A federal judge has stated that she will decide by the end of the week whether to grant a mandatory injunction to the North American Soccer League that would allow it to retain its Division II status.
At a hearing held in U.S. District Court for the Eastern District of New York, Judge Margo K. Brodie heard arguments from both sides as to why the NASL should regain its Division II status. An application by the NASL to be given that designation for the 2018 season was rejected by the USSF back in September on the grounds that the NASL didn't meet the Professional League Standards (PLS) for Division II as laid out by the USSF. These included having a minimum number of teams and having teams in three different time zones in the continental U.S.
The NASL responded by filing an anti-trust lawsuit several weeks later on the grounds that by denying it a Division II designation, the USSF was conspiring with MLS, Soccer United Marketing (SUM) --the league's marketing arm -- and the second-tier United Soccer League, to put the NASL out of business. Tuesday's hearing was intended to determine if the NASL should be granted a mandatory injunction to continue operating as a Division II league while the lawsuit goes on. Judge Brodie indicated she will deliver a written ruling by the end of the week.
"We are thankful to have our day in court to present our arguments before the Judge," said NASL interim commissioner Rishi Sehgal. "We remain hopeful for a ruling in our favor, which of course we believe is supported by the law, the facts, and justice. We look forward to the court's ruling in the coming days."
Based on a transcript of the hearing provided to ESPN FC, the NASL reiterated its stance spelled out in court filings -- that dropping down to Division III would do "irreparable harm" to the league, and would essentially put it out of business.
"What the extreme harm is like the murder of an organization," said the NASL's attorney, Jeffrey Kessler.
Judge Brodie seemed to be of like mind, stating at the beginning of the hearing: "I believe, based on all the affidavits submitted, that plaintiff has made a showing that it will be irreparably harmed if I don't issue the injunction."
In particular, Kessler questioned the legality of the USSF's PLS, which the USSF used as the basis for designating leagues as Division I, II, or III. The NASL argued that the standards have been used as a barrier to entry and are anti-competitive. The NASL argued further that the PLS have been applied selectively to hurt its business and benefit the USL.
"It's all arbitrary, it's all capricious, it's all designed to make it harder for people to compete," said Kessler. "That's what the antitrust laws don't allow it."
Kessler also reiterated the NASL's conspiracy claim against the USSF, MLS, SUM, and the USL. He stated that even if certain members of the USSF Board -- such as USSF president Sunil Gulati -- recused themselves from sanctioning decisions, they still had undo influence on other board members to vote in a way that benefits the existing financial relationship between the USSF, MLS and SUM.
"Because [the USSF, MLS, and SUM] have tied themselves as an organization, as an organization where MLS has to make more money for them to make more money, it is in the interest of the USSF collectively, not just individual board members, to favor-protect MLS because that's the only way they get their primary source of income," said Kessler.
While Judge Brodie acknowledged that there were conflicts in the USSF/MLS/SUM relationship, she said: "I don't know if it makes it illegal."
The USSF argued that the harm to the NASL has been "self-inflicted" and questioned whether dropping down to a Division III designation would be that damaging. The USSF pointed out that ticket revenue was higher in the USL when it was operating as a Division III league in 2016, and that overall revenue was comparable that year to the NASL.
That argument drew some push-back from Judge Brodie, who said: "USL being able to thrive in that league, grow in that division, rather, and then ultimately move up to Division II is very different from a Division II league being told you need to go to Division III to develop. I don't see them as the same. I don't compare them. I don't find them comparable. But you tell me why I'm wrong, counsel."
USSF attorney Russ Sauer responded: "I'm not suggesting that there's no harm potentially to the NASL. The question is whether it's irreparable and whether it's self-inflicted."
Sauer added that a ruling granting a preliminary injunction "would de-legitimize [the USSF's] role as a governing body both in professional soccer, quite frankly, and in amateur soccer." The USSF also disputed the NASL's assertion of a conspiracy, insisting that because some USSF board members had recused themselves, that satisfied the law for non-profit organizations in the state of New York, and there was no evidence of a "walking conspiracy" in which all board members had a conflict of interest.
USSF attorney Chris Yates argued: "No case holds that you can have a walking conspiracy because if you take that to its logical conclusion, your Honor, what does that mean? That means U.S. Soccer can make no decision, the board of directors, even the independent board members, the members who are former paralympic athletes, the members who are representing youth soccer, that the argument is they can make absolutely no decision whatsoever with respect to professional soccer because supposedly there's this conflict."
The USSF questioned whether the NASL really has six viable expansion teams ready to go for 2018, and pointed out that one NASL team, North Carolina FC, is set to join the USL, while another, the San Francisco Deltas, will fold after this season.