A federal jury in Los Angeles delivered an eye-popping $4.7 billion verdict last year against the National Football League, finding that the bundling and exclusive-distribution features of the league’s Sunday Ticket package harmed consumers. A federal judge later overturned the verdict, but the plaintiffs have challenged that decision in the Ninth Circuit Court of Appeals.
The federal judge was right to be skeptical of the plaintiffs’ argument, and the Ninth Circuit should be, too. Despite plaintiffs’ claims to the contrary, bundling games is good for fans—and essential to maintaining the league’s competitive balance.
Finally, a reason to check your email.
Sign up for our free newsletter today.
The original lawsuit sought to break up the Sunday Ticket package—a subscription service currently offered through YouTube TV that lets fans stream every out-of-market NFL game—and force the league to sell games individually. The plaintiffs argued that fans are harmed by having to buy the entire package of games through one exclusive distributor. But economics suggest the opposite: imposing an à la carte system would likely make fans worse off.
Sports leagues around the world bundle games for a reason. Season‑long packages solve a basic problem: fans value games differently. A Dallas Cowboys fan cares a lot about Cowboys games and little about Cincinnati Bengals games; a Bengals fan feels the reverse.
Bundling turns that mismatch into an advantage. Instead of charging Cowboys fans a premium for each Cowboys game, the NFL sets one price for all nonlocal games. The result enlarges the market: a Bengals fan in Indiana might not pay $20 for a single game but will pay $300 for access to every Bengals game, plus occasional marquee matchups.
More importantly, bundling lets popular games subsidize less popular ones, ensuring that every contest gets televised and receives high-quality production. Without this, many games simply wouldn’t be shown outside local markets.
This especially matters for the NFL’s revenue-sharing model, which keeps smaller-market teams competitive. When a Cowboys fan buys Sunday Ticket, he’s effectively helping to pay for high-quality coverage of Bengals games. Break up the bundle, and small-market teams lose a crucial revenue source, potentially affecting competitive balance.
Consider what would happen if the league unbundled its streaming service. Each game would have to cover its own fixed costs—the satellite trucks, the production crews, the broadcast infrastructure. Cowboys vs. Giants might be fine at $25 per game. But Bengals vs. Titans? The math gets ugly fast. The league would either charge diehard fans extremely high prices, reduce production quality, or not televise the game at all.
Research by Gregory Crawford and Ali Yurukoglu confirms this logic, finding that bundling in television significantly benefits consumer welfare by spreading fixed costs across diverse content and allowing popular shows to subsidize niche programming.
Even the regulation-happy European Commission recognized this dynamic in its 2003 UEFA Champions League decision, finding, per a summary of the case, that bundling enabled “full coverage of sports events” and reduced financial risks, while ensuring comprehensive programming.
What really matters for consumers is innovation. The NFL’s exclusive partnerships haven’t stifled competition--they've enabled it. When DirecTV gained exclusive Sunday Ticket rights in 1994, satellite TV was contending with entrenched cable monopolies. Today, YouTube TV’s exclusive deal has produced new features like Multiview (watching up to four games simultaneously) and integrated fantasy-football tracking. These features exist because exclusivity encourages YouTube TV to invest in enhancing its product rather than free-riding on others’ creations.
The district court recognized that the plaintiffs’ economic theories were built on speculation. The plaintiffs’ key expert assumed that all out-of-market games would migrate to free over-the-air television without Sunday Ticket, even hypothesizing that CBS and Fox would share local broadcast feeds with ABC and NBC. This assumption crumbled when CBS executives said that they would never share feeds with competitors.
The deeper issue with the plaintiffs’ argument is what economists call the “nirvana fallacy,” in which imperfect real-world arrangements are judged against idealized alternatives that couldn’t actually exist. Yes, it would be nice if every NFL game were free on broadcast television. But that’s not the relevant comparison. The question is whether fans are better served by the current bundled system or by an à la carte alternative that would likely result in fewer televised games, higher per-game prices, and reduced creativity.
Economics teaches that, with high fixed costs and diverse consumer preferences, bundling often increases the total benefit to producers and consumers. The NFL’s system ensures comprehensive coverage, enables cross-subsidization, keeps all teams viable, and provides a platform for continued innovation. Breaking it up might sound appealing in theory, but it would likely fumble away benefits that fans currently enjoy.
Brian Albrecht is chief economist of the International Center for Law & Economics (ICLE) and writes the weekly economics Substack, Economic Forces.
Photo by Sam Hodde/Getty Images
Donate
City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).