EXPERT DECLARATION OF STEVEN R. PETERSON, Ph.D.

Case 1:17-cv-05495-MKB-ST Document 26-6 Filed 10/16/17 Page 1 of 114 PageID #: 1717
UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
________________________________________________
)
NORTH AMERICAN SOCCER LEAGUE, LLC, )
)
Plaintiff, )
v. ) Civil Action No. 1:17-cv-05495
)
)
)
UNITED STATES SOCCER FEDERATION, INC., )
)
)
Defendant. )
________________________________________________)
DECLARATION OF
STEVEN R. PETERSON, Ph.D.
October 16, 2017

TABLE OF CONTENTS
I. EXECUTIVE SUMMARY .............................................................................................. 1

A. USSFS PROFESSIONAL LEAGUE STANDARDS ................................................................. 2
B. ANALYSIS OF PLAINTIFFS AND PROFESSOR SZYMANSKIS THEORY OF ANTICOMPETITIVE
INJURY ............................................................................................................................. 8
C. PROFESSOR SZYMANSKIS ECONOMIC ANALYSIS IS FLAWED ........................................ 10
II. QUALIFICATIONS AND ASSIGNMENT.................................................................. 13
A. QUALIFICATIONS ........................................................................................................... 13
B. ASSIGNMENT ................................................................................................................. 13
C. MATERIALS CONSIDERED .............................................................................................. 14
III. PLAINTIFFS ECONOMIC THEORY ....................................................................... 14
IV. THE ECONOMICS OF SPORTS AND ANTITRUST ............................................... 15
A. THE ECONOMICS OF SPORTS TEAMS AND LEAGUES ....................................................... 15
B. SELF-REGULATION OF SPORTS LEAGUES ....................................................................... 17
V. THE ORGANIZATION OF SOCCER IN THE UNITED STATES AND THE
CONTROL OF EXTERNALITIES AND FREE RIDING......................................... 19
VI. USSFS PROFESSIONAL LEAGUE STANDARDS ARE PROCOMPETITIVE .. 22
A. USSFS PROFESSIONAL LEAGUE STANDARDS ............................................................... 24
B. COMPOSITION AND PLAY ............................................................................................... 26
C. MARKETS, STADIUMS, AND FIELDS ............................................................................... 31
D. FINANCIAL VIABILITY.................................................................................................... 38
E. MEDIA ........................................................................................................................... 39
F. TEAM ORGANIZATION AND LEAGUE OPERATIONS ......................................................... 40
G. CONCLUSIONS REGARDING THE USSF PROFESSIONAL LEAGUE STANDARDS ................ 42
VII. ANALYSIS OF PLAINTIFFS THEORY OF HARM TO COMPETITION .......... 43
A. MARKET DEFINITION ..................................................................................................... 44
B. THE HYPOTHETICAL MONOPOLIST TEST ....................................................................... 45
C. THE PRODUCT AND GEOGRAPHIC MARKETS FOR ATTENDANCE AT MLS SOCCER
MATCHES....................................................................................................................... 47
D. COMPETITION BETWEEN MLS AND NASL FOR ATTENDANCE ....................................... 54
E. THE RELEVANT MARKETS FOR BROADCAST RIGHTS ..................................................... 56
F. MARKET POWER IN THE MARKET IN WHICH MLS LICENSES BROADCASTERS ............... 58
G. THE CONTRACT BETWEEN USSF AND SUM DOES NOT TRANSFER MONEY FROM MLS
TO USSF AS PLAINTIFF ALLEGES .................................................................................. 62
H. PLAINTIFFS THEORY OF ANTICOMPETITIVE HARM IS UNFOUNDED .............................. 63
VIII. ANALYSIS OF PROFESSOR SZYMANSKIS ECONOMIC ANALYSIS ............. 64
A. PROFESSOR SZYMANSKIS ANALYSIS OF THE FINANCIAL AND PROFESSIONAL
CONNECTIONS BETWEEN USSF AND MSL..................................................................... 64
B. PROFESSOR SZYMANSKI DOES NOT ANALYZE THE CORRECT RELEVANT MARKET ....... 67
C. PROFESSOR SZYMANSKI HAS NO BASIS TO ASSERT THAT USSF AND MLS HAVE
MARKET POWER IN THIS RELEVANT MARKET ........................................................... 74
D. PROFESSOR SZYMANSKIS CONCLUSIONS REGARDING THE PROFESSIONAL LEAGUE
STANDARDS ARE ECONOMICALLY UNFOUNDED............................................................ 76
E. PROCOMPETITIVE JUSTIFICATIONS FOR PROFESSIONAL LEAGUE STANDARDS ............... 88
I. Executive Summary
1. Rigorous economic analysis shows that the United States Soccer Federations (USSF)
Professional League Standards are efficient and procompetitive. The standards foster
stable growth and investment in soccer, thereby expanding output, including limiting free
riding that would otherwise undermine the growth of professional soccer leagues in the
United States. I am a Harvard-trained Ph.D. economist with more than 25 years of
experience in antitrust economics, and I have reviewed the claims put forth by the North
American Soccer League (NASL). I conclude that NASLs claim that USSF and
Major League Soccer (MLS) have an incentive to collude and the related conclusions
Plaintiffs economist Dr. Szymanski offers are both wrong as matter of economics and
are unreliable.
2. USSF governs soccer in the United States. Its goal is to develop soccer into a major sport
alongside American football, baseball, basketball, and hockey. To do this, USSF invests
in the US Mens and Womens National Teams, trains coaches, referees, and athletes,
and promotes soccer for the benefit of all participants. Any amateur or professional
soccer organization can take advantage of USSFs investments by capitalizing on
increased interest in the game or access to more highly trained athletes, coaches, and
referees trained at USSFs expense. USSFs investments help grow soccer, but they also
create incentives for soccer leagues and clubs to free ride on USSFs investments. The
USSF has procompetitive interests in encouraging investment in soccer and limiting free
riding on its and others investments in soccer.
3. USSF administers soccer in the United States, in part, through its Professional League
Standards, which set requirements for professional soccer leagues seeking Division I,
1
Division II, or Division III status. The standards set minimum requirements for leagues
covering the number of teams in the league, geographic breadth and market size,
financial viability, and staffing, among other things.
4. Plaintiff and its economic expert, Professor Szymanski, allege that the Professional
League Standards are anticompetitive and that USSF has discriminatorily applied them
against NASL. The alleged result is that MLSs market power has been protected or
enhanced to the financial benefit of USSF.
A. USSFs Professional League Standards
5. My economic analysis shows USSFs Professional League Standards govern league
characteristics that economics indicate directly affect fans experiences when watching a
soccer game, in person or on television. They encourage investment in soccer in the
United States and are procompetitive, which explains why USSF is not alone among
organizations governing sports in establishing standards related to quality. I address
several of the key requirements of the Professional League Standards at issue in this
matter below.
1. Number of Teams
6. Soccer leagues produce a season-long competition in the context of a championship race.
This contest appeals to fans because it allows them to follow standings, learn about teams
and players, and become involved in the competition over the course of one or more
2
seasons.1 League-based play clearly requires more than a few teams and becomes more
interesting as the number of teams in the league grows, at least to some point.
7. The Professional League Standards currently require Division I leagues to initially have
12 teams and to grow to 14 teams by the third year of operation. Division II leagues must
start with 8 teams and grow to 12 teams by the sixth year of operation. These standards
clearly matter to fans. Leagues with only 4 or 5 teams cannot generate the variety of
team match ups, local rivalries, and competition comparable to that of a larger league. A
five-team league playing about twice weekly would have to repeat matchups by the third
week of the season, limiting fan appeal. The standard requiring a minimum number of
teams thus ensures that US professional soccer leagues grow to the point that they
provide varied and intense competition for fans. The standard helps guarantee the quality
of professional soccer leagues and is procompetitive.
2. Geographic Coverage, Market Size, and Stadium Capacity
8. The Professional League Standards require Division I leagues to have US-based teams in
the Eastern, Central, and Pacific time zones. Division II leagues must initially have
teams in two time zones and have teams in the Eastern, Central, and Pacific time zones
by the third year of operation. This is a way to ensure that soccer can compete with the
four major US sports, all of which have national footprints, for fan interest. If a Division
I or Division II soccer league is to support the nationwide growth of soccer, the league
should not have just a regional footprint and regional appeal. A larger league footprint is
1
Professor Szymanski agrees that soccer competition in the context of league-based play is differentiated
from one-off matches, such as friendlies or scrimmages (Expert Declaration of Stefan Szymanski,
September 20, 2017 (hereinafter Szymanski Declaration) at 35).
3
also important for attracting broadcaster interest in the league.2 Increased broadcaster
interest is, of course, the result of increased fan interest in leagues with larger geographic
coverage.
9. The Professional League Standards include minimum requirements for stadium capacities
for Division I and Division II leagues. NASLs current teams meet that particular
requirement for Division II leagues, which is the status NASL seeks to retain through its
motion for a preliminary injunction. Whether NASLs expansion teams for the 2018
season will meet the requirement is not clear. The stadium capacity requirement directly
affects both fans experience when attending games and teams incentives to invest in the
game. Fans experience while attending a game does not depend solely on the quality of
competition on the field. Fans experience reflects the quality of the stadium, its
amenities, and the size of the crowd, as well as the quality of play. Thus, the stadium
capacity requirement directly affects fans perception of the game, particularly relative to
the major outdoor US sports, which generally have stadiums much larger than the
15,000-seat minimum for Division I soccer leagues. MLS teams regularly draw 15,000
or more fans to their games, and the ability to fill a stadium of about the size of the
typical basketball arena is an important signal that soccer is a serious sport with appeal
comparable to other major US sports.3 Moreover, teams with larger stadiums will have
an incentive to invest to attract fans and fill the stadiums.
10. The Professional League Standards also require Division I leagues to locate 75% of their
teams in metropolitan areas with at least 1 million people. Division II leagues must
2
Szymanski Declaration at 96 (a growing footprint can be attractive to broadcasters who seek to reach
television audiences.).
3
See Appendix C.
4
locate 75% of their teams in metropolitan areas with at least 750,000 people. Clearly,
larger metropolitan areas offer a larger potential fan base that can support better facilities
and better teams. Moreover, sports economics shows that teams invest in talent when
their fan bases respond positively to a teams winning percentage. The standards
encourage leagues to place their teams in larger markets, where they will reach a larger
number of fans, and thus encourage investment in the teams and their facilities.
11. The Professional League Standards requirements for geographic coverage, market size,
and stadium size encourage investment in professional soccer leagues. Moreover,
nothing in the requirements limits the ability to develop a soccer league at levels below
Division I or Division II. The Professional League Standards reflect the fact that teams in
smaller markets will systematically find it in their interest to invest less than teams in
larger markets and that teams with smaller stadiums will create a different impression for
fans than teams that play in larger stadiums. Ensuring that top-tier leagues present fans
with a consistent and positive soccer experience is output expanding because it keeps
leagues from free riding on the investments of the USSF and other leagues that make the
investments that the Professional League Standards require.4 If USSF were to allow free
riding, the incentives for other leagues, such as MLS, to invest in soccer would be
reduced.
3. Financial Stability
12. The Professional League Standards include financial requirements that require leagues to
have funds available to operate a team should it become financially troubled during the
4
I use the term top-tier to mean the upper echelons of professional sports, not necessarily confined to any
particular league or division.
5
course of a season. The standards also establish net worth requirements for principal
owners and each ownership group as a whole. These requirements reflect soccers long
history with failed teams and leagues (for example, an earlier incarnation of the North
American Soccer League and the Womens United Soccer Association).5 Failed leagues
and teams lead to poor press for soccer as a whole and may create the perception among
potential fans that soccer is not a sport worth watching. Also, fans who previously
enjoyed soccer may become disaffected if the teams they have followed suddenly
disappear.
13. One consequence of leagues and teams financial instability is that it turns off fans and
reduces the effectiveness of USSFs and other soccer leagues investments in developing
interest in the sport. Of course, when investment becomes less effective, the incentive to
engage in the investment is reduced as well. Thus, USSFs requirements supporting a
leagues financial stability ensure that a league has sufficient funds to be reasonably
stable and contribute to the development of soccer without free riding on or undermining
others investments in soccer.
4. Team and League Organization
14. USSFs Professional League Standards require Division II leagues to fill 11 team
positions with full-time employees on a year-round basis. These positions include the
general manager, head and assistant coaches, marketing and community outreach staff,
and some administrative positions. Staffing requirements reflect the level of professional
5
See, e.g., Top 20 Professional Sports Leagues Which Failed Miserably (or Hilariously), Masters in Sports
Management, at http://www.mastersinsportsmanagement.org/2010/top-20-professional-sports-leagues-
which-failed-miserably-or-hilariously/, accessed on October 14, 2017. For additional discussion, see the
Declaration of Sunil Gulati, October 16, 2017 (hereinafter Gulati Declaration), at 64, 74, 92, and 143.
6
management, marketing, and community outreach that USSF has found teams should
undertake to be successful and to generate increased interest in soccer in their
communities. This requirement is consistent with USSFs goal of expanding soccer in
the United States.6 It helps ensure the quality of the teams in a league and each teams
outreach to the community, which benefits soccer fans and other soccer organizations.
15. Without this standard, leagues could skimp on staffing requirements by responding to
each individual teams economic incentive to limit its contribution to the soccer
community while benefitting from the investments of USSF and other soccer
organizations. These individual incentives undermine the development of soccer, and
USSFs standards that limit such conduct expand output and are procompetitive.
5. Conclusions on Professional League Standards
16. USSFs Professional League Standards require more investment in the league and its
teams in order to obtain higher divisional status. As described, the standards affect fans
perception of the quality of competition and other aspects of their soccer experience.
Ensuring a quality soccer experience across leagues with a common divisional
designation contributes to the growth of the sport and increases output and interest in the
sport over time. Moreover, standards encourage investment and limit free riding by
soccer organizations that would otherwise succumb to the incentive to limit investment
while benefitting from the investments of others to the detriment of the growth of soccer
in the United States.
6
Gulati Declaration at 74.
7
B. Analysis of Plaintiffs and Professor Szymanskis Theory of Anticompetitive

Injury
17. Plaintiffs theory of anticompetitive harm has two key elements. First, Plaintiff claims
that USSF has applied the Professional League Standards in ways that discriminate
against NASL, thus enhancing MLSs market power. Second, Plaintiff claims that USSF
has the incentive to discriminate against NASL because USSF benefits from the
maintenance and expansion of MLSs market power through USSFs contract with
Soccer United Marketing (SUM), which also licenses MLSs soccer properties. The
economic evidence supports neither of Plaintiffs assertions.
18. My understanding of USSFs contract with SUM is that SUM makes payments above the
minimum payment schedule to USSF based solely on the revenues SUM earns from
licensing USSFs soccer properties. If MLSs licensing revenue were to grow as the
result of increased market power, USSFs contract with SUM would not allow USSF to
participate in the gains from MLSs hypothetical market power. In fact, Professor
Szymanski claims that his analysis of the contract between USSF and SUM shows that
rather than USSF sharing in revenues from MLS soccer properties, SUM siphons off
money from USSF for the benefit of MLS.7 Professor Szymanskis analysis finds exactly
the opposite of what would be required to infer that USSF had an anticompetitive
economic incentive to discriminate against NASL in favor of MLS.
19. Soccer leagues primarily earn money by selling tickets to fans, licensing broadcasts of
matches, and attracting sponsors. Soccer teams sell tickets in geographic markets that are
roughly the size of the metropolitan areas where the teams are located. MLS and NASL
7
Szymanski Declaration at 19 (This suggests that MLS owners profit from SUM and properties that
ultimately belong to USSF.).
8
currently have teams in only two common metropolitan areas, New York City and the
greater San Francisco Bay Area.8 With little scope for competition between NASL and
MLS teams, MLS has little to gain from limiting competition between MLS and NASL in
ticket sales. In addition, Plaintiff does not claim that USSF would benefit from increased
MLS ticket sales because ticket revenues do not flow through SUM. USSF has no
economic incentive to discriminate against NASL to increase MLSs alleged market
power in ticket sales.
20. In order for MLS to exercise market power in the market for broadcast licenses, it would
need to exercise market power over advertisers that would then have to pay above-
competitive advertising rates for advertising during soccer matches. Broadcasters would
channel the above-competitive advertising fees to MLS in the form of license fees. This
theory would also be economically unfounded because MLS programming represents a
very small share of television advertising expenditures or sports television advertising
expenditures. Thus, MLS has no ability to withhold the supply of programming from
broadcasters to exercise market power over advertisers or broadcasters. USSF cannot
enhance MLSs market power relative to broadcasters and advertisers by allegedly
enforcing the Professional League Standards discriminatorily against NASL.
21. If USSF has no economic incentive to discriminate against NASL, some other economic
basis for USSFs conduct must exist. The most likely economic explanation for USSFs
administration of the Professional League Standards is that USSF believes they support
the growth of soccer in the United States. This conclusion is supported by USSFs
8
I understand that NASLs San Francisco team has not yet confirmed that it will return for the 2018 season.
9
decision to implement detailed standards 15 years before NASL reentered professional
soccer.
C. Professor Szymanskis Economic Analysis Is Flawed
22. Professor Szymanski asserts that the close relationship between MLS, SUM, and USSF
represents a significant conflict of interest.9 However, rather than finding an economic
incentive for USSF to favor MLS over NASL, he finds the opposite that MLS benefits
from license fees from USSFs soccer properties through USSFs contract with SUM.
Professor Szymanskis analysis completely undercuts Plaintiffs claim that USSF has an
anticompetitive economic motive to apply the Professional League Standards
discriminatorily relative to NASL.
23. As noted above, soccer leagues primarily earn money by selling tickets to fans, licensing
broadcasts of matches, and attracting sponsors. These are the markets in which MLS
would have to exercise market power in order to increase its profits. Plaintiff recognizes
that these are a soccer leagues primary sources of revenue.10 Nevertheless, Professor
Szymanski does not define relevant markets for ticket sales or broadcast license fees.
Instead he defines a market for top-tier mens soccer leagues in the US and Canada.11
Professor Szymanski asserts that the demand for the services of such a league comes
9
Szymanski Declaration at 17.
10
Complaint, North American Soccer League, LLC, Plaintiff, against United States Soccer Federation, Inc.,
Defendant, United States District Court Eastern District of New York, September 19, 2017 (hereinafter
Complaint) at 38 (The customers in the markets for top-tier and second-tier professional soccer leagues
located in the U.S. and Canada are fans who purchase tickets or licensed merchandise of the leagues,
sponsors who purchase the reputational, promotional and other benefits of association with the leagues and
their clubs, and broadcasters who obtain the rights to distribute games.).
11
10
from teams/owners/promoters wishing to play in these forms of season-long, league-
based competitions.12
24. Professor Szymanski has clearly defined the wrong market for assessing whether USSF
could benefit by discriminating against NASL. MLS would have to exercise its market
power in the markets for tickets and broadcast rights where it sells access to its matches.
Professor Szymanski, however, focuses his relevant market analysis on services to
would-be soccer team owners and the prices of soccer teams. MLS does occasionally
receive payments from owners of expansion teams. However, MLS has no ability to
charge a monopoly price to a would-be team owner acting as an investor. If MLS
attempts to charge expansion teams more than the value of becoming an MLS member,
the owner would simply reject the offer because it would lower his or her wealth.
25. Given that Professor Szymanski has defined the wrong relevant market, he has no basis
to assert that MLS has market power in any market where it sells tickets or licenses to
broadcasters or sponsors.
26. Professor Szymanski asserts there is no valid procompetitive justification for the
divisional structure that USSF implements through the Professional League Standards.13
However, Professor Szymanski explicitly recognizes that USSF may have a legitimate
interest in promoting rules that benefit consumers, improve quality, increase output, and
ensure competition.14 As I have described, in the context of growing soccer into a major
sport in the United States, and where USSF and others are investing heavily to do so, the
12
13
Szymanski Declaration at 6.1.
14
11
Professional League Standards accomplish exactly the goals that Professor Szymanski
asserts would justify them.15 In addition, Professor Szymanski appears to take issue with
the Professional League Standards because they do not reflect observations he makes
about how the game is conducted in Europe.16 However, international comparisons are
simply not helpful for assessing the competitive effects of USSFs Professional League
Standards. USSFs Professional League Standards are specific to the United States, and
the effort to build the sport in the United States faces different obstacles than the
promotion of soccer in Europe, where it is the most popular sport in most countries, and
has been so for many decades.
27. Furthermore, Professor Szymanski asserts that sanctioning NASL as a Division III league
will diminish its ability to compete, particularly against the United Soccer League
(USL). This conclusion appears not to account for the growth and success of the USL
as a Division III league. USLs continued growth and success as a Division III league
(and now provisionally as a Division II league) indicates that league designations do not
preclude (or ensure) success. NASL asked for Division I status in 2015 and has
subsequently faltered to the point that it no longer meets the standards of a Division II
league all while designated as a Division II league. With no change in its Division II
status, NASLs current decline cannot be attributed to USSFs Professional League
Standards.
15
As described in the body of my report, USSF provides public goods that are available to all participants in
soccer in the United States. There are also instances of externalities where teams and leagues take actions
in sports that are individually advantageous, but damaging to the league or the sport as a whole. Professor
Szymanski lists the presence of public goods and externalities as two reasons that regulation of markets can
improve outcomes (Szymanski Declaration at 82).
16
12
II. Qualifications and Assignment
A. Qualifications
28. My name is Steven R. Peterson. I am an Executive Vice President at Compass Lexecon,
an economics consulting firm with expertise in the areas of competition and antitrust,
financial economics and valuation, and regulatory economics. I received my A.B. in
economics from the University of California, Davis, in 1987 and my Ph.D. in economics
from Harvard University in 1992. While at Harvard, my areas of specialization were
economic theory and industrial organization. Industrial organization includes the study
of market power and anticompetitive conduct. I have previously testified on competition
and other matters before Federal courts. I have also served as an adjunct faculty member
in the Department of Economics at Northeastern University where I teach courses on the
economics of antitrust, regulation, and public policy.
29. I have consulted on the economics of antitrust and competition, mergers, estimation of
damages, and the economics of valuation, and on regulation and public policy. A copy of
my curriculum vitae, which includes a list of my testimony in the last four years, is
attached as Appendix A.
30. Compass Lexecon is being compensated for my work in this matter at the rate of
$800/hour. My compensation does not depend in any way on the outcome of this
proceeding. The opinions I express here are my own, and do not necessarily represent
the views of any of my employers.
B. Assignment
31. I have been asked by counsel for USSF to examine Plaintiffs claims that USSF has
conspired to discriminate against NASL, conferring market power on MLS in order to
13
share in the financial gains from MLSs exercise of its alleged market power. Counsel
has also asked that I review the declaration of Professor Stefan Szymanski in support of
Plaintiffs motion for a preliminary injunction.
C. Materials Considered
32. I have examined a range of materials and evidence in the course of my work on this
matter. These items have included legal documents and course of business records from
various soccer entities, including USSF and NASL. A list of the documents considered
by me and by my staff is included as Appendix B to this declaration.
III. Plaintiffs Economic Theory
33. USSF has established Professional League Standards that set requirements for
professional soccer leagues seeking Division I, Division II, and Division III status. As
described below, the Professional League Standards are related to the leagues and their
member teams investments in providing fans with a high-quality soccer experience.
Plaintiff claims that USSF has applied its Professional League Standards in ways that
discriminate against NASL and favor MLS.
34. The economic motivation for the purported discriminatory application of the Professional
League Standards is that USSF and MLS have economic ties through Soccer United
Marketing (SUM).17 SUM licenses broadcast and other rights on behalf of MLS and
certain rights on behalf of USSF (e.g., the broadcast of exhibition/friendly matches
17
Complaint at 103. See also Memorandum of Law in Support of Plaintiffs Motion for a Preliminary
Injunction, North American Soccer League, LLC, Plaintiff, against United States Soccer Federation, Inc.,
Defendant, United States District Court Eastern District of New York, September 20, 2017 at 10-11.
14
involving the US Mens and Womens National Team competitions).18 According to
Plaintiff, the direct economic link between the USSF and MLS creates a powerful
economic incentive for USSF to protect MLSs monopoly position, which USSF
purportedly protects through discriminatory application of the Professional League
Standards. 19 The asserted result of USSFs application of the Professional League
Standards is that NASL has not been able to ascend to the top tier of mens soccer. As a
result of the alleged exclusion of NASL from Division I soccer, MLSs market power has
been maintained or enhanced in the market for mens top-tier professional soccer
leagues located in the U.S. and Canada.20
35. Plaintiffs theory of anticompetitive harm is based on the assumption that USSF shares in
the benefits of MLSs purported market power through license fees earned by SUM.
Consequently, the market power analysis logically should focus on the relevant markets
in which SUM licenses rights to MLS matches.
36. Before addressing these claims, I first describe the economics of sports leagues that relate
to antitrust economics.
IV. The Economics of Sports and Antitrust
A. The Economics of Sports Teams and Leagues
37. Sports competition is the result of two independent teams that are each motivated to win.
A scrimmage or a practice does not have the same characteristics as a true competitive
18
SUM also represents other soccer properties besides those involving MLS and USSF. This includes, for
example, exhibition/friendly matches that the Mexican National Team plays in the United States. See
Kevin Baxter, Mexico's national soccer team finds a great home venue in the U.S., Los Angeles Times,
at http://www.latimes.com/sports/soccer/la-sp-mexico-soccer-20150328-story.html, accessed on October
10, 2017.
19
Complaint at 105.
20
Complaint at 35.
15
contest and generally attracts less fan interest than a genuinely competitive game. Thus,
the most basic sporting event, a one-off game between two teams, is a product that is
jointly produced by the efforts of the two teams. Teams compete on the field, but
competition requires the teams to agree on the rules that govern the on-field competition.
38. One-off games can be interesting, particularly if they involve quality teams, a meeting of
teams that rarely play each other, or top players, but one-off games are not the normal
method for organizing competitive contests. One problem is that one-off games are
unlikely to retain fan interest because many fans will be unfamiliar with the teams or
players and the schedule of play may be erratic. League-based competition has benefits
over one-off games and tournaments for many sports. Leagues consist of a stable roster
of teams that compete regularly with each other. This structure increases fan interest
because fans can learn about the teams and their players over the course of a season or
longer, follow standings as the season unfolds, become involved in rivalries between
teams, and so forth. Generating fan interest in a season-long competition of league
games requires more than two teams and more than just a few so that teams do not meet
too frequently.21 Competition in a league usually ends with some type of championship,
which is often the result of a championship tournament between the top teams in the
league (particularly in the United States).22
21
Franklin Fisher, Christopher Maxwell, and Evan Schouten, The Economics of Sports Leagues and the
Relocation of Teams: The Case of the St. Louis Rams, Marquette Sports Law Review, Vol. 10, Issue 2
Spring 2000, at 195 (Even a small number of teams cannot produce the product that is produced by a
sports league. That product is a series of games in the context of a league season. The elements of
standings, play-offs, and championships are a very large part of what creates fan interest. Those elements
require a league with a non-negligible number of teams.).
22
Plaintiffs and Professor Szymanski agree that there is a distinction between one-off games and tournaments
on one hand and league-based play on the other. See, e.g., Complaint at 45 and Szymanski Declaration at
16
39. The primary product of a sports league is the season-long competition that the member
teams jointly produce. Leagues and their member teams primarily sell access to games
by selling tickets to fans attending games, licensing television stations and networks to
broadcast games, and attracting sponsors who pay to have their products associated with
the league.23
B. Self-Regulation of Sports Leagues
40. The members of a sports league must coordinate some aspects of their operations to
ensure that league games offer a level of play that interests fans, in person and on
television. Most leagues operate with teams owned by individual owners or owner
groups but with significant centralized decision making over some economic aspects of
their organization. Because of the joint production of competition, leagues often share a
portion of gate or broadcast revenues. Sports leagues also generally provide marketing
and other benefits to all teams in the league in order to attract and retain the attention of
the leagues fan base.
41. The members of a league are interdependent because the decisions of one team can affect
others in the league, so successful leagues must find ways to limit teams incentive and
ability to take actions that, while individually beneficial, harm the league as a whole. For
example, a teams decision to change cities may be individually beneficial, but reduce
overall league revenue and attendance. This would be the case, for example, when a
team that is part of a regional rivalry moves and, in making its decision, ignores the
30-33. Neither Plaintiff nor Professor Szymanski provides credible evidence that one-off soccer
competitions are not substitutes for league-based soccer.
23
Games may also be available for viewing on pay television stations or through league-sponsored streaming
services.
17
benefits to its former rival of the fan interest the rivalry created. This is an example of
what economists call an externality. An externality occurs when one party undertakes an
action based on the costs and benefits to itself, but without regard for the effect of the
action on others, or parties external to the decision to take the action.
42. Leagues are also subject to free riding, which occurs when one team takes advantage of
the resources of the league or other teams without compensation. For example, in a
league in which home and visiting teams share gate revenue, one team might choose to
spend very little money on players while sharing in gate receipts at away games. Of
course, this decision negatively affects other teams in the league. The low-quality team
would draw few fans at home games, which reduces gate receipts shared with visiting
teams. Thus, a team that free rides on the reputation and quality of other teams without
contributing to league competition injures other teams.
43. Sports leagues have to find ways to keep the individual incentives of teams, which may
diverge from league incentives, from interfering with the operation of the league and the
creation of competition that attracts sustained fan attention. Different leagues have
different degrees of centralization and different rules to address these problems.24 MLS
24
For example, the National Football League explicitly governs the conduct of home clubs, to ensure they
protect players and provide the conditions for a fair and friendly contest. Clubs face warning and other
penalties for noncompliance. The NFL states Our primary goal is to protect the competitive equity. We
want the game to be decided on the field, between the two teams. See League Governance, NFL
Football Operations, at http://operations.nfl.com/football-ops/league-governance/, accessed on October 7,
2017; Major League Baseball has a rule (that stretches back more than 100 years) prohibiting any
individual from owning more than one team. See David Hill, MLB History: Owners Prevented from
Owning More than One Team, Fox Sports, at http://www.foxsports.com/mlb/story/mlb-history-owners-
prevented-from-owning-more-than-one-team-021017, accessed on October 7, 2017; and the NFL restricts
and governs the membership of franchises: Each entity or each person holding any interest in the
applicant must be approved by the affirmative vote of no less than three-fourths of the members. A three-
fourths majority is also required to transfer a membership to another entity. See Gregor Lentze, The
Legal Concept of Professional Sports Leagues: The Commissioner and an Alternative Approach from a
Corporate Perspective, Marquette Sports Law Review, Vol. 6, Issue 1 Fall 1995, at page 68.
18
has organized itself as a single-entity league in which the league owns the teams and
hires the players on the global market for soccer players. This is not the most common
way to organize a league, but is how the league was initially structured in the 1990s. At
that time much of the activity in forming a new professional league in the United States
was focused on the effort to guard against the risk of having another professional soccer
league fail in the United States.25
V. The Organization of Soccer in the United States and the Control of Externalities
and Free Riding
44. USSF is a non-profit organization headquartered in Chicago, IL. It serves as the
governing association for soccer in the United States, and, in this role, USSF interacts
with other soccer governing bodies, supports athletes at all levels of the sport (from
amateur to professional), develops coaches and referees in the United States, and
generally oversees all aspects of soccer in the United States. USSF has served as the
governing body for soccer in the United States for more than 100 years. USSF states that
its mission statement has been clear and simple: to make soccer, in all its forms, a
preeminent sport in the United States and to continue the development of soccer at all
recreational and competitive levels.26
45. USSF engages in many activities in support of this mission. Prominent among them are:
promoting all types of soccer (from amateur to professional to the national teams of the
25
By the late 1980s, the United States had no prominent professional soccer league. Given the size and
wealth of the country, FIFA (the body that oversees the sport globally) was interested in expanding soccers
popularity in the United States, and did so by awarding the 1994 World Cup hosting rights to the United
States, with the expectation that USSF would facilitate creation of a sustainable professional mens soccer
league (see the Gulati Declaration at IV).
26
USSF at http://www.ussoccer.com/About/About-Home.aspx, accessed on October 3, 2017.
19
United States);27 governing and administering the sport in the US; ensuring the continued
development and advancement of players, coaches, and referees; organizing national cup
competitions; and promptly and equitably resolving grievances arising in the sport.28
46. USSF is not a league, but instead spends effort and resources in ongoing activities that
serve to increase the popularity, quality, and output of soccer in the United States. Over
the years 2014-2016, expenditures by USSF in furtherance of its mission averaged more
than $90 million per year.29 The money is spent to fund and promote the US Mens and
Womens National Teams, which attract interest to the sport, to maintain various youth
teams, to field an Olympic team, to train quality coaches and referees, and other activities
that support the sport and interest in the sport.
47. USSFs contributions to the development of soccer benefit all soccer participants in the
United States. USSFs contributions are also subject to free riding by amateur and
professional organizations. Consider USSFs efforts to increase interest and participation
in soccer. This delivers benefits to all who are involved in the sport. For example, when
USSF promotes interest in the US Mens or Womens National Teams, it helps create a
shared public good in the form of the kind of increased attraction of youth to soccer and
27
By, for example: securing competitions and games for the US National Teams, overseeing international
games hosted in the United States, running youth teams which feed into the future US Mens and Womens
National Teams, running a youth development academy, administration of teams that compete in beach
soccer and futsal, conducting the US Open Cup (which is open to amateur and professional teams),
registration of players and referees at all levels, advertising the successes of the various teams that represent
the United States, subsidizing certain professional players salaries, etc. See USSF at
http://www.ussoccer.com/about/about-us-soccer, accessed on October 6, 2017.
28
Bylaws of the United States Soccer Federation, at http://www.ussoccer.com/about/governance/bylaws,
accessed on October 3, 2017.
29
USSF Audited Financial Statements, Years ended March 31, 2016 and 2015 at 7 and USSF Audited
Financial Statements, Years ended March 31, 2015 and 2014 at 7, at
https://www.ussoccer.com/about/federation-services/resource-center/financial-information, accessed on
October 2, 2017.
20
thereby promotes the development of youth soccer participation. Of course, such interest
encourages people to attend professional soccer matches and watch soccer on television.
Thus, USSFs promotion of soccer inures to the benefit of amateur and professional
soccer alike.
48. Once fan interest is generated, it is what economists call a non-excludable good that can
be used by any soccer league seeking to attract soccer fans to its games.30 This means
that soccer leagues can free ride on the USSFs marketing expenditures and other support
for soccer.31 Teams or leagues free ride on the USSFs expenditures on soccer when they
do not themselves invest in developing fan interest or do not invest to put high-quality
competition on the pitch to retain fan interest. Thus, any entity with a commercial
interest in soccer can free ride on the USSFs investments in soccer in the same way that
an individual team can free ride on the investments of a soccer league.
30
A non-excludable good is a good for which it is difficult or impossible to exclude people from consuming it.
The implication is that it is difficult or impossible to charge for the use or exploitation of the good.
31
From training referees, to overseeing coaching courses, the USSF engages in many activities that are non-
excludable and are subject to free riding. Training referees and coaches, which then serve all players better
as the referees and coaches skills increase, is one way that USSFs investments benefit soccer participants
and organizations that do not directly pay for those services. In addition, USSFs actions generate interest
in the game generally, and these benefits inure to everyone with an involvement in the game. Consider, for
example, the interest and excitement in the sport when the US National Teams are successful. All of those
putting on professional soccer likely benefit (i.e., MLS, NASL, and USL) when the US Womens National
Team wins the World Cup, and those living in the United States are that much more inclined to purchase
tickets to a match taking place nearby. The local club (again, be it MLS, NASL, and USL) also likely
benefits when the Womens or Mens World Cup is on television, even without marginal advertising
spending by the club itself. Interest in the game tends to be at its peak when the World Cup is being held,
and this is particularly true when the US National Teams are doing well in the tournaments. Increased
interest in the sport, in the marketplace in which MLS, NASL, and USL teams sell tickets, is undoubtedly a
valuable public good that the clubs strive to capitalize upon. Soccer differs from other major sports in the
United States in a number of ways, but one of the most obvious differences lies with the relative
importance of the World Cup in the sport. For many players, performing for ones national team is the
pinnacle of the sport, and the global competition eclipses league-based championships and tournaments. In
the other major sports in the United States, league-based championships are seen as the height of
professional accomplishment (e.g., the NBA Championship is generally considered far more important than
an international title in basketball).
21
VI. USSFs Professional League Standards are Procompetitive
49. Sports leagues impose rules on their member teams because their fortunes will rise and
fall together and there are many ways for one team to benefit itself while harming the
league. The USSF is not a league but spends its money to make soccer more popular in
the United States and to improve the quality of soccer competition in the United States.
These expenditures include maintaining developmental youth squads (which feed into the
US Mens and Womens National Teams) and administration of the US Open Cup
competition, as well as support for the quality of soccer competition in the United States
by training referees and providing training camps for promising young soccer players.
All of these expenditures benefit soccer teams and leagues at the amateur and
professional levels. USSF has procompetitive reasons, and reasons consistent with its
mission to increase the popularity of soccer and the level of play of soccer, for creating
rules that keep teams and leagues from free riding on USSFs investments in US soccer
to the detriment of interest in soccer in the United States.
50. Moreover, USSF has procompetitive interests in the financial stability of soccer leagues.
Financial stability not only requires that teams have backers with sufficient capital to
support the leagues teams as they develop fan interest, but also that the league create a
compelling product that ultimately attracts fans. Attracting fans means that the
experience of watching a top-tier soccer match should rival the experience of watching a
game of the other major sports in the United States. Thus, top-tier soccer must be
sufficiently compelling to attract fans from other sports or keep young fans from
switching their allegiance to other sports. In addition to the competition on the field, a
22
top-tier sport experience involves other aspects of the fan experience, such as the quality
of the facilities and concessions, for example.
51. More generally, the USSFs Professional League Standards are analogous to standards
imposed by manufacturers on distributors to limit free riding. In the context of the
manufacturer-distributor relationship, a distributor can free ride on the manufacturers
investment in the quality and reputation of its brand by failing to support the product
appropriately at the time of sale. The distributor may also free ride horizontally on other
distributors who do provide the services necessary to support the product. Distributor
free riding in either of these scenarios erodes the value that consumers associate with a
manufacturers product and reduces the incentive of others to provide high-quality sales
service as the value consumers place on the product or brand falls. Thus, a free riding
distributor can harm the manufacturer and distributors of a product by failing to properly
support consumer satisfaction.32
52. USSF has legitimate reasons to be sure that its efforts to support the growing interest in
soccer in the United States are not undermined by the proliferation of low-quality and
financially unstable professional leagues that reduce fans interest in soccer relative to
other entertainment.
53. In this section, I describe the economic basis for my conclusion that the USSFs
Professional League Standards are procompetitive. The procompetitive nature of the
Professional League Standards is made still more evident in the context of the subsequent
sections of my report that describe how USSF does not benefit from the alleged increase
32
Dennis Carlton and Jeffrey Perloff, Modern Industrial Organization, Third Edition, (Reading, MA:
Addison-Wesley, 2000) at pages 401-405.
23
in MLSs market power. If USSF does not benefit economically from its alleged
discriminatory application of the Professional League Standards relative to NASL, then
USSF has no anticompetitive reason to apply the Professional League Standards
discriminatorily as alleged.
A. USSFs Professional League Standards
54. Figures 1A and 1B show the key requirements of the Division I and Division II Mens
Professional League Standards and how they have changed since 1995. Generally, the
standards address the composition of leagues; requirements for the stadiums and markets
in which they play; financial viability of leagues and teams; requirements for
broadcasting games; requirements for team employees and for player and youth
development; and requirements for league employees.
24
Figure 1A
Select Professional League Standards
Mens Division I Outdoor
1995 2008 2014 Proposed Changes 2015
Composition; Play
Minimum number of teams: 10 10 12; 14 by year 3 16
Competition participation for US-based teams: All US Soccer and CONCACAF competitions for which they are eligible
Markets; Stadia; Fields

Eastern, Central, and
At least 3 time zones in the At least 3 time zones in the
Must have US-based teams located in: At least 3 time zones Pacific time zones in the
continental US continental US
continental US
Min. 75% of league's teams in metropolitan area sized at least: 1,000,000 2,000,000
Minimum seating capacity: 15,000
Financial Viability
League must either have the funds to cover or have $1,000,000
Does not specify amount
performance bonds for each team worth: (maximum requirement is $20,000,000 total)
Team Ownership:
Principal owner with >35% share must have net worth: $40,000,000
Combined ownership net worth: $70,000,000 $80,000,000

Media
All regular season and
Significant portion of games
championship games
Broadcast or cable television contract: Regular season and championship games telecasted on television; the rest
telecasted (streaming
streamed online
counts)
Team Organization
Each team must have the required employees: Full-time Full-time, year-round
Player development: US-based teams must support either an amateur or professional reserve team in a USSF-sanctioned league.
Youth development: US-based teams must have a program to develop youth players.
League Operations
Chief operations officer, a chief financial officer and a
League full-time staff: Chief executive officer
director of marketing/public relations
Note: Required employees include general manager, director of marketing/sales, director of communications/media relations, director of
promotions/community relations, director of game operations, head coach, assistant coach, trainer, ticketing manager, finance director, and
clerical staff.
Sources: United States Soccer Federation Professional League Standards.
25
Figure 1B
Select Professional League Standards
Mens Division II Outdoor
Proposed Changes
1996 2008 2010 2014
2015
Composition; Play
Minimum number of teams: 8 8 8; 10 by year 3; 12 by year 6 12
All US Soccer and

US Open Cup and
CONCACAF
Competition participation for US-based teams: CONCACAF All CONCACAF competitions for which they are eligible
competitions for which
competitions
they are eligible
Markets; Stadia; Fields
At least 2 time zones in

At least 2 time zones in
the continental US;
At least 2 time zones in the continental US; at At least 3 time zones in
Must have US-based teams located in: At least 2 time zones Eastern, Central and
the continental US least 3 time zones in the the continental US
Pacific time zones by
continental US by year 6
year 6
Min. 75% of league's teams in metropolitan area sized at least: 750,000 1,000,000
Minimum seating capacity: 5,000 7,500
Financial Viability
League must either have the funds to cover or have $750,000
Does not specify amount $750,000
performance bonds for each team worth: (maximum requirement is $15,000,000 total)
Team Ownership:
Principal owner with >35% share must have net worth: $20,000,000
Combined ownership net worth: $40,000,000

Team Organization
Employees or Full-time employees or Full-time, during the

Each team must have the required employees: Full-time, year-round
independent contractors independent contractors season
League Operations
League full-time staff: Chief executive officer
Note: Required employees include general manager, director of marketing/sales, director of communications/media relations, director of
promotions/community relations, director of game operations, head coach, assistant coach, trainer, ticketing manager, finance director, and
clerical staff.
Sources: United States Soccer Federation Professional League Standards.
55. Each of the standards is related to factors that affect fans experience of the soccer
competition the league generates, influences fans experiences attending a match,
supports financial viability, encourages media exposure and community outreach, and
supports sound management of the league and its teams. I address the requirements
below and describe why they support USSFs goal to expand interest in soccer in the
United States and are procompetitive.
B. Composition and Play
56. The Professional League Standards for Division I leagues require leagues to have 12
teams initially and 14 teams after 3 years of operation. Plaintiffs immediate concern
with regard to the Professional League Standards requirements, however, is that the
26
Division II standards require leagues to have 8 teams at inception and 10 teams by year
three and 12 teams by year six. NASL does not meet this standard and the number of
NASL teams that will compete in 2018 is uncertain.
57. As described above, a soccer leagues product is season-long, league-based soccer
competition in the context of a championship race. 33 The seasons competition
becomes more attractive to fans as the number of teams rises, at least within reason.34
This is evident from the distinction between friendlies or one-off matches and matches in
the context of league play. League play engages fans in the progression of the season,
team standings, a championship race, team rivalries, and the development of players.
Scrimmages and friendlies potentially offer exciting soccer competition, but they do not
offer the multifaceted elements of competition that arise in the context of league play.
The regular schedule of play among teams in a stable league has also proved to be the
most successful business model for sports.
58. The characteristics of league-based matches are not controversial. Both Plaintiff and
Plaintiffs economic expert agree that league-based competition is distinct from single
games, international competitions, or friendlies.35 Thus, they implicitly recognize that
more than just a few teams are necessary for a league to offer high-quality, season-long
competition to fans. This is apparent because leagues with a few teams would offer
repetitive matchups that would not sustain fan interest over the course of a season or
33
Dennis Carlton, Alan Frankel, and Elisabeth Landes, The Control of Externalities in Sports Leagues: An
Analysis of Restrictions in the National Hockey League, Journal of Political Economy, Vol. 112, No. 1,
2004.
34
Mr. Gulati notes that a minimum number of teams, and sufficient geographic coverage in the United States,
are fundamental to warrant the moniker of a national league. See the Gulati Declaration at 209.
35
Complaint at 45 and Szymanski Declaration at 49-51.
27
seasons. This would be the case even if the teams in the league had quality players and
performed well in matches. An exclusive focus on the quality of competition on the field
is too narrow to capture the other factors that contribute to fans enjoyment of a sport.
59. The best evidence on the optimal number of teams in a US league is found by comparing
to the leagues in the four major US sports: football, hockey, baseball, and basketball.
The number of teams in these leagues also sets sports fans expectations about the
number of teams in top-tier US sports leagues. Figure 2 compares the number of teams
in the NFL, NHL, MLB, NBA, MLS and NASL. The two horizontal lines show the
range of the required number of teams in the Division II Professional League Standards
(8 teams at inception and 12 teams by year 6).
Figure 2
Number of Teams in US Sports Leagues
2017 Regular Season
35
32
31
30 30
30
25
22
20
15
10
8
0
NFL NHL MLB NBA MLS NASL
Note: Dashed lines represent the required number of teams for Division II initially (8) and after six years (12).
Sources: League websites; United States Soccer Federation Professional League Standards 2014.
28
60. The four major US sports have 30 or more teams in their top-tier leagues. MLS has 22
teams, and NASL has 8 teams as of 2017. Clearly, the number of teams required for
Division II status is not large relative to the number of teams in top-tier leagues in the
United States. Moreover, the size of the major US sports leagues indicates that other
sports leagues have found benefit from the increased variety and intensity of competition
that arises in leagues with more than the 12 teams that the Division II standards
ultimately require (and the 14 teams that the Division I standards ultimately require).
61. Plaintiff and Professor Szymanski appear to agree, in principle, that league play offers
fans superior characteristics relative to friendlies and one-off games. This recognition
implies that the relevant issue is not whether establishing standards for the number of
teams in a league is reasonable. The issue is where that number is set. Evidence from
US sports indicates that the benefits of league play continue with increasing numbers of
teams well above the thresholds in USSFs Professional League Standards. Thus, from
an economic perspective, the required minimum numbers of teams are set at reasonable
levels.
62. Standards that are closely related to the quality and variety of competition that a league is
capable of producing are procompetitive. Such standards help informed fans understand
the quality of play they are likely to see over the course of a season, which benefits
consumers. The standard also encourages league growth. League growth expands output
as leagues attempt to increase team numbers with expansion teams in new metropolitan
areas.
29
63. Efforts to expand soccer in the United States have been beset by team and league
failures.36 These failures damage soccers reputation and make it difficult to sustain fan
interest when fans find that the league or team they have followed has failed. Economics
indicates that larger leagues are more likely to survive the failure of poorly located clubs
and other setbacks because the loss of one or two teams will not drive the number of
teams in the league below levels that soccer fans will find uninteresting. Ensuring
stability of leagues is in USSFs legitimate interests because it protects the investments it
makes in expanding soccer and maintains incentives for those leagues that support soccer
at a grassroots level to continue to do so.
64. USSFs Professional League Standards also require that teams in Division I and Division
II play in all US Soccer and CONCACAF competitions for which they are eligible.
Neither Plaintiff nor Professor Szymanski appears to complain about this particular
standard. In fact, they appear to believe that playing in such tournaments would benefit
the teams in question. 37 Clearly the requirement that teams play in international
36
For an example of NASL acknowledging this in 2011, see NASL CEO Aaron Davidson Expressed
Continued Optimism in Receiving Division 2 Sanctioning, IMSoccer News, at
http://www.insidemnsoccer.com/2011/01/25/nasl-ceo-aaron-davidson-expresses-continued-optimism-in-
receiving-division-2-sanctioning/, accessed on October 12, 2017 ([USSF is] demanding that we live up to
those standards. Part of the reason theyre being so strict is because of the instability of where we come
from. 106 teams have played in division two or three since 1996 and of those 84 folded. Fans dont want
to follow a team whos in a league with those sort of stats and that much turnover.) See also Top 20
Professional Sports Leagues Which Failed Miserably (or Hilariously), Masters in Sports Management, at
http://www.mastersinsportsmanagement.org/2010/top-20-professional-sports-leagues-which-failed-
miserably-or-hilariously/, accessed on October 14, 2017. For additional discussion, see the Gulati
Declaration at 64, 74, 92, and 143.
37
Complaint at 53 (Due to the enormous significance accorded by soccer fans to FIFA-affiliated
competitions, and FIFA recognition, it is impossible for a U.S.-based top-tier or second-tier mens
professional soccer league to compete effectively in the relevant markets without the applicable level of
USSF recognition and the ability to participate in such FIFA competitions.). Szymanski Declaration at
70 (The demotion of NASL from DII to DIII imposes an additional anti-competitive restraint with regard
to national and international soccer competition. Specifically, the demotion decreases the chances of an
30
tournaments expands the amount of soccer involving US teams that is available for US-
based fans to watch, even if the competition is not league-based. Nevertheless, the
participation of US teams in international events is output expanding and supports fans
perception that US teams can compete at the international level. Activities that support
fan interest in soccer would be expected to increase US soccer output as well.
C. Markets, Stadiums, and Fields
1. Geographic Coverage and Market Size
65. The Professional League Standards for Division I leagues require US-based teams
located in Eastern, Central, and Pacific time zones in the continental United States.38
Division II leagues must have teams in these three time zones after three years (see
Figures 1A and 1B). These requirements reflect the reality that top leagues in the United
States are present throughout the country. In order for soccer to be considered the equal
of the four major US sports, it will need to be popular throughout the United States as
well, and soccers top-tier leagues will need to compare favorably to those in competing
sports.
66. One aspect of being a major sport in the United States is that the sports top-tier leagues
have the geographic breadth to generate sufficiently broad fan interest that national
broadcasters are interested in carrying games.39 In fact, Professor Szymanski explicitly
NASL team winning the Lamar Hunt US Open Cup, and thus decreases the chances of an NASL team
competing in the CONCACAF Champions League.).
38
In its proposed revisions to the Professional League Standards in 2015, USSF intended to ease the time
zone requirement (e.g., a team in the Mountain time zone would count toward a three time zone geographic
dispersion). In his testimony Mr. Gulati discusses how these proposed revisions were not enacted. Gulati
Declaration at 104-105.
39
John Jones, The Economics of the National Hockey League, The Canadian Journal of Economics,
February 1969, at pages 18-19. In addition, covering all major cities in a given country is beneficial.
High score: Increased game attendance and lucrative media contracts will boost revenue, IBISWorld
31
recognizes that a larger league footprint increases the interest of broadcasters in the
league. 40 Therefore, interest in licensing the national broadcast rights of a regional
league can be expected to be lower than in licensing a league with interest throughout the
country.
67. As described, one way in which USSF evaluates the footprint of leagues is a time zone
requirement. This requirement has existed since 1995-1996, with minor variations (see
Figures 1A and 1B). I have reviewed the composition of both MLS and NASL in light of
the current requirement, and show the results in Figure 3A. This figure shows that MLS
has teams in the three time zones called for in the Professional League Standards, while
NASL lacks a team in the Central time zone. This same analysis is repeated in Figure 3B
with the addition of the time zone locations for teams from the NFL, NHL, MLB, and
NBA. The difference between NASL and the other sports leagues is clear: NASL has no
team in the Central time zone and only one team in the Pacific time zone.41
Industry Report 71121a: Sport Franchises in the US, May 2015, at page 7 (the wealthiest sports franchises
in large metropolitan areas have a major advantage in terms of broadcasting and media coverage because
viewership levels are much higher compared with small-market teams.).
40
Szymanski Declaration at 96 (a growing footprint can be attractive to broadcasters who seek to reach
television audiences.)
41
Note that NASL has made it known to USSF that its team in the Pacific time zone (i.e., the San Francisco
Deltas) has not committed to return to the NASL for 2018. Letter from NASL to USSF, August 15,
2017; see also Gulati Declaration at 208 and 215. As noted above, USSF intended to do away with the
requirement that teams be located in these specific time zones in its proposed 2015 revisions to the
Professional League Standards, while maintaining the principle of geographic dispersion of teams across
multiple time zones.
32
Figure 3A
Number of Teams in Eastern, Central, and Pacific Time Zones
2017 Regular Season
18
16
14
12
10
10
MLS
NASL
8
6
5 5 5
2
1
0
Eastern Central Pacific
Note: MLS has two teams in the Mountain time zone (Colorado Rapids and Real Salt Lake). NASL has one team in the Mountain time zone (FC
Edmonton) and one team in the Atlantic time zone (Puerto Rico FC).
Sources: League and team websites.
Figure 3B
Number of Teams in Eastern, Central, and Pacific Time Zones
2017 Regular Season
18
17
16
16
14
14
13
12
NFL
10 NHL
10
9 MLB
NBA
8 8
8 MLS
NASL
6 6
6
5 5 5 5 5 5
2
1
0
Eastern Central Pacific
Note: Leagues with teams in the Mountain time zone: NFL (2), NHL (4), MLB (2), NBA (3), MLS (2), and NASL (1). NASL also has one team
in the Atlantic time zone.
33
68. The Professional League Standards also require that Division I leagues have 75% of their
teams in metropolitan areas with at least 1 million people and that Division II leagues
have at least 75% of their teams in metropolitan areas with at least 750,000 people. The
justification for such requirements is clear. Quality teams can be expensive to field and
larger metropolitan areas provide a larger population from which to draw fans and offer
larger media markets to support the teams.42 To the extent fans are more likely to watch
soccer on TV if they have a team in their metropolitan area, placing teams in large
metropolitan areas will also help increase national broadcaster interest in carrying games.
Finally, USSF has an interest in encouraging investment to make soccer available to as
much of the US population as possible. Encouraging investment in large rather than
small metropolitan areas supports this goal and encourages increased output.
69. The requirements on geographic breadth and market size recognize that teams that are in
larger markets will systematically have larger potential fan bases and access to greater
broadcast opportunities. While there are undoubtedly examples of small-market teams
with sustained success in their leagues, economics indicates that teams invest in talent
when their fan bases respond positively to winning more games and higher quality
competition on the field.43 A team with a larger fan base is more likely to have fans that
reward the team for winning. Thus, the economics of team sports indicates that leagues
42
Industry Report 71121a: Sport Franchises in the US, May 2015, at page 19 (Geography is pivotal in
determining the anticipated fan base and the likely demographics, as well as the regions media market and
potential for corporate sponsorships. For this reason, major league sports are based almost exclusively in
highly-populated metropolitan areas.).
43
John Vrooman, A General Theory of Professional Sports Leagues, Southern Economic Journal, 1995.
34
meeting the Division I Professional League Standards would be more competitive than
leagues that do not, and similarly for the Division II standards.
70. The standards also do not unduly limit where a league can place teams. There are nearly
60 metropolitan areas in the United States that have populations of 1 million or more and
approximately 80 metropolitan areas in the United States with populations of 750,000 or
more.44 Even if a growing league chooses not to enter a metropolitan area where one of
the 22 MLS teams currently plays, there are numerous available metropolitan areas that
meet the requirements of the Professional League Standards. Thus, the standards do not
place undue restrictions on the locations that a leagues teams can establish themselves.
Moreover, the standard for population size explicitly allows the flexibility for 25% of the
teams in a league to be in smaller metropolitan areas if the league desires.
71. The Professional League Standards requirements addressing geographic coverage and
market size are related to factors that systematically affect the incentives of owners to
invest in their teams and fans perception of the league, whether they attend the game or
watch a broadcast. Moreover, the standards do not limit the output of soccer from
leagues that do not meet the Professional League Standards for a higher divisional
designation. For these reasons, the Professional League Standards addressing geographic
coverage and market size are procompetitive. They encourage investment where it will
be most productive and where team success is most likely.
44
Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016, US Census Bureau,
Population Division, March 2017.
35
2. Stadium Size
72. In this section, I address the Professional League Standards requirements for the seating
capacity of stadiums for Division I and Division II leagues. These requirements may not
be at issue for the present motion in that the immediate issue is whether NASL will be
designated a Division II league. NASLs stadiums for current teams meet the standards
for Division II leagues, but NASLs expansion teams may or may not have arrangements
with stadiums that meet Division II standards. My comments below are directed
primarily at the Division I standard, but are equally applicable to the Division II standard.
73. The Professional League Standards require Division I teams to have stadiums with
minimum seating capacity of 15,000 spectators, and the standards require Division II
teams to have stadiums with minimum seating of 5,000 spectators. The stadium size
requirements complement the requirements regarding market size because larger
metropolitan areas can obviously support larger stadiums than smaller metropolitan areas.
Thus, the stadium size standard gives teams the incentive to make their stadium
investment where it will attract sufficient fans to make the stadium worthwhile. As
described above, investing in larger rather than smaller cities increases exposure to soccer
and increases output.
74. The stadium size requirement has a number of functions. Previously, US soccer leagues
have played in high school stadiums and other facilities that were not at all comparable to
the facilities that US sports fans would expect of a top-tier league based on their
experience with the four major US sports. Clearly, the stadium size requirement affects
fans experience while attending a soccer game, and USSF has an interest in ensuring that
fans experiences at top-tier soccer matches meet their expectations of what a top-tier
36
sporting event should be like. This includes the quality of the facilities, the amenities and
concessions available at soccer venues, and so forth. Here, a proper measure of output
includes the quality of fans experiences of the entire event, which includes the size and
quality of the facilities where the match is held.
75. The size of a stadium also changes the incentive of a team to invest in the quality on the
pitch. As the team puts a higher quality product on the pitch a larger stadium allows the
team to accommodate more fans and earn greater ticket revenue. Given that the stadium
is a significant up-front cost, team owners will choose to locate in metropolitan areas that
will reward investment in the quality of the team by buying tickets.45
76. There may be metropolitan areas that cannot support a 15,000-seat soccer stadium. In
such a circumstance, a team owner might be willing to enter with a smaller stadium but
not with a stadium meeting the Division I standard. As long as there are places where a
stadium with a capacity of 15,000 spectators can be built, however, there is no restriction
on output from the stadium size standard, and as noted above, there are about 80
metropolitan areas with populations of 750,000 or more. Rather than restrict output, the
standard directs soccer stadium investment to cities with sufficient fans to support it.
77. Moreover, there is no reason that a league cannot use a smaller stadium in the smaller
city. A team with such a stadium could not be part of a Division I league, but could still
be a successful business in the smaller city. There is no reduction in output by labeling
this teams matches Division II or Division III. The systematically lower level of
investment in the small-town team will make the experience of attending a game offered
by the small-town team different than the experience of attending a Division I match.
45
The market-size requirements also support this goal.
37
Small and large cities can have professional soccer, but the quality of small-town soccer
with its lower levels of investment in facilities and athletes differentiates it from Division
I soccer.
D. Financial Viability
78. The Professional League Standards require that the league have a minimum amount of
funds available to cover individual team expenses and set minimum requirements for the
net worth of the owners of the leagues teams. These requirements reflect the history of
soccer in the United States which is replete with the failure of soccer teams and leagues.
Team and league failures, particularly if they occur during a season, discourage fans. As
a former CEO of NASL described the problem in 2011: 106 teams have played in
division two or three since 1996 and of those 84 folded. Fans dont want to follow a
team whos in a league with those sort of stats and that much turnover.46 Discouraged
fans frustrate USSFs efforts to build soccer into a major sport in the United States and
vitiate the investments of others that more effectively support the development of soccer.
79. The various financial requirements serve a number of functions. The requirement that the
league maintain funds that increase with the number of teams is to ensure that the league
can take over a team should it become financially unviable during the course of a season.
46
See NASL CEO Aaron Davidson Expressed Continued Optimism in Receiving Division 2 Sanctioning,
IMSoccer News, at http://www.insidemnsoccer.com/2011/01/25/nasl-ceo-aaron-davidson-expresses-
continued-optimism-in-receiving-division-2-sanctioning/, accessed on October 12, 2017; NASL recognized
the instability of Division II level soccer in the past: The NASL and its member teams are fully
committed to establishing a long overdue stable structure and platform for second division soccer in the
United States, Canada and Puerto Rico. See NASL Committed to Securing USSF Sanctioning for 2011,
NASL, January 20, 2011.
38
In the past, teams have folded midseason,47 which discourages fans and makes them less
likely to commit to the next soccer team to start up in the area.
80. The net worth requirement for owners helps ensure the financial viability of the teams in
the league and of the league as well. Moreover, all leagues, not just MLS, have an
interest in the financial wherewithal of their owners because they have an interest in
being sure that the owner will not underfund the team and free ride on the investments of
others.48 Leagues have a legitimate interest in ensuring that unexpected financial strains
do not lead an owner to underinvest in his or her team because doing so would injure all
of the teams in the league.
81. In the case of soccer, which is in the process of developing into a top-tier sport, league
and team failures injure the reputation of soccer and threaten fan interest. Thus,
standards to ensure the financial strength of teams and leagues help avoid free riding by
underfunded teams and leagues that hope to survive on interest created by others
investments in soccer. Therefore, the financial stability of the owners in a league is a
reasonable concern for USSF because soccer leagues have failed in the United States
previously, to the detriment of US fans interest in soccer.
E. Media
82. Neither Plaintiff nor Professor Szymanski appears to take issue with the media
requirements included in the Professional League Standards. At this time, NASL is
47
See the Gulati Declaration at 92 for a discussion of a previous instance of NASL and USSF having to deal
with a mid-season default on obligations by the NASL team in Baltimore.
48
Jared Bartie, Daniel Etna, and Irwin Kishner, Navigating the Purchase and Sale of Sports Teams, New
York Law Journal, 2015 (The financial stability of an owner group obviously affects the owned team, but
also affects the strength of the league as a whole. Accordingly, leagues are careful to ensure that
prospective owners have the resources to undertake team ownership, including related financial
obligations.).
39
seeking an order that would require USSF to grant it a Division II designation for the
2018 season, and the media requirements for Division II leagues are quite minimal. They
require Division II leagues to produce an annual media guide, provide lineup cards at
games, and issue weekly statistical reports and regular press releases.49
83. The Professional League Standards for Division I leagues require that regular season and
championship games be telecast, whether on television or via streaming. The relevant
measure of output for evaluating media is the number of fans who watch a match.
Requiring leagues to broadcast all of their gams increases the availability of soccer on
broadcast television or on streaming services. This standard increases output relative to a
circumstance where not all matches are available by some form of broadcast
transmission.50 The standard gives US soccer fans more opportunities to watch soccer
matches and unambiguously expands output.51
F. Team Organization and League Operations
84. Division I leagues are required by the Professional League Standards to have a full-time,
year-round staff and teams are required to have full-time, year-round staff in a number of
positions as well. For the league, these positions include a chief operations officer, a
49
2014 United States Soccer Federation Professional League Standards at page 2.
50
Katrien Lefever, Sports/Media Complex in the New Media Landscape, New Media and Sport, 2012, at
page 7 (Wide coverage through television, for instance, can result in significant exposure for sports
leagues. Such exposure can deliver private benefits to the league and the clubs in the form of increased
revenue from sponsorship and attraction of new supporters.).
51
In addition, national broadcasts highly value the ability to reach audiences that span the entire continent and
are sometimes riveted to the event on television: Outside of the Academy Awards, Shark Week and a
handful of freakishly successful scripted dramas, sports is the only segment that guarantees huge reach and
live-audience deliveries -- two conditions that also serve to squash much of the ad avoidance that erodes
salable gross ratings points. See Anthony Crupi, Sports Now Accounts for 37% of Broadcast TV Ad
Spending, AdAge, at http://adage.com/article/media/sports-account-37-percent-all-tv-ad-dollars/300310/,
40
chief financial officer, and a director of marketing and public relations. For teams, the
required positions are general manager, several marketing, media, and community
relations positions, coaches, and several administrative and clerical positions.52 The total
number of required full-time positions for a team is 11. The team staffing requirements
are the same for Division II teams as they are for Division I teams.
85. These requirements reflect USSFs view that a well-run soccer team will be planning,
managing the team and its resources, and marketing and engaging in community outreach
and support of soccer generally on a year-round basis. Complaints regarding
requirements that sanctioned soccer leagues have year-round staff (or support youth
leagues) are the complaints of a league or team that hopes to free ride on the investments
of others. The payoff to these efforts may come in the future and may not be captured by
the team making the investment. Therefore, some individual teams might do better if
they could avoid the cost of some staff and community soccer development. Of course,
ensuring that teams do not follow their own incentives and cut staff is the reason for the
standard. The standards encourage management, coaching, community outreach, and
marketing activities that benefit the soccer team and soccer generally.
86. Were USSF to allow Division I or Division II soccer leagues to free ride on the
investments of others, the incentives of the others to invest would be reduced because
lower-quality teams with less coaching investment and less marketing investment would
52
Stephen Ross and Stefan Szymanski, Antitrust and Inefficient Joint Ventures: Why Sports Leagues
Should Look More Like McDonalds and Less Like the United Nations, The Comparative Economics of
Sport, 2010, at page 122 (Free-riding problems occur when firms under-invest in promoting a product
because of a desire to free ride on promotional efforts of others. For example, teams could spend less on
payroll, or avoid costly public relations activities like community outreach, confident that the general
appeal of their club is significantly affected by the general goodwill generated by the efforts of league
officials and other clubs.).
41
benefit from others investment while dissipating the public goods that such investment
creates. Encouraging year-round investment in soccer and the sound management of
teams leads teams to manage themselves more intensively to their own benefit, the
benefit of their league, and the benefit of soccer generally. Such requirements support
the growth of soccer in the United States and expand output.
G. Conclusions Regarding the USSF Professional League Standards
87. Each of the Professional League Standards analyzed here is associated with a legitimate
goal of the USSF or explicitly expands the output of soccer in the United States. In
particular, the standards require that leagues devote the resources necessary to sustain the
level of competition and associated fan interest that USSF finds leagues at different levels
should provide US soccer fans.53 In this regard, the Professional League Standards are
analogous to requirements that manufacturers and franchisors place on their downstream
distributors and franchisees. In each case, the upstream firm has invested in a product or
brand and has an interest in ensuring that its investment is not subject to free riding by
downstream firms. USSF has an interest in protecting its own investments and the
investments of others from free riding because such protections encourage the growth of
soccer in the United States.
53
Industry Report 71121a: Sport Franchises in the US, May 2015, at page 30 (Most spectator sports are
heavily regulated by a governing body which establishes the rules of the game, issues licenses to play,
establishes the annual draw, undertakes most financial arrangements and oversees the operation of the
league); In addition, Mr. Gulati (the President of USSF) notes: The purpose of these standards has never
been to hinder or impede competition. Rather they have been designed in an attempt to (a) reduce (not
eliminate) the risk of league and team failures, particularly during the middle of a season, and (b) further
USSFs mission of growing the game at all levels. See the Gulati Declaration at 74.
42
VII. Analysis of Plaintiffs Theory of Harm to Competition
88. Plaintiffs theory of anticompetitive harm has two key elements. First, Plaintiff claims
that USSF has applied the Professional League Standards in ways that discriminate
against NASL, with the result that MLSs market power has been enhanced. Second,
Plaintiff claims that USSF has the incentive to discriminate against NASL because USSF
benefits from the maintenance and expansion of MLSs market power through USSFs
contract with SUM. Below, I address the relevant markets in which MLS licenses or
sells access to the soccer competition its teams create to determine whether USSFs
conduct could plausibly enhance MLSs market power. I also address whether USSF has
the incentive to enhance MLSs market power as Plaintiff asserts.
89. In short, I find that NASL and MLS teams rarely compete with each other in the same
metropolitan area for ticket sales. Thus, any effort by USSF to discriminate against
NASL would not have a material effect on MLSs bottom line from ticket sales.
Moreover, Plaintiffs claim is that USSF benefits from its association with MLS through
SUM, which manages broadcast and other licensing transactions, not ticket sales. In the
market containing licensing broadcasts of soccer matches, advertisers and broadcasters
have many options other than MLS programming to reach and attract viewers. Moreover,
the ad revenue associated with MLS broadcasts is a very small share of sports advertising
revenue on television and a still smaller share of all television advertising revenue.
MLSs small share precludes the possibility that it could exercise market power over
either advertisers or broadcasters, as would be required to earn above-competitive fees
for broadcast licenses. Moreover, USSF cannot confer market power on MLS in the
market for programming.
43
90. I understand that USSFs contract with SUM does not pay USSF increased amounts if
MLS soccer properties generate more income. In fact, Professor Szymanskis analysis of
USSFs contractual relationship with SUM leads him to assert that money flows from
USSF to MLS through SUM rather than the other way around. Thus, USSF does not
have an economic incentive to discriminate against NASL in favor of MLS as Plaintiff
asserts. Plaintiffs theory fails at each step.
91. I now turn to the analysis of the relevant markets in which MLS sells tickets or licenses
broadcasts of its matches and whether MLS has market power.
A. Market Definition
92. Market definition is an economic tool used to evaluate whether a firm or firms possess
market power. The goal of market definition is to identify the competitive options
customers can turn to in order to avoid paying a price increase by a firm attempting to
exercise market power. The available options are substitutable products and alternative
suppliers to which customers can turn to in order to escape an increase in the price of one
product.
93. A relevant market has two dimensions, a product dimension and a geographic
dimension. The boundaries of the relevant product market delineate the products that are
good substitutes for one another and to which customers would turn should the price of
one product in the market rise. Often using a new supplier entails costs. For example,
transportation costs frequently limit the suppliers that customers can turn to should one
supplier increase prices. The geographic market encompasses the sources of supply (i.e.,
suppliers) that customers view as reasonably interchangeable. The geographic market
44
tracks the alternative suppliers that customers can reach out to for supply when faced
with price increases from one or more suppliers.54
94. Competition in a market depends on characteristics of both supply and demand, but
[m]arket definition focuses solely on demand substitution factors, i.e., on customers
ability and willingness to substitute away from one product to another in response to a
price increase or a corresponding non-price change such as a reduction in product quality
or service.55 Supply-side factors, such as entry and supply substitution, must also be
considered when analyzing market power. They are not part of the market definition
analysis, however.
B. The Hypothetical Monopolist Test
95. The standard method used to define markets is the hypothetical monopolist test. Under
this test, a relevant product market exists if a hypothetical profit-maximizing firm that is
the only present and future seller of the products in the candidate market could profitably
impose at least a small but significant and non-transitory increase in price (a SSNIP) on
at least one product in the market.56 A SSNIP is typically taken to be a price increase of
about 5%.57
96. To apply the hypothetical monopolist test to the product market, we define an initial
candidate market around a product or group of products. If the evidence indicates that a
5% price increase of that product would not be profitable because customers would shift
54
Horizontal Merger Guidelines, US Department of Justice and the Federal Trade Commission, August 19,
2010 (hereinafter HMG) at 4.2.1.
55
HMG at 4. Supply factors are important to the question of market power, but are considered separately
from market definition.
56
HMG at 4.1.1.
57
HMG at 4.1.2.
45
a large share of their purchases to competing products outside of the candidate market,
the candidate market is too small. In this circumstance, we add the next-best substitute
product to the candidate market and apply the hypothetical monopolist test again. The
process of adding increasingly distant substitutes to the candidate market continues until
the 5% SSNIP is profitable. This occurs when customers can no longer effectively
substitute their purchases to products outside of the candidate market. The smallest set of
products satisfying the hypothetical monopolist test defines the relevant product market.58
97. The hypothetical monopolist test is also used to determine the boundaries of the relevant
geographic market. The analysis begins with a candidate set of suppliers of the products
in the relevant product market. If a 5% price increase would not be profitable because
customers would turn to suppliers outside of the candidate market, the next-best
substitute supplier is added to the candidate market. This process continues until a 5%
SSNIP would be profitable because customers cannot substitute their purchases to
suppliers outside of the candidate market.
98. The hypothetical monopolist test ensures that a relevant market contains a sufficiently
large number of products and suppliers that it would be subject to market power if they
were under the control of a hypothetical monopolist. This means that the market includes
the substitute products and sources of supply that are good substitutes for the product
subject to a SSNIP. The products and suppliers outside of the market are not sufficiently
good substitutes to defeat the exercise of market power.
58
HMG at 4.1.1.
46
C. The Product and Geographic Markets for Attendance at MLS Soccer

Matches
99. MLSs product is a season-long series of competitive soccer matches in the context of
league competition that culminates in a championship series. Access to view the soccer
matches that constitute this product is sold in two separate markets. First, fans buy
tickets to watch the game live, usually at a home teams stadium. Second, MLS licenses
the right to broadcast its games to television networks, which broadcast games either
regionally or nationally. Buying a ticket to view a soccer game live at a stadium is not a
substitute for licensing the right to broadcast a soccer game for profit. Therefore, the
relevant markets that include these different sets of rights to view or broadcast soccer
matches must be analyzed separately.
1. The Relevant Product Market that Includes the Live Viewing of

Soccer
100. Attending a soccer match is a form of entertainment. To determine the boundaries of the
relevant product market, we must determine the other forms of entertainment that are
substitutes for attending a soccer match for the attendees of soccer matches.
101. Unfortunately, there is a limited amount of evidence on this point. Attending a soccer
match is a form of entertainment that exists in a marketplace with a wide array of
entertainment options. Figure 4 shows the relative popularity in terms of attendance of a
range of entertainment options based on the number of people who report engaging in the
activity. Professional soccer, as provided by MLS, is not among the most popular
entertainment options that are tracked.
47
Figure 4
Popularity of MLS v. Other Entertainment Options
Spring 2016 Spring 2017
90
80
70
60
Attendance/Visitors (Millions)
50
40
30
20
10
Source: Nielsen Scarborough 2017 USA+ Release 1 (Statista).
102. Assessing the boundaries of the relevant market for attending soccer matches requires
evaluating what other entertainment options soccer match attendees will substitute for
going to a soccer match. Soccer matches are attended by diehard fans who have season
tickets and attend every match, and by other fans with a much more casual attachment to
the game, such as a family which attends only a couple of matches a season. When
selling tickets it is generally not possible to charge more to the diehard fan than to the
more casually interested fan. Therefore, prices are set to attract the most profitable
number of casually interested fans, who are more willing to substitute to alternative forms
of entertainment in the face of a price increase.
103. The evidence on season-ticket sales and attendance shows that there are more-loosely
attached fans at games. Figure 5 shows MLS game attendance and the share of season
tickets sold by teams reporting season ticket sales. For each team, a significant share of
48
attendees buys tickets to single games. These soccer fans are more likely to substitute
other entertainment for soccer if the price of attending soccer matches rises.
Figure 5
Ratio of MLS Season Ticket Sales to Attendance
2017
50,000
64.2%
45,000
40,000
35,000
30,000
76.0% Season Tickets
71.9%
25,000
51.4%
72.5% 74.7%
53.6% 46.0% 60.0%
71.6%
20,000 74.6%
37.4% 59.9%
15,000
10,000
5,000
Note: Figure only includes teams that reported season ticket sales for 2017 in Sports Illustrateds "Behind the MLS Ambition Rankings" Series.
Attendance averages are as of October 10, 2017, and so do not reflect all regular season games in 2017.
Sources: League website; Sports Illustrated, "Behind the MLS Ambition Rankings" Series, March 3-6, 2017; ESPN club regular season statistics.
104. Evaluating the other forms of entertainment in the same market as attending an MLS
game depends on the viability of available alternatives, which may depend on the season,
weather, and other events, sporting and otherwise, that are scheduled around the same
time as an MLS game.59 Moreover, the hypothetical monopolist test indicates that the
question is whether a price increase would drive fans away in amounts that made the
price increase unprofitable. Even if a large number of fans were to substitute other
59
Rodney Fort, Sports Economics, Third Edition, (Boston: Prentice Hall, 2011) at page 21 (Changes in the
price of other entertainment alternatives also shift sports demand functions. All entertainment options can
be considered as alternative consumption possibilities, from opera to Little League.).
49
entertainment, thus rendering a price increase by an MLS team unprofitable, there is no
reason to believe that fans would all go to another sporting event, such as a Division II
soccer game. In fact, the people seeking alternative entertainment need not congregate at
any specific alternative event. Some may go to the movies and some may go to the beach,
and so forth. Thus, highly detailed information would be necessary to determine the
degree of substitutability of different forms of entertainment for attending a soccer game,
and that information is not available. For that I reason, I do not specify the boundaries of
a specific product market.60 Fortunately, the exact boundaries of the relevant product
market need not be determined because it is possible to put reasonable bounds on the
geographic markets for attending an MLS soccer game, which sufficiently determines the
scope of competition between MLS and NASL.
2. The Relevant Geographic Market for the Live Viewing of Soccer
105. We can assess the boundaries of the relevant geographic market for products that
compete with the live viewing of a soccer match. A fan who chooses not to go to a
soccer game and to engage in some other form of entertainment as the result of a 5%
increase in the price of attending the match is unlikely to travel outside of the
metropolitan area where the fan lives (and, for the most part, where the soccer match is
located) when choosing a substitute form of entertainment. This is apparent because a
typical MLS ticket costs about $40, which indicates that a 5% increase is about $2.61
Thus, fans may choose to consume less soccer during the season, but they are unlikely to
60
Professor Szymanski does not define a relevant product market containing attendance at a Division I soccer
game.
61
A fan may view the cost of a soccer match as the full cost of attending the match, which includes parking,
food, and possibly other purchases that are complementary to watching the match.
50
travel to another city for alternative entertainment as the result of a small but significant
non-transitory increase in the price of attending a soccer match.
106. This analysis implies that the relevant geographic market for attending a soccer match is
roughly the metropolitan area where the match is played, and possibly smaller, depending
on time of travel, tolls, and other factors. The implication of geographic markets being
localized in metropolitan areas is that there is virtually no competition in ticket sales for
fans between teams playing in different cities. Figure 6 is a map that shows the locations
of MLS teams. As can be seen in this figure, with the exception of New York City,
teams are generally located several hundred miles apart. Some fans may occasionally
travel to see a particular match, but few would travel between cities to avoid a small price
increase. This implies that MLS games do not generally compete with each other for fans
attending games.
Figure 6
MLS: Team Locations
51
107. Figure 7 is a map showing the locations of NASL teams. Like MLS teams, they are
located in cities that are typically hundreds of miles apart, indicating that NASLs teams
do not compete with each other for fans to attend matches. As it turns out, the potential
for competition between MLS and NASL for fans is quite limited as well. Figure 8 is a
map showing the current overlap of metropolitan areas where there is both an MLS team
and an NASL team. There are two metropolitan areas indicated on this map, the New
York area and the San Francisco Bay area.62 Thus, in their current forms, NASL is in a
position to compete for only a small share of MLSs fans for attendance at games.
Figure 7
NASL: Team Locations
62
Note that NASL has made it known to USSF the San Francisco team has not committed to return to the
NASL for 2018. See letter from NASL to USSF, August 15, 2017; see also Gulati Declaration at 208
and 215.
52
Figure 8
MLS and NASL: Common Team Locations
Note: San Francisco Bay Area includes San Jose, CA; New York Area includes Harrison and Montclair, NJ.
108. Even where teams are in the same larger metropolitan area, they may not draw from the
same fan base. Consider the New York City area, where the NASL Cosmos play in New
York (i.e., Brooklyn). The two local MLS teams, the Red Bulls and New York City
FC play in Harrison, NJ and New York City (i.e., the Bronx), respectively. There are
potential fans who live between these venues, but many fans may not see the venues (and
therefore the teams that play at them) as good substitutes. For example, soccer fans in
New Jersey may view attending a Cosmos game in Brooklyn as a poor substitute for
attending an MLS game in New Jersey. New York City residents may have the same
view with regard to substituting attendance at a match in New York City for a match in
New Jersey.
53
D. Competition between MLS and NASL for Attendance
109. Whether the New York MLS teams and the NASL Cosmos compete for fans to attend
games is not important to this analysis. Similarly, whether MLS teams have some degree
of market power in their metropolitan markets that includes the sale of access to MLS
matches is not relevant. No matter how market boundaries might be reasonably drawn,
there is very little competition between MLS and NASL for ticket sales because the clubs
in question potentially compete for fans in only two of the 22 cities in which MLS has
teams.
110. MLSs experience in New York also illustrates that large cities can accommodate more
than one successful soccer team. New York City FC plays its matches at Yankee
Stadium and drew on average 27,196 fans per game in 2016. The New York Red Bulls
play at Red Bull Arena, which has a capacity of 25,000, and drew about 20,620 fans per
game in 2016.63 Thus, the two teams in New York City are among the higher drawing
teams in the MLS despite being in the same city. To the extent soccer matches draw
some attendees elastically from other entertainment events, it is to be expected that
multiple teams can thrive in the same metropolitan area if they provide a high enough
quality of play to engage fans.
111. With NASLs planned expansion, direct competition between NASL and MLS teams
could increase. However, it is not clear whether the expansion teams are, in fact,
meaningful potential competition. I understand that there is limited information on the
backers and financing behind some of the NASL expansion teams. For example,
63
In contrast to the MLS teams, the New York Cosmos play in MCU Park, which has a capacity of 7,000,
and drew approximately 3,800 fans per game in 2016.
54
testimony indicates that the teams in Atlanta and Detroit have made little progress toward
actually joining the league. 64 Another potential new member, according to Professor
Szymanski, is Boston City FC,65 which appears to exist, but currently plays on a field at a
Catholic high school, which is likely to limit the competitive threat they pose to the New
England Revolution.66
112. In the Los Angeles area, the LA Galaxy plays in the StubHub Stadium in Carson, CA.
NASL plans for an expansion team, California United, to play in Titan Stadium on the
campus of California State University, Fullerton. The two stadiums are located
approximately 25 miles apart. Certainly some potential fans live between the two venues,
but the two venues potentially draw significantly from different catchment areas. Even if
not, the population of the greater Los Angeles area is quite large and can likely support
several professional soccer teams. In fact, MLS plans an expansion team in Los Angeles
with a soccer-specific stadium.67
113. Overall, there is very little competition between NASL teams and MLS teams for fans to
attend games as the result of the two leagues largely operating in different cities, and
NASLs expansion does not materially change this conclusion. Thus, the incentive for
USSF to discriminatorily apply the Professional League Standards against NASL would
not be expected to benefit MLSs ticket sales materially. In fact, it would not even affect
MLS or its teams in most metropolitan areas where they are located.
64
See the Gulati Declaration at 208, 213, and 215.
65
Szymanski Declaration at footnote 20.
66
Szymanski Declaration at footnote 20. See also Boston City FC at http://www.bostoncityfc.com/stadium,
67
See MLS at https://www.mlssoccer.com/topic/expansion, accessed on October 15, 2017 and LAFC at
https://lafc.com/stadium/, accessed on October 15, 2017.
55
114. As described below, Plaintiffs claims regarding USSFs incentive to discriminate against
NASL involves their relationship through SUM, which is responsible for both USSFs
and MLSs sponsorship, television, licensing and royalty revenues. SUM has nothing to
do with ticket revenues at MLS games. Thus, any purported market power in the sale of
tickets to view soccer competitions in MLS league matches in the metropolitan areas
discussed herein does not provide USSF an economic incentive to discriminate against
NASL in the application of the Professional League Standards.
115. Moreover, USSF has acted in ways that are inconsistent with the theory that it wants to
limit competition between MLS and NASL teams. For example, USSF has worked to
sustain the viability of the New York City Cosmos, an NASL team that operates in the
same greater metropolitan area as two MLS teams. If USSF could benefit by reducing
competition between NASL and MLS teams for fans attending games, USSF would not
have an interest in helping a team that potentially competes with MLS teams survive.68
As explained above, the failure of a professional soccer team or league, including NASL,
would be detrimental to USSFs goal of growing the popularity of soccer in the United
States.
E. The Relevant Markets for Broadcast Rights
116. Not all fans can attend soccer matches in person. To reach more soccer fans, MLS
licenses the rights to broadcast its games to television networks. Determining the
boundaries of the relevant product market that includes the broadcast rights to MLS
matches requires a brief review of the economics of commercial-supported television
networks.
68
Gulati Declaration at 180-185, 200, and 217.
56
1. Television Networks and the Demand for Content
117. Television networks obtain the rights to programming either by licensing programming
or creating it themselves. Networks broadcast the programming they license to television
viewers. Advertising-supported networks do not earn revenue directly from television
viewers, however. Instead, networks charge advertisers a fee to place their commercials
in the shows that the networks broadcast. This means that a television networks demand
for programming is directly the result of advertisers willingness to pay to insert
advertisements in the programming. It is the advertisers that pay the bills at advertising-
supported networks, and the advertisers that are the primary customers of the network,
not the viewers. In fact, the viewers attention is the product that television networks
sell to their advertisers.
118. Advertisers place commercials in programs that television networks broadcast in order to
influence television viewers to buy their products. The amount that advertisers are
willing to pay to place a commercial spot in a program depends on the number and
characteristics of viewers the advertiser can reach by advertising in that program.
Programming that draws more viewers in the advertisers target demographic is more
valuable to the advertiser than other programming. Advertisers goal is to have as many
viewers in their target audience as possible view their ads at the lowest possible cost.
They do not care if the audience is reached through soccer programming, other sports
programming, or some other type of show altogether. Thus, advertisers substitute one
type of programming for another as they assemble a portfolio of ad placements.69
69
This is fundamental to advertising: In order to measure the relative cost efficiency of a media vehicle or a
media schedule, you can calculate how much audience each media vehicle delivers for the money.
Calculating cost efficiency allows the buyer to select media vehicles that deliver the most audience for the
57
2. MLS Matches Compete in a Broad Programming Market
119. The value of a license to broadcast MLS games depends on the number and
characteristics of the viewers it will attract. Networks sell their viewers attention to
advertisers, but advertisers simply want to reach their viewers at the lowest possible cost.
Therefore, if a hypothetical monopolist network that controls all MLS programming
attempted to raise advertising rates, advertisers would simply shift their advertisements to
other networks programming that gave them access to their target demographic groups at
competitive rates.
120. The implication of the analysis above is that MLS competes in a broad market with many
other types of programming when licensing the rights to broadcast its games. This result
follows from the willingness of advertisers to switch among programs to reach their
target audiences as inexpensively as possible and the ability of networks to turn to other
programming if MLS demands an above-competitive price for the rights to broadcast its
matches. The relevant geographic market encompasses the sources of supply of
programming that compete with MLS programming. Thus, the geographic market must
be at least as large as the United States.
F. Market Power in the Market in which MLS Licenses Broadcasters
121. Clearly, if a license to broadcast MLS matches does not allow a broadcaster to charge
above-competitive rates to advertisers, the network will not pay an above-competitive
rate for a license for MLS matches, even if it must compete with other networks for the
MLS license. The economic reasoning is clear: rather than pay an above-competitive
money. Along with audience and impact, cost also plays and important role in the return on investment
of different options. Planners and buyers want to get the most communication possible for their money.
Ronald Geskey, Media Planning & Buying in the 21st Century, 2011, at pages 166-167.
58
price to MLS to broadcast its programming, any network considering broadcasting MLS
games would turn to some other source of programming. Advertisers would be willing to
advertise during this alternative programming, paying based on the audience the
programming generates.
122. There is little doubt that MLS represents a very small share of the programming on
television and even a very small share of the sports programming on television. Figure 9
shows that MLS television viewership has been growing. However, as shown in Figure
10, MLSs television viewership is quite small compared to the viewership of the four
traditional sports in the United States. Notably, soccer viewership is only 8.5% of
football viewership in 2017 and soccer is only 3.5% of all sports viewership in 2017.
Figure 9
MLS TV Viewership
14
12
10
8
Viewers (Millions)
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Note: Annual numbers represent the number of people that watched a league event on US broadcast TV within the last twelve months.
59
Figure 10
TV Viewership by League
160
140
120
100
Viewers (Millions)
80
60
40
20
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
NFL MLB NBA NHL MLS
Note: Annual numbers represent the number of people that watched a league event on US broadcast TV within the last twelve months.
123. Figure 11 shows the total national broadcast rights revenue for the four major US sports
and soccer (including MLS and certain games for the Mens and Womens US National
Teams combined). This figure reflects the value of the advertising that broadcasters earn
from televising games of the different leagues because competition among broadcasters
will lead them to pass through their advertising revenue, with the broadcasters retaining
enough revenue to earn a competitive return on their investments. Soccers income from
national television licensing deals is $90 million per year. In contrast, the NFL earns
more than $7 billion, or more than 75 times the value of soccers broadcast rights. In fact,
the licensing revenue earned by soccer is less than 1% of the licensing revenue earned by
the other sports combined. This result demonstrates that soccers share of advertising,
even when limited to advertising on sports television, is extremely small. Figure 11
shows the broadcast revenue for all soccer programming.
60
Figure 11
Revenue from National Broadcast Rights
Average Annual Value (in billions)
$7.01
DISH
DirecTV
Univision
Rogers (Canada)
Turner
NBC
CBS
$2.60 Fox
ABC/ESPN
$1.65
$0.60
$0.09
NFL NBA MLB NHL Soccer

Note: MLB also has a deal with Rogers (Canada) that is not included in this data because terms of the deal were not publicly released.
Sources: "How Much Do the NFL and TV Partners Make a Year?," Outkick the Coverage, Mar 1,2017; "NBA to announce 9-year, $24 billion
TV deal with ESPN, Turner", SB Nation, Oct 5, 2014; "Baseball Scores $12 Billion In Television Deals," Forbes, Oct 2, 2012; "The NHL's New
Broadcast Deal With Rogers Communications Signals Canadian Team Expansion," Forbes, Nov 26, 2013; "MLS, U.S. Soccer officially
announce new TV deal with ESPN, Fox, Univision," Philly.com, Dec 13, 2015; Rogers adds baseball TV rights to hockey with wide-ranging
MLB deal, The Toronto Star, January 9, 2014; How The Deal Between DISH and MLB Helps Pave The Way For In-Market Streaming,
Forbes, April 1, 2015.
124. MLSs very small share of advertising revenue implies that it could not benefit by
withdrawing games from broadcasters to attempt to raise soccers advertising revenue
and thus increase the license fees from broadcasters to MLS. If the price of advertising
on an MLS broadcast is above the competitive level based on its viewership, an
advertiser would simply move its advertisements to another program. Broadcasters will
not pay more for programming than they expect to earn from it, which implies that the
license fees MLS can negotiate will reflect the competitive advertising rates that
broadcasters earn when airing MLS matches.
61
G. The Contract between USSF and SUM Does Not Transfer Money from MLS
to USSF as Plaintiff Alleges
125. Plaintiff asserts that USSF and MLS have a direct economic link because USSF has a
contract with SUM to license USSFs soccer properties.70 Plaintiff claims this contract
creates a powerful economic incentive for the USSF to protect MLSs monopoly
position as the sole mens top-tier Division I league located in the U.S. and Canada.71
This is a key component of Plaintiffs theory of anticompetitive harm. However, the
contract Plaintiff asserts is the source of USSFs anticompetitive motives does not
provide the incentives Plaintiff asserts.
126. USSFs contract with SUM would create an economic incentive for USSF to favor MLS
over NASL only if USSF received increased amounts of money under the terms of its
contract with SUM when SUM increased its revenue from licensing MLS soccer
properties. I understand that this is not the case. Payments to USSF under its contract
with SUM depend on the revenue SUM generates selling USSFs soccer properties
only.72 USSF does not receive higher payments from SUM in the event that MLS makes
more money from its licensing of television broadcasts or other MLS properties.
127. If USSF cannot share in the benefits of MLSs purported market power, USSF has no
economic incentive to do anything to enhance or extend MLSs market power. This is
particularly the case because the exercise of market power would entail withholding
soccer from fans, which is contrary to USSFs goal to expand soccer in the United States.
70
Complaint at 105.
71
Complaint at 105.
72
See also the US Soccer/SUM Licensing Agent Agreement (especially at the defined terms Soccer
Properties, Licensed Marks, Player Rights, and Marketing Opportunities in the agreement).
62
H. Plaintiffs Theory of Anticompetitive Harm Is Unfounded
128. Analysis of the markets in which MLS sells the rights to view soccer matches shows that
the USSF could not confer market power on MLS. As described above, MLS and NASL
both have teams in only two metropolitan markets where soccer fans could potentially
substitute attendance at an NASL game for attendance at an MLS game, or vice versa.
Moreover, there is no claim that USSF benefits from increased revenue from MLS ticket
sales.
129. The market in which MLS licenses broadcasts of MLS matches is broad because
advertisers have alternatives for reaching their target demographic groups, and television
networks can find other programming options to substitute for MLS programming if
MLS demands license fees that are above-competitive levels. MLS has a very small
share of the programming market. Given MLSs small share, USSF cannot confer
market power on MLS in the market for licensing content by discriminating against
NASL. Moreover, even if MLS were to gain from reduced competition with NASL in
the market for television content, USSFs contract with SUM does not provide for
additional payments to USSF in that circumstance.73 Thus, the anticompetitive economic
motivation that Plaintiff claims to have identified as influencing USSFs application of
the Professional League Standards does not exist.
130. If USSF has no anticompetitive economic incentive to discriminate against NASL in
favor of MLS, USSFs enforcement of its Professional League Standards must be based
on other incentives. My analysis shows that the Professional League Standards are
procompetitive because they promote investment and protect the public goods
73
See also US Soccer/SUM Licensing Agent Agreement (see 6 of the agreement).
63
surrounding soccer in the United States. Thus, the Professional League Standards are
consistent with USSFs stated mission to grow soccer in the United States and require no
alternative explanation.
VIII. Analysis of Professor Szymanskis Economic Analysis
131. Below, I address some of the errors in Professor Szymanskis analysis of competition in
the relevant market that contains league-based professional mens soccer competition.
My fundamental conclusions are that Professor Szymanski mischaracterizes the
incentives created by SUMs representation of USSFs soccer properties and that
Professor Szymanski has not analyzed the correct relevant market to reliably evaluate
whether MLS has market power. As a result, Professor Szymanski has no basis to assert
that USSF has an economic incentive to favor MLS over NASL. Similarly, his analysis
provides no foundation for his conclusion that MLS has market power in the relevant
markets pertinent to the injunction sought by Plaintiff.74
A. Professor Szymanskis Analysis of the Financial and Professional

Connections between USSF and MSL
132. Professor Szymanski begins his analysis by describing the relationship between USSF,
SUM, and MLS. He asserts that the close relationship between MLS, SUM, and USSF
represent a significant conflict of interest for USSF[,] in part as the result of Don
Garbers serving as Commissioner of MLS, CEO of SUM and sitting on the governing
council of USSF.75 I understand that USSF has retained an expert on governance who
74
I disagree with many aspects of Professor Szymanskis analysis. Below, I address some of the serious
flaws in his economic analysis. My work in this matter, however, is at an early stage, and I do not address
each of my disagreements with Professor Szymanski. I will update my review of Professor Szymanskis
economic analysis as appropriate and as my work in this matter progresses.
75
64
will address whether USSF has instituted procedures that protect against conflicts of
interest. I restrict my analysis to the economic incentives that Professor Szymanski
claims to have identified.
133. Professor Szymanski insinuates that USSFs relationship with SUM, which operates as a
subsidiary of MLS, 76 creates conflicts of interest that may lead USSF to discriminate
against NASL. SUM manages MLSs soccer properties, such as licensing matches to
television networks, lining up sponsorships, licensing MLS trademarks, and so forth.77 In
2004, IMG, which had previously been USSFs marketing agency, indicated it was no
longer interested in serving in that capacity.78 In addition, USSF had not been getting the
kind of sponsorship results it sought from the soccer properties controlled by the
Federation. Over time, SUM was able to negotiate an agreement that USSF found more
acceptable. According to Mr. Gulati, SUM proposed an arrangement to the USSF that
would guarantee a substantial annual minimum amount of marketing revenue with
additional upside if SUM exceeded certain revenue generation milestones. 79 USSF
receives 70% of the revenue above the thresholds.80 The guaranteed component was
particularly attractive to the USSF because it provided a measure of financial certainty
and security which would allow the USSF to better plan for the future growth and
76
See Bloomberg at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=58275017,
77
MLS Digital Properties and Soccer United Marketing, MLS, at https://www.mlssoccer.com/advertise/,
accessed on October 9, 2017; MLS seeks to buy back stake from Providence, Sports Business Daily, at
http://www.sportsbusinessdaily.com/Journal/Issues/2016/04/18/Finance/MLS-Providence.aspx, accessed
on October 9, 2017.
78
79
80
US Soccer/SUM Licensing Agent Agreement at 6.
65
development of the sport knowing that it had a guaranteed stream of revenue for the life
of the agreement.81 This agreement was entered into in 2004 and has since been updated
and amended.82 Mr. Gulati indicates that negotiations for the contract were held at arms
length.83
134. Professor Szymanskis analysis of the contract appears generally consistent with mine.84
He recognizes that SUM must make a minimum payment to USSF and that USSF and
SUM share in revenue above certain thresholds based on a 70/30 split, with 70% going to
USSF. However, Professor Szymanski goes on to describe that after SUM pays USSF
what its contract specifies, SUM distributes the remaining profits to its MLS majority
shareholders.85 Professor Szymanski asserts that the profits from SUM explain why the
MLS franchise fee is $150 million despite MLSs being a loss-making entity. Professor
Szymanski implies that the franchise fee includes an interest in SUM. He concludes that
the apparent importance of SUM to the value of a stake in MLS suggests that MLS
owners profit from SUM and properties that ultimately belong to USSF.86
135. Of course, Professor Szymanskis conclusion that it is MLS that benefits from USSF
soccer properties completely undermines Plaintiffs assertion that USSF has an economic
incentive to favor MLS and disfavor NASL. For USSF to have an economic incentive to
favor MLS and disfavor NASL, USSF must benefit financially from doing so that is,
81
82
US Soccer/SUM Licensing Agent Agreement at 6.
83
84
85
86
66
USSF must gain from the increased value of MLSs soccer properties that result from
MLSs purported increased market power flowing from USSFs discriminatory conduct.
Professor Szymanski finds the opposite. Rather than finding that USSF shares in the
value of MLS soccer properties, Professor Szymanski finds that MLS is siphoning off the
value of USSF soccer properties to the benefit of MLS owners.
136. Of course, if USSF does not benefit economically from its purported efforts to enhance
and maintain MLSs alleged market power, Plaintiff and Professor Szymanskis theory of
anticompetitive harm falls apart.
B. Professor Szymanski Does Not Analyze the Correct Relevant Market
137. Professor Szymanski undertakes to define the relevant market in which MLS is purported
to have market power. However, Professor Szymanski analyzes the wrong market and
adduces evidence regarding the scope of competition and the existence of market power
that are not economically pertinent to relevant market analysis. His analysis does not
even address the question of market power in the licensing of television broadcasts,
which is the alleged source of USSFs incentive to favor MLS and disfavor NASL. With
no reliable relevant market analysis, Professor Szymanskis conclusions regarding market
power are economically baseless.
1. Professor Szymanskis Analysis of the Relevant Market Teams and

Team Owners
138. Professor Szymanski attempts to define the relevant markets for (1) top-tier mens
professional soccer leagues located in the US and Canada, and (2) second-tier mens
professional soccer leagues located in the US and Canada.87 After stating the relevant
87
67
markets, Professor Szymanski correctly defines the next task, which is to identify the set
of products that are most likely to be close competitive substitutes for the relevant
product.88 Professor Szymanski, however, does not properly identify the product that
a soccer league sells.
139. Professor Szymanski recognizes that teams sell tickets, concessions, sponsorships,
television rights, etc.89 He also recognizes that there is a distinction between league-
based competition and ad hoc competition.90 These facts clearly indicate that MLS sells
soccer competition in the form of a season of league-based matches. For the most part,
MLS earns revenue by selling tickets to matches, licensing television broadcasts, and
attracting sponsors. 91 However, without meaningful explanation, Professor Szymanski
does not address the scope of the markets in which he recognizes leagues and their teams
earn the bulk of their revenue or that Plaintiff identifies in the complaint. This is a
fundamental error.
140. Rather than define the relevant markets for ticket sales, licenses to broadcasts, and
sponsorships, Professor Szymanski focuses his analysis on the services that leagues
provide to teams and their owners. Professor Szymanski asserts MLS is currently a
monopoly supplier of top-tier professional mens soccer leagues in the US and Canada.
88
89
90
91
The Complaint also identifies these product markets. Complaint at 38 (The customers in the markets for
top-tier and second-tier professional soccer leagues located in the U.S. and Canada are fans who purchase
tickets or licensed merchandise of the leagues, sponsors who purchase the reputational, promotional and
other benefits of association with the leagues and their clubs, and broadcasters who obtain the rights to
distribute games.).
68
Demand for these services comes from teams/owners/promoters wishing to play in these
forms of season-long league based competitions.92
141. Professor Szymanskis market definition analysis addresses the price of buying teams in
different leagues and the question of whether buying an NASL team is a substitute for
buying an expansion MLS team.93 Based on the large difference in the price of buying an
MLS expansion team and buying an NASL team, Professor Szymanski asserts that the
two teams are not in the same market for the wealthy owners who might consider buying
a professional soccer team. Professor Szymanski also addresses whether the prices of
teams in other leagues would constrain the price of an MLS team. He concludes without
evidence that [f]or would-be owners, a change in the franchise price for a major (or
minor) league baseball, basketball, football, or hockey team is unlikely to have a
substantial effect on prices for soccer teams.94
142. Professor Szymanskis analysis is completely backwards. If we assume that sports team
owners are profit-maximizing business people, the value of sports teams are driven by the
value of their expected discounted cash flows. Thus, if more people become interested in
soccer as the quality of play in the United States rises, and there is no change in the
popularity of other sports, the value of soccer teams will rise relative to the value of other
teams. There would be no substitution by owners of soccer teams to owning other sports
teams. It is simply the case that soccer is now generating more revenue and cash flow
and that the investment value of the teams has risen relative to other teams.
92
Szymanski Declaration at 37 (emphasis added).
93
Szymanski Declaration at 42-43.
94
69
143. As an analogy, when the price of Ford stock rises because the market realizes that it has a
new successful model of pickup truck, we do not expect investors to substitute to other
stocks. The value of Ford has increased because of factors specific to Ford that make
investors believe it will generate greater cash flow in the future, warranting the increase
in its share price. Given investors expectations, they do not substitute to other
investments because of the price increase of Fords stock. Ford has become more
attractive to own as the result of its improved prospects, and investors hold it at the
higher price.
144. It is impossible to determine whether a league has market power by examining the value
of its teams. Soccer teams will increase in value as they draw more fans to games and as
their television license fees rise as the result of increased TV viewership. In this
framework, increasing team values reflect the increased quality of the product and the
increased fans that it draws. In any event, it is not possible to distinguish between high
team prices that result from market power or high team prices that result from selling a
high-quality product that consumers want to buy. Market power is in no way a
prerequisite for sports team prices or the value of any business to be high.95
95
Szymanski compares MLS expansion team fees to NASL expansion fees. This analysis cannot discern
whether MLS expansion fees reflect the expected income associated with high-quality soccer or whether
they reflect asserted market power in the markets for tickets, broadcast licenses, and sponsorships.
Professor Szymanski has also asserted that the price of an MLS expansion franchise is high because MLS
siphons money off of USSF through SUM. Szymanski at 19. Professor Szymanski cannot distinguish
among the possible causes of high MLS expansion fees. Thus, he has no basis to assert that MLS team
prices are high as the result of market power rather than some other reason.
70
2. Professor Szymanskis Analysis of Whether Fans View Attending

Events of Different Sports as Substitutes
145. Professor Szymanski reviews the literature on addressing whether fans see different
sports as being direct substitutes for each other.96 He recognizes that this literature does
not address the question of whether would-be sports franchise owners see buying teams
in other sports as a substitute for buying a soccer team, but asserts that this literature
addresses a related question.
146. Professor Szymanski does not describe why the literature on fan substitution is related to
the question of whether sports team owners view owning teams in different sports as
substitutes. It is possible that if fans were to stop watching one sport and instead started
watching another, team values in the first sport would fall and team values in the second
sport, which was gaining fans, would rise. This, however, does not tell us anything about
whether would-be team owners view teams from different sports as substitutes. Instead,
this example shows that team prices reflect the net present value of the cash flow they
generate. In short, fan substitution tells us nothing about owner substitution. Moreover,
owners willingness to substitute their uncommitted investment dollars among
investments, even sports investments, is not economically relevant to assessing whether
MLS has market power.
147. The literature on fan substitution of one sport for another generally finds that when fans
cannot attend one sporting event, such as during the National Hockey League (NHL)
lockout, they do not appear to substitute en masse to other sports.97 For example, during
96
97
For a discussion of this literature see Jason Winfree, Fan substitution and market definition in professional
sports leagues, The Antitrust Bulletin, Vol. 54, No. 4, Winter 2009.
71
the NHL lockout, NBA teams and minor league hockey teams experienced relatively
minor increases in attendance. This suggests that different sports, including professional
hockey at a lower level than the NHL, were not the primary substitutes for NHL hockey
fans.98
148. The study of the effect of the NHL lockout on fan substitution between sports does not
provide clear answers on where fans go when a change in price or quality leads them to
choose not to attend a sporting event. When unable to attend one sporting event, fans
seem not to congregate at other sporting events occurring at approximately the same time.
Of course, this implies that the fans must be doing something other than attending a
sporting event, which the study of NHL attendance explicitly does not address.99 The
people substituting away from attending hockey games appear to have substituted some
type of non-sport entertainment. Thus, the study of the NHL lockout is consistent with
substitution by sports fans to a broad group of alternative activities.
149. Based on the finding in the limited literature addressing the substitution of fans between
live sporting events, Professor Szymanski concludes that a would-be hypothetical
monopolist of either top-tier or second-tier mens professional soccer would be able to
98
Daniel Rascher, Matthew Brown, Mark Nagel, and Chad McEvoy, Where did National Hockey League
fans go during the 2004-2005 lockout? An analysis of economic competition between leagues,
International Journal of Sport Management and Marketing, 2009, at page 186.
99
Daniel Rascher, Matthew Brown, Mark Nagel, and Chad McEvoy, Where did National Hockey League
fans go during the 2004-2005 lockout? An analysis of economic competition between leagues,
International Journal of Sport Management and Marketing, 2009, at page 186. (Of course, this does not
include all of the possibilities for a sport competing with non-sports forms of entertainment (e.g., movies,
the beach). This paper addresses competition for live in-person attendance between the same sport at
different levels of competition and different sports at the same level of competition.)
72
impose a price increase without fear of losing profit from substitution away by would-be
owners to other non-soccer entertainment options.100
150. This conclusion is irrelevant to the present inquiry and economically unfounded.
a) Professor Szymanski focuses on the wrong market. MLS primarily earns revenue by
selling tickets to fans attending matches and by selling broadcast rights and
sponsorships. These are the markets that must be evaluated for market power, not the
market for teams sold to would-be owners who could readily deploy their investment
dollars elsewhere.
b) Sports leagues in general, and MLS in particular, do not primarily profit by selling
expansion franchises. Expansions are relatively rare and have costs for leagues and
the owners of the other teams in the league. Moreover, there is no scope to exercise
market power over well-informed, sophisticated investors considering buying sports
teams with their uncommitted investment funds.
c) A lack of fan substitution does not alter the above conclusion. Team prices reflect the
expected net present value of cash flow that the team will generate. If a league
increased the price of an expansion franchise above the value of the expected net
present value of cash flow, prospective owners would not buy the team as an
investment. Raising the price of a team to a potential owner has no effect on fans, all
else equal.
d) High team prices are economically uninformative about market power. Elsewhere in
his report, Professor Szymanski asserts that the price of an MLS expansion franchise
100
73
is high because MLS siphons money off of USSF through SUM. Thus, he has no
basis to assert that MLS team prices are high as the result of market power rather than
some other reason.
e) Professor Szymanski is not consistent in his economic analysis of market power. If
MLS has market power in the market for ownership of top-tier soccer teams, MLS
must be withholding teams from the market in order to elevate their prices. When
criticizing USSFs standard requiring Division II leagues to have a minimum number
of teams, Professor Szymanski asserts that [l]eagues have a natural incentive to
expand if profitable opportunities exist.101 If Professor Szymanski believes leagues
naturally expand to fill profitable opportunities, he has no basis to assert that MLS is
withholding teams from the market by failing to expand. If MLS has no incentive to
withhold teams from owners, MLS is not exercising market power.
151. For the reasons stated above, I find that Professor Szymanskis analysis of the relevant
market is economically misguided. Having defined the wrong relevant market, Professor
Szymanskis analysis is incapable of addressing whether USSF and MLS have market
power in any market for viewing or licensing mens soccer competitions in the United
States and Canada.
C. Professor Szymanski Has No Basis to Assert that USSF and MLS Have
Market Power in This Relevant Market
152. Professor Szymanski asserts that the alleged conspirators have market power in this
relevant market.102 Presumably this relevant market is the market for teams sold to
101
102
74
would-be owners. This conclusion is economically baseless. First, one of the asserted
conspirators, USSF, does not participate in the market for selling expansion franchises
to would-be soccer team owners. Thus, USSF cannot have market power in the market
for soccer league services to team owners.
153. Second, the value of a soccer team equals the expected net present value of its cash flow.
No investor will pay more than this amount for the team as an investment. Thus, there is
no ability to extract monopoly prices from investors seeking to buy sports teams, as long
as the investors invest based on standard investment principles.
154. Third, Professor Szymanski asserts monopoly power is the power to control prices or
exclude competition. 103 MLSs alleged market power is not the mechanism of
exclusion that Plaintiff or Professor Szymanski asserts. Rather, Plaintiff and Professor
Szymanski assert that it is USSF that has excluded NASL from competing in the top tier
of professional soccer in the United States and now threatens to exclude NASL from the
second tier of US soccer.104 USSFs asserted power to exclude has nothing to do with
market power in either the market that Professor Szymanski defined or the relevant
markets I have defined. Rather, the asserted exclusion results from USSFs application
of the Professional League Standards.
155. In Professor Szymanskis economic framework, MLSs market power serves only as the
economic payoff to USSF for discriminating against NASL to the benefit of MLS. As
noted previously, Professor Szymanski does not assert to have found a financial
relationship between USSF and MLS that benefits USSF as MLS increases revenues.
103
104
75
Rather, Professor Szymanski identifies a relationship in which MLS is asserted to be
siphoning money off of USSFs soccer properties to enhance its bottom line rather than
the other way around. 105 Such a financial relationship cannot serve as the economic
motive for USSF to discriminate against NASL.
D. Professor Szymanskis Conclusions Regarding the Professional League

Standards Are Economically Unfounded
156. Professor Szymanski asserts that the Professional League Standards are financial,
administrative and technical conditions that are unrelated to the competitive outcome
of on-field competition. As a result, the hierarchy imposed by the Professional League
Standards is inherently artificial and anti-competitive. 106 Professor Szymanski
concludes there is no valid procompetitive justification for divisional structure as
implemented by USSF. 107 This conclusion is economically unfounded and, in some
cases, contradicted by Professor Szymanskis own testimony.
a) Contrary to his assertion above, Professor Szymanski recognizes elsewhere that the
USSF may have a legitimate interest in promoting rules that benefit consumers,
improve quality, increase output, and ensure competition.108 As described above,
the Professional League Standards provide teams and leagues with incentives to
invest in the sport of soccer (expanding output) and are reasonably related to the
success of the league and the quality of competition it produces for fans. Professor
Szymanskis testimony indicates that any questions about the Professional League
105
Szymanski Declaration at 19 (This suggests that MLS owners profit from SUM and properties that
ultimately belong to USSF.).
106
107
Szymanski at 6.1.
108
76
Standards are at most questions of degree, not whether the standards can serve
procompetitive ends.
b) One of the Professional League Standards requires that teams have some degree of
national coverage based on the number of time zones in which they have teams in the
continental United States. Professor Szymanski asserts that the regulation of time
zone coverage also makes little economic sense.109 Elsewhere, however, Professor
Szymanski recognizes that a growing footprint can be attractive to broadcasters who
seek to reach television audiences. Thus, Professor Szymanski explicitly recognizes
that a league with national coverage has greater appeal than a regional league.110
Thus, Professor Szymanski contradicts his assertion that time zone coverage is not a
reasonable measure of the success and appeal of a league. Moreover, Professor
Szymanskis comparisons to leagues in countries with a single time zone are
obviously uninformative. Professor Szymanski also fails to recognize that the four
major US sports with which soccer competes for sports fan interest are present in all
four continental US time zones (see Figure 3B).
c) Professor Szymanski asserts that the Professional League Standard covering the
number of teams in a league is unlikely to be procompetitive. Such a conclusion
seems not to recognize that the requirement to have more teams provides a direct
incentive for leagues to expand output. However, once again, Professor Szymanski
contradicts himself. Professor Szymanski asserts that league competition is different
from one-off games in ways that matter to fans, such as season-to-season competition
109
110
77
with a stable league membership, rankings, and championships.111 Clearly league
competition requires some minimum number of teams and fans are likely to want to
attend more games if there is a wider variety of visiting teams. Thus, greater numbers
of teams, at least to some point, will tend to increase fan interest within Professor
Szymanskis theory of the differences between league competition and one-off games.
d) Professor Szymanskis report provides direct evidence of USSFs procompetitive
incentives underlying the Professional League Standards. Professor Szymanski
describes that as early as 1975, the USSF had Professional League Standards that
required professional leagues to maintain sufficient geographic coverage and
maintain at least eight teams in competition. Clearly, the USSF saw the benefits of
standards even when professional soccer in the United States was in its infancy. The
early use of standards indicates that they were motivated by USSFs goal of
increasing the popularity of soccer rather than as a means of anticompetitive
discrimination.
e) Similarly, by the time the 1995 Professional League Standards were promulgated,
MLS was selected as the vehicle for building a national Division I soccer league.112
The standards at that time would have established targets for MLS to hit or maintain
rather than serving any exclusionary or anticompetitive purpose. The next application
111
112
Oral Testimony of Sunil Gulati, Iain Fraser, et al, Plaintiffs, vs. Major League Soccer, LLC, Defendants,
United States District Court of Massachusetts, October 5, 2000 at pages 1636-1637 and 1747; Oral
Testimony of Sunil Gulati, Iain Fraser, et al, Plaintiffs, vs. Major League Soccer, LLC, Defendants, United
States District Court of Massachusetts, October 11, 2000 at pages 1952-1953; Oral Testimony of Alan
Rothenberg, Iain Fraser, et al, Plaintiffs, vs. Major League Soccer, LLC, Defendants, United States District
Court of Massachusetts, October 30, 2000 at pages 3418-3422.
78
for Division I status did not occur until NASLs request in 2015.113 The long history
of Professional League Standards prior to any claims that they are anticompetitive
undermines Professor Szymanskis conclusion that they have no procompetitive value
and are unrelated to a leagues success and fans perception of the league.
f) With regard to stadium size, Professor Szymanski recognizes that NASLs current
teams meet the Professional League Standards Division II requirement that stadiums
seat 5,000 spectators.114 Yet, Professor Szymanski seems to find that the presence of
teams with small stadiums in various European leagues calls USSFs stadium-size
regulations into question. However, Professor Szymanski appears to ignore the fact
that other professional soccer leagues, and entities that oversee other sports, mandate
minimum stadium sizes in a manner consistent with USSF. For example regulations
covering stadium size are seen in other professional soccer leagues, including the J
League in Japan and the Liga Nacional de Ftbol Profesional in Spain, both of which
set minimum capacities of 15,000 for their Division I teams. These two leagues also
have seating capacity requirements of 10,000 and 6,000, respectively, for their
Division II teams. 115 In addition, other prominent soccer organizations require a
minimum number of stadium seats in order to host a championship match. 116
Furthermore, league regulations on minimum seating capacity in stadiums are also
113
Gulati Declaration at 65 and 133-137.
114
115
See Japan Football Association Stadium Guideline at https://www.jfa.jp/documents/pdf/basic/07/01.pdf,
accessed on October 10, 2017; Reglamento General de la Liga Nacional de Ftbol Profesional, La Liga,
2016, at http://files.proyectoclubes.com/alaves/201507/03161522reglamento-lfp.pdf, accessed on October
10, 2017.
116
For example, UEFA and FIFA require minimum seating accommodations of 8,000 and 30,000 for major
international matches. See UEFA Stadium Infrastructure Regulations, 2010 Edition; FIFA Football
Stadiums: Technical recommendations and requirements, 5th Edition.
79
observed in professional and college sports in the United States. For example, the
NFL set a minimum seating capacity of 70,000 for all NFL stadiums built in the
1970s onwards, and the NCAA sets an average attendance requirement of 15,000 for
all Football Bowl Subdivision teams.117
157. Professor Szymanskis testimony shows that the Professional League Standards have
procompetitive benefits and are associated with league success and stability and fans
perceptions of a league. Moreover, Professor Szymanskis analysis does not provide a
basis for his universal condemnation of the Professional League Standards.
1. Promotion and Relegation Are Not Needed to Justify Assigning

Leagues to Divisions
158. Professor Szymanski asserts that without promotion and relegation, there is no
procompetitive basis to impose a divisional structure. Professor Szymanski bases this
conclusion, in part, on comparisons to soccer leagues in countries where the membership
in the top-tier leagues is based on promotion and relegation rather than on professional
league standards. According to Professor Szymanski, some of these leagues play at a
higher level than MLS and have greater popularity, but would not meet some of USSFs
Professional League Standards.
159. As described above, the Professional League Standards provide incentives for leagues to
expand output, encourage investment in and promotion of soccer, and are related to
league characteristics that influence fans perception of the league. Thus, they are
procompetitive rather than anticompetitive. Claims that the Professional League
117
See Judith Long, Public/Private Partnerships for Major League Sports Facilities, 2013; Divisional
Differences and the History of Multidivision Classification, NCAA, at http://www.ncaa.org/about/who-
we-are/membership/divisional-differences-and-history-multidivision-classification, accessed on October 10,
2017.
80
Standards are not perfectly related to some aspects of team performance do not make
them misleading or anticompetitive. This is particularly the case where, as Professor
Szymanski finds for professional sports, it is very easy for fans to gain experience and
realize product quality quickly.118
160. International comparisons are also not helpful for assessing the competitive effects of
USSFs Professional League Standards. There is no doubt that the Professional League
Standards are specific to the United States, its geography, the current popularity of soccer
in the United States, and so forth. USSFs promotion of soccer in the United States faces
different obstacles than the promotion of soccer in Europe, where it is the most popular
sport in most countries, and has been so for many decades.
161. The Professional League Standards must also be evaluated based on the environment in
which they were first promulgated. The first Professional League Standards of the
specificity of the current standards were enacted in 1995. The 1995 Professional League
Standards were developed as MLS was getting off the ground. Launching MLS required
billions of dollars of investment.119 The original MLS team owners would have been less
willing to invest if they believed that the league would not be financially stable and if
they did not believe they would share in the leagues success. Thus, at the time MLS was
launched the owners would have been less willing to invest had promotion and relegation
been part of the long-term plan for the league. To the extent that establishing divisional
118
Szymanski Declaration at 67. See also Szymanski Declaration at 84 (The primary interest for fans in
any sports league is the quality of play on the field. By its nature, information on this aspect of the leagues
is widely collected and disseminated and easily available from a variety of media outlets that can be feely
accessed.)
119
81
standards on objective criteria rather than on promotion and relegation increased
investment in MLS, the current system should be viewed as procompetitive.
2. Division III Leagues Have Found Success
162. Professor Szymanski asserts that designating NASL as a Division III league will
negatively affect NASL because some owners are unwilling to support a Division III
league. The evidence shows that Division III leagues can grow and succeed.
163. Professor Szymanski acknowledges that fans can easily ascertain on-field product
quality,120 and observation tells us it is nearly universal that games including compelling
teams (e.g., one or both consistently demonstrating a top quality of play, winning
championships, having world-class players, etc.) generate significant fan interest. I have
reviewed data on attendance at games in MLS, NASL and USL and find that NASL and
USL have reported comparable average attendance figures over the past year, with NASL
attendance figures being slightly higher for the prior two years. Figure 12 shows average
reported attendance for NASL and USL for the years 2015-2017. As this figure shows,
NASL drew nearly 6,000 fans per game, on average, across the league in 2015, more than
4,700 in 2016, and more than 4,300 in 2017. Over this same time period, USL drew
more than 3,300 fans per game, on average, across the league in 2015, more than 3,400 in
2016, and about 4,300 in 2017.
120
Szymanski Declaration at 67. See also Szymanski Declaration at 84.
82
Figure 12
Average Attendance at USL and NASL Games
7,000
6,000 5,912
5,000 4,749
4,365 4,325
4,000
3,370 3,439
3,000
2,000
1,000
0
2015 2016 2017
NASL USL
Note: 2017 averages are as of October 9, 2017, and so do not reflect all regular season games.
Sources: ESPN NASL regular season statistics; ESPN USL regular season statistics; USL Total Attendance Soars by 33 Percent in 2016, USL,
Sep 28, 2016; NASL Annual Reports, 2014 and 2015.
164. These attendance figures provide an indication that, to at least some degree, teams in
NASL and USL draw comparable numbers of fans to the live games they play.
Something more than the designation of Division II or Division III must influence
the ability of these teams to draw fans to their matches. Economic reasoning can provide
insight, because, in the case at hand, on-field skill at playing the game of soccer is not the
only high-quality attribute of relevance. It is clear that those investing in professional
soccer teams have economic interests in long-term stability of the league(s) in which they
operate. This is important for our analysis because fundamental to this dispute is the
assertion that a Division III designation will seriously undermine the ability of NASL to
compete with MLS and USL.121
121
Complaint at 52 and Szymanski Declaration at 130.
83
165. I have investigated the marketplace outcomes of teams operating in both NASL and USL.
I began this examination with USL, and, as can be seen in Figure 13, USL currently
includes 30 clubs, spanning the entire United States.
Figure 13
USL: Team Locations
166. USL did not always include 30 clubs, and examining the history of the league makes it
clear that a Division III designation in and of itself is not harmful to a leagues ability to
compete and grow. After playing as part of Division II in 2010, USL became a Division
III league in 2011, and remained Division III through the end of the 2016 season.122 As
Figure 14 shows, the league more than doubled in size during its time in Division III,
from 12 teams in 2011 to 29 teams in 2016 (three teams joined in 2017, one folded, and
one moved down to the Premier Development League (PDL), leaving USL with 30
122
USL was part of Division II in 2010. See Division 2 Professional League to Operate in 2010, USSF, at
http://www.ussoccer.com/stories/2014/03/17/12/20/division-2-professional-league-to-operate-in-2010,
accessed on October 9, 2017; and was in Division III each year 2011-2016. See USSF Annual General
Meeting, years 2012-2014 and 2016.
84
teams).123 In addition to significantly growing the number of teams in the league despite
its Division III status, USL has also managed to retain a large number of teams from their
first season onwards: Figure 14 indicates that of the 36 teams that joined USL at any
point in the 2011-2016 period, 75% remained in the league from the start of their first
season through the end of the 2016 season.
Figure 14
USL Team History
2011 Present
Antigua Barracuda FC 2011 - 2013
Charleston Battery 2011 - Present
Charlotte Eagles 2011 - 2014
Dayton Dutch Lions 2011 - 2014
FC New York 2011
Harrisburg City Islanders 2011 - Present
Orange County SC 2011 - Present
Orlando City FC 2011 - 2014
Pittsburgh Riverhounds 2011 - Present
Richmond Kickers 2011 - Present
Rochester Rhinos 2011 - Present
Wilmington Hammerheads FC 2011 - 2016
Phoenix Rising FC 2013 - Present
VSI Tampa Bay FC 2013
Current Teams
LA Galaxy II 2014 - Present
OKC Energy FC 2014 - Present Joined MLS
Sacramento Republic FC 2014 - Present
Austin Aztex 2015 Joined PDL
Charlotte Independence 2015 - Present
Colorado Springs Switchbacks FC 2015 - Present
FC Montreal 2015 - 2016
Folded
Louisville City FC 2015 - Present
New York Red Bulls II 2015 - Present
Portland Timbers 2 2015 - Present
Real Monarchs SLC 2015 - Present
Saint Louis FC 2015 - Present
Seattle Sounders FC 2 2015 - Present
Toronto FC II 2015 - Present
Tulsa Roughnecks FC 2015 - Present
Vancouver Whitecaps FC 2 2015 - Present
Bethlehem Steel FC 2016 - Present
FC Cincinnati 2016 - Present
Orlando City B 2016 - Present
Rio Grande Valley FC Toros 2016 - Present
San Antonio FC 2016 - Present
Swope Park Rangers 2016 - Present
Ottawa Fury FC 2017 - Present
Reno 1868 FC 2017 - Present
Tampa Bay Rowdies 2017 - Present
2011 2012 2013 2014 2015 2016 2017 2018
Note: Puerto Rico United, River Plate Puerto Rico, and Sevilla FC Puerto Rico not shown - teams removed from USL on May 10, 2011 due to
financial difficulties.
Sources: United Soccer League, Transfermarkt,; Austin pro soccer franchise will roll in 2019 in 5,000 seat COTA venue, American
Statesman, August 9, 2017; Charlotte Eagles to Participate in Premier Development League in 2015, Charlotte Eagles, 2014; Major League
Soccer names Orlando City SC as 21st franchise, set for 2015 debut, MLS, November 19, 2013; Dayton Dynamo Look to Tap Into Ohios
Soccer Renaissance with Downtown Stadium Move, Midfield Press, December 2016; Montreal Impact associates with Ottawa Fury FC in the
USL, MLS, December 9, 2016; USL Pro Announces Discontinuation of FC New York, Empire of Soccer, November 1, 2012; Wilmington
Hammerheads FC Awarded PDL Franchise, USL PDL, September 19, 2016; USL Pro to see teams fold; MLS to field squads; new team
partnership, ODFC News, November 17, 2013.
123
I do note that a number of these teams are owned by, or affiliated with, MLS clubs.
85
167. This general stability and growth of USL for the duration of its Division III status can be
contrasted with that of NASL through its tenure as Division II league. NASL began as a
Division II league in 2011,124 and as Figure 15 shows, NASLs inaugural season included
eight teams. Through the end of the 2017 season, NASL still consisted of eight teams.
While the count of teams in NASL fluctuated from year to year, the league was able to
show no sustained growth over the entire period it maintained Division II status.
Furthermore, of the 17 teams that joined NASL at any point between 2011 and 2017,
only eight remained in the league from the start of their first season through the end of
the 2017 season, a retention rate of less than 50%.
124
Note that in its Application for Membership to United States Soccer Federation in 2010 (2010 NASL
Application), NASL embraced the organizational structure of soccer that USSF was overseeing in the
United States (The league has established itself based upon the following fundamental principles:
Commitment to developing a strong second division soccer league in the United States, which will
complement the first division and will contribute to building the sport at the grassroots level; [D]evelop
an infrastructure to fuel the growth of the game at the second division level 2010 NASL Application at
page 1; This included application of USSFs Professional League Standards (The League complies with
all of the USSF Professional League Standards for a Division II Mens Outdoor League (the Standards).
Set forth herein is a demonstration that the League will comply with each of the Standards that apply at the
league level.) 2010 NASL Application at page 4; see also the following discussion of each of the
Standards at pages 4-5.
86
Figure 15
NASL Team History
2011 Present
Atlanta Silverbacks 2011 - 2015
FC Edmonton 2011 - Present
Fort Lauderdale Strikers 2011 - 2016
Minnesota United FC 2011 - 2016
Montreal Impact 2011
North Carolina FC 2011 - Present Current Teams

Puerto Rico Islanders 2011 - 2012 Joined MLS
Tampa Bay Rowdies 2011 - 2016
Joined USL
San Antonio Scorpions 2012 - 2015
Joined NPSL
New York Cosmos 2013 - Present
Folded
Indy Eleven 2014 - Present
Legal Issues
Ottawa Fury FC 2014 - 2016
Jacksonville Armada FC 2015 - Present
Miami FC 2016 - Present
Puerto Rico FC 2016 - Present
Rayo OKC 2016
San Francisco Deltas 2017 - Present
2011 2012 2013 2014 2015 2016 2017 2018
Sources: Standings, NASL; NASL Suspends Operation of Atlanta Silverbacks, NASL, Jan 11, 2016; Fort Lauderdale Strikers Begin New
Chapter with Bill Edwards Acquisition, The Florida Squeeze, June 20, 2017; Minnesota United FC to join MLS in 2017, debuting at TCF Bank
Stadium, MLS, August 19, 2016; Passionate Montreal named as 19th MLS City, MLS, May 7, 2010; USL Announces Addition of Ottawa
Fury FC, USL, October 25, 2016; Tambalea el futuro de los Islanders, Primera Hora, August 19, 2013; NASL to open 2017 season with eight
clubs, NewsOK, January 6, 2017; NASL Releases Statement on San Antonio Scorpions, NASL, December 22, 2015; USL Expands with
Additions of Tampa Bay Rowdies, Ottawa Fury FC, USL, October 25, 2016.
168. Additionally, as indicated in both Figures 14 and 15, both USL and NASL have seen
teams move across leagues in both directions (i.e., moving up to MLS or down to lower
developmental leagues). Two teams (Minnesota United FC and Montreal Impact) from
NASL, and one (Orlando City FC) from USL, have moved up to join MLS in Division I.
In the other direction, the Atlanta Silverbacks moved from NASL to the National Premier
Soccer League (NPSL), and the Charlotte Eagles, Dayton Dutch Lions, and
Wilmington Hammerheads FC (all from USL) moved to PDL.
169. Comparison of the history of the success of USL and NASL illustrates that the
designation of a league as Division II or Division III does not determine the success (or
87
lack thereof) of the league itself or of its member teams. The histories of the USL and
NASL also call into question Plaintiffs claim that NASL has been injured by its
designation as a Division II league under the Professional League Standards. There is no
economic basis to find that NASLs loss of teams over the last several years is the result
of its Division II status because there was no change in NASLs divisional designation to
negatively impact NASL. Some other cause is needed to explain NASLs fall from
contending for Division I status to now failing to meet the standards for Division II.
E. Procompetitive Justifications for Professional League Standards
170. USSF has long had Professional League Standards, and those of relevance here were in
place starting in about 1995, with occasional updates since that time. Thus, USSF has
found that setting league standards promotes soccer in the United States since before
there were or even could be plausible claims that the standards had anticompetitive
effects. In fact, when NASL applied for Division II status in 2010, it explicitly
recognized USSFs authority to have Professional League Standards and to assign
leagues to divisions based on them.125 These factors indicate that USSFs Professional
League Standards have procompetitive effects. USSF would have no reason to
promulgate them when it did if USSF did not anticipate they would make soccer a more
stable and popular sport in the United States. Moreover, NASL asserts that the
Professional League Standards have no procompetitive basis after experiencing a
sustained period of disappointing growth relative to other leagues. Moreover, Professor
Szymanski has not identified an economic connection between USSF and MLS that
would give USSF an economic interest in conferring alleged market power on MLS,
125
2010 NASL Application at pages 1 and 4-5.
88
particularly at the expense of failing to fulfill its mission of promoting soccer in the
United States.
171. Professor Szymanskis claim that he has been unable to identify any procompetitive
benefit that might hypothetically offset the competitive harm caused by the USSF
Standards is inconsistent with his description of circumstances in which market outcomes
can be improved by regulation.126 One such circumstance involves externalities (effects
on parties that are not considered when taking an action based on ones own costs and
benefits), and another involves public goods (goods which are non-excludable in the
sense that there is no way to keep people from using or consuming them, usually without
payment).127
172. Sports leagues offer many examples of externalities and public goods that need to be
managed. Within leagues, teams make decisions about locations, the quality of team to
field, and many other decisions that affect other teams in the league. If a team makes
these decisions with an eye toward maximizing its own profits, the effects on other teams
are externalities that need to be managed. USSFs mission is to make soccer a more
popular sport in the United States. USSF invests heavily in the US National teams,
which create substantial interest in soccer, invests in youth soccer to build interest in the
sport and recruit young athletes, trains referees, and so forth. These investments create
public goods and USSF cannot keep soccer organizations from taking advantage of them.
Many entities interested in soccer, including for-profit soccer leagues, are able to take
advantage of the publics interest in soccer, are able to employ young athletes trained by
126
127
89
USSF, and draw upon the most-talented coaches and referees trained at USSFs expense
rather than their own. They benefit from these resources in a way that contributes to their
bottom lines.
173. These considerations indicate that USSF has an interest in being sure that the public
goods it creates are used to their best effect. In particular, USSF has an interest in
defining what a top-quality soccer experience entails in the United States and ensuring
that the top-tier leagues and teams are financially sound. The USSF has an interest in the
financial viability of leagues and teams because the failure of a prominent league,
particularly one that was designated as Division I, would reflect badly on soccer and
suggest to potential fans that the quality of soccer in the United States is poor and not
worth their time.
174. Professor Szymanski is simply incorrect that there are no reasons for USSF to promulgate
Professional League Standards. As described above, his testimony regarding the benefits
of a broad league footprint and the important characteristics of league play directly
contradict his assertion that the Professional League Standards serve no procompetitive
ends.
I declare under penalty of perjury that the foregoing is true and correct.
Executed October 16, 2017, at Boston, Massachusetts.
__ _
Steven R. Peterson
90
Appendix A: Curriculum Vitae

APPENDIX A
CURRICULUM VITAE
Steven R. Peterson, Ph.D.
OFFICE: Compass Lexecon

200 State Street
9th Floor
Boston, MA 02109
(617) 520-0200 main
(617) 520-0217 direct
speterson@compasslexecon.com
PROFESSIONAL EXPERIENCE
Compass Lexecon
Boston, MA
Executive Vice President, April 2013 present
Senior Vice President, January 2006 March 2013
Managing Director, August 1999 December 2005
The Economics Resource Group, Inc.

Senior Economist, 1992 July 1999
Economist, 1990 1992
Northeastern University, Boston, MA

Adjunct Faculty, 2011-2017
Harvard University, Cambridge, MA

Teaching Fellow, 1989 1990
EDUCATION
Harvard University, Cambridge, MA

Ph.D. in Economics, 1992
Dissertation: Strategic Aspects of Litigation and Settlement
University of California, Davis

A.B., Economics, 1987, Highest Honors
TESTIMONY AND CONSULTING EXPERIENCE

Radio Music License Committee
In an Arbitration before the Hon. Vaughn Walker, Kenneth R. Feinberg, Esq., and
Lee A. Freeman, Jr., Esq. between: SESAC, Inc., SESAC, LLC, and SESAC
Holdings, Inc., Claimants v. Radio Music License Committee, Respondent, Expert
Report (December 23, 2016). Reply Expert Report (January 23, 2017). Hearing
Testimony (February 23 and March 10, 2017).

Radio Music License Committee v. Global Music Rights, LLC. in the United
States District Court for the Eastern District of Pennsylvania. Declaration
(November 18, 2016). Declaration (July 21, 2017).

Sanum Investments Limited
In an Arbitration Under the Rules of the Singapore International Arbitration
Centre between: Sanum Investment Limited, Claimant, versus ST Group Co., Ltd.,
Sithat Xaysoulivong, S.T. Vegas Co., Ltd., S.T. Vegas Enterprise Ltd., Xaya
Construction Co., Ltd. and Xaysana Xaysoulivong, Respondents, Witness
Statement, with Joseph P. Kalt and Eric Henson (April 20, 2016).
National Association of Broadcasters and Pandora Media, Inc.

In re: Determination of Royalty Rates and terms for Ephemeral Recording and
Digital Performance of Sound Recordings, before the United States Copyright
Royalty Judges, Library of Congress. Expert Report (February 23, 2015),
Deposition Testimony (March 24, 2015), Hearing Testimony (May 14, 2015).
National Association of Broadcasters

In re: Antitrust Consent Decree Review: American Society of Composers, Authors
and Publishers/Broadcast Music, Inc. Comments on Behalf of the National
Association of Broadcasters (August 6, 2014).
Leidos, Inc.
United States of America v. Leidos, Inc., in the United States District Court for the
District of Columbia. Expert Report (March 28, 2014).

Radio Music License Committee v. SESAC, Inc., SESAC, LLC, and SESAC
Holdings, Inc. in the United States District Court for the Eastern District of
Pennsylvania. Declaration (November 14, 2013). Deposition (December 4,
2013). Trial Testimony (December 10, 2013).
BJs Wholesale Club, Inc.

Irene Cappalli v. BJs Wholesale Club Inc. in the United States District Court,
District of Rhode Island. Expert Report (March 15, 2012). Deposition (April 27,
2012). Declaration (February 12, 2013).
National Marine Fisheries Service

Consultant to National Marine Fisheries Service on market power and excessive-
share limits in the Surf Clam and Ocean Quahog fisheries (2010 2011).
Energy Intensive Manufacturers Working Group

Coalition for Responsible Regulation, Inc. et al. v. United States Environmental
Protection Agency, in the United States Court of Appeals for the District of
Columbia Circuit. Declaration (September 14, 2010).
Amex Construction Company, Inc.

ExxonMobil Oil Corporation v. Amex Construction Company, Inc., in the United
States District Court, Northern District of Illinois, Eastern Division. Expert Report
(February 15, 2010). Deposition (March 2, 2010).
Delta Air Lines, Inc.

Consultant to Delta Air Lines on LaGuardia/Reagan National Airport slot swap
with U.S. Airways (2009 2010).
Imperial Credit Industries, Inc.

In re: Imperial Credit Industries, Inc., in the United States Bankruptcy Court,
Central District of California, Santa Ana Division. Rebuttal Report (April 27,
2007). Trial Testimony (May 22, 2008).
Delta Air Lines, Inc.

Consultant to Delta Air Lines on Delta-Northwest merger (2007 October 2008).
Greater Lakeside Corporation

The Higbee Company v. Greater Lakeside Corporation, Causeway LLC of
Delaware, Broadway Management Corporation, and Jeffrey Feil, in the United
States District Court for the Eastern District of Louisiana. Expert Report
(September 18, 2007). Supplemental Expert Report (September 25, 2007).
Deposition (October 19, 2007).
TransCanada Corporation
Consultant to TransCanada Corporation on acquisition of ANR Group (2007).
Exxon Mobil Corporation

JAAM, Inc., d/b/a Tigerland Exxon v. Exxon Mobil Corporation and Mon Valley
Petroleum, Inc., in the United States District Court for the Western District of
Pennsylvania. Expert Report (January 12, 2007).
Finova Capital
In Re: Finova Capital Corporation and Finova Mezzanine Capital, Inc., in the
United States Bankruptcy Court for the District of Delaware. Expert Report (May
19, 2006). Deposition (August 2, 2006).
Volvo Cars of North America, Inc.

Bay Ridge Volvo American, Inc. et al. v. Volvo Cars of North America, Inc., in the
United States District Court Southern District of New York. Expert Report (June
1, 2005). Deposition (August 17, 2005). Supplemental Expert Report (November
11, 2005).
Israel Electric Corporation, Ltd.

Israel Electric Corporation Ltd. vs. the Public Utilities Authority, the Minister of
National Infrastructures, the Minister of Finance, the Israel Securities Authority
and the Government Corporations Authority (Request for Injunction): In the
Israeli Supreme Court, No. /04, August 2004. Statement (August 30, 2004), with
Joseph P. Kalt and Paul B. Vasington.
Flying J, Inc.
Flying J, Inc. v. Comdata Network, Inc., in the United States District Court of
Utah (Northern Division). Declaration (June 22, 2004). Damages Report (June 22,
2004). Deposition (October 6, 2004). Hearing Testimony (November 19, 2004).
Musicmatch, Inc.
Gracenote, Inc. v. Musicmatch Inc., In the United States District Court Northern
District of California (Oakland Division). Expert Report (February 17, 2004).
Declaration (February 24, 2004). Deposition (March 2004).
Monica Pappas, Bill DeVitt, and Monica Pappas Associates

The Healthcare Financial Group, Inc., v. Monica Pappas DeVitt et al., in the
District Court, Arapahoe County, Colorado. Filed written expert testimony on
lost-profits damages (February 2003).
Ticketmaster Corporation
Evaluated damages from asserted anti-competitive conduct (2003).
Amoco Production Company, Amerada Hess Corporation, and Shell Western E&P, Inc.
Assessed fair market value of CO2 for payment of royalties. Analyzed issues of
market structure of CO2 industry and marketability of CO2 at the well (2002).
American Airlines
Conducted analysis of market structure, capacity additions, and pricing in an
antitrust suit asserting predatory conduct (2001).
For a Mutual Insurance Company

Conducted market research and performed benchmarking analyses to establish
pricing approach and prices for new internet services (2000).
Bass Enterprises Production Company

Assessed fair market rental value of oil-bearing property temporarily taken by the
federal government (2000).
Boeing Company
Filed declaration of behalf of Boeing Company (Delta Launch Services, Inc.) for
a NASA administrative proceeding regarding release of contract information
under the Freedom of Information Act (2000).
Honeywell, Inc.
Conducted study of damages arising from monopolization in the market for ring
laser gyroscope inertial navigation systems. Conducted analysis of damages
arising from patent infringement (1998).
British Airways, Plc.

Conducted study of the competitive effects of British Airways proposed alliance
with American Airlines. Advised on and assisted with presentations before the
European Commission (1998).
HarperCollins Publishers
Brother Records, Inc., et al., v. HarperCollins Pub. Inc., et. al. Filed written
expert testimony on damages in libel litigation (December 1997).
Northeast Utilities
Before the Federal Energy Regulatory Commission, OA97-237-000, ER 97-1079-
000, and EC97-35-000. Conducted analysis of competition in the New England
generation market. Filed affidavit in support of NUs Answer to Requests to
Reject or Condition Approval of Market-Based Rates (with Frank A. Felder) (July
1997).
McDonnell Douglas Corporation

McDonnell Douglas Corporation v. National Aeronautics and Space
Administration, in the U.S. District Court for the District of Columbia.Filed
affidavit describing how the public release of cost and price information affects
negotiations and competition in markets for launch services (November 1996).
Pennzoil
Before the Federal Energy Regulatory Commission, Docket No, IS95-35-000.
Provided written direct testimony (October 1996) and oral testimony (January
1997) on the cost of capital of oil pipeline facilities.
Pennzoil
Before the Federal Energy Regulatory Commission, Docket No. IS94-37-000 and
Docket No. IS 94-23-000. Provided written direct testimony (April 1995) and oral
testimony (November 1995).
BP Exploration (Alaska) Inc.

Modeled the costs and benefits associated with increased enhanced oil recovery
activities within the Prudhoe Bay Unit (1995).
Case 1:17-cv-05495-MKB-ST Document 26-6 Filed 10/16/17 Page 100 of 114 PageID #:
1816

Burlington Northern Industries-Santa Fe Pacific Corporation

Performed cost-benefit analysis of the proposed Burlington Northern/Santa Fe
merger. Analyzed the benefits accruing to shippers from expanded single-line
service (1994 1995).
PUBLICATIONS AND RESEARCH
Using Economics to Identify Common Impact in Antitrust Class Certification,

American Bar Association, Section of Antitrust Law, Economics Committee Newsletter,
Vol. 11, No. 1, Spring 2011 (with Andrew Lemon).
Rigorous Analysis to Bridge the Inference Gap in Class Certification (with Andrew
Lemon), Journal of Competition Law and Economics, March 2011.
Oil Price Volatility and Speculation (with Kenneth Grant), The Energy Daily, August
25, 2009.
Understanding Todays Crude Oil and Product Markets (with Kenneth Grant and
David Ownby), American Petroleum Institute, 2006.
Understanding Natural Gas Markets (with Charles Augustine and Bob Broxson),
American Petroleum Institute, 2006.
Regulatory Failure in the California Electricity Crisis (with Charles Augustine), The
Electricity Journal, August/September 2003.
Market Power Analysis in a Dynamic Electric Power Industry (with F. Felder), The
Electricity Journal, April 1997.
Testing the Merits of Providing Customized Risk Management (with Frank A. Felder
and Sarah E. Tobiason), 17th Annual North American Conference of the United States
Association for Energy Economics, International Association for Energy Economics,
October 1996.
Competition Between Regulators and Venue Shopping by Natural Gas Pipelines in

California (with Joseph P. Kalt), 14th Annual Conference of the Advanced Workshop in
Regulation and Public Utility Economics, May 1995.
Environmental Regulation and International Competitiveness: What Does the Evidence

Tell Us? (with Adam B. Jaffe, Paul R. Portney, and Robert N. Stavins), Journal of
Economic Literature, Vol. 33, March 1995.
Implementation of the Core of a Two Person Exchange Economy without Integer

Games or Refinements of Nash Equilibrium (with Simon Grant, Stephen King, and Ben
Polak), Economics Letters, 1992.
1817

OTHER REPORTS AND PRESENTATIONS
The Economic Impact of Delta Air Lines Seattle Expansion, (with Bryan Keating).
August 14, 2015.
Antitrust Analysis of Aftermarkets, American Bar Association, Section of Antitrust,

2010 Spring Meeting (with Edward Schwartz and Paula Render).
Do Environmental Regulations Impair Competitiveness? A Critical Review of

Economic Studies (with Barry Galef and Kenneth Grant). Prepared by ICF Consulting
Group and The Economics Resource Group, Inc., for the Office of Policy Analysis and
Review, Office of Air and Radiation, U.S. Environmental Protection Agency, September
1995.
Indexing Natural Gas Pipeline Rates (with Amy B. Candell, Joseph P. Kalt, Sheila M.
Lyons, and Stephen Makowka). Explored indexing as a form of Incentive regulation for
natural gas pipelines and created the Pipeline Producer Price Index that could be used to
implement indexing proposals. The Economics Resource Group, Inc., April 1995.
Environmental Regulations and the Competitiveness of U.S. Industry (with A. Jaffe, P.

Portney and R. Stavins), U.S. Department of Commerce, Economics and Statistics
Administration, Washington, DC, NTIS No. PB-93-193514, July 1993.
HONORS AND AWARDS
Jacob K. Javits Fellow, Harvard University, 1987 1991
Phi Beta Kappa, University of California, Davis, 1987

1818

Appendix B: Materials Considered

1819

Appendix B: Materials Considered

Legal Filings
1. Complaint, North American Soccer League, LLC, Plaintiff, against United States
Soccer Federation, Inc., Defendant, United States District Court Eastern District
of New York, September 19, 2017;
2. Memorandum of Law in Support of Plaintiffs Motion for a Preliminary Injunction,
North American Soccer League, LLC, Plaintiff, against United States Soccer
Federation, Inc., Defendant, United States District Court Eastern District of New
York, September 20, 2017;
Testimony
3. Oral Testimony of Sunil Gulati, Iain Fraser, et al, Plaintiffs, vs. Major League Soccer,
LLC, Defendants, United States District Court of Massachusetts, October 5, 2000;
4. Oral Testimony of Sunil Gulati, Iain Fraser, et al, Plaintiffs, vs. Major League Soccer,
LLC, Defendants, United States District Court of Massachusetts, October 11,
2000;
5. Oral Testimony of Alan Rothenberg, Iain Fraser, et al, Plaintiffs, vs. Major League
Soccer, LLC, Defendants, United States District Court of Massachusetts, October
30, 2000;
6. Oral Testimony of Alan Rothenberg, Iain Fraser, et al, Plaintiffs, vs. Major League
Soccer, LLC, Defendants, United States District Court of Massachusetts,
November 3, 2000;
Declarations and Expert Reports
7. Expert Declaration of Stefan Szymanski, North American Soccer League, LLC,
Plaintiff, against United States Soccer Federation, Inc., Defendant, United States
District Court Eastern District of New York, September 20, 2017;
8. Declaration of Sunil Gulati, North American Soccer League, LLC, Plaintiff, against
United States Soccer Federation, Inc., Defendant, United States District Court
Eastern District of New York, October 16, 2017;
9. Written evidence submitted by Professor Stefan Szymanski, House of Commons
Football Governance Culture, Media, and Sport Committee, July 29, 2011;
United States Soccer Federation Documents
10. Bylaws of the United States Soccer Federation, May 1, 2017;
11. Bylaws of the United States Soccer Federation, September 1, 2016;
12. USSF Audited Financial Statements, Years ended March 31, 2016 and 2015;
13. USSF Audited Financial Statements, Years ended March 31, 2015 and 2014;
14. US Soccer/SUM Licensing Agent Agreement;
15. US Soccer Mens Professional Outdoor League Standards, adopted May 21, 1995;
16. US Soccer Mens Professional Outdoor League Standards, adopted April 20, 1996;
1820

17. US Soccer Womens Professional Outdoor League Standards, adopted July 17, 1997;
18. US Soccer Indoor Soccer Professional League Standards, adopted February 12, 2000;
19. United States Soccer Federation Professional League Standards, adopted 2008;
20. United States Soccer Federation Professional League Standards, adopted August 9,
2010;
21. United States Soccer Federation Professional League Standards, adopted May 29,
2012;
22. United States Soccer Federation Professional League Standards, adopted February 28,
2014;
23. United States Soccer Federation Professional League Standards, proposed changes
2015;
24. United States Soccer Federation Board of Directors Meeting Minutes: June 15, 2008;
September 24, 2008; November 22, 2008; February 5, 2010; February 17, 2013;
June 1, 2013; October 11, 2013; December 8, 2013; February 28, 2014; June 1,
2014; October 10, 2014; December 7, 2014; February 13, 2015; May 31, 2015;
July 5, 2015; September 8, 2015; December 6, 2015; January 13, 2016; March 8,
2016; April 28, 2016; May 19, 2016; June 26, 2016; September 23, 2016; October
5, 2016; December 6, 2016; February 9, 2017; March 3, 2017; June 8, 2017; July
26, 2017;
25. US Soccer Board of Directors Meeting Presentation, September 8, 2015;
26. National Council Meeting Draft Minutes: June 2, 2013; March 1, 2014;
27. NASL Compliance with Pro League Standards (Division II Outdoor Mens League)
11/2011, 2012 application;
28. NWSL Proposed Teams Compliance with Pro League Standards (Division I Outdoor
Womens League) 7/2014, application for 2015;
29. NASL Compliance with Pro League Standards (Division II Outdoor Mens League),
application for 2010;
30. USL Compliance with Pro League Standards (Division II Outdoor Mens League),
application for 2010;
31. US Soccer Federation 2000 Strategic Business Plan, Phase I August 2000;
32. US Soccer Federation 2000 Strategic Business Plan, Phase II October 2000;
33. US Soccer Federation Phase III Business Plan, May 11, 2002;
34. US Soccer Federation Phase IV Business Plan, November 2003;
35. Bylaws of the United States Soccer Federation, 2016-2017;
36. Bylaws of the United States Soccer Federation, 2017-2018;
37. United States Soccer Federation Policy Manual, 2000-2001;
1821

40. Policy Amendments Passed by USSF Board of Directors Since Last National Council
Meeting, March 10, 2017;
42. United States Soccer Federation Policy Concerning Conflicts of Interest and Business
Ethics;
43. US Soccer Federation 2011 Annual General Meeting Booklet;
Soccer United Marketing Contracts
48. Official Sponsor Agreement between Soccer United Marketing and Allstate Insurance
Company, January 1, 2001;
49. Letter Agreement from SUM to Anheuser-Busch, February 16, 2011;
50. Official Sponsor Agreement between Soccer United Marketing and AT&T Services,
April 8, 2013;
51. Official Sponsor Agreement between Soccer United Marketing and BP Lubricants
USA, January 1, 2012;
52. Official Sponsor Agreement between Soccer United Marketing and Brown-Forman
Corporation, January 1, 2011;
53. Official Sponsor Agreement between Soccer United Marketing and The Coca-Cola
Company, January 1, 2015;
54. Official Sponsor Agreement between Soccer United Marketing and Continental Tire
The Americas, January 1, 2013;
55. Official Sponsor Agreement between Soccer United Marketing and Johnson &
Johnson Consumer Companies, December 1, 2014;
56. Official Sponsor Agreement between Soccer United Marketing and Panasonic
Corporation of North America, October 4, 2011;
57. Official Sponsor Agreement between Soccer United Marketing and Nike, October 22,
1997;
58. Letter of Agreement from SUM to Pepsi-Cola, January 3, 2012;
59. Official Sponsor Agreement between Soccer United Marketing and Tag Heuer,
branch of LVMH Swiss Manufactures SA, March 2016;
60. Official Sponsor Agreement between Soccer United Marketing and VISA, 2011;
61. Letter of Agreement from ESPN to SUM, August 4, 2006;
62. Memorandum of Understanding between SUM and USSF and ESPN, May 2, 2014;
63. Memorandum of Understanding between SUM and USSF and FOX, May 2, 2014;
1822

64. Memorandum of Understanding between SUM and USSF and Univision, May 2,
2014;
65. Memorandum of Understanding between SUM and NBCUniversal Media, August 10,
2011;
66. Television Rights Agreement between SUM and Univision, August 2006;
National American Soccer League Documents
67. NASL Annual Report 2012;
69. NASL Team Financials 2013;
70. NASL Team Financials 2014;
72. NASL Club Financials 2015;
75. NASL Update to USSF Pro League Standards Task Force, NASL presentation,
December 5, 2015;
76. NASL Application for Division I, for 2016 season, May 2015;
77. NASL Application for Division II for 2011 season;
78. 2015 NASL Non-domestic Players
79. Certificates of NASL Team Holdings, 2009;
80. Certificate of Formation of NASL, 2009;
81. NASL Team Questionnaires, 2010 for Carolina Railhawks, FC Edmonton, Miami FC,
Montreal Impact, Puerto Rico Islanders, FC Tampa Bay Rowdies;
82. NASL Team Compliance Matrix, 2010;
83. NASL Appendum to Application for Membership to United States Soccer Federation,
for 2011 season;
United Soccer League Documents
84. USL Waivers Requested Update 2016;
85. USL Supplement to USSF Annual Report, December 9, 2009;
86. USL PRO 2012 USSF Annual Report;
87. USL PRO 2013 USSF Annual Report;
88. USL PRO Compliance Summary (Post-Season 2012);
89. USL PRO Compliance Summary (Post-Season 2013);
90. USL PRO 2012 League Status Presentation, prepared for US Soccer Federation;
91. USL PRO Prospectus, 2013;
1823

92. USSF Division II Sanctioning Application, USL, September 3, 2015;

93. USSF Annual Report, USL, November 20, 2015;
Major League Soccer Documents
94. MLS Response to United States Soccer Federation Professional League Standards,
2012;
95. MLS Annual Report to US Soccer, December 2013;
96. MLS Annual Report to US Soccer, November 20, 2015;
2013;
2015;
99. Major League Soccer 101, June 2017;
Documents from Other Soccer Organizations
100. Alterations in the Articles since January 1912, FIFA, May 24, 1924;
101. Statutes, Regulations, Standing Orders of the FIFA, 1958;
102. FIFA Statutes, April 2016 edition;
103. Bylaws of the United States Olympic Committee, March 9, 2017;
104. UEFA Stadium Infrastructure Regulations, 2010 Edition;
105. FIFA Football Stadiums: Technical recommendations and requirements, 5th Edition;
106. Japan Football Association Stadium Guideline, J-League, 2010;
107. Reglamento General de la Liga Nacional de Ftbol Profesional, La Liga, 2016;
108. Letter from FIFA to Alan Rothenberg, April 13, 1993;
109. English Football League Membership Criteria;
110. Asian Football Confederation Stadium Regulations;
United States Soccer Federation Correspondence
111. Letter from NASL to USSF, May 31, 2015;
112. Letter from NASL to USSF, August 15, 2017;
Academic Literature
113. Franklin Fisher, Christopher Maxwell, and Evan Schouten, The Economics of
Sports Leagues and the Relocation of Teams: The Case of the St. Louis Rams,
Marquette Sports Law Review, Vol. 10, Issue 2 Spring 2000;
114. Franklin Fisher, Christopher Maxwell, and Evan Schouten, The Economics of
Sports Leagues: The Chicago Bulls Case, Marquette Sports Law Review, Vol. 10,
Issue 1 Fall 1999;
1824

115. Gregor Lentze, The Legal Concept of Professional Sports Leagues: The
Commissioner and an Alternative Approach from a Corporate Perspective,
Marquette Sports Law Review, Vol. 6, Issue 1 Fall 1995;
116. Dennis Carlton, Alan Frankel, and Elisabeth Landes, The Control of Externalities
in Sports Leagues: An Analysis of Restrictions in the National Hockey League,
Journal of Political Economy, Vol. 112, No. 1, 2004;
117. John Jones, The Economics of the National Hockey League, The Canadian
Journal of Economics, February 1969;
118. Jared Bartie, Daniel Etna, and Irwin Kishner, Navigating The Purchase and Sale of
Sports Teams, New York Law Journal, October 26, 2015;
119. Daniel Rascher, Matthew Brown, Mark Nagel, and Chad McEvoy, Where did
National Hockey League fans go during the 2004-2005 lockout? An analysis of
economic competition between leagues, International Journal of Sport
Management and Marketing, 2009;
120. Jason Winfree, Fan substitution and market definition in professional sports
leagues, The Antitrust Bulletin, Vol. 54, No. 4, Winter 2009;
121. Jason Winfree, Jill McClunskey, Ron Mittelhammer, and Rodney Fort, Location
and attendance in major league baseball, Applied Economics, 2004;
122. Brian Mills and Rodney Fort, League-Level Attendance and Outcome Uncertainty
in U.S. Pro Sports Leagues, Economic Inquiry, 2014;
123. Rodney Fort and James Quirk, Cross-Subsidization, Incentives, and Outcomes in
Professional Team Sports Leagues, Journal of Economic Literature, Vol. 33,
1995;
124. Rodney Fort, Inelastic Sports Pricing, Managerial and Decision Economics, 2004;
125. Young Hoon Lee and Rodney Fort, Attendance and the Uncertainty-of-Outcome
Hypothesis in Baseball, Review of Industrial Organization, 2008;
126. Rodney Fort and Jason Winfree, Sports Really are Different: The Contest Success
Function and the Supply of Talent, Review of Industrial Organization, 2009;
127. Rodney Fort, European and North American Sports Differences, Scottish Journal
of Political Economy, Vol. 47, 2000;
128. Roger Noll, Broadcasting and Team Sports, SIEPR Discussion Paper, No. 06-16,
2007;
129. Robert Baade and Richard Dye, The Impact of Stadium and Professional Sports on
Metropolitan Area Development, Growth and Change, Vol. 21, Issue 2, 1990;
130. Robert Baade, Robert Baumann, and Victor Matheson, Selling the Game:
Estimating the Economic Impact of Professional Sports through Taxable Sales,
Southern Economic Journal, 2008;
131. Harrison Campbell, Professional Sports and Urban Development: A Brief Review
of Issues and Studies, The Review of Regional Studies, 1999;
1825

132. Bruce Johnson, Peter Groothuis, and John Whitehead, The Value of Public Goods
Generated by a Major League Sports Team, Journal of Sports Economics, Vol. 2,
No. 1, 2001;
133. Kaveephong Lertwachara and James Cochran, An Event Study of the Economic
Impact of Professional Sport Franchises on Local U.S. Economies, Journal of
Sports Economics, 2007;
134. Jordan Rappaport and Chad Wilkerson, What Are the Benefits of Hosting a Major
League Sports Franchise? Federal Reserve Bank of Kansas City, 2001;
135. John Siegfried and Andrew Zimbalist, The Economics of Sports Facilities and
Their Communities, The Journal of Economic Perspectives, Vol. 14, No. 3,
2000;
136. John Siegfried and Andrew Zimbalist, A Note on the Local Economic Impact of
Sports Expenditures, Journal of Sports Economics, 2002;
137. John Siegfried and Andrew Zimbalist, The Economic Impact of Sports Facilities,
Teams and Mega-Events, The Australian Economic Review, vol. 39, no. 4, 2006;
138. Donald Alexander and William Kern, The Economic Determinants of Professional
Sports Franchise Values, Journal of Sports Economics, 2004;
139. Brad Humphreys and Michael Mondello, Determinants of Franchise Values in
North American Professional Sports Leagues: Evidence from a Hedonic Price
Model, International Journal of Sport Finances, 2008;
140. Phillip Miller, Private Financing and Sports Franchise Values: The Case of Major
League Baseball, Journal of Sports Economics, 2007;
141. Roger Noll, The Organization of Sports Leagues, SIEPR Discussion Paper, No.
02-43, 2003;
142. Sonia Falconieri, Frederic Palomino, and Jozsef Sakovics, Collective vs. Individual
Sale of TV Rights in League Sports, Edinburgh School of Economics Discussion
Paper Series, No. 85, 2002;
143. Stephen Hall, Stefan Szymanski, and Andrew Zimbalist, Testing Causality
Between Team Performance and Payroll, Journal of Sports Economics, Vol. 3,
No. 2, 2002;
144. John Vrooman, A General Theory of Professional Sports Leagues, Southern
Economic Journal, 1995;
Books
145. Katrien Lefever, Sports/Media Complex in the New Media Landscape, New
Media and Sport, 2012;
146. Stephen Ross and Stefan Szymanski, Antitrust and Inefficient Joint Ventures: Why
Sports Leagues Should Look More Like McDonalds and Less Like the United
Nations, The Comparative Economics of Sport, 2010;
147. Ronald Geskey, Media Planning & Buying in the 21st Century, 2011;
1826

148. Stephen Dobson and John Goddard, The Economics of Football, Second Edition,
2011;
149. Judith Long, Public/Private Partnerships for Major League Sports Facilities, 2013;
150. Phillip Areeda and Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust
Principles and Their Application, 2017;
151. William Kern, The Economics of Sports, 2000;
152. Rodney Fort, Sports Economics, Third Edition, 2011;
153. Simon Kuper and Stefan Szymanski, Soccernomics, 2014;
154. Wladimir Andreff and Stefan Szymanski, Handbook on the Economics of Sport,
2006;
155. Dennis Carlton and Jeffrey Perloff, Modern Industrial Organization, Third Edition,
2000;
Industry Reports
156. Roger Bell and John Purcell, Over The Line: The Economic Cost of Promotion into
the English Premier League, Vysyble, 2017;
157. High score: Increased game attendance and lucrative media contracts will boost
revenue, IBISWorld Industry Report 71121a: Sport Franchises in the US, May
2015;
Trade Press and Newspaper Articles
158. Kevin Baxter, Mexico's national soccer team finds a great home venue in the
U.S., Los Angeles Times, March 28, 2015;
159. David Hill, MLB History: Owners Prevented from Owning More than One Team,
Fox Sports, June 30, 2017;
160. Brian Quarstad, NASL CEO Aaron Davidson Expressed Continued Optimism in
Receiving Division 2 Sanctioning, IMSoccer News, January 25, 2011;
161. NASL Committed to Securing USSF Sanctioning for 2011, NASL, January 20,
2011;
162. Anthony Crupi, Sports Now Accounts for 37% of Broadcast TV Ad Spending,
AdAge, September 10, 2015;
163. "Behind the MLS Ambition Rankings" Series, Sports Illustrated, March 3-6, 2017;
164. Clay Travis, "How Much Do the NFL and TV Partners Make a Year?," Outkick the
Coverage, March 1, 2017;
165. Mike Prada, "NBA to announce 9-year, $24 billion TV deal with ESPN, Turner,"
SB Nation, October 5, 2014;
166. Christina Settimi, "Baseball Scores $12 Billion In Television Deals," Forbes,
October 2, 2012;
167. Christina Settimi, "The NHL's New Broadcast Deal With Rogers Communications
Signals Canadian Team Expansion," Forbes, November 26, 2013;
1827

168. Jonathan Tannenwald, "MLS, U.S. Soccer officially announce new TV deal with
ESPN, Fox, Univision," Philly.com, December 13, 2015;
169. Rogers adds baseball TV rights to hockey with wide-ranging MLB deal, The
Toronto Star, January 9, 2014;
170. Maury Brown, How The Deal Between DISH and MLB Helps Pave The Way For
In-Market Streaming, Forbes, April 1, 2015;
171. Daniel Kaplan and Ian Thomas, MLS seeks to buy back stake from Providence,
Sports Business Daily, April 18, 2016;
172. Premier League: Clubs 'risk bankruptcy' with promotion, BBC, October 10, 2017;
173. USL Total Attendance Soars by 33 Percent in 2016, USL, September 28, 2016;
174. Division 2 Professional League to Operate in 2010, USSF, January 7, 2010;
175. NASL Suspends Operation of Atlanta Silverbacks, NASL, January 11, 2016;
176. Kartik Krishnaiyer, Fort Lauderdale Strikers Begin New Chapter with Bill Edwards
Acquisition, The Florida Squeeze, June 20, 2017;
177. Minnesota United FC to join MLS in 2017, debuting at TCF Bank Stadium, MLS,
August 19, 2016;
178. Passionate Montreal named as 19th MLS City, MLS, May 7, 2010;
179. USL Announces Addition of Ottawa Fury FC, USL, October 25, 2016;
180. Esteban Pagn Rivera, Tambalea el futuro de los Islanders, Primera Hora, August
19, 2013;
181. James Poling, NASL to open 2017 season with eight clubs, NewsOK, January 6,
2017;
182. NASL Releases Statement on San Antonio Scorpions, NASL, December 22,
2015;
183. USL Expands with Additions of Tampa Bay Rowdies, Ottawa Fury FC, USL,
October 25, 2016;
184. Kyle Lyttle, Austin pro soccer franchise will roll in 2019 in 5,000 seat COTA
venue, American Statesman, August 9, 2017;
185. Charlotte Eagles to Participate in Premier Development League in 2015, Charlotte
Eagles, 2014;
186. Major League Soccer names Orlando City SC as 21st franchise, set for 2015 debut,
MLS, November 19, 2013;
187. Chris Kivlehan, Dayton Dynamo Look to Tap Into Ohios Soccer Renaissance with
Downtown Stadium Move, Midfield Press, December 2016;
188. Montreal Impact associates with Ottawa Fury FC in the USL, MLS, December 9,
2016;
189. Dave Martinez, USL Pro Announces Discontinuation of FC New York, Empire of
Soccer, November 1, 2012;
1828

190. Wilmington Hammerheads FC Awarded PDL Franchise, USL PDL, September 19,
2016;
191. USL Pro to see teams fold; MLS to field squads; new team partnership, ODFC
News, November 17, 2013;
192. Doug Pappas, Inside the Major League Rules, Outside the Lines, 2002;
193. Top 20 Professional Sports Leagues Which Failed Miserably (or Hilariously),
Masters in Sports Management, May 20, 2010;
Websites
194. US Soccer (www.ussoccer.com);
195. NFL (www.nfl.com);
196. NHL (www.nhl.com);
197. MLB (www.mlb.com);
198. NBA (www.nba.com);
199. MLS (www.mlssoccer.com);
200. NASL (www.nasl.com);
201. NFL Football Operations (www.operations.nfl.com);
202. ESPN FC (www.espnfc.us);
203. Bloomberg (www.bloomberg.com);
204. NCAA (www.ncaa.org);
205. Transfermarkt (www.transfermarkt.com);
206. MLS team websites;
207. NASL team websites;
208. USL team websites;
Government Publications
209. Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016, US
Census Bureau, Population Division, March 2017;
210. Horizontal Merger Guidelines, US Department of Justice and the Federal Trade
Commission, August 19, 2010;
211. Video Program Distribution and Cable Television: Current Policy Issues and
Recommendations, US Department of Commerce, June 1988;
Other Documents and Data
212. Nielsen Scarborough 2017 USA+ Release 1, Statista;

And all other materials cited in my Declaration.
1829

Appendix C: 2017 MLS Team Information

1830

Appendix C: 2017 MLS Team Information

Team City Stadium Average Attendance Capacity Year Joined
1 Atlanta United FC Atlanta, GA Mercedes Benz Stadium 46,720* 40,000** 2017
2 Chicago Fire Bridgeview, IL Toyota Park 17,368 20,000 1998
3 Colorado Rapids Commerce City, CO Dick's Sporting Goods Park 15,460 18,061 1996
4 Columbus Crew SC Columbus, OH MAPFRE Stadium 15,439 19,968 1996
5 D.C. United Washington, DC RFK Stadium 16,434 19,647** 1996
6 FC Dallas Frisco, TX Toyota Stadium 15,105 16,000 1996
7 Houston Dynamo Houston, TX BBVA Compass Stadium 17,315 22,039 2006
8 LA Galaxy Carson, CA StubHub Center 22,171 27,167 1996
9 Minnesota United FC Minneapolis, MN TCF Bank Stadium 20,537 50,805 2017
10 Montreal Impact Montreal, QC Saputo Stadium 20,006* 20,801 2012
11 New England Revolution Foxborough, MA Gillette Stadium 18,466 20,000** 1996
12 New York City FC New York, NY Yankee Stadium 22458* 28,940** 2015
13 New York Red Bulls Harrison, NJ Red Bull Arena 20,922 25,000 1996
14 Orlando City SC Orlando, FL Orlando City Stadium 25,019 25,500 2015
15 Philadelphia Union Chester, PA Talen Energy Stadium 16,700 18,500 2010
16 Portland Timbers Portland, OR Providence Park 21,144 22,000 2011
17 Real Salt Lake Sandy, UT Rio Tinto Stadium 18,761 21,030 2005
18 San Jose Earthquakes San Jose, CA Avaya Stadium 19,992* 18,000 1996
19 Seattle Sounders FC Seattle, WA CenturyLink Field 43,297 39,419** 2009
20 Sporting Kansas City Kansas City, KS Children's Mercy Park 19,564 18,467** 1996
21 Toronto FC Toronto, ON BMO Field 27,633 30,000** 2007
22 Vancouver Whitecaps FC Vancouver, BC BC Place 21,372 22,120** 2011
Note: (*) Indicates teams which played some home games at a different stadium in 2017.
(**) Indicates stadiums at which capacity is potentially greater.
Average attendance does not include games after October 14, 2017.
Sources: League and team websites; ESPN MLS regular season statistics.

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Case 1:17-cv-05495-MKB-ST Document 26-6 Filed 10/16/17 Page 1 of 114 PageID #: 1717

UNITED STATES DISTRICT COURT

STEVEN R. PETERSON, Ph.D.

October 16, 2017

I. EXECUTIVE SUMMARY .............................................................................................. 1

United States. I am a Harvard-trained Ph.D. economist with more than 25 years of

soccer organization can take advantage of USSFs investments by capitalizing on

riding on its and others investments in soccer.

financial viability, and staffing, among other things.

enhanced to the financial benefit of USSF.

A. USSFs Professional League Standards

5. My economic analysis shows USSFs Professional League Standards govern league

soccer game, in person or on television. They encourage investment in soccer in the

organizations governing sports in establishing standards related to quality. I address

6. Soccer leagues produce a season-long competition in the context of a championship race.

of professional soccer leagues and is procompetitive.

2. Geographic Coverage, Market Size, and Stadium Capacity

an incentive to invest to attract fans and fill the stadiums.

and stadium size encourage investment in professional soccer leagues. Moreover,

engage in the investment is reduced as well. Thus, USSFs requirements supporting a

others investments in soccer.

4. Team and League Organization

undertake to be successful and to generate increased interest in soccer in their

communities. This requirement is consistent with USSFs goal of expanding soccer in

organizations. These individual incentives undermine the development of soccer, and

5. Conclusions on Professional League Standards

Ensuring a quality soccer experience across leagues with a common divisional

in the United States.

B. Analysis of Plaintiffs and Professor Szymanskis Theory of Anticompetitive

economic evidence supports neither of Plaintiffs assertions.

economic incentive to discriminate against NASL in favor of MLS.

economic incentive to discriminate against NASL to increase MLSs alleged market

power in ticket sales.

theory would also be economically unfounded because MLS programming represents a

very small share of television advertising expenditures or sports television advertising

broadcasters to exercise market power over advertisers or broadcasters. USSF cannot

enhance MLSs market power relative to broadcasters and advertisers by allegedly

enforcing the Professional League Standards discriminatorily against NASL.

decision to implement detailed standards 15 years before NASL reentered professional

C. Professor Szymanskis Economic Analysis Is Flawed

represents a significant conflict of interest.9 However, rather than finding an economic

anticompetitive economic motive to apply the Professional League Standards

discriminatorily relative to NASL.

from teams/owners/promoters wishing to play in these forms of season-long, league-

Professor Szymanski, however, focuses his relevant market analysis on services to

charge a monopoly price to a would-be team owner acting as an investor. If MLS

has been so for many decades.

status, NASLs current decline cannot be attributed to USSFs Professional League

II. Qualifications and Assignment

28. My name is Steven R. Peterson. I am an Executive Vice President at Compass Lexecon,

financial economics and valuation, and regulatory economics. I received my A.B. in

from Harvard University in 1992. While at Harvard, my areas of specialization were

of market power and anticompetitive conduct. I have previously testified on competition

in the Department of Economics at Northeastern University where I teach courses on the

economics of antitrust, regulation, and public policy.

the views of any of my employers.

conspired to discriminate against NASL, conferring market power on MLS in order to

Plaintiffs motion for a preliminary injunction.

by me and by my staff is included as Appendix B to this declaration.

III. Plaintiffs Economic Theory