Could this lead to the ability to finally unbundle your NFL games? Maybe. Eventually.
Football fans are a formidable bunch, and anyone attempting to inhibit their ability to watch their favorite teams is likely to be on the business end of a metaphorical “truck stick.” But the face-painting cosplay “super fan” crowd has nothing on the group of individuals and businesses that have been suing the NFL and DirecTV for nearly a decade over the price of the NFL Sunday Ticket Package.
For the uninitiated, if you don’t live in your team’s home market but still want to watch them play on Sundays, your only two options are to go to a local bar that may have Sunday Ticket or purchase it yourself. If you choose to buy Sunday Ticket, there is no option simply to purchase a la carte access to, say, the Jets or Giants. Instead, you have to buy all of the games (including the crappy ones) together.
This “all or nothing” proposition drove a group of fed-up individuals and business owners in 2015 to sue the league and DirecTV over what it alleged to be antitrust violations.
Since then, there have been a number of twists and turns, including when a California federal court dismissed the case altogether and the Ninth Circuit Court of Appeals reversed that decision in 2019. The most recent chapter of this saga commenced earlier this month as the judge currently presiding over the case certified it as a class-action.
For those scoring at home, this is a really big deal.
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The NFL Cartel
If you follow any sports law wonks, you may have heard the NFL described as a “cartel” once or twice — and no, the league isn’t doing any illicit drug running.
A cartel is really just any group that works together to maintain artificially high prices for a service in order to restrict competition.
Though some think of the NFL as a monolithic entity, it’s really just an association of individual businesses (i.e. the teams). So if you begin to look at each NFL team as a separate business, you can start to see how “cartel” is a fitting title. This cartel-esque relationship among the 32 teams has benefitted them as they are the most successful sports league in the United States. Unfortunately for the NFL, the manner in which they do business as a collective is also at the heart of the Sunday Ticket lawsuit.
Because the league brokers its media rights as a unit (as opposed to on an individual team basis), it opens the NFL up to potential antitrust issues. “Antitrust” is just an outdated term to refer to the body of law that governs monopolies and anticompetitive business practices.
Hindering Competition
The plaintiffs’ first argument is that the NFL’s practice of brokering its media rights as a cartel has hindered competition in the market for broadcasting individual teams’ games, harming the consumer.
The supporting theory is that if individual NFL teams didn’t sell their media rights as a unit, individual teams would compete to sell the broadcast rights for their games to different distributors, which would enable the average NFL fan to purchase only the games they want to watch.
History and legal precedent back this argument. The United States Department of Justice sued the NFL in 1951, alleging antitrust violations stemming from their decision to outlaw teams from striking individual broadcast deals. A federal court judge sided with the Justice Department and briefly prevented the NFL from acting as a cartel with respect to their broadcast rights. The NFL solved this problem by lobbying Congress to pass a law called the “Sports Broadcasting Act,” which gave the big four major sports an exemption from federal antitrust law such that they were allowed to start brokering their media rights as a group.
However, as technology evolved, the courts began to rule that the SBA only protected league contracts with “over the air” or network television stations and that the exemption did not apply to cable TV networks like ESPN or satellite providers such as DirecTV. Thus, the NFL is no longer immune from being sued for antitrust violations as a result of its joint contracts with providers like DirecTV or Google/YouTube.
It remains to be seen how successful this argument will be. It’s hard to say whether individual teams would still try to sell their local broadcast rights in addition to the joint league contract because it would dilute the value of the league-wide broadcast contracts, which is what keeps franchise values high and owners happy.
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The Broadcasting Monopoly
The second argument is an interesting one, asserting that the NFL has a monopoly over broadcasting professional football
This becomes more complicated in light of the emergence (or reemergence) of fledgling professional football leagues like the XFL and USFL. The critical task for the plaintiffs’ lawyers will be properly defining the relevant market because the NFL certainly has the market share in terms of attention, but is no longer the “only game in town.” Of course they have a monopoly over the broadcasting rights for NFL teams in New York or Los Angeles, but that’s arguably a different market altogether.
However, what is undeniable is the impact on consumers because of the “take it or leave it” format of Sunday Ticket. It forces individuals to buy every game for $293.94 and sometimes upwards of $100,000 for commercial customers like bars. The lack of a middle ground might be a sticking point in a potential settlement, as one could see the NFL requiring Google/YouTube to allow customers to purchase games “a la carte” instead of the bundle.
The Path Forward
The reason why any of this is considered “news” is because the judge has certified two classes of plaintiffs for the case. That means there are now two distinct groups of potential plaintiffs: residential Sunday Ticket customers and commercial Sunday Ticket customers — and you don’t have to be lawyer to figure out that the more people who were harmed, the bigger the recovery is likely to be. Class actions allow a few named plaintiffs to represent a class of individuals who effectively have the same claim(s) against common defendant(s), which is more efficient than having thousands of separate lawsuits clogging up the system over the same issue.
In practical terms, the class certification means that things are getting real, so much so that you might expect to see some movement ahead of the rollout of YouTube’s version of Sunday Ticket. It might even result in the ability to unbundle your NFL games soon — though I wouldn’t hold my breath.
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