LOS ANGELES -- Professional sports leagues have 4.8 billion reasons to review how they distribute out-of-market broadcasts after Thursday's judgement against the NFL in the “Sunday Ticket” case in U.S. District Court.
“It’s going to require other leagues to take a close look at their model and make sure that the means by which they’re providing consumer choice really does ensure true choice,” said Christine Bartholomew, vice dean and professor in the University of Buffalo's School of Law. “What happened here, at least according to the jury, was that the NFL had really suppressed consumer choice. Not only did they steer the consumers towards using satellite TV, it meant that they had to buy the whole package.”
The jury of five men and three women determined the NFL violated antitrust laws in distributing Sunday afternoon games not aired locally on Fox or CBS on a premium subscription service that only had one distributor. That kept the cost of the package high and limited those who could subscribe so that it would not impact local ratings.
The class-action lawsuit covered 2.4 million residential subscribers and 48,000 businesses in the United States who paid for the package of out-of-market games from the 2011 through 2022 seasons on DirecTV.
The jury awarded $4.7 billion in damages to the residential class and $96 million in damages to the commercial class. Since damages can be tripled under federal antitrust laws, the NFL could end up being liable for $14.39 billion.
Major League Baseball, the National Basketball Association and National Hockey League also offer out-of-market packages, but they are structured in a different manner compared to the NFL. All three are offered on cable and satellite providers as well as streaming.
With their digital packages, MLB and the NBA offer multiple options, including a team-by-team package. The NBA also offers a pay-by-game option.
The NHL's digital package in the U.S. is included in the subscription to the ESPN+ streaming service.
The MLB, NHL and NBA packages also come in at a lower subscriber fee than “NFL Sunday Ticket” despite having longer seasons.
Ari Lightman, a professor of digital media and marketing at Carnegie Mellon University, said the NFL will need to be more in line with consumer demands going forward.
“They need to understand different audiences in terms of where they exist, how fans interact and what they’re looking for,” he said. “They want things that fit and are personalized to their needs because anything in excess that they're paying for is unwanted stuff, which is the whole idea around bundling. ... The price point that they were offering on the ‘Sunday Ticket’ package was just a little bit extreme."
Some also remained surprised that the NFL allowed the case to go to court without settling. The league hasn't fared well in antitrust cases and has settled most before they got to court.
In 2010, the Supreme Court ruled in American Needle's case against the NFL that the league was a collection of 32 teams and not a single entity. The cap maker sued the NFL in 2004 for violating antitrust laws for reaching an exclusive deal with Reebok, that began in 2001.
Justice John Paul Stevens wrote in his opinion that “Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities.”
The NFL and American Needle eventually settled the case in 2015.
Judge Philip S. Gutierrez is scheduled to hear post-trial motions on July 31, including the NFL’s request to have him rule in favor of the league because the judge determined the plaintiffs did not prove their case.
The NFL has said it would appeal the verdict. That appeal would go to the 9th Circuit Court of Appeals and then possibly the Supreme Court.
Payment of damages, any changes to the “Sunday Ticket” package and/or the ways the NFL carries its Sunday afternoon games would be stayed until all appeals have been concluded.
During closing arguments, the plaintiffs showed a 2017 memo where the NFL was exploring putting games not shown on Fox or CBS on cable channels.
The possibility also remains that somewhere down the line the NFL settles the case. The lawsuit was originally filed in 2015 by the Mucky Duck sports bar in San Francisco but was dismissed two years later in U.S. District Court in Los Angeles. The 9th Circuit Court reinstated the case in 2019.
“ People were critical of the way the plaintiffs' case was put on because of the complicated nature of the evidence. Apparently it was the right strategy because they came out victorious," said Irwin Kishner, co-chair of the Sports Law Group with New York law firm Herrick. "And the NFL trying to bring up wealthy owners might not have the best strategy. Hindsight’s always 20/20.”
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There are 4.8 billion reasons why other leagues are watching the fallout from 'Sunday Ticket' case
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June 30, 2024 at 03:17AM
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