DOJ Launches Antitrust Case Against NFL & Airlines Jack Up Bag Fees

0:01Neal Freyman:Marketers, tell us if this sounds familiar. You invest in something that seems incredible, like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest ROAS of all major ad networks. Spend$250 on your first campaign on LinkedIn Ads and get a$250 credit. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd terms and conditions apply good morning brew daily show i'm neil freiman and i'm toby howell today the southern college more exclusive than the ivy league then the doj has opened an investigation into the nfl it's friday april 10th let's ride good morning and happy friday El Nino is coming, but not just any El Nino.

0:53This week, forecasters updated their models for an increased chance of a super El Nino, an unusually intense version of the climate-altering pattern. El Nino is when a warming patch of water in the Pacific Ocean influences climates all over the globe, causing more stormy activity in some places while drying out others and sparking storms, floods, droughts, and typhoons. Later this year, those effects could be multiplied with a super El Nino we haven't seen in a long time. One professor of atmospheric science, Paul Roundy, wrote there's real potential for the strongest El Nino event in 140 years.

1:24Neal Freyman:Super El Nino pumps me up. I don't know why. Maybe because they're pretty rare. There have only been four since 1950. The last one was a decade ago in 2015. A Super El Nino doesn't actually mean that we're going to get like end of world storm level intensity. It just means that the normal impacts of El Nino, which are that warm, dry winter in the northern part of the country and then the wetter, colder winter in the southern states, is just a higher chance that that happens. Also, supercharged summer temperatures. So we just had our winter from hell in the north. Now, everyone in SoCal and Texas and Florida in the Sunbelt, they are going to get their bad winter, their wet winter.

2:03Neal Freyman:It's coming for you next. One positive, a super El Nino could also mean an especially quiet Atlantic hurricane season. So there's always two sides of the El Nino coin. And now a word from our sponsor, TaxAct. Neil, what are taxes? Another classic Toby bit. Yes, this is certainly one of my famous bits. I totally know what taxes are. Then it's time you check with TaxAct. They help small business owners get their taxes done by providing the only online DIY filing software for small businesses. With TaxAct, you can file your business taxes any way you'd like. you can do them by yourself with step-by-step guidance.

2:36Neal Freyman:You can file with help from a credentialed tax expert when you have questions, or you can upload your documents and an expert will prepare and file for you. Just head to taxact.com slash business dash returns to get started. That's taxact.com slash business dash returns. Football is America's sport, but watching football also feels like a sport in and of itself with all the streaming services you got to pay for. An unexpected single high safety, though, is looking to lay the boom on the rising cost of viewership, the Department of Justice. The DOJ has opened an antitrust investigation into whether the NFL is squeezing fans and harming consumers with all these subscription fees.

3:16Neal Freyman:Back in the day, to see the Jets suck, you flipped on your TV and watched the game. Then in 1961, Congress passed the Sports Broadcasting Act, which gave sports leagues a hall pass on some antitrust rules so they could negotiate media deals as a package. Fast forward to today, and the league has used that leverage to chop up its schedule and sprinkle games across a dozen platforms, each with a monthly bill attached. That bill has gotten very big. Watching every NFL game last season, as Senator Mike Lee, the chair of the Antitrust Subcommittee, points out, would run you nearly$1 ,000 and requires access to CBS, NBC, ESPN, Fox, Amazon Prime, and YouTube's Sunday ticket, which alone runs$240 a season.

3:57Neal Freyman:The NFL points out that over 87 % of its games air on free broadcast TV and that 100 % of games are free in the local markets of the teams playing, which is great, but also not really the point if you're a Bills fan living in Miami. Neil, paying a grand to watch all my fantasy players underperform should be illegal. Talk about an unstoppable force, meaning an immovable object. This is the U.S. government versus the National Football League. As someone say, it's just America versus America, a true heavyweight battle. There is growing scrutiny of the high cost to consumers of watching sports, especially the NFL, on both sides of the aisle in D.C.

4:35They're very much on the hot seat right now, and there's a very important dynamic lurking in the background of all this, which is that the NFL back in 2021 signed all these rights deals with CBS, NBC, Fox, all its broadcasting partners. And there's an opt out ahead of the 2029, 2030 season where Roger Goodell, the commissioner, can go can basically renege on all these agreements, say we want to renegotiate them and they want to get a lot more money because they're looking at the Super Bowl and they're saying 134 million people watch this in the second quarter. We think we can go back and get even more money from these broadcasting partners.

5:07So they want to rip up these agreements and get more money. And that's what's kind of lurking in the background. This is what has D.C. really looking at this antitrust exemption.

5:16Neal Freyman:Yeah, in 2025, the NFL had 83 of the top 100 Nielsen-rated shows. So they certainly have the leverage to rip up those agreements. So what would happen if this exemption that was handed down to them back in 1961, what would happen if it disappeared? the NFL would have to market their TV rights on a team-by-team basis. They can't say like, hey, we are a league as a whole. You have to pay, you have to negotiate with us if you want to broadcast our games. Instead, it's the Jaguars now offending for themselves and saying, hey, anyone want to pay us money to broadcast our TV games? Likely the demand wouldn't be there.

5:57Neal Freyman:It wouldn't be the same at least that the Cowboys would get, for instance. And so it makes teams have to start to fend for themselves, which makes maybe the pie that the revenue, the league is bringing in a little bit smaller. It would make salary cap a little harder for the smaller teams to deal with, which could lead to two leagues fracturing from each other. One with the Cowboys in it, one with the Jaguars down. I'm beating up on the Jaguars right now. But small market teams, let's just insert small market teams there. It's more difficult for them to negotiate their own rights. It's just amazing how the balance of power has shifted since 1961.

6:30That antitrust exemption was put in place to help out the NFL, which was a fledging league, and it wasn't doing so well compared to the very strong broadcasters. And now we're living in a world in 2026 where the NFL is more powerful than ever and broadcasters are back on their heels. But right now the law is sort of tilted toward the NFL. So it's unclear what's going to happen toward this antitrust exemption, whether it's going to go away or not. It would change the NFL as we know it, but I think they'll probably come to some sort of agreement. It could be some sort of power play by the broadcasters here, putting pressure on politicians to put pressure on the NFL to work out some sort of agreement that lowers costs for all of us who just want to watch games.

7:10Moving on, this morning we'll get our first look at the inflationary impact of the war in Iran from the Consumer Price Index report. Data released yesterday showed inflation was already a problem leading up to the conflict. The Personal Consumption Expenditures Index, what you would call the opening act to today's CPI headliner, showed prices remained elevated in February, even before the biggest oil shock in history. Core inflation, which removes food and energy, jumped 0.4 % from the month prior and rose 3 % from a year earlier. Reminder that the Fed's target inflation rate is 2%, so we've been well above those comfortable levels for five consecutive years.

7:46Inflation has that gnarly effect of draining Americans' purchasing power. The PCE showed that consumer spending rose 0.5 % in February, which sounds healthy until you factor in inflation, which shows spending basically stagnating at 0.1%. That continues a six-month trend of a more cautious consumer as they contend with higher inflation and a creaky job market. Toby, all eyes are on the inflation report coming out in just a few hours. And if that's the entree, this appetizer was a soggy plate of fries.

8:12Neal Freyman:Yeah, not so appetizing. I think that what we're seeing is some residual effects of tariffs still filtering through the economy right now because a lot of the price firmness came from goods in this PCE index drop. Prices of recreational goods, clothing all picked up from the start of the year. services inflation actually cooled a little bit. That is excluding energy and housing, of course. So you are seeing just more physical things costing more money, which a lot of people did expect when the Liberation Day tariffs were kind of announced. There are some potential tailwinds, though. This wasn't all bad because a lot of economists are looking at higher tax refunds as a potential boon to help support spending in the coming months.

8:59Neal Freyman:Again, that risks being offset by the higher inflation ticking in. But that is one thing that people looked at and said, there is some hope here that spending will remain robust because of the increased amount of tax refunds people are getting. Yeah, we've got two clashing forces coming to household finances. Their tax refunds, which are running about 14 % higher than last year, but not for me, apparently. That translates to about$290 per household. But then at the same time, we have elevated oil prices, and we don't know exactly where they're going to go. But at current levels, that would amount to a loss of$350 per household.

9:32So it looks like all of those gains are going to be wiped out by higher energy prices.

9:35Neal Freyman:And you set the table well saying that the CPI report is dropping today. The reason why a lot of people are very excited for that is because we're going to see some of the impact of rising gas prices from the Iran war. Again, the PCE, even though the Fed loves looking at it to make their rate decisions, that does not reflect these volatile food and energy costs. CPI report does. Well, that was February. This is March. Yeah. And in addition, that is pre-war that we're getting. So we are getting a more up-to-date report and we're getting one that does bring in oil and gas prices. So it's not going to be pretty.

10:11Neal Freyman:I mean, there are some pretty dire expectations going into this. Economists are expecting almost a 1 % increase in the CPI. That is the biggest advance since 2022. So So a little bit nervous ahead of this drop later today. Let's head to Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock that wrapped up their taxes already and another that's scrambling to the deadline. I won the pre-show drag race, so I get to go first. And my Stock of the Week is Vanderbilt University, which has become more selective than some Ivies. I literally did a double take when I saw this. For the upcoming fall, Vanderbilt admitted just 2.8 % of regular decision applicants, 1 ,382 students out of 48 ,720 applications, itself a record high.

10:56Combined with early decision, that comes out to a total Vanderbilt admissions rate of 4%. To put that in perspective, Vanderbilt's acceptance rate about 20 years ago was 32.8%, and the 4 % currently makes it more exclusive than Yale and Columbia, which accepted about 4.2 % of applications. So what the heck is going on in Nashville? Why has Vandy become the southern belle of the ball? There are a bunch of factors driving Vandy's rise to near Ivy status. One is that it's got an enviable mix of elite academics and great D1 sports culture, that work hard, play hard mentality attractive to high achieving high school seniors.

11:31Another reason is that in general, Southern universities are seeing heightened interest due to better weather, typically lower prices, and there are less political campuses after the upheaval of the past few years. Toby, the Commodores are rising.

11:43Neal Freyman:Commodores are ripping. They kind of screwed me in March Madness, though, so I still have a bone to pick with them. One other factor that is leading to the influx of applications is it's just easier to apply these days. The Common App is a lot easier for a lot of people to fill out. Also, standardized testing is a massive factor when you have to consider applications. Vanderbilt doesn't require students to submit those standardized test scores, so that could have juiced up their application numbers a little bit. That is kind of the overthinking approach to this story. The other approach is what you said is just Vanderbilt's an awesome school.

12:21Neal Freyman:It's located in an awesome part of town. It's warm there. Again, a lot of people are attracted to Southern schools because of the air of apoliticalness that are in some of those campuses. So sometimes you don't have to overthink a story. Vanderbilt's a sick place to go to school. But we're also seeing this happen across similar kind of Southern schools that want to vault into the exclusive Ivy League status. And one other one is Duke University this year. It has an overall acceptance rate of four point seven percent. And that acceptance rate, Duke's acceptance rate, has been cut by about half over the past decade.

12:57So Duke, Vanderbilt, other sort of private Southern schools are really wanting to become this. they're all vying to become the Ivies of the South, and they're lowering their acceptance rate to the point where I wouldn't even think of applying now if I was a high school senior.

13:10Neal Freyman:As I was reading about all these stories, I go, I would have literally no chance. What do you mean the regular decision rate is sub 3 %? It does seem very difficult to get in because there's just a lot of demand right now. Vanderbilt is looking at that demand, though, and going, what if we just expanded our entire campus? They have plans for new campuses in New York, San Francisco, and West Palm Beach, Florida. They actually are breaking ground on the San Francisco one by 2027. And this is going to be a full-blown four-year undergraduate college. It's not going to be just a satellite outpost. So that is maybe something we could see become more common as the demand is there.

13:49Neal Freyman:What if we just opened more schools and had like this chain mentality when it comes to higher education? All right, we're going to take a quick break and come back with our dog of the week.

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15:29Neal Freyman:At the center of it all is a new hero, Anthony, a hardworking, kind, and very patient temp employee who has no idea that the company is fake and that the entire retreat is staged around him. And here is the fun part. You'll be able to try all four flavors of Rockin' Grandma's Hot Sauce sold on Amazon. Jury Duty Presents Company Retreat is streaming now on Prime Video. Catch the feel-good comedy that'll knock your sauce off. My dog of the week is the zippers on your carry-on because they're going to be bursting due to all the extra clothes you're trying to fit in there. American Airlines announced yesterday that it's jacking up bag fees with the biggest squeeze coming for the people who can least afford it, Basic Economy Flyers.

16:08Neal Freyman:For regular tickets booked starting yesterday, your first checked bag at the airport will run you$50, up$10. Second bag is$60. But if you're flying a basic economy starting May 18th, your first bag is$55 and your second is$65. American is far from the only airline doing this. United, JetBlue, Delta, and Southwest have all hiked their bag fees in the past two weeks. The culprit is jet fuel, which has gone completely vertical since the Strait of Hormuz choked off global supply. But American is uniquely punishing the cheap seats. The whole industry has figured out that premium cabins are where the growth is, while regular economy sales are softening.

16:47Neal Freyman:So American is broadcasting that if you're paying up, we'll treat you like royalty. If you're not, we'll nickel and dime and quarter in penny. Neil, put another way, kind of stinks to fly right now. Overhead bin space is going to be an absolute disaster. I mean, people are going to get hurt. It was already bad, and now they're charging even more to check a bag. You're obviously bringing more suitcases on the plane. Jet fuel prices have about doubled since late February, climbing to about$4.80 a gallon. This is airline's second biggest cost coming after labor. New projections say that at current jet fuel prices, airlines would be on the hook for about $40 billion more in fuel spending alone this year from the rise in jet fuel.

17:31So obviously, they're going to turn on this switch. And it's a very lucrative switch because they make billions of dollars in bag fees, and people are willing to pay them. So last year, airlines made$7.2 billion dollars on bag fees alone. So you can easily split the switch and just say, okay, do we want to make another couple hundred millions of dollars to offset jet fuel prices? Okay, let's just charge$5 more for bag fees.

17:53Neal Freyman:Yeah, it's easier to charge for bag fees than for fares alone because fares are also going up in price. United said that they're going to raise prices 15 to 20 percent. Delta said that higher fares would stick around. A lot of the CEOs have also said people are willing to pay them. I guess people are just willing to pay any prices at this point to go the places where they want to go. But this is definitely American is unique in this sense that they are specifically penalizing regular economy flyers because they think that they've gotten the reputation of not being the premium airlines that, you know, Delta and United are trying to push into at this point.

18:29Neal Freyman:So I really do think that they're trying to discourage or even, you know, overtly punish this lower economy flyer by charging, you know,$5 extra to try to differentiate themselves and say, hey, we do have premium offerings. You're going to pay a little bit less if you book with our normal economy fares. Let's talk about Delta because they have an interesting ace in the hole to help mitigate this rise in jet fuel costs. And that's because they own a refinery. In 2012, they bought a refinery in Pennsylvania to process crude oil into kerosene or jet fuel. And it's been a very interesting move. It's the only airline in the United States that has their own refinery.

19:13And sometimes in some years it looks absolutely genius. In other years, it looks like a money pit boondoggle. But right now it looks like a very savvy forward looking move as jet jet fuel prices go up and they can actually just make their own in Pennsylvania.

19:26Neal Freyman:Yeah. Everyone roasted this when they first bought it because it was a Konoco Phillips plant and they were planning to shut it down. And Delta's like, hey, we'll buy it. And everyone's like, why would you buy something that in literal oil and gas companies said is not worth it to run anymore. And yeah, it ebbs and flows on whether this is a smart move or not based off of a thing called the crack spread, which is the difference in price between crude oil and jet fuel. The larger that crack spread is, the smarter it looks to have your own refinery. And United CEO Scott Kirby actually is a little bit jealous right now.

19:59Neal Freyman:He said over the life of the refinery, the benefit is shared by everyone because you can sell that fuel to everyone. But right now the crack spread is much higher so they'll get real benefit from the higher crack spread that will be unique to them so i think he's got some green with uh envy in his eyes right now yeah delta said that the refinery is going to boost its second quarter earnings by 300 million dollars they're also pouring you know 1.6 billion dollars into this thing for maintenance and repair since they bought it in 2012 but it would just be funny to drive on the pennsylvania turnpike and just see like a big refinery and with a big delta sign on it i'll take a look next time i'm over there.

20:33Okay, let's sprint to the finish with some final headlines. Home, sweet home. The four astronauts on the Artemis 2 mission will, if all goes according to plan, complete their historic journey tonight with a splashdown in the Pacific Ocean. When they looped around the moon earlier this week, Reid Wiseman, Victor Glover, Christina Koch, and Jeremy Hansen traveled further from Earth than any other humans have gone before. They also became the first astronauts to visit the moon in more than five decades, testing key systems ahead of a planned lunar landing a couple of years from now. Toby, this won't exactly be a gentle re-entry.

21:04The Orion spacecraft will re-enter Earth's atmosphere in a fireball of 5 ,000 degrees, going about 24 ,000 miles per hour, or about 31 times the speed of sound.