The NFL has rarely lost on the field, but a crushing defeat in an antitrust lawsuit could change the way the world’s richest sports league generates and distributes billions of dollars in revenue each year.
A Los Angeles jury on Thursday sided with fans who claimed the league conspired with DirecTV to raise subscription prices to watch games broadcast from their team’s home market. The $4.7 billion in damages could be tripled under federal law.
This doesn’t mean the game is over.
The judge could potentially reduce the verdict or even overturn it altogether and rule in favor of the NFL. He did not do it look favorably upon on the fans’ arguments at trial, and he dismissed the case in 2019 before it became a class action. Post-trial motions are set for July 31.
“It’s a really serious problem, but there’s a long way to go,” said Patrick Crakes, a media consultant and former Fox Sports executive who helped negotiate the network’s deals with the NFL. “As far as the big picture, the NFL’s place in the media landscape and its value, it’s not going to stop them. They’re going to keep moving forward.”
If the verdict stands, the NFL said it would appeal all the way to the Supreme Court, extending a case that dates back to 2015. San Francisco’s Mucky Duck bar filed the original suit, arguing that the Sunday Ticket the NFL forced viewers to pay. for out-of-market games, even when their team wasn’t playing – and charged high prices for it. In other words, as a fan, you have to buy the rights to every Sunday game, not just when your team plays.
It took the jury less than a day of deliberations to decide that the decision was unfair. The verdict is a shock to the way sports are delivered to consumers and a blow to the NFL, so accustomed to having the Midas touch. Even if it appeals, the league must brace itself for the potential costs of a loss.
It’s hard to know how much money the NFL has. As a private company, it doesn’t share its finances. In 2010, NFL Commissioner Roger Goodell set a revenue goal of $25 billion by 2027.
Currently, one way to estimate NFL revenue puts it at around $12 billion, according to the annual report of the Green Bay Packers, the only NFL team that publishes its finances. Each of the 32 teams receives the same amount from the NFL, and the Packers received $374.4 million in 2022, the latest figures available.
FIFA, the world soccer body, is the only other sports organization that rivals the NFL in terms of money, at least during a World Cup year. It earned more than $6 billion from the 2022 World Cup in Qatar. It has about $4 billion in cash reserves.
If FIFA has that much money, it can be assumed that the NFL at least has the ability to save up and pay the verdict, but it will take time. The same will apply to the appeal.
Change of power
The next issue – assuming the verdict is not overturned – could be a power shift between the NFL and its teams.
The NFL has kept its members happy by signing massive TV deals that make everyone rich. The NFL will receive $110 billion from its 11-year TV deal signed in 2021.
The NFL has always been special. In 1961, Congress passed the Sports Broadcasting Act after a U.S. district court ruled that the NFL was violating antitrust rules by pooling rights in a deal with CBS.
The law allowed the NFL to bundle all of the teams’ rights to make the league economically viable. But the law focused on broadcast deals, while the Mucky Duck lawsuit focused on whether the NFL violated antitrust laws with the Sunday Ticket package offered by DirecTV, a satellite provider.
If the verdict stands, teams could have the opportunity to sell their local rights and out-of-market games on cable or even a streaming service. The temptation could be heightened if the NFL tried to pass the cost of the fine onto each team — a potential amount that could be between $150 million and $450 million.
“Ultimately, it’s a free market, and hopefully it will create more opportunities for people to see NFL products,” said Sarah Hartley, a sports law professor at the University of Virginia School of Law and a partner at Bryan Cave Leighton Paisner. But she also cautioned that the legal process is far from over.
Youtube
From 2023, Youtube replaced DirecTV as the Sunday Ticket television network. It pays the NFL $2 billion a year and charges its customers $349. While the deal doesn’t involve YouTube, it’s unclear whether the streaming platform would be interested in giving more money to a team with a larger fan base and viewership. It’s also unclear whether the team’s owner thinks he can strike a better deal on his own.
Jerry Jones, the owner of the Dallas Cowboys, admitted as much during the trial. “I am convinced that I would make a lot more money than the Bengals,” he said on the stand. Which made some people laugh.
Jones is arguably the architect of the NFL’s financing of television revenue. In 1992, CBS and NBC actually lost money on NFL broadcasts. The NFL broadcast committee wanted to give the networks millions in discountsJones said no, brought a new network called Fox and started a bidding war.
When Jones resisted the discount, he was a new owner after buying the Cowboys in 1989 for $140 million. It’s now worth billions. New owners are now looking to make their mark.
