How the NFL Blackout Rule Was Spawned by the Courts and the Congress
|by James M. Marsh||
Fall 2000, Vol. 63, No. 3
The NFL and the clubs succeeded in persuading the judge to deny the government's first request. This ruling, in the case of United States v. National Football League, 116 F.Supp. 319 (E.D.Pa. 1953), was issued in November 1953 after a bitterly contested piece of litigation and marked the beginning of legalized NFL blackouts.
The trial, before Judge Alan K. Grim, began in January 1953 after extensive discovery and proceedings on pre-trial motions2 and consumed twenty-six trial days in the ensuing months. The Justice Department's proof consisted largely of documents and admissions by the defendants in depositions and answers to interrogatories, plus cross-examination of league and club officials. There was little dispute about the nature, extent and effect of the league's bylaws and how they were adopted. The crux of the case was whether those rules resulted in illegal restraints on competition in the sale of television rights.
One of the principal issues involved concerned the proof as to which regular season games and which playoff games had been blacked out. Questioned about a particular game, one witness asked, "Was that the game played in the snowstorm?" When no lawyer on either side answered this query immediately, Judge Grim said, "No. The game played in the snowstorm was the 1948 playoff between the Eagles and the Cardinals."3 Dead silence in the courtroom. The league and club officials suddenly realized that they were before a judge who not only knew all about football but also probably knew all about the challenged rules and their effect.
The reaction of league officials such as Commissioner Bert Bell and club officials such as Art Rooney and Tim Mara4 reflected their frustration and was expressed in the corridors outside the courtroom during recesses: How could it be that this judge had the authority to tell them how to run their business? After all, they had created this business, invested large amounts of money in it and suffered severe losses before learning how to turn a profit. And now that they had learned how to make it work, no judge should be able to reverse that trend with the stroke of a pen.
But when Judge Grim handed down his opinion and order in November 1953, the defendants learned that their greatest fears had been largely unjustified. Judge Grim's opinion reflected not only his practical approach to the antitrust laws, but his belief that professional football and television and their relationship to each other involved substantial risks, some of which should be protected. Judge Grim had been impressed by testimony and documents showing that when the Los Angeles Rams had allowed their home games to be televised locally, attendance had dropped to one-half of what it had been during the previous year when such telecasting was not allowed; and in the following year, when they again did not permit such telecasting, they more than regained the loss, doubling home attendance. Judge Grim also considered the conclusions of research studies that strongly indicated that televising outside games into the home territory on days when the home team was playing at home had severe adverse effects on attendance at those games.
Judge Grim therefore stated his conclusion approving the ban on telecasts into other teams' territories as follows:
"The purposes of the Sherman Act certainly will not be served by prohibiting the defendant clubs, particularly the weaker clubs, from protecting their home gate receipts from the disastrous financial effect of invading telecasts of outside games. The member clubs of the National Football League, like those of any professional athletic league, can exist only as long as the league exists. The league is truly a unique business enterprise, which is entitled to protect its very existence by agreeing to reasonable restrictions on its member clubs. The first type of restriction imposed by Article X is a reasonable one and a legal restraint of trade." 116 F.Supp. 319, 325-326.
Judge Grim's findings in this respect were crucial to the league and the individual clubs. Indeed, one official NFL publication states, "This court decision is the groundwork for pro football's emergence as the game of the American mid-century."5
It appears that, at least at that time, the league and the clubs realized that they had won on the most important point in the case, and so they did not immediately challenge the court's other findings that were not to their liking. However, in 1961 the league and the clubs did request Judge Grim to rule that his 1953 order was not violated by an agreement they had made with Columbia Broadcasting System (CBS) that, in effect, gave CBS rather than the commissioner, plenary authority to decide which games would be televised or broadcast and into what territories. Not surprisingly, Judge Grim gave short shrift to this request, which he rejected in July 1961. The docket shows that in August 1961 the parties agreed to terminate that agreement.
But, at about the same time, the league and the clubs apparently realized that use of the political process was the course most likely to be fruitful, because Congress could grant an exemption from the antitrust laws, which would solve all their problems. Their success in this endeavor was noted by the Supreme Court of the United States in National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984). In that case, Justice John Paul Stevens, affirming the invalidity of the NCAA's rule giving it plenary control over television of its members' football games, wrote for the court: "In this connection, it is not without significance that Congress felt the need to grant professional sports an exemption from the antitrust laws for joint marketing of television rights. See 15 U.S.C. §§ 1291-1295. The legislative history of this exemption demonstrates Congress' recognition that agreements among league members to sell television rights in a cooperative fashion could run afoul of the Sherman Act, and in particular reflects its awareness of the decision in United States v. National Football League, 116 F.Supp. 319 (E.D.Pa. 1953), which held that an agreement among the teams of the National Football League that each team would not permit stations to telecast its games within seventy-five miles of the home city of another team on a day when that team was not playing at home and was televising its game by use of a station within seventy-five miles of its home city violated §1 of the Sherman Act. See S. Rep. No. 1087, 87th Congress, 1st Sess. (1961); H.R. Rep. No. 1178, 87th Cong., 1st Sess., 2-3 (1961), U.S. Code Cong. & Admin. News 1961, p. 3042; 107 Cong. Rec. 20059-20060 (1961) (remarks of Rep. Caller); id., at 20061-20062 (remarks of Rep. McCulloch); Telecasting of Professional Sports Contests: Hearings on H.R. 8757 before the Antitrust Subcommittee on the House Committee on the Judiciary, 87th Cong., 1st Sess., 1-2 (1961) (statement of Chairman Celler); id., at 10-28 (statement of Pete Rozelle); id., at 69-70 (letter from Assistant Attorney General Loevinger)."
So, in the final analysis, the perceived importance of successful, profitable professional football teams in a strong league prevailed in both the courts and the Congress. Judge Grim gave the league and each club a first down, and Congress gave them the winning touchdown. The end result is that, free of the antitrust laws, the NFL can enforce the rule that forbids any team from televising any home game in its home city if every single seat for that game has not been sold out seventy-two hours before game time.
And that situation will continue until there is sufficient clamor from the public and the teams to move Congress to repeal the NFL's exemption from the antitrust laws. Perhaps their need for votes in the NFL cities in the election year of 2000 will impel the politicians to follow that salutary course.
Now that television rights have supplanted gate receipts as the principal source of revenue, there should not be any arbitrary restraints on the sale and utilization of such rights.