NFL Sunday Ticket class action lawsuit heads to trial

Nine years ago, a group of NFL Sunday Ticket subscribers sued the league over an issue that has fueled antitrust prosecutions since the 1950s: Do NFL teams that limit how they compete in broadcast licensing violate antitrust law?

This fundamental legal question will face a jury trial that begins next Wednesday in the courtroom of U.S. District Judge Philip Gutierrez in Los Angeles. Gutierrez certified last year In Re: Antitrust proceedings regarding the “Sunday ticket” in the NFL league as part of a class action lawsuit on behalf of over 2.4 million individual subscribers and over 48,000 restaurants, bars and other retail establishments that purchased Sunday Ticket between June 17, 2011 and February 7, 2023 (these dates reflect applicable statutes of limitations ).

Sunday Ticket is available on YouTube TV for $349 per year, although various discounts, promotions and add-ons may change the price. It was previously available through DirecTV.

On Wednesday, both sides presented Gutierrez with a proposal for a common position on the matter, summarizing the dispute. Unless the trial is preceded by a last-minute settlement, the courtroom could feature fascinating and revealing witness testimony from several courageous professional soccer players. Attorneys for the defendants have previously indicated that they may call Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert Kraft as witnesses. Meanwhile, the defendants plan to call NFL Commissioner Roger Goodell as a witness for 45 minutes of live testimony.

It is possible that Goodell would like to avoid a situation in which he would be cross-examined by opposing counsel, especially given recent events. Earlier this year, another court unveiled transcripts of Goodell’s 2022 deposition given in a class-action lawsuit filed against the NFL by former players who accused the league of blame for long-term brain damage they suffered while playing. In his testimony, Goodell made several comments that were met with criticism and appeared to undermine the scientific consensus on the link between concussions and certain brain diseases.

This latest class action lawsuit undoubtedly pales in severity.

The plaintiffs allege that the league and teams are violating antitrust law and raising costs for fans by making some out-of-market broadcasts available exclusively through Sunday Ticket. NFL teams pool their broadcast rights and contractually agree to respect other teams’ exclusive broadcasting territories. This solution ensures, for example, that Detroit Lions games are broadcast in the Detroit area, and the Lions team does not have to worry about other NFL teams broadcasting games to Detroit.

But NFL teams could act differently. Instead of New England Patriots fans living in Detroit having to buy a Sunday ticket to watch their favorite team, the Patriots could negotiate with a television network to broadcast Lions games in the country. In an alternate universe where teams invade territories broadcast by other teams, Patriots fans will be able to watch New England games for free, or at least for less than they pay for a Sunday ticket.

The plaintiffs will rely heavily on their lead expert witness, economist Daniel Rascher, who previously served as plaintiffs’ expert in several antitrust lawsuits brought by athletes against the NCAA, including House v. NCAA. Meanwhile, the NFL will rely primarily on expert testimony from Douglas Bernheim, a Stanford economist who previously testified for plaintiffs in the landmark vitamin C pricing trial and the recent Epic Games v. Google a lawsuit.

If “Sunday Ticket” plaintiffs win, and the victory withstands an appeal to the U.S. Court of Appeals for the Ninth Circuit and the U.S. Supreme Court, could result in more than $6 billion in damages and force the NFL to revise its broadcasting policy.

Topics presented by In Re: Antitrust proceedings regarding the “Sunday ticket” in the NFL league stem from the unique business structure of professional leagues, especially the NFL. The NFL oversees 32 individual franchises, which of course compete on and off the field, but also sometimes collaborate to create a functional professional sports league.

For this purpose, NFL teams have to agree on the rules of the game. If teams do not agree that a touchdown counts as six points or that a fumble occurs when a player has possession of the ball and loses it before being tackled, those teams will not be allowed to play competitive games. But as the United States Supreme Court has ruled American Needle v. NFL (2009), teams do not have to cooperate in licensing clothing intellectual property. Instead, they could compete with each other, with one team signing with Nike, another with Reebok, another with New Balance, and so on.

Collaboration between NFL teams on broadcasts caused legal problems for the NFL as far back as the 1950s. The United States Department of Justice sued the NFL on antitrust grounds, challenging how teams agreed in the league’s charter and bylaws to refrain from competing in other teams’ home territories (typically 75 miles in each direction from the outer limits of the city in which they play). This restriction prevented out-of-town television stations from competing to broadcast games that could be broadcast to fans. A federal judge in 1953 agreed that NFL fans should not be deprived of the fruits of greater broadcasting competition.

In 1961, the NFL won a major legislative victory when Congress passed and President John F. Kennedy signed the Sports Broadcasting Act. The SBA provides limited antitrust relief to professional football, basketball, baseball, and hockey leagues when they negotiate a national television agreement with a network that provides “sponsored television broadcasts” (meaning free and over-the-air broadcasts of games).

SBA reveals a seemingly archaic broadcasting world in which Americans watched a handful of television channels received through an antenna placed on their television set or on the roof. The broadcasts were “free” in the sense that Americans did not pay to watch them, but since the stations sold airtime for advertising, it still made economic sense. SBA does not apply to cable, streaming or pay satellite television because they are not broadcast over the air AND free.

Case closed? Not so fast.

The NFL has plenty of counterarguments that could convince a jury or, if necessary, an appellate court.

First, the league maintains that the plaintiffs’ case could unravel an agreement that appears to appeal to fan consumers. Last year, the NFL aired 93 of the 100 most-watched TV shows in the US. No other league, sport, politician, or TV show – really All— credibly competed with NFL broadcasts. In the lawsuit, the league warned that if teams could not cooperate on broadcast arrangements, the economics of NFL broadcasting would change, with undesirable consequences. Some games may not be available on free TV options. Some teams could move games from free-to-air television to premium cable.

At this point, the league insists its television offerings “are among the most consumer-friendly entertainment products in the world,” and local fans can watch home games on free-to-air television, a stark comparison to other leagues where local fans often have to pay to watch regular season games on TV.

The seemingly outdated SBA is also potentially relevant to the process. First, consumers can still use antennas to receive local and even out-of-town broadcasts. Some relatively inexpensive antennas available at retail claim to capture programs from thousands of miles away. Second, the SBA is embroiled in a situation in which, the NFL claims, the league’s ability to broadcast free games locally will be jeopardized if litigation forces changes in the allocation of broadcast rights.

While the NFL has a potentially compelling legal argument, the league is likely taking a risk by going to trial. Some of the NFL’s most valued figures could face difficult questions under oath and be forced to share business information they would prefer to keep secret. Don’t be surprised if the case is settled before jury selection begins next Wednesday.