The 5 O’Clock Club: A serious court challenge may change the way the NFL sells its games to fans (2024)

The 5 o’clock club is published from time to time during the season, and aims to provide a forum for reader-driven discussion at a time of day when there isn’t much NFL news being published. Feel free to introduce topics that interest you in the comments below.

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SB Nation has a lot of smart people (and a few dumber ones like me) writing under its umbrella. A couple of days ago, one of the smart ones who has a legal background, Mark Schofield, wrote an in-depth and interesting article about the NFL’s billion-dollar antitrust case with ‘Sunday Ticket’.

I had put a Twitter link to an article on Pro Football Talk on the same topic in yesterday’s Daily Slop, but because the All a’Twitter section of the article had gotten too long, I deleted it.

I decided to, instead, quote from the more detailed and informative article on SB Nation, and use it as a discussion topic in today’s 5 O’Clock Club.

For anyone who doesn’t want to read the entire SB Nation article, here are the highlights:

On Thursday opening arguments are scheduled to begin in In re: National Football League Sunday Ticket Antitrust Litigation, a class action lawsuit currently pending in the United States District Court for the Central District of California. The class action case alleges that the Defendants (the NFL and its member teams) as well as the league’s broadcast partners, and DirecTV engaged in a conspiracy to violate Articles 1 and 2 of the Sherman Act, which governs United States antitrust law.

In a nutshell, the Plaintiffs are alleging that the Defendants — again the NFL and its member teams — as well as the league’s broadcast partners and DirecTV engaged in a conspiracy regarding the NFL Sunday Ticket product, where out-of-market fans were forced to pay substantial sums of money to watch their favorite teams in action.

Specifically the Plaintiffs allege three components of this conspiracy. First, that the teams have agreed not to compete with each other when it comes to producing telecasts of their games, instead conveying those rights to the league, and giving the NFL “exclusive” rights to enter into broadcast agreements.

Next, the Plaintiffs allege that the NFL has entered into agreements with broadcast partners — specifically CBS and FOX — to create a “single telecast” for every Sunday afternoon NFL game. Under the agreement, according to Plaintiffs’ theory of the case, those networks are given the “exclusive” right to broadcast a limited number of games free and “over-the-air.”

The third pillar of the conspiracy, according to Plaintiffs’, is that the league then exclusively (there is that word again) licenses to DirecTV the copyrights of those telecasts, which DirecTV then bundles into NFL Sunday Ticket. This means that out-of-market fans who want to watch their favorite teams play are forced into buying the “premium offering” of NFL Sunday Ticket.

[What is] the result [of this], according to [the] Plaintiffs? DirecTV was able to “charge supercompetitive prices for Sunday Ticket because fans unwilling to pay for Sunday Ticket cannot, for example, purchase out-of-market games individually or by team.” Plaintiffs assert that absent this agreement — or “conspiracy” as they term it — fans would be able to access all NFL games at “lower prices.”

Plaintiffs’ brought this class action suit alleging violations of Sections 1 and 2 of the Sherman Act, seeking billions of dollars in damages. The Sherman Act is a Federal law which governs antitrust law in the United States.

Originally passed in 1890, the Sherman Antitrust Act broadly seeks to prevent anticompetitive agreements, and unilateral conduct that creates monopolies, or tries to monopolize a relevant commercial market.

Class action lawsuits involve “representative” plaintiffs, who stand in the litigation as representatives of the entire group of plaintiffs.

In Feburary of 2023, the United States District Court for the Central District of California certified the litigation as a class action lawsuit, and then in January of this year U.S. District Court Judge Philip S. Gutierrez denied another Motion for Summary Judgement filed by the Defendants.

In that Opinion, Judge Gutierrez walked through the four pillars raised by the Defendants when seeking summary judgement. First, the Defendants argued that the Plaintiffs lack “standing” to seek damages, alleging that the Plaintiffs purchased “nothing” from the NFL and cannot “prove” a conspiracy. Second, the Defendants argued that the “Sports Broadcasting Act” (SBA) prevents Plaintiffs from bringing a claim, since the Plaintiffs are also challenging agreements between the NFL and CBS and FOX, and the SBA bars those claims.

Third, the Defendants argued that the Plaintiffs cannot prove that Defendants “took concerted action nor that the concerted action unreasonably restrained trade.” Finally, the Defendants alleged that once those three arguments fail, all that is left for the Plaintiffs to challenge is the direct agreement between the NFL and DirecTV. That agreement standing alone, Defendants argued, was not enough to show a violation of the relevant Sherman Act sections.

Judge Gutierrez, in the lengthy 30-page opinion, dismissed those arguments.

As things stand at the moment, a Jury Trial is underway in front of Judge Gutierrez in Courtroom 6A of the United States District Court for the Central District of California. The trial is set [to begin in] 13 days.

As for what to expect?

Who knows. But you might want to prepare for some kind of settlement in the coming days.

[There is] risk for both sides. The Plaintiffs are at risk of losing this case after years of incurring litigation costs. The Defendants [the NFL] are at risk of being hit with a massive monetary damages award, and potentially a new system of NFL media rights where fans can purchase individual games or team specific packages. A loss in this litigation could also mean that the league is forced to allow for multiple Sunday Ticket packages, creating competition and driving down prices.

Living abroad as I do, this issue means little to me. I have, since 2012, purchased a subscription to the NFL’s international delivery platform ‘Game Pass’, which gives me access to every game, every week, as well as All-22 ‘coach’s film’, a library of previous seasons’ highlights and games, NFL Network, and a large library of original NFL Films content.

But I have gleaned from years of reading the comments section of Hogs Haven that access to games and associated costs have been an issue for many fans, and that, with the NFL’s ongoing commitment to a expanding array of agreements with broadcast partners and an increasing variety of platforms, while access to games in aggregate may be a solvable problem, the cost of access and lack of ability to pick and choose specific games or teams is a significant issue for many NFL fans.

A core legal concept at work in all of this is the anti-trust exemption that was granted to the NFL in 1961, shortly after I was born. The exemption allows the league to negotiate broadcasting contracts on behalf of all teams collectively rather than forcing the teams to strike individual deals with broadcasters, which would be the situation if the exemption were not in place.

No one seems to think that the current court case will lead to the elimination of the antitrust exemption that has been in place for 63 years, but imagine for a moment what it would mean if that were to be the eventual outcome.

Popular teams like the Cowboys and successful teams like the Chiefs would dominate the broadcast platforms with wide and frequent distribution, and the income could potentially flow directly to those teams rather than to the league, as it does now. Small market teams could find themselves scrambling to get the same kind of lucrative deals, having to settle for games being broadcast only by the local TV stations; this would be especially true for a struggling franchise that would be currently typified by, for example, the Carolina Panthers. The Snyder-era Redskins likely would have suffered a similar fate despite being a large-media-market team for reasons I’m sure I don’t have to enumerate here.

The flow-on effects with respect to salary cap and free agency would be unpredictable but could possibly result in the NFL coming to resemble Major League Baseball, in which ‘rich’ teams could simply out-spend ‘poor’ teams in pursuit of championships (which was largely the case in the NFL before the introduction of the salary cap on 1994).

Because I am unaffected by the broadcast practices of the NFL in the US, I may be completely unaware of other obvious issues related to the ongoing changes in the NFL’s distribution of its product in both free-to-air and paid platforms. I do understand, however, why a pay-per-view menu that allowed an NFL fan to pick the games he or she wanted to watch would be seen as a positive outcome for the many out-of-market fans who seem to struggle to find ways to watch their favorite teams from week to week.