A federal jury in California ruled against the National Football League on Thursday, June 28, in a class-action antitrust case that could have huge implications for how out-of-market broadcasts are handled in the future. The jury’s decision in the NFL Sunday Ticket case comes with a $4.8 billion price tag that could balloon to more than $14 billion if the judgment is upheld.
The road to this decision stems from a 2015 complaint by Mucky Duck, a San Francisco sports bar that claimed the league violated antitrust laws by bundling all out-of-market games together with the NFL Sunday Ticket, making it impossible to buy a package that features just one team.
Under the $4.8 billion judgment, residential subscribers would receive around $4.7 billion, while nearly $100 million would go to commercial users like the Mucky Duck.
Federal antitrust law allows private parties to sue for triple damages, which could mean the NFL would be on the hook for more than $14 billion. If divided among the league’s 32 teams, that would be roughly $450 million per team.
For its part, the league has promised to appeal the decision and the case could end up before the Supreme Court. The trial itself got messy when the federal judge overseeing the case reprimanded the plaintiffs’ attorneys, saying, “It turned into 25 hours of depositions and gobbledygook.”
Straight Arrow News Business Correspondent Simone Del Rosario breaks down the implications of the ruling with Helen “Nellie” Drew, the director of the University of Buffalo Center for the Advancement of Sport and a professor of practice in sports law.
The following has been edited for clarity. You can watch the full interview in the video at the top of this page.
Simone Del Rosario: Nellie, we are about to enter a lengthy appeals process. What does this mean for fans out there who might think that this ruling could give them better access to their favorite team’s games right away?
Nellie Drew: Oh, that’s not going to happen this season. The NFL is already committed to an appeal. It will no doubt be a lengthy one. There is a possibility for certain post-trial motions, so we’ll have to see how those go. But the challenge always with antitrust cases is that they are so complex, and as we know, litigation doesn’t exactly move at lightning speed anyhow, so this is going to take a while to be parsed out.
Simone Del Rosario: This was a jury trial, but the federal judge in this case did not love where the plaintiffs were going during their arguments, saying, “The case has turned into 25 hours of depositions and gobbledygook. This case has gone in a direction it shouldn’t have gone.” Could the federal judge throw out the verdict and side with the NFL?
Nellie Drew: I suppose it’s possible. There’ll probably be a motion to overturn the verdict for sure. What does that mean as a practical matter? Well, it took the jury less than three hours to come to this conclusion. That’s a pretty significant statement. It’s not like they were on the edge of going the other way.
I am actually amazed that we went as far as we did. My colleague, Christine Bartholomew, who’s an antitrust expert, has mentioned the fact that it’s rare for antitrust cases to go all the way to trial. And for this one to have completed, it’s just mind-boggling to me, absolutely mind-boggling.
Simone Del Rosario: What does this mean for the NFL’s antitrust exemption? They argue that this falls under it and allows the league to package games and sell them to networks. The plaintiffs argued that it only applies to over-the-air broadcasts, not pay TV.
Nellie Drew: This is not new law. The sports broadcasting exemption goes back to Richard Nixon wanting to watch the then-Washington Redskins on TV, quite honestly. I mean, that’s how old this is and the sports broadcasting exemption act specifically was drawn for over-the-air broadcasts, and that was emphasized very heavily.
You also have to remember that as a matter of practice, the courts construe any exemptions to the antitrust laws extraordinarily narrowly. The idea is that the antitrust framework is supposed to be inclusive, as much as possible, and any exemptions are supposed to be very, very narrow and very, very specific, which is what the sports broadcasting act is.
And if you review the legislative history of the sports broadcasting act, that is very, very clear. So I was quite honestly, very surprised to see the NFL take that position, although I guess there’s not much else they could possibly say.
Simone Del Rosario: What do we do with that now, given the new television landscape with streaming? It’s so different than it was in the ’60s.
Nellie Drew: It’s a very different context since Richard Nixon’s days, right? But having said that, the underlying point is access. I don’t know how much of an NFL fan you are, but the complaint I’ve heard from a number of people over the course of the past year is, it’s gotten to a point where you have to own multiple platforms be able to follow your team.
And so it’s almost going the other way. And part of me also wonders, just as a practical matter, when is the NFL going to realize that the lifeblood of the league and the source of all its revenue is the fans? So if the fans aren’t able to consume the product they want to consume, eventually they’re going to go, ‘Maybe soccer is better, right?’
Simone Del Rosario: Is this going to have an effect on cable companies that rely on bundled packages?
Nellie Drew: Yes, although how that’s going to play out remains to be seen. It depends upon what the ultimate outcome of this is. And what was interesting, too, you may have read that the NFL tried to posit this as a premium subscription: ‘This is only for a very small portion of our fan base.’
In reality, given the society we live in now, I’ve got seven kids, half of them are out of the area and adore the Buffalo Bills, but they can’t watch them on a regular basis under the current construct.
Simone Del Rosario: Let me ask you this, then. Did the NFL mess up in its arguments? Roger Goodell called it a supplemental package for the biggest fans, just like you said, but the NFL Sunday Ticket was pitched as this place to watch your favorite teams.
Nellie Drew: I think the challenge for the NFL counsel was that the advertising messaging was one thing, and then they had to try to spin it a different way when they got into court.
And antitrust counsel, which is always there in league meetings because almost everything the league does has potentially some antitrust implications; we know now, in the wake of the Supreme Court case some years ago, that for sure, when each of the teams in the league discusses anything with any other team, you have the potential for a Section 1 Sherman Act violation, because you have two potential competitors collaborating.
Now, some of this collaboration is necessary for the league to function, that’s been recognized by the courts. Somebody has to set the schedule, somebody has to agree upon what the rules are going to be, what the new kickoff rule is going to be, for example. That type of collaboration is, generally speaking, allowed under the antitrust laws.
It’s when you use that position, and combine that with a sort of monopoly, if you will, that the NFL has over its product to extract unreasonable profits, that’s when you start running into trouble. And the key here was that consumer choice was definitely being constrained by this artificial construct.
Simone Del Rosario: Let’s talk about consumer choice. I know this isn’t really a legal question. It’s definitely more of a business question. But what do you think of the potential popularity of an NFL product where customers could subscribe to a single team?
Nellie Drew: But the challenge then is, what does that do to the broadcast partners? And that’s their bread and butter they’re trying to protect. I mean, they have this greed, right? They wanted to use the Sunday Ticket to extract an extra little bit, but in the process, they know that they have to protect their broadcast partners. Because my kids in Boston aren’t watching the Patriots. They’re watching the Bills if they can get them, right? And so that’s the challenge.
