## Facts

- The National Basketball Association (NBA) is a league of separately owned teams that competes on the court but cooperates to produce professional basketball games and sell broadcast rights.
- WGN-TV operated as a “superstation” because cable systems across the United States carried its signal beyond the Chicago area.
- In the 1990–91 season, WGN televised 25 Chicago Bulls regular-season games; for 1991–92 it planned to televise 30.
- The NBA sold national television packages to NBC (26 regular-season games) and TNT (50 regular-season games).
- Under existing local broadcast rules, each team could televise up to 41 games over-the-air in its home market and place other games on local cable; teams also could not televise in competition with NBC’s national broadcasts.
- In 1990, the NBA adopted additional limits directed at superstations: (1) a cap of 20 games per season, and (2) a prohibition on superstation telecasts that competed with TNT.
- The Bulls and WGN challenged the 20-game cap as reducing the output of Bulls games available on broadly accessible television and as protecting the league’s national package from competition.

## Issues

1. Whether the NBA’s 20-game superstation cap is an unlawful agreement restraining trade under Sherman Act § 1, or a permissible restraint ancillary to a legitimate sports-league joint venture evaluated under the rule of reason.
2. Whether the Sports Broadcasting Act provides immunity or support for the NBA’s restriction on superstation telecasts.
3. Whether, on the evidentiary record supporting preliminary injunctive relief, the 20-game cap’s competitive harms outweighed any procompetitive justifications.

## Decision

- The Seventh Circuit affirmed the district court’s injunction preventing enforcement of the NBA’s 20-game superstation cap.
- The court treated the NBA as a joint venture whose internal rules can be assessed as ancillary restraints, but held the cap remained subject to rule-of-reason scrutiny.
- The court concluded the cap functioned as an output limitation and, on the record presented, lacked adequate procompetitive justification.
- The court rejected a broad reading of the Sports Broadcasting Act that would shield the cap from antitrust review.
- Other broadcast-rule disputes were left for further proceedings and were not resolved in this appeal.

## Legal Principles

- Agreements among teams within a professional sports league may be evaluated under the rule of reason when the restraint is plausibly ancillary to producing the league’s product, but joint-venture status does not exempt restraints from antitrust scrutiny.
- Under the rule of reason, a court evaluates actual or likely effects on competition, including whether a restraint reduces output and consumer choice, and whether asserted benefits justify those harms.
- Restrictions that operate as explicit caps on televised games can be condemned when they suppress output without sufficient competitive justification, even in the sports context.
- The Sports Broadcasting Act is construed narrowly as an exemption for certain pooled sales of broadcast rights; it does not automatically immunize league rules restricting local or superstation telecasts outside the protected pooling arrangement.

## Conclusion

The Seventh Circuit upheld an injunction against the NBA’s 20-game superstation limit, holding that although the NBA functions as a joint venture, the challenged rule acted as an unjustified output restriction under rule-of-reason analysis and was not insulated by the Sports Broadcasting Act.


Chi. Pro. Sports Ltd. P’ship v. Nat’l Basketball Ass’n, 961 F.2d 667 (7th Cir. 1992)