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LOS ANGELES — The way the NFL can distribute its package of out-of-market games could be decided in federal court as the result of a class-action lawsuit.
Subscribers to the NFL's "Sunday Ticket" package are claiming the league broke antitrust laws by selling its package of out-of-market Sunday afternoon games airing on CBS and Fox at what the lawsuit says was an inflated price. The subscribers also claim the league restricted competition by offering "Sunday Ticket" only on a satellite provider.
The NFL maintains it has the right to sell "Sunday Ticket" under its antitrust exemption for broadcasting. The plaintiffs say that only covers over-the-air broadcasts and not pay TV.
The case got underway on June 6 in Los Angeles. Closing statements are expected next week.
The lawsuit was originally filed in 2015 by the Mucky Duck sports bar in San Francisco. On June 30, 2017, U.S. District Judge Beverly Reid O'Connell dismissed the lawsuit and ruled for the NFL because she said "Sunday Ticket" did not reduce output of NFL games and that even though DirecTV might have charged inflated prices, that did not "on its own, constitute harm to competition" because it had to negotiate with the NFL to carry the package. Two years later, the 9th Circuit Court of Appeals, which has jurisdiction over California and eight other states, reinstated the case. On Feb. 7, 2023, U.S. District Judge Philip Gutierrez ruled the case could proceed as a class action. Gutierrez on Jan. 12 rejected a final attempt by the NFL to dismiss the case.
The class action applies to more than 2.4 million residential subscribers and 48,000 businesses, mostly bars and restaurants, that purchased "NFL Sunday Ticket" from June 17, 2011, to Feb. 7, 2023. Google's YouTube TV became the "Sunday Ticket" provider last season.
The NFL might be the king of American sports and one of the most powerful leagues in the world but it often loses in court, especially in Los Angeles. It was in an LA federal court in 1982 that a jury ruled the league violated antitrust rules by not allowing Al Davis to move the Raiders from Oakland to Los Angeles.
This is one of the rare times when a high-profile case where league financial matters would become public has gone to court without the NFL first settling. In 2021, the league settled with St. Louis, St. Louis County and the St. Louis Regional Convention and Sports Complex Authority for $790 million over the relocation of the Rams to Los Angeles.
According to memos presented by attorneys for the plaintiffs, Fox and CBS have always wanted the league to charge premium prices for "Sunday Ticket" so that it doesn't eat into local ratings — the more subscribers to "Sunday Ticket," the greater the threat to local audience numbers.
During opening statements, attorney Amanda Bonn showed a 2020 term sheet by Fox Sports demanding the NFL ensure "Sunday Ticket" would be priced above $293.96 per season.
When the "Sunday Ticket" contract was up for bid in 2022, ESPN wanted to offer the package on its streaming service for $70 per season along with offering a team-by-team product, according to an email shown by Bonn. That was rejected by the NFL.
The attorneys representing the subscribers have made this case more complicated than it should be, according to the judge. Instead of calling some of the fans or Jason Baker, the owner of the Mucky Duck, they have relied on economists who gave complicated testimony.
Gutierrez voiced his frustration over the case when he told the plaintiffs' attorneys: "The way you have tried this case is far from simple. This case has turned into 25 hours of depositions and gobbledygook."
NFL Commissioner Roger Goodell took the stand on June 17 for the first time since he began his tenure in 2006. Dallas Cowboys owner Jerry Jones, retired CBS Sports chairman Sean McManus and Larry Jones, executive vice president of Fox Sports, have also testified.
Daniel Rascher, a sports economist at the University of San Francisco, was called as an expert witness by the subscribers' attorneys.
If the NFL is found liable, a jury could award $7 billion in damages, but that number could balloon to $21 billion because antitrust cases can triple damages.
Not for awhile, since the NFL would appeal to the 9th Circuit and possibly the Supreme Court after that.
The NFL could offer a team-by-team package, something done by Major League Baseball and the NBA for its out-of-market packages, and actively market a weekly package if fans didn't like games being shown in their area.
Since all the major leagues offer out-of-market packages, they are keeping an eye on this case since individual teams selling their out-of-market streaming rights, especially in baseball, would further separate the haves from the have nots.
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