NFL Sunday Ticket Antitrust Class Action Marches Toward Trial

The National Football League dominates the airwaves—of the 100 most watched U.S. TV broadcasts in 2023, 93 were NFL games—but a long-running antitrust class action in California argues the league’s TV arrangements unlawfully preclude intraleague competition and artificially raise fans’ prices.

On Thursday, In Re: NFL’s “Sunday Ticket” Antitrust Litigation took a major step toward trial.

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In a 30-page order, U.S District Judge Philip S. Gutierrez denied the NFL’s motion for summary judgment, concluding there are genuine disputes about material facts in the case. This week’s decision places the case on track for trial, unless the NFL successfully appeals to the U.S. Court of Appeals for the Ninth Circuit or negotiates a settlement with subscribers.

Originally filed in 2015, In Re: NFL’s “Sunday Ticket” Antitrust Litigation features two certified classes that represent at least 2.4 million residential subscribers who purchased the Sunday Ticket after June 17, 2011, and at least 48,000 commercial establishments that have subscribed during the same period. Court records indicate projected damages are in the ballpark of $6.1 billion.

Gutierrez certified the classes last February.

The NFL’s business structure is crucial to the case. Although the NFL is a single league, it is also a collection of 32 independently owned and managed businesses (a.k.a. teams, franchises or clubs) whose joint venture is the production of NFL games.

Teams have agreed to not compete with one another in the broadcasts of games and empowered the league to manage and sell individual teams’ telecast rights. The NFL, in turn, has signed contracts with CBS and Fox to air many games through free, over-the-air TV in local broadcasts while separately licensing games to DirecTV (now YouTube) for the “Sunday Ticket,” where fans who want to watch out-of-market games must pay to do so.

If NFL teams instead competed in the sale of broadcast rights, each could sell its rights to broadcasters in multiple markets or even nationally. Those games could then be broadcast on free TV or at a lower price than the Sunday Ticket.

Consider a team like the Dallas Cowboys, which has numerous fans across the country. It’s conceivable the Cowboys could secure a national TV deal. The plaintiffs maintain there would be a greater number of telecasts of NFL games, for free or at lower prices, if the 32 teams competed with one another in selling their telecasts.

Gutierrez found the NFL’s defenses unavailing. The league argued the subscribers lack standing to sue since they “purchased nothing from the NFL.” Gutierrez disagreed, noting the decision to purchase the Sunday Ticket from DirecTV to watch out-of-town games reflects an alleged conspiracy involving the league and its teams.

Similarly, the fact that individual NFL teams aren’t nominally part of the league’s Sunday Ticket agreement doesn’t mean they aren’t part of the alleged conspiracy. Gutierrez stressed “club owners ratify” TV contracts.

“Defendants place great weight on the fact that the member clubs are not part of the NFL-DirecTV Agreement,” the judge wrote. “But this fact is misleading. It does not follow that, because the member clubs are not parties to the NFL-DirecTV Agreement, DirecTV and the member clubs are not connected in the overall conspiracy.”

Gutierrez emphasized how teams consolidate “would-be competing telecasts in the NFL” and the presence of contractual restrictions barring teams from negotiating out-of-market telecasts. He pointed to an agreement that “no more than two telecasts can be broadcast at the same time in a given local market” as evidence of anti-competitive behavior.

The Los Angeles-based judge illustrated these restrictions through a hypothetical involving the LA Rams. He wrote if the team “desired to offer a telecast of one of its games to an out-of-market viewer, it could not telecast the game in New York City if the Jets or the Giants were playing at home.”

He added the Rams “would have to enter an agreement with the San Francisco 49ers to telecast the Rams home game against the 49ers in Los Angeles” and wouldn’t “be able to telecast that same game in San Francisco if the 49ers wanted to telecast the game in their home territory.”

To further that line of critique, Gutierrez observed that if CBS and Fox are “only able to each broadcast a football game on one channel in a given area, then necessarily there are many games not being broadcast in that area. And most consumers will only be able to watch three of the 10 to 13 games being played on a Sunday via free, over-the-air broadcasts.”

Gutierrez was similarly unpersuaded by the NFL’s reliance on a single-entity defense. For decades, the league has insisted that although its teams compete, they necessarily collude to produce NFL teams and thus function as one.

The legal significance of that point is that Section I of the Sherman Act regulates competing businesses, not departments within one company or subsidiaries and their parent company. In American Needle v. NFL (2009), the U.S. Supreme Court rejected the NFL’s single-entity defense in the context of NFL teams collectively licensing apparel to one company on grounds that teams are independently owned and are thus unlike, for example, Alphabet Inc. and its subsidiaries like Google and Waymo. (For more on single entities in sports and antitrust law, please read this article from one of the co-authors in the Yale Law Journal.)

The NFL has resurfaced the single-entity argument in this litigation, arguing teams and the league necessarily cooperate in game broadcasts. Teams, the league underscores, must cooperate since broadcasts will show the trademarks of individual teams and the league itself.

Although the subscribers concede “cooperating is necessary to put on a football game,” they reject the idea that NFL teams must cooperate in the broadcast of that game. To that end, they cite arrangements for Notre Dame football broadcasts. Notre Dame isn’t a member of a Power Five conference and yet sells telecast rights to a broadcast network and its games feature trademarks of competing universities, conferences and the NCAA. In other words, if Notre Dame can figure out how to individually sell TV rights, why can’t NFL teams?

Lastly, the NFL’s attempt to claim its arrangements are exempt from antitrust scrutiny via the Sports Broadcasting Act of 1961 (SBA) didn’t have much suasion with Gutierrez.

The SBA insulates national TV deals for football, basketball, baseball and hockey leagues when the games are broadcast on free, over-the-air channels. Although the SBA doesn’t apply to games on DirecTV or any paid cable, satellite or streaming service, the NFL nonetheless sees it as applicable since its Sunday Ticket contract is connected to how it distributes games for free in local markets. The judge disagreed, reasoning the league’s “position taken to its logical conclusion would allow the NFL” to extend the SBA to paid telecasting, as well.

The fact that the NFL lost its motion of summary judgment doesn’t necessarily mean it will lose the case. The league can argue its system of broadcasts ought not to be disrupted given its immense popularity with fans and given that, in a world without the Sunday Ticket, some out-of-town fans might not be able to watch their teams play. From that lens, the NFL’s TV structure arguably enhances, not restricts, competition since it leads to more opportunities for fans to watch games.

The NFL can attempt an appeal of Gutierrez’s order to the Ninth Circuit, but federal appellate courts usually decline to review a case until after the trial court enters a final judgment. The league probably wants to avoid a trial since it would mean its executives and other influential figures—including commissioner Roger Goodell and owners involved in media and broadcast deals—could be called to testify. Various media and broadcast contracts could be publicly observed in a trial, too. The NFL thus might now be more inclined to offer subscribers more attractive settlement terms.

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