Events and Reports
an article by SportBusiness International
SportBusiness International (Original Publication date: October 2016)
NFL commissioner Roger Goodell has announced the objective of reaching $25bn in revenues within the next decade and America’s most popular league seems well on the way to such a lofty goal.
The numbers crunched by business magazine Forbes this year on each of the 32 teams’ values are astounding.
Yes, we expect the Dallas Cowboys to carry the flag for the sport – and pretty much every other sport, considering it is apparently worth more than any other franchise globally, including Real Madrid, Barcelona and Manchester United. But a value of $4.2bn? A full 25 per cent more than the NFL’s next most valuable team, the New England Patriots?
And consider the overall valuations. An NFL franchise comes in at an average worth of $2.34bn, an increase of 19 per cent in one year. The least valuable club, the Buffalo Bills, are tagged at $1.5bn, an increase of 13 per cent. So what’s going on and will such significant increases continue?
Audiences
The first place to look is at the product itself and its attraction for commercial partners.
“It is the appointment viewing,” says Chris Curtin, chief brand and innovation officer at Visa. “It’s harder and harder to aggregate audiences for live events, and the NFL still delivers that, not just once in a while, but every Sunday, every Monday night and now every Thursday night. The NFL still maintains that appeal of sitting down and watching the games as they occur.”
That element is crucial for advertisers, of course. While viewing audiences have become so fragmented for other TV programming, hardly anyone is sitting down to watch recorded NFL games at a later time. With the advent of fantasy football and its soaring popularity, plus the always present gambling element, Visa and all the other league partners are assured of large audiences.
Viewership for live games actually fell by about 11 per cent in the first six weeks of the 2016 season, but Goodell cited a number of acceptable reasons for the dip – most notably two clashes with broadcasts of US presidential debates.
Moreover, Curtin notes that the NFL performs well on gender diversity, attracting family viewing, with communities even hosting viewing parties. In America, other than perhaps the NCAA basketball tournament, better known as March Madness, and some rare one-offs, only the NFL has that kind of drawing power. “With the exceptions of the Oscars or the presidential debates, the point is well taken: sport is one of the remaining platforms that consistently delivers in a world with multiplicity,” he says.
Another element that makes the NFL so attractive is the devotion that fans carry for the sport. “The second thing is the NFL intersects well with elements we like to stand for as a brand, including passion,” Curtin adds. “That is an equity within a brand that we would like to share and that Visa would like to exemplify, hopefully. There’s such a big bond between the fans and the teams and the players. In that respect, you are seeing extraordinary and ordinary human beings that are relatable.”
Visa, the second-longest sponsor of the NFL behind Gatorade, also has deals with nine individual clubs: Atlanta, Baltimore, Buffalo, Cleveland, Denver, New England, San Francisco, Chicago and Jacksonville. Those affiliations are important, because they can reach hundreds of thousands of fans directly at the stadia.
“With the exceptions of the Oscars or the presidential debates, the point is well taken: sport is one of the remaining platforms that consistently delivers in a world with multiplicity”
Experience
Many believe that the TV experience is superior for the NFL than for any other US sports viewers, particularly when the weather gets dicey in locales ranging from Buffalo to Green Bay to Kansas City to Denver. But the league has been seeking ways to make the in-game experience at the ballpark something special. Sponsors want to be in on those efforts, too.
“They have enhanced the experience of going to an NFL game that makes it attractive beyond what is being done on the field,” Curtin says. “It can range from the way in which you get tickets or present them, or the ability to buy merchandise. It’s become more and more sophisticated in the way people interact with them.
“Their Twitter partnership (for streaming games) is somewhat remarkable. I have experienced that myself and it is a really compelling way in which they are doing that. Those are some of the dynamic and interesting things they are trying to do.”
It’s not just sponsors and advertisers who find it imperative to be affiliated with the NFL. It runs true for the league’s broadcast partners.
That means DirecTV, Fox, CBS, NBC and ESPN for live television game coverage. It means SiriusXM Satellite Radio, too.
The NFL product brings such a strong cachet that it can virtually establish a broadcast outlet as a viable entity. That happened with Fox on television nearly a quarter of a century ago and it has occurred with SiriusXM.
“For us, they have really been a major tent pole in our programming,” says Steve Cohen, SiriusXM’s senior vice-president of sports programming. “We announced our deal with the league in 2003 and launched our Sirius NFL Radio channel in 2004. We also gave fans the ability to hear home and away broadcasts no matter where the listeners happen to be, and that was a groundbreaker for radio.
“Fans are transplanted all over the country. It’s hard to estimate the value of a local radio broadcast, except to say you don’t get to watch a local TV broadcast of your team; everything is on national networks. The only way to truly keep in touch with your hometown team and with the experts who follow the team is through the local radio.”
Uniqueness
Again, there is a uniqueness to the NFL that works on multiple levels. Cohen also notes that SiriusXM’s partnership with the league has led to other innovations, including establishing a fantasy sports channel that tends to draw more callers – and more subscribers – than any other sports outlet on satellite radio.
“We track a lot of subscribers because of what we provide in our overall line-up,” Cohen says, referring to a wide variety of music, talk and news channels. “We know the NFL is an important element and we know the strength of the NFL brand and loyalty of fans to their teams. If we give them a well-presented product, they will be happy to pay for radio.
“Plus, we are talking NFL all over our service, from Howard Stern to the music channels to all our different partner channels. It’s really a sport that transcends.”
Will it continue? Business-wise, why not? Certainly there are some major issues, most notably preventing and treating concussions and head trauma for players. There’s also the constant bickering over every topic between the players’ union and the league.
While hardly discounting those subjects, it’s impossible to ignore the possibilities for the NFL in America and across the globe.
“We can expect gross revenues from broadcasting to rise significantly,” says Marc Ganis, a keen observer of NFL business as president of SportsCorp Ltd, a Chicago-based consulting firm. “But perhaps the most important reason for rising numbers overall is because the revenues the league will generate will come from all forms of partnerships. The NFL is the best-run business of any professional sports leagues worldwide and their partners recognise that.
“As the league continues to explore the alternative means of distribution, it will find some big players in the digital space wanting to grab rights. It will create the ability to have a new meaningful revenue stream, much of it based on international viewership and use.”
Expansion
Such countries as India, China and Brazil will be targeted by the NFL, which will provide digital coverage that should help spur merchandising and other marketing ventures. No need to stage live games in those countries – a logistical nightmare in such a condensed season for such a physical sport – when you can reach millions more potential fans through the web and social media, as well as with traditional broadcasting.
“The NBA has done the best job of international expansion,” Ganis notes. “Major League Baseball has done the best job in visual viewership. The NFL will become even more the sports league, taking the greatest advantage of digital distribution on a worldwide basis.”
Although Ganis believes some of Forbes’ numbers are too high, he projects NFL valuations will continue to rise – and not just for the big shots such as the Cowboys and Patriots.
If the Washington Redskins get a new stadium, their value “will soar,” he says. The Falcons will move into a state-of-the-art facility in Atlanta next year. If the Chargers don’t get a new stadium approved in San Diego, they could head to Los Angeles to join the Rams in their new arena, planned for opening in 2019. The Rams’ value could double from the current $2.9bn by then.
Should Las Vegas come through on its stadium proposal for the Oakland Raiders, including $750m in public funding, that franchise, worth $2.1bn now, will try to get approval from the rest of the owners to head to the desert.
“The $25bn is achievable,” Ganis says, “but will have to be subject to market conditions the league does not control.”
The way the NFL is going, it might be able to control those conditions, too.
Events and Reports
Related articles