This week’s Club Sportico focuses on a less-discussed piece of the NFL’s superlative business success—the antitrust exemption it received from Congress back in 1961.
Former NFLPA boss DeMaurice Smith joined the Sporticast podcast earlier this week, and he was asked about the greatest threat to the NFL’s business. He didn’t respond with concussions, CTE or youth participation. He didn’t talk about politics, changing media consumption or rising NBA valuations. Instead, he pointed to that antitrust exemption as the principal source of the NFL’s power—and its wealth.
The essay dives into the 1961 Sports Broadcasting Act (SBA), which allows the NFL (and other leagues) to sell their media rights as a collective. That law is under fire for a separate reason right now, as NCAA reformers look to expand the law’s purview to include college conferences. It also talks about the politicians, both current and in the past, who have keyed in on the SBA as a way of criticizing the NFL. That list includes the senator Smith called “the only person that ever made the NFL quiver.”
Here is an excerpt of that essay ✍️:
While I won’t debate the legality behind the SBA, there’s obviously a whole lot more to the NFL’s success. The other major leagues all have similar exemptions, and none of them are close to the NFL’s scale, revenue, viewership or cultural impact.
One thing the NFL did differently was utilize the full scope of the exemption. Instead of using it to sell national packages while also letting teams sell their local rights, NFL owners rolled all of their TV rights up into those mega national TV packages. That’s helped the league avoid entirely the cascading consequences of the collapse of many so-called regional sports networks (RSNs). It also allowed the NFL to blackout local telecasts, push exclusive games to its own NFL Network, and—despite a contentious legal battle that may not be fully over—sell its Sunday Ticket product as the priciest comprehensive out-of-market option among U.S. leagues.
The SBA isn’t the league’s only antitrust exemption. The NFL also has one regarding labor, which encourages and protects collective bargaining. But the broadcast one is critical to the league’s current business model. Without it, the NFL would need to replace its current pool-and-share revenue policy—which ensures competitive balance—with a system where every team would hit the market on its own. Imagine the imbalance in media money paid for the Dallas Cowboys home package relative to that of the Jacksonville Jaguars or Cincinnati Bengals.
And while it’s lived on for more than 60 years, it wouldn’t take that much to dramatically overhaul the SBA—perhaps just one administration’s Department of Justice to decide, in Smith’s words, that the league had “too much power.”
During a hearing in May, Sen. Ted Cruz (R-Texas) said the league had been “tiptoeing up” to the rules laid out in the SBA. Last month, the House Judiciary Committee sent a letter to commissioner Roger Goodell requesting a briefing on the league’s media strategy. This is the third sentence of that letter (emphasis ours):
“The sports broadcasting market has changed significantly since the SBA was enacted, and recent antitrust cases have raised important questions about whether the SBA should be modified or repealed as a result.”
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