The Legality Behind the PLL/MLL “Merger” & Antitrust Concerns

On December 16, 2020, the Premier Lacrosse League (PLL) announced a merger with Major League Lacrosse (MLL). Under this agreement, the leagues will operate as one under the “PLL” brand and model. This did not come as a shock to those in the lacrosse world. Since September 2018, when co-founders Paul and Mike Rabil created the PLL, this merger, or possibility of a merger, was always looming.

Background of MLL and PLL

Professional field lacrosse began with the creation of the MLL, organized by Jake Steinfeld in 1999 with its inaugural season being played in the summer of 2001. Originating with six teams, the league expanded throughout the years, testing out teams in new cities across the country and Ontario, Canada. At its peak in 2006-08, there were ten teams in the league. The MLL has always operated with its teams based in particular markets, including Baltimore (Annapolis), Boston, Long Island, Philadelphia, and Denver. For nearly two decades, the MLL was unrivaled for professional talent.

Paul Rabil–at the time an all star MLL player–and a group of deep pocketed investors first approached the MLL for a buyout in 2018 after declining attendance figures, stagnating wages, and player privacy concerns. The two were unable to come to an agreement. In September 2018, Bloomberg reported that Rabil would be starting his own lacrosse league backed by “Wall Street’s Lacrosse Fraternity,” called the Premier Lacrosse League. This league would utilize a tour-based model, distinct from the MLL’s market-based model, consisting of six clubs. The inaugural season was held in the summer of 2019, and included a 14-week tour based schedule taking place in 12 major-market cities. In 2020, the PLL expanded and added another club, making its total count seven. The league was named Sports Breakthrough of the Year in 2020 by the Sports Business Journal and is distributed through an exclusive media-rights agreement with NBC Sports Group.

The COVID-19 pandemic put a wrench in the sports world and especially threatened the still new PLL, which only had one season under its belt. However, the PLL displayed its niche ability to innovate the game by being the first North American team-sports league to structure a return to play plan after coronavirus. The season consisted of a 20 game bubble tournament, hosted in Herriman, Utah in which there were no positive COVID-19 tests among the 300 people in the bubble. Both leagues operated with overlapping schedules in 2019 and 2020 and those two years proved to be enough pressure to force a change.

The “Merger”

As mentioned above, this past December the PLL announced that it would absorb the MLL in a “merger,” unifying professional outdoor lacrosse leagues. Terms of the merger were not disclosed. However, we do know that the PLL will immediately expand to include the Boston Cannons (former MLL team) as the PLL’s eight team, under the rebranded name Cannons Lacrosse Club. The PLL will also retain the rights to all of the former MLL teams for future expansion considerations.

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The key word that does a lot of heavy lifting is “merge.” Legally speaking, a merger requires two companies to consolidate into a new entity with a new ownership and management structure. Mergers require no cash to complete but dilute each company’s individual power. In an acquisition, however, a new company does not emerge. Instead, the smaller company is consumed and ceases to exist with its assets becoming part of the larger company. Acquisitions, sometimes called takeovers, generally carry a more negative connotation than mergers. As a result, acquiring companies may refer to an acquisition as a merger even though it’s clearly a takeover

Given the limited details of the agreement, it seems very apparent that this deal is an acquisition rather than a legal “merger.” So while the word “merger” is being used, we don’t know what that truly means and there are still many unanswered important questions. For example, what happens to the MLL; how much money changed hands; how are current MLL contracts with venues, players and sponsors affected; what league assets move over; does the PLL assume any debt obligations (if any); and how are MLL investors affected? Ryan Conwell of laxallstars.com addresses some of the aforementioned questions in his article titled, “A Deep Dive Into the PLL & MLL Merger.

Of particular interest is the MLL’s assets, or lack thereof. Unlike other professional leagues, the MLL has very limited tangible assets such as stadiums, practice facilities or owned office space. What tangible assets the league does have (such as gear and merchandise) will likely be sold or donated. However, Conwell is concerned about the league’s “soft assets” that would help build a long term story of professional lacrosse. He presents the following questions: Do MLL league records, all-star appearances, historical franchises, and coaching records come over to the PLL in the merger? How much do they have for historical footage, photos, and audio? And how much of all this can be worked in to tell the PLL’s story beyond the two years they’ve had?

Potential Anti-trust Concern?

We all are familiar with the Sherman Antitrust Act as it was part of the curriculum throughout grade school. The Act not only applies to large resource industries such as oil, steel, and tobacco, but also prescribes the rule of free competition among those engaged in commerce, including professional sports. Section 1 states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” Section 2 prohibits prohibits monopolization or attempts at monopolizing any aspect of interstate trade or commerce and makes the act a felony.

One case in particular, Robertson v. National Basketball Ass’n in the Southern District of New York in 1970, raises antitrust concerns with respect to the merger and/or acquisition of another professional league. There, the merger or other combination of the National Basketball Association (NBA) and the American Basketball Association (ABA) would eliminate one of two competitors and leave only one surviving major professional basketball league in the market of professional basketball in the United States. The court noted that such a merger raised serious questions as to its legality under both § 1 and § 2 of the Sherman Act and the court granted a temporary restraining order (TRO) to block the merger. The net effect of any merger, consolidation, combination, or agreement between the two leagues would be to eliminate one of two competitors and leave only one surviving major professional basketball league in the market of professional basketball in the United States. Additionally, there would be an immediate and irreparable injury on the plaintiff basketball players, some of whom had already signed contracts to play in the rival league in future seasons. The players who were free to negotiate for future contracts with either of the rivals would instantly lose that competitive advantage if one of the rivals was eliminated by merger or other combination, said the court.

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Now, this case was over 40 years ago and obviously the TRO did not hold up as the NBA ultimately “merged” with the ABA. Nevertheless, the case still addresses valid legal arguments, especially one regarding players who had existing contracts with the MLL and PLL. If Robertson teaches us anything it’s that this new PLL may face an antitrust suit from disgruntled players who have no future in the consolidated league. While unlikely, the PLL should be aware of any and all legal liability they may face in this merger.

Closing Remarks

As someone who has played lacrosse for almost 21 years now, I am an avid supporter for growing the game and creating a unified professional field league. This is an extremely important objective for the sport and merging the two leagues (or one acquiring the other) was essential to meet that objective. Props have to go to Paul and Mike Rabil–they have essentially built an entirely new professional league as a “start up” business, and expanded it during a global pandemic. Not only that, the PLL was the first North American team-sports league to structure a return to play plan after coronavirus and thrived during its bubble with not a single positive COVID-19 test. It can’t be denied, that’s impressive.

In the long run, this merger will be momentous for the sport of lacrosse, escalating competition and bringing the best in the world to one stage. With NBC Sports owning exclusive media rights to the PLL, there is hope to increase interest and popularity in the sport like never before. Lacrosse fans across the country will be tuning in in the coming weeks and months for the Expansion Draft (March 11), Entry Draft (March 25), Collegiate Draft (April 6) and ultimately the start of the 2021 season. I look forward to see what the league does with respect to the questions posed above and am excited for–what I’m sure will be–an exciting spring and summer of lacrosse.

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