A federal jury announced a ruling that will see the National Football League pay between $4.7 billion and $14.4 billion in damages as part of a class action lawsuit over anticompetitive practices from the Sunday Ticket television package.
The ruling could change the way the NFL splits broadcast rights and packages in the future and will also see teams paying out the damages.
What Happened: Filed in 2015, a class action lawsuit alleged that the NFL and DirecTV worked together on driving up the cost of its package to show games to NFL fans. DirecTV held the rights to Sunday Ticket from 1994 to 2023 and is now a unit of a joint venture owned by AT&T Inc T and TPG.
While NFL Commissioner Roger Goodell attempted to defend the league and its practices during the trial, the ruling was in favor of the millions of subscribers and restaurants and bars who filed the suit.
The ruling calls for the NFL to pay out $4.7 billion in damages, an amount that could triple under federal antitrust laws that allow triple the damages awarded.
If the verdict is upheld and the amount is $14.4 billion, the damages would be split evenly between the 32 NFL teams, as reported by the Associated Press.
This means that each team would have to pay out $449.6 million as part of the federal ruling.
To put that figure in context, the NFL salary cap is $255.4 million for the 2024 season. This means NFL teams will pay around 1.76 times more than they are paying the star players for the 2024 season as damages for the lawsuit.
In the 2023 NFL team valuations from Forbes, the Detroit Lions were listed second to last at $3.6 billion. The team had 2023 revenue of $495 million and operating income of $51 million in 2023, ranking last among the 32 teams for both categories.
Thirty of the NFL teams had revenue of over $500 million for 2023 with the Dallas Cowboys leading the way at $1.14 billion. Only the Cowboys would be able to cover the $449.6 million fee with their yearly operating income, with a reported $504 million in operating income for 2023.
The big question if the ruling stands will be how teams will factor in the huge payout. Will the money come from the team owners, through new debt offerings or trickle down to higher ticket fees and concession fees for fans to offset the fine.
Related Link: Sportonomics: Why Investing in American Sports Franchises Has Doubled The Returns Of The Market
What's Next: The NFL plans to appeal the verdict and some industry experts see the case heading to the Supreme Court in an attempt to overturn the ruling.
"We are disappointed with the jury's verdict today in the NFL Sunday Ticket class action lawsuit," an NFL rep said in a statement, as reported by Variety. "We continue to believe the our media distribution strategy, which features all NFL games broadcast on free over-the-air television in the markets of the participating teams and national distribution of our most popular games, supplemented by many additional choices including RedZone, Sunday Ticket and NFL+, is by far the most fan-friendly distribution model in all of sports and entertainment."
DirecTV lost the rights to Sunday Ticket and the NFL saw several bidders on the package including Apple Inc AAPL. Ultimately, Alphabet Inc GOOGGOOGL won the rights to Sunday Ticket and offers the packages as part of its YouTube segment.
YouTube is paying the NFL $2 billion annually over a seven-year deal for the Sunday Ticket rights. Under the agreement, YouTube can show all out of market Sunday games not shown on CBS or Fox.
During the trial it was revealed Walt Disney Company DIS-owned sports brand ESPN wanted the rights to Sunday Ticket and would offer individual team plans.
While the NFL and YouTube won't be required to make immediate changes to the Sunday Ticket plans, some predict that team plans or weekly plans could start to be offered to show more competitive packages for fans.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
