NFL draft day: How teams legally collude to restrict draftees' rights and choices

In August of 1944, a football player named E.J. McGroarty received a contract offer signed by Green Bay Packers icon Curly Lambeau to play for the Packers at $150 per game. He also got an allowance of $35 per week for living expenses, but only until the first game. The top 2024 National Football League pick is expected to ink a deal worth over $41 million. That pick belongs to the Chicago Bears and will likely be USC quarterback phenom Caleb Williams. But none of the league draft picks will have the right to dictate where he plays.

The NFL player draft is one of the most anticipated off-field sports events of the year. In Chicago, speculation over the Bears’ top 2024 pick has energized the local sports media since last season. However, instead of calling it draft day, it could be called NFL collusion day. All the major pro leagues do much the same thing, but the NFL version has more pomp, circumstances and anticipated impact.

The entire NFL first round is of interest because all teams have so many positions to fill, including several key backups. There are seven total rounds and all are meaningful, especially the first three or four rounds. The NBA draft can be exciting, too, especially if a generational player looms, but it only bothers to do two rounds. The widely anticipated NFL draft, however, offers the optimum impact, visibility and entertainment value. But why is such a draft even legal?

It isn’t — sort of. Thirty-two competitors collude to restrict the rights and choices of the new playing talent. The top performers are destined to land with very poor teams unless there is a fortuitous trade. That sounds exactly like an antitrust violation. What if all the auto companies collude to restrict the choices of customers, limit where the best cars are sold and fix auto prices? That sounds illegal, too. Because it is.

Sports leagues benefit from two technical points that allow such collusion. The Bulls’ Michael Jordan saw the problem. In 1995, Jordan and Knicks superstar Patrick Ewing tried to decertify the NBA players union and rescind the salary cap so that superstars, namely themselves, could make even more money. (Their effort failed.)

Any contract, combination or conspiracy to restrict or harm competition is illegal under the federal Sherman Antitrust Act of 1890. But there are exceptions lurking in legal nooks and crannies that are navigated by all the major sports leagues (except for baseball, which has a unique antitrust exemption).

Exceptions for collusion

Exception 1: If the collusion helps competition as much or more than it impedes it, then it will be legal. NFL teams argue that the draft keeps all teams in business and thus aids competition. Exception 2: Player unions. If a certified players union is in place, like the NFLPA, most of the antitrust rules don’t apply. The union and the league can negotiate and agree on things that violate antitrust law. That’s it. Sports antitrust law in a paragraph.

The NFL and NBA also have meaningful team salary caps to protect the teams financially, especially from each other. But with most leagues, including the NFL, if there is a salary cap, why do they also need a player draft? The draft is to protect lesser teams, assuring they can get some good players by giving the lower-ranked teams a priority for draft picks. But with a salary cap, no team can pick all the best players anyway.

With a salary cap but no draft, more teams could choose to bid on a new superstar quarterback, pass rusher, or receiver. They might have less to spend elsewhere, but the top players would have more choices. The leagues could pick one restriction or the other, but not necessarily both.

With their top 2024 pick, the Bears had a well-publicized quarterback dilemma, which they resolved by trading their starter Justin Fields. Is the NFL draft a restrictive exercise? It is. But it’s also fun, gets ratings and mostly protects the member teams.

Why are pro sports different from other businesses? Because the sports business is an anomaly where teams have to compete and cooperate at the same time. The object is to sell tickets, make money, and win championships, but not to drive the other teams in their own league out of business. That makes all the difference, and so the tangled web of rules, exceptions, and exceptions to the exceptions, lives on. Especially on draft day.

Eldon Ham is a member of the faculty at IIT/Chicago-Kent College of Law, teaching sports, law and justice. He is the author of five books on the role of sports history in America.

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