Consumers and taxpayers help pay for the stadiums and other sports venues of professional sports teams, pave the way for the roads to get to them, buy all kinds of fan gear and then face the threat of not being able to see their favorite teams play on television because of a broadcast blackout.
The Buffalo Bills, in particular, were mentioned by a number of senators and witnesses testifying Thursday before the Senate Judiciary Committee, which has a threat of its own — to eliminate the antitrust exemptions sports leagues were granted in 1961.
“Americans really love sports and they deserve to see them — on their terms, not on the terms of those prescribed by the professional sports leagues in blacking out what they think Americans should see, rather than what Americans want to see,” said Sen. Richard Blumenthal, D-Conn., who chaired the hearing on “The FANS Act: Are Sports Blackouts and Antitrust Exemptions Harming Fans, Consumers and the Games Themselves.”
The Furthering Access and Networks for Sports Act (S.1721), sponsored by Blumenthal and Sen. John McCain, R-Ariz., would remove the antitrust exemption that allows blackouts if games do not sell out, will prevent the threat of blackouts as leverage in broadcast contract negotiations and asks leagues to make home games available on the Internet. The House version of the bill (H.R.3452, is sponsored by Rep. Brian Higgins, a Western New York Democrat.
Blumenthal said last year, the National Football League playoffs accounted for the 10 most watched sporting events of the year, noting most were carried on free over-the-air TV.
Blumenthal said billion-dollar professional sports leagues derive almost half of their revenue — estimated upwards of $17 billion a year — from licensing television rights to cable broadcasts and regional sports networks, costs passed on to consumers in higher cable and pay-TV rates.
“Sadly, fans are often treated like a fumbled football, sometimes even a kicked football,” he said. “When places like Buffalo, New York, fail to sell out its 74,000-person stadium, the Bills game is blacked out for local fans. The good news is we can do something about it.”
Blumenthal said essentially every American company is bound by antitrust laws that prevent coordination and price fixing, but the four major sports leagues were granted a special exemption by Congress under the Sports Broadcasting Act of 1961.
The other leagues are Major League Baseball, the National Hockey League and the National Basketball Association.
A television blackout is when a network will not air live coverage of a game in certain markets, most often imposed when stadiums do not sell out.
The Federal Communications Commission’s sports blackout rules prohibited cable and satellite operators from airing any sports event that had been blacked out by a local broadcast television station pursuant to a private blackout policy adopted by a sports league.
William T. Lake, chief of the FCC’s Media Bureau, said the blackout rule for cable was adopted in 1975 to prevent a reduction in ticket sales.
Blumenthal said the country affords the leagues special status because of the special role they play in American culture, but that it does not give them the right to abuse that privilege.
“The FCC recognized this when they threw a flag this September on the NFL’s anti-fan blackout policy,” he said, noting FCC Commissioner Thomas Wheeler, in announcing the repealing of the FCC’s sports blackout rules, said the “federal government should not be a party to sports teams keeping their fans from viewing the games.”
The repeal, however, does not prevent sports leagues from continuing to have blackout policies, Lake said.
He noted the FCC’s unanimous decision was based on extensive comments, including conflicting economic analyses, and the changes that have occurred since the rule was adopted more than 50 years ago.
He said the primary source of revenue for the NFL has shifted from ticket sales to TV revenues, which he said exceeded $10 billion in 2013. He also said the increased popularity of NFL games has brought fans to the stadiums, making blackouts increasing rare.
Gerry Waldron, outside counsel to the NFL on television-related matters, said the FANS Act attempts to dictate business decisions by threatening the SBA and would be harmful to fans. He said any changes to the SBA would undermine the business and legal structure that allows the NFL to be the only professional sports league that offers all of its regular-season games to viewers at no charge.
Waldron said the NFL’s television policy emphasizes broadcast television because it tries to make each game a special event and obtain the broadest possible audience. It is also to encourage fan participation in each local market, and the broadcast agreements generate substantial revenues that are equally shared by the 32 NFL clubs so smaller markets like Buffalo, Green Bay or Minneapolis receive the same amount as New York City or Chicago media markets.
“The hallmarks of NFL games are full stadiums, excited crowds and competitive games,” Waldron said. “Sold-out games improve the experience both for fans in the stadium and for those watching on television. Increased attendance at games also helps to support local jobs, businesses and taxes.”
He noted only two games were blacked out last year. He did not say where, but one was in Buffalo – the Dec. 22, 2013 matchup between the Bills and the Miami Dolphins. Another two Buffalo blackouts were prevented when owner Ralph C. Wilson bought up remaining tickets to create a sold-out game.
Waldron said blackouts are few and far between, another sign that the NFL is being responsible. He said it is easy to remember in the late 1990s when 25 percent of games were being blacked out.
Waldron said the FANS Act would harm fans by creating uncertainty around sports broadcast television that could result in programming moving to pay TV such as cable or satellite.
“This bill does not use the heavy hand of government to force the sports leagues to do anything,” Blumenthal said. “It doesn’t require them to end blackouts with the threat of fines or enforcement actions. It does end the blank check from the government to leagues and it takes away Congress’ implicit endorsement of blackout policies. It represents a bargain to the leagues. They can continue enjoying their exemption from existing law if they treat fans fairly.”
He said the hearing was a fact-finding mission; that the bill will not pass this year, but he and McCain will re-introduce it in the next Congress, which will be seated in January.
“Fans hate local blackouts,” said David R. Goodfriend, founder and chairman of the Sports Fan Coalition, a nonprofit organization of fans.
“I’m a disabled Vietnam vet,” Goodfriend said Denis Steinmiller of North Tonawanda related. “I also suffer from post-traumatic stress disorder. I am unable to attend the Bills games because of my disabilities. Watching the Bills on TV is one thing I look forward to every year, as well as helps me deal with my PTSD. Please put all the games on TV for me and the others who gave much of ourselves for our country.”
Besides the antitrust exemption, professional sports leagues and their broadcast partners benefit from tax breaks and public funding for stadiums and infrastructure support from municipalities, according to Sally Greenburg, executive director of the National Consumers League.
She said a 2012 Bloomberg study estimated that tax exemptions on interest paid by municipal bonds issued for sports facilities cost the U.S. Treasury $146 million per year. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, taxpayers’ subsidies to bondholders will total $4 billion.
“In return for the government largesse lavished on sports leagues, consumers are right to be outraged when essential services are cut to subsidize unaffordable tickets at publicly funded stadiums,” Greenburg said. “Cable and satellite subscribers — fans and nonfans alike — are angry that their bills go up due to ever higher sports programming costs when the games even make it on the air. The game is clearly rigged in favor of the professional sports leagues and taxpayers are getting the short end of the stick. So, it is indeed time for Congress to step in and begin to level the playing field.”
A video of the full hearing may be viewed at www.judiciary.senate.gov/meetings/the-fans-act-are-sports-blackouts-and-antitrust-exemptions-harming-fans-consumers-and-the-games-themselves