Summer is usually a slow time for fans of football. There are usually some trade talks here or there throughout the summer lull to keep fans talking. Maybe even a contract dispute that grabs a few headlines. But the intense on-field battles fans crave are on hold until the fall.
The summer of 2024 is shaping up to be a little different, at least in the eyes of the NFL brass. The NFL has been locked in a legal battle of its own that has now resulted in a $4.7 billion jury verdict that threatens a core aspect of its lucrative business model.
Worse yet for the NFL, U.S. antitrust law allows for the tripling of damages, which would balloon that verdict to a whopping $14 billion. The original civil class action and antitrust lawsuit revolves around how the NFL packages and distributes its televised games, specifically through a product known as NFL Sunday Ticket.
NFL’s Sunday Ticket allows fans to watch out-of-market games that are not broadcast in their local television market. For example, if you’re living in Las Vegas and want to watch the out-of-market Cowboys vs Lions game, you would need to buy a Sunday Ticket package which costs $349-$449 per season.
Bars and other businesses that air NFL football games are also required to buy pricey NFL Sunday Ticket packages.
Essentially, the plaintiffs in the case argued that the NFL and the individual teams colluded in a type of price-fixing scheme related to Sunday Ticket.
By working together, the plaintiffs argued, teams with less popularity were able to charge more than they would otherwise be able to charge if they were forced to negotiate viewing rights individually.
Plaintiffs also claimed that the inflated Sunday Ticket prices were used to protect high broadcast fees paid by CBS and Fox.
The Long Path to a $4.7 Billion Verdict
The $4.7 billion jury verdict is one of the largest in American history, but it started somewhat unassumingly with a small sports bar in San Francisco that goes by the name Mucky Duck.
The Mucky Duck is a local hangout that’s tightly nestled between a row of other small businesses that line 9th Avenue in San Francisco. You would probably walk right past it if it weren’t for the small sign hanging out front showing a duck in a stylish scarf enjoying a mug of cold beer.
The Mucky Duck first brought its lawsuit against the NFL nine years ago. Since then, it’s been a winding road that saw the case get dismissed in 2017. But in 2019, the case was reinstated as a class action lawsuit that included subscribers to Sunday Ticket from 2011 through 2023.
That nine-year legal journey was a difficult one that included over 1.2 million documents that needed to be reviewed during the discovery process.
Among the huge trove of documents were two specific pages that the plaintiff’s legal team described as a “smoking gun” (something the NFL has denied in their recent legal request).
The plaintiffs argued that the two documents showed how the NFL would present Sunday Ticket pricing structures to potential bidders for their input or approval. Lawyers for the plaintiffs also argued that the NFL chose partners who agreed to maintain the current Sunday Ticket restrictions regarding the airing of out-of-market games.
The result, according to the plaintiffs, was a violation of antitrust laws and led to anti-competitive pricing models that resulted in billions in damages.
Needless to say, there’s a lot on the line in this case that started out in the back office of a tiny San Francisco pub. To put it in football terms, this is like the Super Bowl going into double overtime, with everything on the line, at least for the NFL.
If the NFL’s request is denied and the jury verdict stands, it can upend the highly lucrative business model that drives the league’s record revenue year after year.
Much of the NFL’s negotiating with broadcast partners is dependent on the protection that Sunday Ticket provides. It’s part of the reason NFL broadcast rights are so lucrative for the league.
As large tech giants like Amazon, Alphabet, and Apple enter the live sports broadcasting fray, there is even more money on the table than ever before. These tech giants don’t need to turn a direct profit on the broadcast rights they secure. A company like Amazon simply provides live sports and entertainment as a perk for its Prime customers. This means sports leagues are likely to land even bigger deals in the future, assuming they can keep the business model alive.
Cases like this with such heavy implications are usually brought by the government or are waged between two corporate titans. The recent action against Apple’s app store or Delta Airlines’ threat to sue Microsoft and CrowdStrike are two such recent examples.
But this was truly a case reminiscent of David vs Goliath. A small town pub that took on the NFL behemoth and won, at least for now.
The victory wasn’t lost on other small bar owners who see this as vindication and reimbursement for the money they were forced to spend on broadcast packages that often lead to losses instead of profits.
The NFL Successfuly Overturns The Verdict
While the plaintiffs enjoyed a victory, their celebrations were short-lived.
After the jury verdict, lawyers for the NFL requested a hearing to consider overturning the verdict or granting a new trial. NFL lawyers argued that two expert witnesses for the plaintiffs presented flawed methodologies when describing the damages and how they should calculated.
During the trial, Dr. Daniel Raschner and Dr. John Zona presented methodologies they had extrapolated from college football economic models. After the verdict, the defense claimed that these methodolgies do not properly take into consideration the impact of out-of-market dynamics, which were pivotal to the case against the NFL.
On July 31st, U.S. District Judge Philip Gutierrez overturned the $4.7 billion jury verdict. In a 16-page ruling, Judge Gutierrez wrote that without the flawed methodologies and ensuing calculations, no reasonable jury could have found class-wide injury or damages.
Despite the latest ruling, this pivotal case is likely far from over. The plaintiffs are no strangers to setbacks. Their original case was dismissed in 2017, only to successfully have it reinstated two years later.
After the July 31st ruling, the plaintiffs are likely to appeal Judge Gutierrez’s decision.
They may have reason to be optimistic. The jury’s findings and the ruling of Judge Guiterrez suggest that the main legal issue is with the calculation of damages, not whether antitrust violations took place at all.
As for The Mucky Duck, they’ll continue serving beer in their unassuming sports bar in San Franciso. For them, it’s already been nearly 10 years. They knew taking on the NFL wouldn’t be easy.
But as every diehard sports fan knows, after every setback, hope renews with the start of a new year and a new season.
The Mucky Duck and their legal team are hoping they can get a similar fresh start when they appeal the latest ruling to the 9th Circuit in the coming months.
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