September 26, 2024
By Shalabh Gupta, Amran Nawaz, and Drit Kaleci
The NFL “Sunday Ticket” case has become one of the most significant litigations in recent memory, attracting widespread attention due to the substantial financial implications and the potential changes in the management of sports broadcasting rights in the United States. The case centers around allegations that the NFL’s “Sunday Ticket” package, which offers exclusive access to out-of-market games, violated antitrust laws and led to inflated prices charged to subscribers.
In the landmark decision, the federal jury initially awarded the plaintiffs a $4.7 billion verdict against the NFL. The ruling was seen as a major victory for consumers and a potential catalyst for significant changes in the packaging and selling of broadcasting rights of the NFL and other sports leagues. However, the California federal court later overturned the verdict,1 introducing new complexities to the case and raising questions about the role of expert testimony in such a high-stakes litigation.
This article will explore the initial ruling, the subsequent overturning of the verdict, and the critical role of financial experts in the litigation process.
The league began offering its NFL “Sunday Ticket” package in 1994 as an option for sports bars, restaurants, and fans to watch “out-of-market” games at their homes. The “out-of-market” games refer to NFL matchups not broadcasted by local television networks, as they are typically considered less relevant to local viewers. However, many local fans are interested in these games, particularly if they support teams outside their region or want to watch more games during the season.2
The NFL “Sunday Ticket” case is a class action filed on behalf of more than 2.4 million residential subscribers and 48,000 businesses that bought the package between June 17, 2011 and February 7, 2023. The plaintiffs claim that the NFL and its broadcast partners, including DirecTV, violated antitrust laws by establishing an exclusive arrangement that limited fans’ options to watch the “out-of-market” NFL games and led to inflated subscription prices charged to consumers to watch these games.3
The plaintiffs presented two expert opinions in support of their claim. The first expert used college football as the basis of developing the but-for world in his analysis.
He calculated the subscribers’ damages to be $7.0 billion based on the assumption that the NFL games (like college football games) would become available on over-the-air channels for no extra cost to the customers.4 The second expert assumed that alternative “direct-to-consumer” service provider(s) would compete with DirecTV and reduce consumer prices by 49.7%, or $3.48 billion, to 67.8%, or $4.75 billion.5
The federal jury found that the NFL’s conduct had indeed constituted an illegal monopoly and awarded damages of $4.7 billion. While the jury did not adopt the opinion of the plaintiffs’ experts, the damages award was purportedly based on the testimony provided by the experts. The large award reflected the jury’s determination that the NFL’s practices caused substantial harm to many consumers by limiting competition and keeping prices “artificially” high.6,7
Shortly after the jury’s decision, the NFL filed post-trial motions seeking to overturn the verdict. A critical aspect of the post-trial proceedings was the role of expert testimony. U.S. District Judge Beverly Reid O’Connell overturned the jury’s verdict in a detailed ruling.8
Judge O’Connell found that the first expert proposed multiple variations of the but-for world “without analysis of how the economically rational actors would have acted”.9 Judge O’Connell also found that the expert failed to present “a but-for world grounded in economic rationality”.10 Judge O’Connell also found that the second expert “failed to define an assumption that was necessary for evaluating the rationality and reliability of his models” and “[w]ithout that information, the Court cannot determine whether the but-for worlds were modeled reliably.”11
Based on its review of the evidence presented, the Court excluded the testimony of both experts and overturned the jury’s verdict of awarding damages of $4.7 billion to the plaintiffs.
The court’s decision to overturn the $4.7 billion verdict highlights the importance of robust and credible expert testimony in litigation.
Financial experts are tasked to assist the trier of fact in their deliberations by:
In the “Sunday Ticket” case, the initial $4.7 billion jury verdict against the NFL was significant for consumer rights, reflecting the perceived harms of exclusive broadcasting agreements. However, the Court deemed the analyses of the plaintiffs’ experts to be speculative, overturning the jury’s verdict on economic damages.
The NFL “Sunday Ticket” litigation highlights the critical need for financial experts to provide tribunals with dynamic, objective, and evidence-based assessments that fully capture the complexities of the market.
Shalabh has provided financial analyses, economic advisory, forensic accounting, quantification of damages and other litigation support services to clients and their counsel for 10 years. He is a Chartered Accountant (CA), a Certified Fraud Examiner (CFE), and a Chartered Business Valuator (CBV).
Amran has more than 8 years of experience in accounting and financial consulting, with specializations in the quantification of damages and valuations in the context of commercial and investment disputes. He is a Chartered Professional Accountant (CPA, CA) and a Chartered Business Valuator (CBV).
Drit has provided audit, tax advisory and business valuation services to multinational clients across several industries. He has a Bachelor of Science in Finance from the Rutgers University and is pursuing his Chartered Business Valuation (CBV) credentials.
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Eric Poer, CPA, a globally recognized securities, accounting, valuation, and regulatory enforcement expert, was retained by Orrick, Herrington, and Sutcliffe LLP to provide expert and summary witness testimony in defense of Apple Inc., CEO Timothy Cook, and CFO Luca Maestri in a high-stakes securities class action dispute.
Neil Gaudion provided an expert report and testimony on behalf of Five Star Resort Owner, LLC, in construction dispute litigation surrounding a $2 billion Ritz-Carlton Hotel development. The jury awarded $2 million, plus interest, an amount determined from Mr. Gaudion’s testimony.