In a stunning blow to the National Football League, a Los Angeles jury recently handed down a major verdict against the organization and in favor of TV viewers. The monumental decision could have a major impact on the way the NFL does business, and may even change the game for football fans everywhere. Let’s dive into the details of the case that's sending shockwaves through the sports world.
Why Is Sunday Ticket So Expensive?
The lawsuit was originally brought by a group of plaintiffs that included NFL fans who had bought subscriptions to a service called “Sunday Ticket,” which showed out-of-market games.
Each team in the NFL had entered into its own agreement with the League to pool their telecasting rights and give the NFL the authority to exercise those rights. With those rights, the NFL would enter into an agreement with TV networks. Specifically, CBS and Fox were the networks that coordinated to create a single telecast for Sunday football games. The NFL agreed to let CBS and Fox broadcast a limited number of what are known as “local games” (in-market) through free, over-the-air television.
Separately, the NFL also entered into an agreement with DirecTV to take games already being played on channels like Fox and CBS and resell them to fans that were “out-of-market.” Those games were packaged and bundled together in one service called “Sunday Ticket.”
Flagged for Inflating
There was a stench of potential antitrust violations in the air over the way NFL ran Sunday Ticket. Fans are forced to buy the whole slate for the year, despite the service being marketed to fans who often just want to see one specific team that’s out-of-market.
It costs about $300 per football season, but some fans thought the price was intentionally inflated in order to limit the number of subscribers. Their theory was that the NFL kept Sunday Ticket expensive specifically to make sure that enough fans still would just watch whatever games were on their local broadcast networks.
They took the League to court, claiming that not only DirecTV but also CBS and Fox conspired to control prices for the Sunday Ticket package. The plaintiffs essentially argued that antitrust law could require each NFL team to negotiate an individualized contract for televising only its own games.
They claimed that the NFL and these TV companies formed “interlocking agreements” that aimed to “suppress competition for the sale of professional football game telecasts,” which violated the Sherman Antitrust Act. Section 1 of that Act prohibits all contracts or conspiracies that restrain trade or commerce, though it has been interpreted by the U.S. Supreme Court to prohibit only unreasonable restraints of trade.
False Start at First Trial
At court, the plaintiffs’ attorneys were able to point to some incriminating evidence from the League’s C-suite. One key piece of evidence was an email that the cable sports network ESPN had sent to NFL’s executives in which they offered the Sunday Ticket service for a mere $70. ESPN also offered to sell single-team packages.
The NFL turned that offer down, choosing to stick with DirecTV. But more and more streaming services have started to offer sports services in recent years – take, for instance, Amazon’s deal with Thursday Night Football and Apple’s streaming of Major League Baseball. The NFL eventually decided to go the streaming route and contracted YouTube in 2022 to provide streaming for most of their games, except those that air on traditional television in their local markets.
Again, this could be seen as designed to ensure customers still tuned in on TV. And the YouTube package for Sunday Ticket conveniently cost a lot more than what ESPN was offering – a $349 add-on subscription on top of the price of YouTube TV.
In 2017, the case was dismissed when a federal judge decided that the plaintiffs hadn’t made a good case that the NFL’s distribution deal with DirecTV actually harmed competition, as required for a price-fixing claim.
Supreme Court Punts the Case
But when that dismissal was appealed, the Ninth Circuit disagreed. The appellate court found that the plaintiffs did sufficiently argue that the “interlocking agreements” involved the same sorts of restrictions that would harm competition, so it reversed the dismissal. The was even appealed to the U.S. Supreme Court at one point, though SCOTUS declined to take it up.
Justice Brett Kavanaugh wrote a brief opinion “simply to explain that the denial of certiorari should not necessarily be viewed as agreement with the legal analysis of the Court of Appeals.” But he also criticized the plaintiffs’ claims that antitrust law would require each time to make a separate contract for broadcasting the games it plays, saying that this is not what the country’s antitrust jurisprudence has held. He wrote: "The NFL and its member teams operate as a joint venture. Antitrust law likely does not require that the NFL and its member teams compete against each other with respect to television rights."
However, since that was simply Justice Kavanaugh explaining his own rationale in denying cert, the brief opinion is merely guidance for lower courts and does not have the force of law.
Treble in Store for NFL
The case eventually made its way back to federal district court with a different judge. This time it went to trial – a jury trial, to be exact, which is noteworthy because it’s so rare of an occurrence in civil antitrust cases. When an antitrust case goes to a jury, it's often related to the amount of damages and something that the government may ask for but fail to get. This happened with Google’s recent antitrust case. In the NFL’s case, the jury found in favor of the plaintiffs and ordered the NFL to pay almost all of the damages that the plaintiffs had asked for: about $4.6 billion.
If that sounds like a big loss to the NFL, remember that with antitrust cases, the law allows for a thing called “treble damages.” This basically just means that the court can award up to three times the amount of damages that the jury finds the defendant owes. If this played out, the NFL would be on the hook for over $14 billion to pay out to the plaintiffs.
Needless to say, the NFL is almost surely going to appeal the case. Their lawyers probably cost a lot, but not quite $14 billion. So we’ll have to wait and see whether the case is truly settled, but however it ultimately turns out could make a world of difference for America’s Fall Sunday afternoons.
Related Resources:
- It's Ladies Night (In Court) for the Fresno Grizzlies (FindLaw's Legally Weird)
- What Is Antitrust Law and Trade Regulation? (FindLaw's Learn About the Law)
- From the Rink to the Court: NHL On Trial (FindLaw's Legally Weird)
