The NFL has rarely been a loser on the field, but a decisive defeat in an antitrust case 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 ruled in favor of fans who claimed the league colluded with DirecTV to raise subscription prices for games broadcast from their team’s home market, awarding $4.7 billion in damages that could triple under federal law.
That doesn’t mean the game is over.
The judge could possibly reduce the verdict or even overturn it entirely and rule in favor of the NFL. He has not look positive due to arguments made by fans during the trial, and he dismissed the case back in 2019 before it became a class action lawsuit. Post-trial motions are scheduled for July 31.
“It’s a really serious problem, but there’s still a long way to go,” said Patrick Crakes, a media consultant and former Fox Sports executive who helped negotiate the network’s contracts with the NFL. “As far as the NFL’s overall image and place in the media landscape and its value, this is not going to stop them. They’re going to keep doing what they’re doing.”
If the ruling stands, the NFL will appeal all the way to the Supreme Court, extending a case that dates back to 2015. San Francisco bar Mucky Duck filed the original lawsuit, arguing that the NFL’s Sunday Ticket forced viewers to pay for games outside their market even when their team wasn’t playing – and charged high prices for doing so. In other words, as a fan, you must purchase the rights to every game on a Sunday, not just your team’s games.
The jury took less than a day to decide the verdict was unfair. The ruling is a shock to the way sports are delivered to consumers and a major blow to the NFL, which is used to having the Midas touch. Even though it will appeal, the league must factor in the potential cost of losing.
It’s hard to say how much money the NFL has. As a private company, it doesn’t disclose its finances. Back in 2010, NFL Commissioner Roger Goodell set a revenue target of $25 billion by 2027.
Currently, the NFL’s revenue can be estimated at about $12 billion, according to the annual financial statements 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, soccer’s world governing body, is the only other sports federation that rivals the NFL financially, at least during a World Cup year. It earned over $6 billion from the 2022 World Cup in Qatar. It has about $4 billion in cash reserves.
If FIFA has that much money, it’s safe to assume that the NFL will at least be able to save up the money and pay the verdict. But that will take some time. The same goes for the appeal.
Power shift
The next problem – assuming the ruling is not overturned – could be a shift in power between the NFL and its teams.
The NFL has kept its members happy by signing huge TV deals that make everyone rich. The NFL will receive $110 billion from its 11-year TV contract it 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 had violated antitrust laws by bundling rights in a contract with CBS.
The law allowed the NFL to pool the rights of all teams to make the league economically viable. However, the law focused on broadcast contracts, while Mucky Duck’s lawsuit was about whether the NFL had violated antitrust laws with the Sunday Ticket package offered by DirecTV, a satellite provider.
If the ruling stands, teams could gain the ability to sell their local rights and games outside of their market through cable or even a streaming service. The temptation could be even greater if the NFL tried to pass the cost of the fine on to each team – a potential hit that could range from $150 million to $450 million.
“Ultimately, it’s a free market and the hope is that this will give more people the opportunity to watch 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 cautioned that the legal process is far from over.
Youtube
From 2023 Youtube has replaced DirecTV as the home of Sunday Ticket. It pays the NFL $2 billion a year and charges customers $349. While YouTube was not involved in the case, it’s hard to say whether the streaming platform is better off giving more money to a team with a larger fan base and more viewers. It’s also hard to say whether the team owner believes he can negotiate a better deal himself.
Jerry Jones, the owner of the Dallas Cowboys, admitted this during the trial. “I am convinced that I would make a lot more money than the Bengals,” he said on the witness stand. This caused some laughter.
Jones is arguably the architect of the NFL’s financing through television revenues. In 1992, CBS and NBC actually made losses on NFL broadcasts. The NFL broadcast committee wanted to give the broadcasters millions in Discounts. Jones said no, brought a new network called Fox and started a bidding war.
When Jones fought back against the refund, he was the new owner, having bought the Cowboys for $140 million in 1989. Today, the company is worth billions. There are now new owners looking to make a name for themselves.