NFL ‘Sunday Ticket’ At Stake As Court Clears Way For Major Antitrust Trial

Winston Cho
·6 min read
12

There’s a stark contrast to how the NFL approaches broadcast rights to its out-of-market football games compared to the other four professional sports leagues: Fans who want to watch games that aren’t broadcast locally must purchase the Sunday Ticket premium offering.

On Thursday, a federal judge found that the NFL must face a multibillion dollar trial in February challenging the bundling of those rights by its 32 teams and the league exclusively licensing those telecasts. U.S. District Judge Philip Gutierrez concluded that there’s enough evidence to suggest that there may be monopoly ownership of out-of-market games through a multilevel conspiracy that resulted in inflated prices for Sunday Ticket buyers.

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The eight-year-old legal battle centers on allegations that the NFL and its clubs conspired in violation of antitrust laws to allow the league to reach exclusive deals with broadcast partners for the right to air out-of-market games. According to multiple class action complaints over the issue, NFL teams would compete against each other in this market absent the bundling of those rights, possibly through individual online streams of games.

Under the current regime, viewers must buy Sunday Ticket to watch games outside of their home market. In 2022, the NFL struck a deal with Google’s YouTube for the rights, which used to be held by DirecTV.

A jury trial is scheduled to start on Feb. 22, with damages estimated at $6.1 billion. The class action seeks an order barring further violations of antitrust law, which could bar the NFL from exclusively offering out-of-market games to a single provider.

Ruling against the NFL on summary judgment, the court found that it’s “misleading” for the NFL to argue that its 32 teams can’t be a part of the alleged conspiracy because they technically weren’t parties to its deal with DirecTV. The members clubs, it reasoned, “sanctioned the deal.”

“Further, the NFL, through the NFL-Network Agreements—which the member clubs ratify — comes to own the copyrights of the game telecasts produced by CBS and FOX,” the order stated. “It is those copyrights that the NFL licenses to DirecTV.”

The U.S. 9th Circuit Court of Appeals provided some guidance on the decision. On dismissal, the federal appeals court found that it’s reasonable to sue the NFL — despite the fact that plaintiffs purchased the Sunday Ticket package from DirecTV — because the suit “adequately alleges that DirecTV conspired with the NFL and the NFL Teams to limit the production of telecasts to one per game.” This alleged multilevel conspiracy to violate antitrust laws, it explained, caused the antitrust injury at issue in the case.

According to the order, there are multiple agreements at issue in the case that may have resulted in DirecTV’s monopoly ownership of out-of-market telecasts. Among them: A deal with the NFL and its teams agreeing not to compete with one another in telecasting their games and instead conveying those rights to the NFL; the league’s agreement with CBS and Fox to create a single telecast for every Sunday afternoon NFL game, with the networks in turn being granted the exclusive right to broadcast a limited number of games through free, over the air TV in local markets; and an agreement between the NFL and DirecTV enabling the bundling of out-of-market games into the Sunday Ticket subscription package.

Gutierrez said that these deals may be anticompetitive, because they could’ve prevented teams from individually producing telecasts of games.

“If the member clubs have agreed not to produce their own telecasts, then the member clubs can individually compete neither with DirecTV—for out-of-market telecasts—nor CBS and FOX—for local broadcasts,” the judge wrote. “Provisions in the NFL-Network Agreements also restrict the NFL and its member clubs from offering their own out-of-market telecasts.”

Under the league’s deal with CBS and Fox, no more than two games can be broadcast at the same time in any given local market. This effectively provides the networks exclusive rights to certain games.

Testimony from NFL chief media and business officer Brian Rolapp didn’t help. He said that Sunday Ticket is intended to be a “complementary premium product” that’s “priced and distributed as a premium,” implying that the NFL drafted its deal with the networks to “reduce competition for the CBS and FOX broadcasts.” The court stressed, “The only option for the NFL and its member clubs to resell out-of-market telecasts is as a premium subscription package, which DirecTV has purchased the right to provide.”

Further enhancing the value of Sunday Ticket through potentially anticompetitive means was the NFL’s deal with DirecTV, according to the order. The court pointed to three provisions in the agreement: Restrictions on the number of over-the-air broadcasts that can be distributed nationally and the specification of a minimum number of games that must be “regionalized,” which left DirecTV as the only provider to out-of-market viewers; an embargo on telecasts appearing on more than one channel, reducing the number of games shown locally for free; and a mandate that no more than two over-the-air broadcasts can be shown in any location at one time, which allowed the satellite giant to provide to a region telecasts of all the other games besides the two that were being provided for free by CBS or Fox.

Gutierrez concluded the evidence could lead a jury to conclude that the NFL provided DirecTV “exclusive control of out-of-market telecasts.”

Also at issue in the case was whether the NFL has an antitrust exemption through the Sports Broadcasting Act, which permits major sports leagues to bundle teams’ broadcasting rights. Congress passed the law in 1961 in response to lobbying from the NFL, recognizing that such behavior could run afoul of the Sherman Act, an antitrust law barring unreasonable restraints of trade, among other things.

The court sided with plaintiffs that the exemption doesn’t immunize the NFL because they’re not challenging the league’s collective sale of telecast rights to free, over-the-air TV networks, which is covered by the SBA, but rather contracts with service providers for which subscribers are charged a fee. The defendants, it said, “infer a broader antitrust exemption than the SBA provides.”

Gutierrez added, “The SBA cannot be read to immunize contracts that restrict competition for paid telecasts.”

A jury trial is scheduled to start on Feb. 22. Last year, the court certified two classes of residential and commercial subscribers who purchased Sunday Ticket from 2011 to 2022, including bars and restaurants. The order was issued after the case took a trip to a federal appeals court, which reversed a ruling dismissing the case. The NFL didn’t immediately respond to a request for comment.

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