Advertisement

NFL Sunday Ticket Antitrust Class Action Nears Trial Date

Nine years ago, a group of NFL Sunday Ticket subscribers sued the league over a topic that has spawned antitrust litigation since the 1950s: Do NFL teams limiting how they compete in licensing broadcasts run afoul of antitrust law?

That core legal question is headed for a jury trial set to begin next Wednesday in the Los Angeles courtroom of U.S. District Judge Philip Gutierrez. Last year Gutierrez certified In Re: NFL’s “Sunday Ticket” Antitrust Litigation as a class action on behalf of more than 2.4 million residential subscribers and more than 48,000 restaurants, bars and other commercial establishments that purchased Sunday Ticket from June 17, 2011 to February 7, 2023 (these dates reflect applicable statute of limitations).

More from Sportico.com

Sunday Ticket is available through YouTube TV for $349/year, though various discounts, promotions and add-ons can change the price. It was previously available through DirecTV.

On Wednesday, both sides presented to Gutierrez a proposed joint statement of the case, in which they summarized the dispute. If the trial is not preempted by a last-minute settlement, the courtroom could produce fascinating and revealing witness testimonies with several bold-named pro football figures. The defendants’ attorneys have previously indicated they could call Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert Kraft to the stand. The defendants, meanwhile, plan to call NFL commissioner Roger Goodell to the stand for 45 minutes of live testimony.

Goodell, conceivably, would like to avoid a situation where he is cross-examined by opposing counsel, especially considering recent developments. Earlier this year, a different court unsealed transcripts of a 2022 deposition Goodell gave in a class-action lawsuit filed against the NFL by former football players alleging the league was culpable for the long-term brain damage they suffered by playing. In his testimony, Goodell made several comments that drew critique and seemed to cast doubt on the scientific consensus about the link between concussions and certain brain diseases.

This latest class-action suit, no doubt, pales in terms of gravity.

As the plaintiffs see it, the league and teams are breaking antitrust law and raising fans’ costs by making certain out-of-market broadcasts available only through Sunday Ticket. NFL teams pool their telecast rights and contractually agree to respect other teams’ exclusive broadcasting territories. That arrangement ensures, for example, that Detroit Lions games are broadcast in the Detroit area and the Lions don’t have to worry about other NFL teams pumping game broadcasts into Detroit.

But NFL teams could operate differently. Instead of New England Patriots fans who live in Detroit having to buy Sunday Ticket to watch their favorite team, the Patriots could negotiate with a television network to air their games in Lions country. In this alternative world where teams invade other teams’ broadcast territories, those Patriots fans might be able to watch New England’s games for free or at least for less than what they pay for Sunday Ticket.

The plaintiffs will lean heavily on their main expert witness, economist Daniel Rascher, who previously served as a plaintiffs’ expert in several antitrust lawsuits filed by athletes against the NCAA, including House v. NCAA. The NFL, meanwhile, will primarily rely on the expert testimony of Douglas Bernheim, a Stanford economist who previously testified for the plaintiffs in the landmark vitamin C price-fixing litigation and the recent Epic Games v. Google lawsuit.

If “Sunday Ticket” plaintiffs win and the victory withstands appeal to the U.S. Court of Appeals for the Ninth Circuit and the U.S. Supreme Court, it could lead to damages of more than $6 billion and force the NFL to revise its broadcasting polices.

The issues presented by In Re: NFL’s “Sunday Ticket” Antitrust Litigation stem from the unique business structure of pro leagues, especially the NFL. The NFL oversees 32 individually owned franchises, which, of course, compete on the field and off-the-field, but they also collaborate, sometimes necessarily, to operate a functional pro sports league.

To that end, NFL teams must agree on game rules. If teams can’t agree that a touchdown counts as six points or that a fumble occurs when a player has possession of the football and loses it before he’s downed, those teams wouldn’t be able to play competitive contests. But as the U.S. Supreme Court held in American Needle v. NFL (2009), teams don’t have to collaborate on licensing of intellectual property for apparel. They could instead compete with one other, with one team signing a deal with Nike, another with Reebok, still another with New Balance and so on.

The collaboration of NFL teams for broadcasts sparked legal problems for the NFL as far back as the 1950s. The U.S. Department of Justice sued the NFL on antitrust grounds, challenging how teams agreed in the league constitution and bylaws to refrain from competing in other teams’ home territories (generally 75 miles in every direction from the exterior limits of the city where they play). This restriction precluded out-of-town TV stations from competing to acquire game broadcasts that could be aired to fans. A federal judge in 1953 agreed that NFL fans should not be denied the fruits of more broadcasting competition.

In 1961, the NFL scored a major legislative victory when Congress passed, and President John F. Kennedy signed into law, the Sports Broadcasting Act. The SBA provides a limited antitrust exemption to professional football, basketball, baseball and hockey leagues when they negotiate a national TV contract with a network that provides “sponsored telecasting” (meaning free and over-the-air) of games.

The SBA captures a seemingly archaic broadcasting world where Americans watched a handful of TV channels that an antenna on their TV or roof picked up. The broadcasts were “free” in the sense that Americans didn’t pay to watch them, but because networks sold airtime for commercials, the arrangement still made economic sense. The SBA does not apply to cable TV, streaming or paid satellite TV because they are not over-the-air and free.

Case closed? Not so fast.

The NFL has a bevy of counter arguments that could persuade a jury or, if necessary, an appellate court.

For one, the league maintains that the plaintiffs’ case could unravel an arrangement that fans—consumers—seem to like. Last year, the NFL accounted for 93 of the year’s 100 most-watched TV broadcasts in the U.S. No other league, sport, politician, TV show—really anything—credibly competed with NFL broadcasts. In court filings, the league has warned that if teams can’t collaborate in broadcast arrangements, the economics of NFL broadcasting would change and there would be unwanted consequences. Some games might become unavailable on free TV options. Some teams could relocate games from free TV to premium cable.

To that point, the league insists its TV arrangement “is one of the most consumer-friendly entertainment products in the world,” with local fans able to watch home games on free TV—a stark comparison to other leagues where local fans often must pay to watch regular season games on TV.

The seemingly antiquated SBA is also potentially relevant in the trial. For one, consumers can still use antennas to pick up local and even out-of-town broadcasts. Some relatively inexpensive antennas available for retail claim to capture broadcasts from thousands of miles away. For another, the SBA is implicated if, as the NFL claims, the league’s ability to air free games locally would be harmed if the litigation compels changes to the distribution of broadcast rights.

While the NFL has potentially persuasive legal arguments, the league is arguably taking a risk by going to trial. Some of the NFL’s most prized insiders could face difficult questions under oath and be compelled to share business information they’d prefer to keep confidential. Don’t be shocked if the case settles before jury selection begins next Wednesday.

Best of Sportico.com