The NFL did it again, skirting a potential significant threat to its unprecedented prosperity, this time by way of a judge who, magically, made a $14 billion judgment against them disappear.
Large verdict and a large overreaction
The Sunday Ticket litigation that began almost a decade ago finally reached a jury verdict last month, and what a verdict it was: The jury awarded the plaintiffs—consumers as well as bars and restaurants—$4.7 billion, which, per antitrust law, would be trebled (tripled) to the amount of $14.1 billion. Even for a business with annual revenues of almost $13 billion in 2023, that would have been quite a number for the NFL to swallow.
The public reaction was, as always, an overreaction. Some suggested NFL teams would have to operate differently due to a cash crunch the verdict would create. Some suggested the salary cap would be affected, that teams would no longer be able to sign their star players. Some suggested the Sunday Ticket model would immediately disband and/or be sold at dramatically reduced rates. With quiet amusement to all of this, I said, please.
In the unlikely event that NFL teams were forced to pay large damages, it would never have resulted in teams writing a single check; payments would have been made over a number of years. In fact, teams were never going to write checks at all. The damages would have been deducted from the NFL’s annual distributions—currently over $400 million—each year.
If the verdict held, NFL teams would have been fine, the cap would not have been affected, and business as usual would have continued.
Hail Mary successful
But, of course, we are not talking about a damages payout right now. We’re not even talking about an appeal to the Ninth Circuit, let alone the Supreme Court. Before any potential appeals, NFL attorneys, on July 31, asked Judge Philip Gutierrez, who oversaw the jury trial and is planning to retire in October, to order a new trial, or reduce the damages award, or, as a Hail Mary request, set aside the verdict and rule for the NFL.
The Hail Mary worked.
Jurisprudence favors jury verdicts and trial judges are highly unlikely to alter them, but Gutierrez was so frustrated with the plaintiffs’ economic experts and the jury “reverse engineering” to create their damages amount, that he dismissed the case, along with $14.1 billion.
Of course, the plaintiffs can appeal to the Ninth Circuit and eventually have (another) day in court, but that is months, if not years, away. Meanwhile, the NFL keeps its billions, and will continue to operate the Sunday Ticket pricing model—now on YouTube—unabated.
Prosperity unimpeded
This stunning turn of events for the league reminds me of several other perceived threats to the success of the league that were swatted away.
- In 2003, Maurice Clarett won his case invalidating the NFL’s draft-eligibility rule requiring players to be three years removed from high school. As vice president/general counsel of the Green Bay Packers at the time, there was a line of scouts at my door asking if they now had to scout sophomores, freshmen and even high school players (the draft was a couple of months away). That panic subsided soon after when the Second Circuit Court of Appeals, in an opinion written by future Supreme Court Associate Justice Sonia Sotomayor, affirmed the NFL draft-eligibility rule. Threat averted.
- In 2011, a lower court ruled that the NFL’s lockout of its players was illegal, striking an apparent blow to the league’s leverage in negotiating a new CBA with the NFLPA. But the 8th Circuit Court of Appeals reversed, allowing the lockout to continue and forcing the players, hat in hand, to rush back to start training camp and accept a team-friendly CBA. Threat averted.
- In the early 2010s, when the concussion crisis was percolating with thousands of lawsuits circling the league, documentaries and movies such as League of Denial and Concussion, there was a chorus of leaders—including then President Barack Obama—saying they would not let their sons play football. This was obviously a significant threat to the NFL’s business model. But alas, the NFL negotiated a global settlement of roughly $1 billion for all retired players, there are no more lawsuits, and we don’t seem to hear much about concussions and brain trauma from the country’s most popular sport.
- In 2014, there were domestic violence issues, from Ray Rice punching his girlfriend to other disturbing incidents from star players such as Adrian Peterson and Greg Hardy. Many questioned the league’s tolerance of that behavior; several female commentators—some of whom I worked with at ESPN—said they would no longer cover the league. The NFL instituted new policies, the league moved on (without Rice), the female commentators never left, and we react differently to players’ domestic violence issues.
- In 2015 to ’16, Tom Brady was suspended four games for allegedly deflating footballs. Once again, the lower court ruled for the player and accused NFL commissioner Roger Goodell of overreach, only to be overruled by the Second Circuit Court of Appeals (again), where his broad commissioner powers were affirmed. Although Brady’s suspension brought much polarizing reaction, the net result was that the commissioner’s power was actually emboldened from it.
- In 2017 to ’18, Colin Kaepernick’s kneeling during the national anthem brought out calls and commentary that it would cause the decline of the NFL. So much for that.
- In 2020, the COVID-19 pandemic arrived to a sport that, by its nature, involved exchange of breath and sweat at close distances. The NFL played to sparse (or no) crowds, moved games around to different days of the week (there was a Wednesday game) and, to the surprise of many, played a full season and, of course, extracted their pound of flesh from the players in the salary cap the next year.
- During that pandemic, the NFL forged another decade-long and team-friendly CBA, wrangled a 17th game from the NFLPA, and negotiated cumulative media contracts totaling $110 billion over 11 years. The latest franchise sale exceeded over $6 billion. Player contracts, save for Deshaun Watson, are still not guaranteed, as they are in other major sports leagues. There have been recent stadium subsidies from public sources for the Buffalo Bills ($850 million), Tennessee Titans ($1.2 billion) and Jacksonville Jaguars ($600 million) with more to come. These are salad days for NFL owners.
One potential threat
The only potential threat that I can think of that could potentially knock the NFL from its lofty perch would be something relating to sports gambling, although even that seems unlikely. I don’t know what that would be, but the league’s embrace of sports betting has created a different kind of fan, one that is more transactional than emotional. I wonder sometimes if a percentage of these “transactional fans” will eventually find other places to do their (betting) business, even knowing NFL betting is ingrained in millions.
I realize fan engagement through betting—whether fantasy or real betting—is nothing new, but I think it will become more common and more insidious in the future. Mind you, I have no thought that an individual betting scandal—no matter the magnitude of the player or coach—can knock the league from its elevated status, but I think slow drips in this area could be damaging. Not fatal or even severe, but damaging. We will see.
For now, Mark Cuban’s comment from long ago about the NFL that “pigs get fat, hogs get slaughtered” is still a fantasy. The NFL seems to be able to weather, persevere and even get stronger through any storm, any threat or any setback in its inexorable march toward unseen heights in popularity and prosperity.
This article was originally published on www.si.com as NFL Perseveres Through Sunday Ticket Storm.
