The U.S. Court of Appeals for the 2nd Circuit has denied the North American Soccer League's appeal to obtain a preliminary injunction that would have reinstated its status as a Division 2 league.
The ruling is the latest blow suffered by the NASL, though league insiders told ESPN they were not surprised at the decision.
Last September, the U.S. Soccer Federation Board of Directors voted to deny giving the NASL a Division 2 designation because it had not met the USSF's Professional League Standards (PLS) for what constitutes a second-tier league. The standards include a minimum number of teams and how those teams are distributed geographically.
The NASL had been granted Division II status in previous years, including 2017 when the USSF opted to grant the NASL that status on a provisional basis.
The NASL responded by filing an antitrust lawsuit against the USSF. The suit alleges that the standards are anticompetitive and create a barrier to competition and thereby prevent the NASL from competing directly with MLS.
The suit also alleges that with the help of the standards, the USSF, MLS, the second-tier United Soccer League, and Soccer United Marketing (the marketing arm of MLS) have engaged in a conspiracy to drive the NASL out of business, by illegally stripping it of its Division 2 status so that the USL will be the only Division 2 league while MLS will maintain its status as the only Division 1 league in the U.S.
The NASL sought to obtain an injunction that would reinstate its status as a Division 2 league while the antitrust lawsuit made its way through the courts. But U.S. District Court Judge Margo K. Brodie ruled in November that while there were some merits to the NASL's case, the league "has not made a clear showing of entitlement to relief."
The NASL appealed that ruling, but it was upheld by a three-judge panel on Friday.
"We evaluate NASL's motion under the heightened standard applicable to mandatory preliminary injunctions," the latest ruling read. "NASL has not demonstrated a clear likelihood of success on the merits of its antitrust claim against USSF under 15 U.S.C. §1. Accordingly, we AFFIRM the order of the District Court denying NASL's motion for a preliminary injunction, and we REMAND the matter for further proceedings on the merits of NASL's claims."
NASL interim commissioner Rishi Sehgal told ESPN: "We're studying the decision with our lawyers, and we don't have further comment."
The USSF didn't immediately respond to a request for comment.
The ensuing months since the antitrust suit was first filed have been even more difficult for the NASL. After finishing the 2017 season with eight teams, the NASL has seen Edmonton FC and league champion the San Francisco Deltas shut their doors, while North Carolina FC and Indy Eleven joined the rival USL which has been granted a Division II designation by the USSF.
While the NASL was prepared to take on California expansion teams in San Diego and Orange County, that was contingent on the NASL retaining its Division II status since the higher designation would result in higher revenues related to sponsorship and broadcasting.
The league has since announced it would alter its league schedule to begin play in September instead of in the spring, but it is unknown how many teams will begin the season.
What is clear is that the litigation will continue. Not only has New York Cosmos owner Rocco Commisso been on record as saying he will continue to pursue the lawsuit, but the NASL has also sued most of the USSF Board of Directors on the grounds that they breached their fiduciary duty.