NASL, USSF Meet in Court to Argue Injunction

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BROOKLYN, N.Y. — No decision was reached Tuesday on the North American Soccer League‘s request for an injunction to remain a Division II league as its antitrust lawsuit against the United States Soccer Federation plays out, though Judge Margo K. Brodie did attempt to cut through the chatter from both sides and focus on the merits of their legal arguments in U.S. District Court for the Eastern District.

Judge Brodie said that she intends to have a written decision on the injunction by the end of the week.

A few days before Tuesday’s nearly three-hour hearing, the NASL received slightly troubling news when Judge Brodie instructed the parties that what the league was requesting actually constituted a mandatory injunction since the NASL does not have Division II sanctioning under the current status quo. A mandatory injunction requires a higher burden of proof as it involves the court forcing a private entity — in this case USSF — to take an affirmative action.

Much of Tuesday’s hearing was spent discussing the potential harm of an injunction to either side. Judge Brodie began by saying she leaned toward saying the balance of harm was in the NASL’s favor, though only barely. NASL counsel Jeffrey Kessler proclaimed that failing to secure Division II sanctioning would essentially “murder” the league and that the USSF had yet to prove it would suffer any harm by the league remaining Division II as it has for seven years.

USSF counsel Russell Sauer argued that an injunction would de-legitimize the federation’s ability to regulate soccer at all levels and that any disgruntled professional or amateur league could then challenge any decision in court.

As for the NASL’s claim that it would be forced to cease operations without Division II sanctioning, Sauer noted that as “self-inflicted harm,” which is not the same as irreparable harm. USSF’s position is that the declarations provided by three current NASL owners offer no evidence of how a move down to Division III would kill the league.

Sauer pointed in the direction of New York Cosmos owner Rocco Commisso in the courtroom as he said, “(NASL) owners say they want to be a Division II league, and if they’re not going to be a Division II league they’re going to take our toys and go home.”

To counter Commisso’s claim that the revenue available in Division III is unsustainable for him and other NASL owners, USSF counsel presented data showing how independent United Soccer League teams outperformed the NASL in ticket revenue while still operating as Division III in 2016 and that revenues at both levels are comparable. Kessler conceded hat the NASL has higher losses than the USL because it has been spending more in the hopes of one day competing with MLS, while the USL is satisfied with spending less and offering “lower-quality soccer.”

Judge Brodie did push the USSF on its claim that the NASL could simply move down a division to stabilize. She questioned Sauer on whether the USSF would admit the NASL would likely lose members who are unwilling to drop down and therefore be at risk of folding.

Both sides confirmed in the hearing that North Carolina FC is already prepared to jump ship from the NASL to the USL regardless of how the injunction falls. The NASL feels North Carolina’s owner Steve Malik sold the league out by not committing to next season. Without North Carolina, the NASL sanctioning application only had commitments from seven teams, which included expansion teams in San Diego and Orange County, Calif. Neither Edmonton nor the San Francisco Deltas were included in the NASL’s presentation. Commisso told reporters after the hearing that Malik never helped the NASL with expansion efforts once he was awarded a seat on USSF’ pro soccer council earlier this year. North Carolina is also seeking an expansion team in Major League Soccer.

USSF counsel also addressed the NASL’s assertion in an earlier filing that the league has six letters of intent from new teams waiting to join once the injunction is granted. Sauer said that the letters were procured a month after the NASL filed its lawsuit suspect. He also cited the NASL’s agreements with the prospective ownership groups as “non-binding” and that none of them have the financials to thrive on their own.

Judge Brodie asked Kessler why the NASL wouldn’t reapply for Division II with these new ownership groups. He replied that the NASL’s hand has been forced by the USSF originally telling the league it could not appeal the sanctioning decision in September. In the interim, USSF President Sunil Gulati has only offered to recommend that the Board of Directors revaluate the league’s sanctioning application.

In her opening remarks, Judge Brodie said she was still looking to be convinced there is evidence of a conspiracy between the USSF, MLS and SUM.

“There’s definitely some smoke there,” Judge Brodie told Kessler. “At the end of the day, I cannot draw the inference you want me to draw… You have to show concerted lawful action.”

USSF counsel Chris Yates spoke to the NASL’s allegations of a conspiracy between the USSF, MLS and Soccer United Marketing to prevent any league from challenging MLS’ status at the country’s top league. He stated that the vote to deny the NASL’s sanctioning application was 9-1 against the NASL, with all board members affiliated with a conflict of interest recusing themselves. United States Adult Soccer Association president John Motta was the lone vote in favor of the NASL.

Yates argued that this voting process, to avoid conflicts of interest, is in line with proper non-profit procedure, yet the NASL claimed non-voting members still carry influence and can sway voters. The entire set up of the the USSF’s governance, according to the NASL, is “infected” by the financial ties between MLS, USSF and SUM.

Kessler claimed the USSF is compromised in its decision-making because of its economic ties to MLS and SUM. He referred to an agreement sealed in evidence between the USSF, saying, “For them to get their 70-30 split … MLS has to be popular enough to bring in enough money.” Yates later refuted the number, saying it was 20 percent or less.

After the hearing, Commisso was admanat that the lawsuit would continue no matter what the decision on the injunction is.