have developed a series of assumptions about how to apply the Sherman Act to leagues. However, these assumptions indicate that the courts do not believe that sports leagues should be insulated from antitrust laws. A closer examination of these assumptions shows that the court believes its activities should be supervised more carefully.The issue of a per se violation versus the use of the Rule of Reason arose in Smith. Smith contended that the NFL draft and consequent restrictions constituted a per se violation of the antitrust laws. The owners argued that the league would not survive the competition for players within the draft and furthermore that if antitrust laws applied, the draft would be permitted under the Rule of Reason standard. The court however, precluded application of the Rule of Reason because of the clear restraints of the group boycott. The court also stated that even if the rule was applicable, the owners would not be saved from liability. For the draft to be lawful under the Rule of Reason it would be necessary for the court to find that the draft was a reasonable way of pursuing legitimate business interests and that it did not have the purpose or effect of unreasonably restraining competition.The question of whether player restraints in general should be treated as per se illegal or judged under the rule of reason has received much attention. Since it is uncertain which approach might be employed by a court in determining the legality of the draft eligibility rule, it is analyzed first under the per se test and then under the rule of reason.To justify the draft eligibility rule under the rule of reason the leagues would have to establish that the restraint merely regulates and perhaps promotes competition rather than suppresses it. After first applying the rule of reason it will then look at the alleged restraint to determine whether it has any legitimate business purpose. It will then balance this purpose ...
