The shocking $4.7 billion ruling against the NFL could disrupt the balance of power between the league and its teams
The NFL has rarely been a loser on the field, but a lopsided blowout in an antitrust lawsuit could change how the world’s richest sports league generates and distributes billions of dollars in revenue every year.
A Los Angeles jury on Thursday sided with fans who claimed the league conspired with DirecTV to raise the price of subscriptions to watch games broadcast out of their team’s home market. The $4.7 billion in damages could be tripled under federal law.
That doesn’t mean the game is over.
The judge could potentially slash the verdict or even throw it out entirely and rule in the NFL’s favor. He didn’t look favorably on the fans’ arguments during the trial, and he dismissed the case back in 2019 before it turned into a class action. Post trial motions are set for July 31.
“It’s a real serious problem, but there’s a long way to go,” said Patrick Crakes, a media consultant and former Fox Sports executive who helped to negotiate the network’s deals with the NFL. “As far as the bigger picture goes and the NFL’s place in the media landscape and their value, it’s not going to stop them. They are going to keep rolling on.”
If the verdict stands, the NFL said it will appeal all the way to the Supreme Court, prolonging a case that dates back to 2015. The Mucky Duck bar in San Francisco filed the original lawsuit, arguing that the NFL’s Sunday Ticket 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 must buy the rights to every game on a Sunday, not just when your team plays.
The jury took less than a day of deliberations to decide that was unfair. The verdict is a shock to how sports are offered to consumers, and a major blow to the NFL, so used to having the Midas touch. Even though it will appeal, the league has to plan for the potential costs of losing.
It’s hard to know how much cash the NFL has. As a private company, it doesn’t share its finances. Back in 2010, NFL Commissioner Roger Goodell set a revenue target of $25 billion by 2027.
Right now, one way to estimate the NFL’s revenue puts it at about $12 billion, according to the annual statement of the Green Bay Packers, the only NFL team that publishes its finances. Each of the 32 teams get the same amount from the NFL, and the Packers got $374.4 million in 2022, the last available figures.
FIFA, the world soccer body, is the only other sports organization that competes with the NFL in terms of money, at least during a World Cup year. It made over $6 billion from the Qatar World Cup in 2022. It has about $4 billion in cash reserves.
If FIFA has that much cash, you can assume that the NFL at least has the ability to save up and pay the verdict, but it will take some time. So will the appeal.
Power Shift
The next issue – assuming the verdict isn’t 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 makes everyone rich. The NFL will get $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 US district court ruled the NFL was breaking antitrust rules by pooling rights in a deal with CBS.
The Act allowed the NFL to bundle all the teams’ rights together to make the league economically viable. But the Act focused on broadcast deals, while the Mucky Duck lawsuit focused on whether the NFL broke antitrust laws with the Sunday Ticket package offered by DirecTV, a satellite provider.
If the verdict stands, teams could be granted the opportunity to sell their local rights and out-of-market games on cable or even a streaming service. The temptation could be strengthened if the NFL tried to pass on the cost of the fine to each team — a potential hit that could be anywhere from $150 million to $450 million.
“Ultimately, it’s a free market, and the hope is that it will create more opportunity for people to view the NFL product,” said Sarah Hartley, a sports law lecturer at the University of Virginia School of Law and a partner at Bryan Cave Leighton Paisner. But she also cautioned that legal process is far from over.
YouTube
Starting in 2023, YouTube replaced DirecTV as the home of Sunday Ticket. It pays the NFL $2 billion a year and it charges customers $349. Even though the case didn’t involve YouTube, it’s hard to tell if the streaming platform will be better off giving more money to a team with a bigger fan base, and viewers. It’s also hard to know whether team owner thinks they can strike a better deal on their own.
Dallas Cowboys owner Jerry Jones admitted as much during the trial. “I’m convinced I would make a lot more money than the Bengals,” he said on the stand. It got some laughs.
Jones is arguably the architect for the NFL being funded by TV revenues. Back in 1992, CBS and NBC actually lost money on NFL broadcasts. The NFL broadcast committee wanted to give the networks millions in rebates. Jones said no, brought in a new network called Fox, and started a bidding war.
When Jones fought back against the rebate, he was a new owner after buying the Cowboys in 1989 for $140 million. It’s now worth billions. There are now new owners looking to make their own mark.
