NASL Lawsuit Fails to Retain Division II Status for 2018

NASLThe North American Soccer League (NASL) lost the first round of a legal fight against U.S. Soccer (USSF) to retain Division II status, as U.S. District Court Judge Margo Brodie denies the request for an immediate injunction based on antitrust claims — an injunction the league says is crucial to short-term survival.

The NASL lawsuit argued that the decision to demote the circuit from Division II to Division III status would irreparably harm league owners. Their argument: the United Soccer League (USL) had plotted with Major League Soccer (MLS) and its affiliated arm, Soccer United Marketing (SUM), to put NASL out of business. Playing at Division III would impede NASL’s ability to attract new investors and new teams, e USSF officials say that putting aside its decision about Division II status would diminish its place in the marketplace and with FIFA.

A key argument in the NASL case: the professional league standards (PLS) set up by USSF was arbitrary and designed to prevent free NASL throughout the U.S. soccer industry, including the denial of NASL to move to Division I status in 2015. The current PLS calls for a Division II league to feature 12 teams across at least three time zones, a standard not met in the recent past and not previously projected for NASL in 2018. The USSF argument: the PNS is required to bring order to the industry.

“As (U.S. Soccer) argues, the PLS may have been necessary and directly responsible for the growth of soccer in the United States,” Brodie wrote in her decision. “While (the NASL) may ultimately be correct in its assessment that the PLS create more harms than benefits, the Court cannot conclude, based on the evidence thus far, that (the NASL) has demonstrated a clear showing of entitlement to relief on these grounds.”

NASL attorneys did indeed persuade Brodie that the move would cause the league irreparable harm, but is not something that automatically leads to immediate relief in the court system. To have prevailed on the request for immediate relief, she wrote, NASL would have needed to prove some level of conspiracy, but a conspiracy between USL and MLS was never established and was dismissed as being circumstantial.

It’s important to note that was a request for a preliminary injunction and not a hearing on the full merits of the case. There are still a slew of options for NASL: appeal this decision to a higher court (which is always a tough sell and could take months to resolve), move forward with a plan to add several teams to the existing eight (or six) teams or making another run at Division II status in the future while proceeding with this lawsuit. (Remember, this court proceeding was for a preliminary injunction.) It could also play as an independent league, but that puts the NASL as an outcast league, unable to participate in the U.S. Open Cup tournament. Propping up several new teams to meet USSF Division II standards will require lots of capital, and with North Carolina FC apparently out the door to join USF and San Francisco Deltas looking at folding the team, and other team owners on the fence about what path to succeed, some hard decisions are in the works. Indeed, with rumors about Indy Eleven and FC Edmonton defecting as well, there could be only four existing NASL teams in business for 2018.

Here’s what USSF had to say about the decision:

And here’s the statement from NASL Interim Commissioner Rishi Sehgal:

We are very disappointed with the Court’s decision in denying our motion for a preliminary injunction. We remain steadfast in our pursuit of antitrust claims against the U.S. Soccer Federation and are confident that justice will ultimately be served. In light of the extreme harm this decision poses to the NASL and our teams, players, coaches and fans, we will immediately begin reviewing all of our legal options including the process for appealing today’s ruling.

As noted, North Carolina FC is expected to go the USL route. A new 2018 team, San Diego 1904, may also go that route, per the San Diego Union-Tribune:

“We have said all along that we plan to move forward,” Watkins said. “San Diego deserves a professional soccer team, and we’re going to continue moving forward in that direction. We need to first understand the status of the (NASL) and consider our own contingencies, and then make a sound business decision.

“The good thing about the infrastructure we’ve created is we can plug it into any league system.”

Some have speculated 1904 FC will go the USL route, which puts it in the second division for 2018 and allows it to continue plans to build a 10,000-seat stadium in Oceanside but goes against its stated business plan.

Image courtesy NASL. 

RELATED STORIES: NASL Preliminary Injunction Hearing Set for TuesdayNASL Lawsuit Alleges That SUM Tried to Shut Down CosmosCommisso Blasts US Soccer’s Gulati, Calls for ResignationNASL Calls for Preliminary Injunction to SurviveNASL Lawsuit Challenges US Soccer Over Loss of Division II StatusUSSF Will Not Extend NASL’s Division II Status into 2018

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