1. Are all professional sports subject to the antitrust laws?

2. What was the effect of this ruling on the professional sport of basketball?

Spencer Haywood was the ultimate American rags-to-riches story. Born into a Mississippi sharecroppers’ family of 10 children, he spent his first 15 years in a rural poverty only imagined today. Then he moved to Detroit to live with his brother and, for the next decade or so, created the foundation of what could have become a legend greater than Michael Jordan’s. At 6 foot 9 inches and 225 pounds, he was not of remarkable size for the company he kept on the basketball court. He was just, in a word, unstoppable. At 19 years of age he led a decimated U.S. basketball team (at the time composed of all collegiate players) to a gold medal in the Mexico City Olympics. That same year, as a sophomore, he scored an average of 32 points AND pulled down an average of 21.5 rebounds for the Division I University of Detroit. Citing the hardship of his family he then left school to play for the Denver Rockets of the American Basketball Association (ABA). His first season he was named not only the ABA’s rookie of the year but also its most valuable player. Unfortunately, the ABA was falling apart around him, and he sought to jump to the wellfunded NBA to play for the Seattle Supersonics.

Standing in his way, however, was one of the rules that, along with its reserve clause and the exclusivity of its draft system, preserved the NBA’s control over the supply of players that might run up and down its hardwoods. Simply put, the NBA prohibited any person to play in its system until their high school class had graduated college (a four-year period in those days).

In a lawsuit against the NBA, Haywood claimed that the NBA’s employment of this rule was illegal as it violated the Sherman Antitrust Act’s main provision: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

Is the prohibition by the NBA prohibiting anyone playing for its teams whose high school class has not had time to graduate college a restraint of trade and thereby illegal under the antitrust laws of this country? 

The court held that the four-year rule was a restraint on trade and illegal under the Sherman Antitrust Act.