On October 22, 1939, experimental television station W2XBS[1] in New York City produced the first telecast of a National Football League (NFL) game. The now-defunct Brooklyn Dodgers defeated the Philadelphia Eagles 23–14 at Ebbets Field. The TV audience was estimated to be 1,000 people. On a cloudy day with no stadium lights, the picture became so dim at times that the telecast temporarily became a radio broadcast. No one knew it yet, but the American sports and entertainment landscape would be forever changed.

In the mid to late twentieth century, the NFL grew to become the most popular and profitable professional sports league in the United States, and its presence on television was the single most important factor in its rise. Today, NFL games are among the most valuable entertainment properties in the world, as evidenced by the league’s most recent set of broadcasting contracts, worth more than $100 billion over eleven years. The development of the league’s symbiotic relationship with television did not come without controversy, however. On several occasions, both the federal government and private parties brought the NFL into federal court by asserting that its methods of televising football games violated antitrust laws.[2] This spotlight summarizes some of those legal challenges, the resolutions of which were crucial to the NFL’s ascent.

Founded in 1920, the NFL (“American Professional Football Association” until 1922), had humble beginnings, with many of its fourteen original teams based in small cities like Akron, Ohio; Muncie, Indiana; and Rock Island, Illinois.[3] Professional football was not very popular at the time, as most American sports fans preferred baseball, boxing, horseracing, and college football. Some football enthusiasts even opposed the very idea of a professional alternative, fearing that it would take attention away from the college game.

In the league’s early years, many of its teams were financially unsound and folded due to poor attendance. The league’s remedy was to improve its franchise locations by putting all of its teams except the Green Bay Packers in major cities by 1934. Nevertheless, professional football continued to lag far behind other sports in popularity.

The advent of television is what began to turn things around. In 1947, when relatively few Americans owned TV sets, the NFL took a gamble on the new medium by giving its franchises permission to sell game broadcast rights to local stations. Regular broadcasts began the following season—unpromisingly. TV revenue did little to boost earnings, and in fact many teams saw attendance drop once fans realized they could watch games for free at home. No NFL teams broadcast their games for the 1949 season except the Los Angeles Rams, which broadcast all home games. Seeing attendance drop significantly, the Rams persuaded broadcast sponsors to reimburse the team for any losses incurred in 1950. After having to pay the team $200,000 that year, the sponsors declined to renew their contracts.

This inauspicious start notwithstanding, NFL owners, eyeing the rapid increase in sales of TV sets, did not want to lose out on the opportunity to broadcast their games. In 1951, to address the problem of TV broadcasts hurting ticket sales, the league instituted what became known as “blackout” rules designed to prevent weaker teams from losing in-person spectators to stronger teams’ TV broadcasts. Per Article X of the NFL bylaws, the league commissioner was given ultimate authority to approve or disapprove any broadcasting contract, broadcaster, or sponsor. No team was permitted to broadcast a game into the home territory of another team (specifically, within a 75-mile radius of their stadium) while that team was playing at home. An additional rule provided that games could not be broadcast in the home territory of another team if that team was playing an away game and broadcasting the game back to its own home territory. The league believed that preventing teams from competing with one another for television viewers was also necessary to protect each team’s future ticket sales. The blackout rules applied to radio as well as television broadcasts.

The U.S. Department of Justice (DOJ) considered the NFL’s blackout rules to be illegal, resulting in a 1953 federal court ruling. The DOJ filed a lawsuit asserting that the new rules, by taking away from teams the ability to decide when and where to broadcast their games, constituted an unreasonable restraint of trade in violation of the Sherman Antitrust Act of 1890. In United States v. National Football League, Judge Allan Grim of the U.S. District Court for the Eastern District of Pennsylvania applied a rule of reason analysis in upholding the rule against broadcasting to the territory of a team playing at home and striking down the others. Judge Grim agreed with the government that each of the NFL’s rules constituted a restraint of trade but pointed out that not every restraint was unreasonable. The teams were not dividing up marketing territories as companies might attempt to do, the judge noted. Rather, the nature of professional sports made their situation unique: while teams competed against one another as hard as they could on the field, it was not to their advantage to do the same off the field. The teams needed one another to prosper in order to maintain a viable league. Rules designed to help weaker competitors at the potential expense of stronger ones, while normally disfavored by the law, might be permissible in this context.

In light of the NFL’s unique situation, Judge Grim found the rule prohibiting telecasts in a team’s home territory while that team played at home to be reasonable because it was well tailored to protect home game ticket sales. Early television contracts were nowhere near as lucrative as they would become later, and teams still made most of their money from game attendance. “Reasonable protection of home game attendance is essential to the very existence of the individual clubs, without which there can be no League and no professional football as we know it today,” he noted. The prohibition of telecasts in a team’s home territory while that team played away was different, however. On a day when a team played away from its home stadium, it had no ticket sales to protect. The relationship between television broadcasts and future ticket sales was uncertain and could only be the subject of speculation. Grim therefore struck down the rule as an unreasonable restraint of trade. The evidence also showed no discernible relationship between radio broadcasts and ticket sales, so Grim invalidated those restrictions as well. While the NFL lost several portions of the case, it was permitted to retain the core blackout rule that best protected home game ticket sales.

Later in the decade, the NFL’s popularity on TV got a major boost. December 28, 1958, was the turning point. The Baltimore Colts, led by star quarterback Johnny Unitas, defeated the favored New York Giants 20–17 at Yankee Stadium, winning the NFL championship. A thrilling game, it was the first NFL playoff game to be decided in sudden-death overtime. An estimated 40 million people, a huge audience at the time, watched the national telecast of the game. Many professional football experts consider the 1958 championship game to be the starting point for the NFL’s swift rise to become the most popular sports league in the country.[4]

As television revenues increased, there remained a sizeable wealth disparity between teams in large markets, such as the New York Giants, and those in smaller markets, with the Green Bay Packers occupying the smallest. To keep the league financially healthy, NFL owners wanted to make a dramatic change to the way games were shown on television. Rather than continuing to allow each team to negotiate its own broadcasting contracts, the league decided to centralize the process, bundling the rights to all games into a single TV package and sharing the revenue equally between teams.[5] In 1961, the NFL agreed to sell the rights to this package of games to CBS, a decision that brought the league back into federal court.

The league’s decision to pool broadcasting rights sprung not only from the economic inequality of its teams but also from a desire to maintain its advantage over a new competitor: the American Football League (AFL). The NFL had been without a serious competitor since the All-America Football Conference folded in 1949 after four seasons.[6] The AFL, founded in 1959 to begin play in 1960, immediately looked like a formidable competitor. Its team owners were wealthy (generally wealthier than NFL owners, in fact), so they could afford to sign star players and quickly establish eight franchises (later expanded to ten) in major metropolitan areas. Four AFL teams set up shop in areas where NFL franchises played. The Titans (later named the Jets) would compete with the Giants in New York City, the Chargers with the Rams in Los Angeles, the Texans[7] with the Cowboys (also a new franchise in 1960) in Dallas, and the Oakland Raiders with the nearby San Francisco 49ers.

The new league quickly made a decision that was crucial to its success: to pool its broadcasting rights and sell them as a single package to ABC. Deciding in 1961 to do the same, the NFL was aiming to maintain its competitive advantage.[8] The NFL faced an obstacle that the AFL did not, however, in the form of Judge Grim’s 1953 order. The NFL filed a petition, which the DOJ opposed, seeking a ruling from the U.S. district court that its agreement with CBS did not violate the earlier court order. In an opinion commonly referred to as United States v. National Football League II (1961), Judge Grim pointed to the provision in his order prohibiting the NFL or its teams from making contracts “having the purpose or effect of restricting the areas within which broadcasts or telecasts of games … may be made.” The current agreement gave CBS the right to determine, without input from the NFL, which games would be shown on television and where. The transfer of these rights to CBS, which took away from individual teams the ability to decide which of their games would be televised, was an obvious violation of the earlier order, Grim ruled.

The NFL lobbied Congress to override Grim’s order, and Congress responded quickly, enacting the Sports Broadcasting Act of 1961 on September 30.[9] The act provided that antitrust laws would not apply to any “joint agreement” in which a professional sports league pooled and sold the rights to telecast its games. An agreement that prohibited the televising of games in certain areas (other than a home area blackout provision such as the NFL employed[10]) would not be included in the antitrust exemption.[11] The Senate Judiciary Committee’s report expressed the view that without the act, many teams would not be able to earn enough television revenue to survive, threatening the continued existence of professional football. AFL Commissioner Joe Foss, no doubt wary of a similar challenge to his league’s broadcasting contract, testified to Congress that television revenue was crucial to the survival of a professional football team, making it necessary to prevent large TV revenue disparities between teams.

With the legal roadblock out of the way, the NFL completed its deal with CBS, giving the network the exclusive right to telecast NFL games for two years for more than $9 million. When that contract ended, CBS won a bidding war against the other networks, paying more than $28 million to renew for another two years. With this contract, the NFL’s television revenue exceeded its gate revenue for the first time. The following year, the AFL moved from ABC to NBC, selling the rights to its games for $36 million over five years. The symbiotic relationship between professional football and national television had been solidified.

Having survived in large part because of its ability to secure national television contracts, the AFL entered into a merger agreement with the NFL in 1966. The contract provided for an annual AFL‑NFL World Championship Game beginning in January 1967[12] and a full merger under the NFL banner in time for the 1970 season.[13]

For more than a decade after the merger, the expanded NFL faced no competition in the professional football landscape. In 1983, however, the United States Football League (USFL) entered the picture, playing a spring and summer schedule and televising its games on ABC and ESPN. The following year, the league decided it would play a traditional fall schedule starting in 1986, hoping that by competing head-to-head with the NFL it could follow in the footsteps of the AFL by forcing a merger.

The same year, blaming the NFL for the financial losses it had incurred in its first two seasons, the USFL filed suit against the NFL in the U.S. District Court for the Southern District of New York, alleging among other things that the NFL’s television contracts with ABC, CBS, and NBC[14] violated the antitrust laws as well as Judge Grim’s 1953 and 1961 orders. Although the Sports Broadcasting Act of 1961 had modified the effect of those judicial decrees, the USFL maintained that the NFL was still prohibited from entering a broadcasting contract involving pooled television rights with more than one network. The USFL argued that Congress had intended to overrule Judge Grim’s decrees only to permit the NFL to contract with one network, as the league was attempting to do at the time. In United States Football League v. National Football League (1986), U.S. District Judge Peter Leisure ruled that “the statutory language in issue [exempting “any joint agreement” from the antitrust laws] has a plain and unambiguous meaning and that the term ‘any’ means that the antitrust exemption applies to all pooled rights contracts that a sports league may enter into. Not one, but all.” 

Although Judge Leisure found the meaning of the 1961 act to be clear, he proceeded to analyze the USFL’s argument that the legislative history of the act supported the league’s contention that the NFL was permitted to sell its rights only to a single network. In hearings on the bill, AFL Commissioner Foss expressed concern that a league might secure contracts with more than one network with the intent of excluding a competing league from television broadcasting. He suggested that the act include language prohibiting such conduct. The House report on the bill mentioned Foss’s concern, explaining that the act was not intended to exempt from the antitrust laws an agreement “where the intent or effect … is to exclude a competing league or its members from the sale of any of their television rights.” The act was not amended to exclude contracts with multiple networks, however. In fact, NFL Commissioner Pete Rozelle predicted during his hearing testimony that in twenty years it might be desirable for the NFL to use more than one network.  

During the hearings, the NFL stated that its intention in seeking the legislation was to obtain “the right to go on a single network,” and in league meetings, team owners had referred to the proposed law as the “single network plan.” Reading these statements in their full context, however, Leisure did not interpret them to mean that the act had been intended to permit contracts with only one network. The judge explained:

This position has to be contrasted with the situation at the time the first CBS pooled rights contract was made. In 1960, nine teams had contracts with CBS, two teams had contracts with NBC, and two teams, Washington and Cleveland, had contracts with sponsors. The games of a popular team, such as the New York Giants, would be telecast frequently and over a broad area, while the games of a less popular team would be aired less frequently, if at all, and to smaller audiences. The resultant disparity in television income would upset the league’s competitive balance. Only by selling the telecast rights of the individual clubs in a package to a network could the league “insure that [the] clubs will continue to have the income to enable them to be competitive on the field.”

Judge Grim’s decision prohibited the clubs from entering into such a contract. Therefore, the apparent significance to the NFL of the Sports Broadcasting Act of 1961 was that the league would be able to sell the clubs’ telecasting rights as a package to a network, not that the league would be limited to one network.

Furthermore, Congress had made an exemption to the antitrust laws for the 1966 AFL-NFL merger agreement. During hearings on that bill, NFL Commissioner Rozelle expressed the view that a larger league, with more games to exhibit, might need two networks to handle the logistics. A joint memo the two leagues submitted to Congress explicitly contemplated that the expanded league would continue to use two networks, as the AFL and NFL had previously done separately. Such an arrangement would be necessary for fans of the New York Giants and New York Jets, for example, to watch their teams play when both played at the same time. No member of Congress expressed the belief that a dual network plan would violate the 1961 act or any prior court decree.   

In rejecting the USFL’s motion for summary judgment, Leisure held that the NFL’s contracts with the three broadcast networks did not, in and of themselves, constitute a violation of the antitrust laws. Whether those contracts might violate the law by virtue of having the intent or effect of excluding the USFL from television coverage would be factual matters to be developed at trial.

On July 29, 1986, after ten weeks of trial and five days of deliberations, the jury returned a verdict, finding the NFL not liable on most counts of the USFL’s complaint. The jury denied the claim at the heart of the USFL’s case that the NFL had, by making contracts with and coercing the three broadcast networks, illegally prevented the USFL from securing television coverage necessary to its survival. Although the jury did find for the plaintiffs on one claim—that the NFL had willfully acquired or maintained monopoly power over professional football—it awarded the USFL only $1 in damages (increased to $3 under the Sherman Act’s treble damages provision[15]). Following the verdict, the USFL folded, having played its last game in 1985 and lost $200 million.

Judge Leisure denied the USFL’s motions for a new trial and judgment notwithstanding the verdict, rulings which the U.S. Court of Appeals for the Second Circuit affirmed. The court of appeals took note of several mistakes the USFL made in developing its business (such as ignoring salary guidelines meant to keep costs under control) and found evidence sufficient to support “the jury’s evident conclusions that the USFL’s product was not appealing largely for reasons of the USFL’s own doing and that the networks chose freely not to purchase it.” The court also agreed with Leisure’s analysis and conclusion that the NFL’s broadcasting contracts did not constitute a per se antitrust violation.

Antitrust challenges to the NFL’s broadcasting arrangements did not cease after the league’s victory over the USFL. In recent years, plaintiffs have challenged certain aspects of NFL Sunday Ticket, a package of out-of-market games launched in 1994 that was until recently available for purchase by subscribers to DirecTV, a satellite television provider. Litigation has also developed over the NFL’s creation in 2003 of its own broadcasting network, called NFL Network, and its broadcasts of league games. These issues have yet to reach final resolution. In the meantime, the football broadcasting landscape has continued to evolve, particularly as streaming services have entered the picture. In 2017, for example, Amazon entered into an agreement with the NFL to stream games through its Amazon Prime Video service. As technology continues to progress, the federal courts may be called upon to address football broadcasting arrangements that cannot yet be foreseen.

Jake Kobrick, Associate Historian
For more information, contact history@fjc.gov 

Related FJC Resources:
Read the biographies of the judges mentioned in this spotlight: Allan Grim, Peter Leisure, and Roszel Thomsen.

Further Reading:
Boliek, Babette. “Antitrust, Regulation, and the ‘New’ Rules of Sports Telecasts.” Hastings Law Journal 65, no. 2 (February 2014): 501–549.

Eisenberg, John. The League: How Five Rivals Created the NFL and Launched a Sports Empire. New York: Basic Books, 2018.

Fecteau, Alan. “NFL Network Blackouts: Old Law Meets New Technology with the Advent of the Satellite Dish.” Marquette Sports Law Review 5, no. 2 (Spring 1995): 221–242.

Flatt, Ethan. “Solidifying the Defensive Line: The NFL Network’s Current Position under Antitrust Law and How it Can Be Improved.” Vanderbilt Journal of Entertainment and Technology Law 11, no. 3 (Spring 2009): 637–672.

Garubo, Philip A., Jr. “The Last Legal Monopoly: The NFL and its Television Contracts.” Entertainment and Sports Law Journal 4, no. 2 (1987): 357–384.

Grow, Nathaniel. “Regulating Professional Sports Leagues.” Washington and Lee Law Review 72, no. 2 (Spring 2015): 573–652.

This Federal Judicial Center publication was undertaken in furtherance of the Center’s statutory mission to “conduct, coordinate, and encourage programs relating to the history of the judicial branch of the United States government.” While the Center regards the content as responsible and valuable, these materials do not reflect policy or recommendations of the Board of the Federal Judicial Center.