## Facts

- Chicago Professional Sports Ltd. Partnership (the Bulls’ ownership entity) and WGN Continental Broadcasting Co. (a Chicago “superstation” carried nationally by cable and satellite) sought to televise more Bulls games nationwide, capitalizing on the team’s popularity and Michael Jordan’s drawing power.
- The NBA limited how many games a member team could distribute nationally via a superstation and later adopted a per-game “tax” (fee) on superstation telecasts carried to a national audience.
- In earlier litigation (“Bulls I”), the Seventh Circuit affirmed preliminary injunctive relief allowing WGN to carry 25–30 Bulls games per season.
- After Bulls I, the NBA restructured its national TV arrangements in 1993, transferring broadcast rights to NBC in an effort to align its practices with the Sports Broadcasting Act framework described in Bulls I.
- Under the restructured arrangement, NBC televised a limited number of regular-season games, teams retained the ability to televise games locally (subject to NBC selections), and the league contemplated a defined number of superstation games, most of which were allocated to Turner (TBS/TNT), leaving a smaller allotment potentially available for WGN to license from the league.
- WGN did not purchase the games the league offered under that superstation allotment; instead, the Bulls continued to sell a set of games directly to WGN, relying on the existing injunction and their reading of the NBC contract.
- After a nine-week bench trial (with extensive factual stipulations), the district court made the 30-game allowance permanent and held the NBA’s proposed $138,000 per-game superstation tax “excessive,” effectively barring it.
- The Bulls and WGN appealed, seeking authority to televise up to 41 games per season on WGN. The NBA cross-appealed, contending it could set a lower cap (e.g., 15 or 20 games) and impose the per-game tax.

## Issues

1. Whether the NBA’s limits on superstation telecasts and its proposed per-game superstation tax are unlawful restraints of trade under Sherman Act § 1 under the rule of reason.
2. Whether, under the rule of reason, the Bulls and WGN had to prove a properly defined relevant market, the NBA’s substantial market power in that market, and injury to competition (such as reduced output) rather than merely showing harm to the Bulls or disagreement over revenue allocation.
3. Whether the district court erred by issuing permanent, detailed relief (fixing a 30-game entitlement and rejecting the fee as “excessive”) without the needed market-power and competitive-effects findings.

## Decision

- The Seventh Circuit vacated the district court’s judgment and remanded for further proceedings.
- The court held that challenges to the NBA’s broadcast limits and superstation fee must proceed under a rule-of-reason framework centered on consumer harm—especially whether the restraint reduces output in a relevant market.
- The court stated that substantial market power is an indispensable element of a rule-of-reason claim; without market power, coordinated conduct cannot plausibly cause the type of competitive harm the Sherman Act addresses.
- The court rejected the idea that a “high” fee is itself an antitrust violation; a dispute about who receives broadcast revenues does not establish injury to competition.
- The court did not finally decide whether the Bulls could televise 41 games or whether the NBA’s tax was lawful; it required further factfinding and analysis on market definition, market power, and competitive effects.
- The court emphasized judicial restraint in supervising league operations: antitrust remedies should not turn courts into ongoing administrators of league broadcast policy absent a demonstrated harm to competition.

## Legal Principles

- A sports league’s cooperative decisions about producing and distributing games are generally evaluated under the rule of reason, not condemned automatically, because league cooperation is necessary to supply the product.
- The central antitrust question is whether a restraint reduces output or otherwise harms consumers in a relevant market; injury to a particular team, or dissatisfaction with internal revenue splits, is not enough.
- Substantial market power in a properly defined relevant market is required to prevail under the rule of reason; market power is what makes anticompetitive harm plausible.
- A high price or fee, standing alone, does not violate the Sherman Act; antitrust law is not a tool for courts to set “reasonable” prices for league transactions.
- The NBA’s classification as a single entity versus a joint venture was not conclusively resolved on appeal; regardless, the court treated the league as sufficiently integrated that plaintiffs challenging internal coordination must prove market power and injury to competition.
- Courts should avoid issuing detailed, ongoing regulatory-style injunctions that substitute judicial choices for league governance unless the plaintiff proves an unreasonable restraint with competitive harm.

## Conclusion

In Bulls II, the Seventh Circuit vacated and remanded a permanent injunction that fixed a 30-game superstation allowance and rejected the NBA’s per-game superstation tax as excessive, holding that the Bulls and WGN had to satisfy rule-of-reason requirements—especially defining a relevant market, proving substantial NBA market power, and showing injury to competition such as reduced output—rather than treating internal fee levels or revenue disputes as antitrust violations.


Chicago Professional Sports, Ltd. Partnership & WGN v. National Basketball Association (Bulls II), 95 F.3d 593 (1996)