Clearly the NFL, and any sports league for that matter, is a single entity in some of its endeavors. Before games can be played, there has to be an agreed-upon set of rules. The transactions costs associated with these negotiations are quite high, especially so when we take into account the number of games and the number of teams. Would it be efficient for each pair of NFL teams to negotiate the rules before each and every game? How would fans know when to go to Buffalo Wild Wings to watch their favorite team?
But it's quite another thing to say that the NFL is a single entity when it comes to negotiating broadcast contracts, setting ticket prices, negotiating player salaries, etc. You may not have heard about this, but the NFL is arguing this in a case that is going to be heard by the SCOTUS. Here's Brad Humphreys at TSE:
What was once a relatively minor anti-trust case has somehow made its way to the US Supreme Court. The issue before the Supreme Court is no longer a piddly restraint of trade case about who has the rights to manufacture NFL licensed merchandise. The Supreme Court will instead rule on whether or not the NFL can be considered a "single entity" in all its business functions. If the Court finds that the NFL constitutes a "single entity," the NFL would have a blanket antitrust exemption, in all cases except where the NFL would collude with other sports leagues to fix prices. Such an exemption would have consequences in input markets, affecting players and coaches, and output markets, affecting television broadcasts. It would also increase the power of the NFL and other sports leagues to extract subsidies from taxpayers for facility construction and operation. It could also affect other North American leagues - the NBA and NHL have both filed Amicus Curiae briefs. The Supreme Court will rule on this case in the upcoming 2099-2010 session.
Here's Brad again, writing about an amicus filed by a set of excellent sports economists:
Our principal conclusion is that economic research provides a clear basis for distinguishing between collaborative activities among members of a league that enhance economic efficiency and benefit consumers from collusive activities that are not essential for the efficient operation of a league and that benefit league members by reducing competition among teams. We believe that a ruling that anysports league is a single entity in which teams cannot engage in anticompetitive collaboration in “core venture functions” is inconsistent with the consensus among economists about the efficient scope of league authority and the nature of competition in professional sports.
As citizens and professional economists, we have a substantial interest in fostering the appropriate use of economics in antitrust and in assuring that the economic assumptions that guide decisions in antitrust litigation do not conflict with the consensus from economics research both generally and with respect to professional team sports. The NFL Respondents highlight our interest in this matter by referring to their preferred approach to the single entity concept as “a more nuanced, economics-based approach.”
Of course each of the individual team could market its own souvenirs and paraphernalia, their own radio and television broadcasts, etc. But in doing so they would have to compete against one another and this would lower the revenues they would be able to obtain. A ruling that the NFL is a single entity in all endeavors would be the same as giving the teams the power to collude in their business activities (over and above that given by the Sports Broadcasting Act of 1961). While this would be great for the NFL as a whole, it would reduce the welfare of football fans (and football players, for that matter) as a whole. The case thus bears some watching.