Guardian (London), July 17, 2008, at 1.244 ee Johnson, supra note 126, at I1.245 ee Lewis & Taylor, supra note 90, at 385 B2.1 1.246 See id. at 387 B2.20.

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Specifically, the draft restrains competition by limiting the number ofteams that may bargain for a player's services and by limiting that player'sability to individually choose whom to play for. Instead, the player is forced toeither play for the team that drafted him, or sit out for the remainder of theteam's exclusivity period. The makeup of the NBA draft has similarities to theFA's retention system, which the British court in Eastham held was animpermissible restraint of trade. Like the retention system at issue in Eastham,the NBA's draft imposes a form of compulsion in which the player is unable tochoose his employer for a number of years.247

If the NBA's European venture stops in London, the league and its CBAwould only be subject to British law and in that case, could maintain its draftsystem, as long as it meets the exemption to Chapter 1 as specified in section 9of the Competition Act. To obtain such an exemption, the NBA mustdemonstrate that the draft actually improves the distribution of players' services,allows fans a share of the resulting benefit, only restricts competition asnecessary, and does not completely destroy competition. Under this exemption, itis quite possible that the NBA could maintain a successful argument that thedraft, although severely hindering competition for players' services, promotescompetitive balance by dispersing player talent and, in doing so , ultimatelybenefits players, teams, the NBA, and fans. Moreover, to justify the draft underChapter 2, the NBA must demonstrate that it has a legitimate interest inimposing the draft, and, in protecting that interest, that it has employed onlynecessary and proportionate restraints on competition.

2. The NBA draft may violate Articles 81 and 39 of the EC Treaty.As already discussed, the NBA draft restrains trade. However, the draft

may meet the requirements of the EC's nonstatutory exemption. The draft is aproduct of the CBA, which presumably is conducted in good faith on mandatorysubjects of collective bargaining, though, it still has maintains anticompetitiveeffects as prohibited by Article 81 of the EC Treaty.

Specifically, by denying amateur players any input about which team theywill play for, the NBA draft would violate Article 81 as a per se restrictiveagreement or decision that affects trade between member states and has anadverse effect on competition within the relevant market. However, if the NBAcan present a convincing argument to the ECJ, the draft may be considered"necessary in order to make that competition possible in the first place .. 248

247 ornsby, supra note 126.248 ase C-415/93, Union Royale Belge des Soci6t6s de Football Ass'n ASBL v. Bosman, 1995,E.C.R. 4837,1265.

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In particular, the NBA would have to successfully argue that by maintaining adraft, it ensures competitive balance and, thus, league sustainability.

Moreover, the NBA draft may also be exempt from EC competition lawunder Article 81(3)249 if the NBA can show that the draft provides an economicbenefit to the market by improving the distribution of players' services. TheNBA must also demonstrate that the draft does not eliminate market competition

250for players' services and is entirely necessary. It is reasonable to believe thatthe EC would exempt the NBA draft from the EC Treaty. Although the draftcontains various restrictions on competition within the market for players'services, the draft offers the benefits of increased competitive balance within theNBA, which may make the restriction necessary under Article 81(3).

In addition to Article 81(3), the NBA may seek to exempt draftcompetition law violations through Article 86(2). Under that provision, the draftmay be exempt if it is a service for the general economic interest, also known asan obligated form of public service. However, the NBA almost certainly does notfit within that exemption because it is not an obligated form of public servicewithin the United States, let alone the United Kingdom.

If the NBA cannot obtain one of the aforementioned statutory exemptionsunder the EC Treaty, as part of a CBA, the NBA may seek to exempt the draftvia the developing nonstatutory exemption under Article 81 pursuant to theECJ's Albany standard. The NBA CBA was reached between "management andlabor in pursuit of [recognized objectives] . . . ,251 was conducted in good faith,and involved mandatory subjects of bargaining. But the CBA affects more thanthe parties to the agreement, namely those not yet in the NBA. 252 Thus, althoughpart of a CBA, the effect of the NBA draft on third parties may render thenonstatutory exemption inapplicable.

Additionally, considering the ECJ's rulings in Bosman and Commission v.France, the NBA draft may also violate the right to the free movement ofworkers throughout the EC ,25 regardless of how professional basketball istreated, especially considering that access to leisure activities is a corollary toArticle 39's guarantee of the freedom of movement. 25 4 The draft likely violatesthe right to free movement because it maintains aspects of the impermissiblereserve clause, a means by which leagues restrain trade and restrict player

249C Treaty, supra note I1,at art. 81(3).250Id ."5Case C-67/96, Albany Int'l BV v. Stichting, 1999 E.C.R. 1-5751,IM59-60.252 his is the same unsuccessful argument made by the plaintiff in Wood, 809 F.2d at 960. However,as a decision of the Second Circuit Court of Appeals, Wood is clearly inapplicable as governingprecedent of the EC Member States; thus, the argument may have merit in the EC.253 delman &Doyle, supra note 2, at 432, 435.254ee Case C-334/94, Comm'n v. France, 1996 E.C.R. 1-1307, 21 .

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255movement. Th e ECJ has said that any rule imposed by a professional sportsleague's governing body that hinders the player's ability to exercise anyfundamental freedoms-such as access to the market-and serves as an obstacleor hindrance on the freedom of movement violates the EC Treaty and thusrequires an objective justification by the governing body imposing the rule. 2 5 6

Because the ECJ tests justifications on a case-by-case basis, to obtain the"sporting exception" enunciated in Meca-Medina, the NBA may benefit byjustifying its draft system on the grounds that the draft promotes competitivebalance and benefits for its young players.2 57 However, the lack of suchrestrictive practices within European sports coupled with the landmark Bosmancase, which explicitly prohibits such restraints, means that the draft likelyviolates Article 39 of the EC Treaty and cannot be exempted from such aviolation.

B. NBA's Age RequirementAnother potential violation of the U.K. laws and the EC Treaty within the

NBA CBA is the league's age requirement. Within its CBA, the NBA stipulatesthat a player may enter the league only if he "is or will be at least [nineteen]years of age during the calendar year in which the Draft is held" and it has been"at least one (1) NBA Season ... since the player's graduation from highschool."2 58 The NBA's age requirement is contrary to the practices of typicalEuropean professional sports leagues, which impose no age restriction and evenimpose rules to ensure that minors playing in the league have the necessaryacademic assistance and can remain near their families. 2 5 9 Due to this contrastand its inherent restraints, the NBA's age requirement likely violates British andEC laws.1.The NBA's age requirement may violate Chapters I and 2 of the Competition

Act.

Similar to the NBA's age requirement, in Britain, some league rulesprohibit teams from signing players outside of the EC who are under eighteen

255 ee Kaplan, supra note 238, at 1622.256 See Case C-150/04 Comm'n v. Denmark, 2007 E.C.R. 1-1163 1 35; Case C-514/03, Conm'n v.Spain, 2006 E.C.R. 1-963 26.257Se e Kaplan, supra note 238, at 1622.258NBA CBA, supra note 10, at art. 10, 1(b)(i).259 delman &Doyle, supra note 2, at 409.

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years of age.260 Even so, the NBA's age requirement has no real comparison toany current practice in British sports, as soccer teams are not prohibited fromsigning players under eighteen who reside within the EC,26' and many teams ge tchildren, not ye t in their teens, to sign professional contracts.262 Fo r instance, in2001, English soccer powerhouse Manchester United paid

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