The National Football League (NFL) has a long history of being one of the most prosperous American sports leagues. Despite all the hoopla about the “Big Three” sports in North America (or “Big Four” for hockey enthusiasts), the truth is that pro football comes first, followed by everything else.
In 2015, the NFL’s tax-exempt status was revoked as a result of mounting criticism over its sharply rising revenue. Since 1942, this status had been in effect. A trade association comprised of the 32 teams that make up the league now exists and is funded by them. The Green Bay Packers are still a nonprofit organization even though there are 31 clubs that are commercially owned.
The majority of the NFL’s income comes from Broadcast contracts. Ticket revenues, licensing and merchandising rights, and corporate sponsorships are additional sources of income.
The NFL seems to be profitable than ever, despite some recent setbacks, like as debates about player concussions and the national anthem. The NFL, however, does not disclose its financial success to the general public due to its private status.
Without accounting for the streaming partnerships reached in December 2022, the league earned an estimated $11.1 billion for the 2021–2022 season. The projected $11.1 billion is a decrease from the roughly $15 billion or more anticipated to have been earned in 2019. 67 For more context, consider that NFL Commissioner Roger Goodell set a revenue goal of $25 billion by 2027 a decade before the epidemic struck.
FACTS:
The National Football League is one of the most successful sports leagues in the nation (NFL).
The league’s tax-exempt status expired in 2015.
Roger Goodell, the commissioner of the NFL, aimed to make $25 billion by 2027.
Television deals are the NFL’s main revenue stream.
Only one NFL team, the Green Bay Packers, is run as a nonprofit corporation.
The Business Model
The NFL separates its revenue streams into two groups: local and national.
The league itself negotiates national merchandise, licensing, and TV contracts, which make up the majority of national revenue. The 32 teams receive equal shares of this money after that, regardless of individual team performance. 9 According to shareholder papers from the Green Bay Packers, the NFL generated around $9.8 billion in total revenue in the fiscal year (FY) ending March 31, 2021, with $309 million going to each franchise.
The teams themselves generate local income through concession sales, ticket sales, and corporate sponsors. The Packers’ local revenue for the fiscal year that ends on March 31, 2021, was $61.8 million, a 70.7% decrease from the prior FY as a result of COVID-19.
To assist cover the high operating expenses of maintaining a professional football team, large earnings are required. The Packers incurred expenses totaling $410 million in FY 2021. The majority went into player salaries, with the remainder going toward stadium maintenance, advertising, and team and administration expenses.
The Dallas Cowboys are the richest club in the NFL, according to Forbes, with $1.1 billion in revenue and $466 million in operating profits in 2021.
The basic organization and breakdown of the NFL’s business are as follows:
Huge Discounts on TV and Streaming. The Super Bowls are among the most watched TV broadcasts in American history, and football is the most watched sport in the country.
Mondays, Thursdays, and Sundays throughout the regular season see live NFL broadcasts in the US. The highest-rated television programs on a regular basis are these games. Media companies have therefore paid a lot of money for the rights to broadcast them.
The NFL currently has TV deals in place with Amazon, CBS, ESPN/ABC, FOX, and NBC running through the 2033 season.
Sources familiar with these deals, announced in March 2021, told CNBC that they may be valued more than $100 billion. The Super Bowl broadcast rights will be divided among the four TV networks on a yearly basis, while “Thursday Night Football” will only be available on Amazon.com.
The NFL and Google (GOOG) signed a multi-year agreement in December 2022, giving YouTube TV and YouTube Primetime Channels the exclusive right to offer NFL Sunday Ticket to American consumers beginning with the 2023 NFL season.
Subscribers to YouTube TV can access over 100 channels of live and recorded TV using this service. A new way for consumers to subscribe to and access content on the YouTube app is through YouTube Primetime Channels. 17 The NFL Sunday Ticket package pact with Google is expected to cost the league nearly $2 billion yearly, up from $1.5 billion under a prior agreement with AT&T’s DirecTV.
According to Susan Wojcicki, CEO of YouTube, “YouTube has long been a place for football enthusiasts, whether they are streaming live games, following their home team, or watching the best plays in highlights.” She continued by saying that people would be able to watch the game on YouTube TV or YouTube Primetime Channels as well.
According to the NFL, as part of the partnership, YouTube and the NFL will provide select YouTube Creators with an opportunity to attend important NFL tentpole events as well as exclusive access to official material.
The NFL is rumored to be looking to license the marketing rights for pubs and restaurants for $200 million.
Transactions in Merchandising and Licensing
The NFL also gets money by selling businesses the right to sell goods that bear the NFL’s logo, even though its massive Broadcast agreements account for the bulk of its domestic earnings. For instance, in 2018, the NFL and Nike Inc. (NKE) partnered to announce a 10-year license agreement with the online sports store Fanatics. By virtue of this agreement, Fanatics will serve as the only producer of all adult-sized, Nike-branded goods offered for sale on the NFL’s website.
While the price of this agreement was not made public, it is most likely negligible in comparison to the NFL’s TV contracts.
Sales of Tickets and Concessions
Although ticket sales represent a significant source of income for individual NFL clubs, they still pale in comparison to the rapidly increasing money from TV agreements (you’re probably detecting a theme here).
NFL games often sell out in their 70,000-seat stadiums, with the average ticket costing roughly $151.2021 per fan. There isn’t much room for improvement in this situation.
The only thing that sports teams can do is decide to rebuild their stadiums so that additional seats and concessions are added. While expensive and intrusive, these upgrades often pay off. NFL clubs may utilize their stadiums to hold non-football activities, including concerts, but there are still restrictions on the potential for income development from these events.
Considering the aforementioned statistics, NFL clubs could perhaps make more than $10 million in ticket revenue from a single, completely sold-out stadium event. Nevertheless, the number of expenditures must be deducted from that sum, such as taxes, marketing/administrative fees, and payments to artists or sportsmen, and the profit is drastically reduced.
Concession sales pale in comparison to TV offers, just like ticket sales. The typical NFL club makes very little money from concessions, while the profits from selling food and beverages during games are quite substantial.
Business Sponsors
NFL clubs are paid by corporate sponsors to put their logos on products, TV transitions, player jerseys, etc.
The naming rights to NFL stadiums are the most sought-after sponsorships. The Sports Business Journal estimates that the naming rights of So-Fi Stadium in Los Angeles are worth $30 million annually, but the name rights to Allegiant Stadium in Las Vegas are valued between $20 and $25 million annually.
Future TV Development Plans
TV isn’t going away, despite some assertions, at least not when it comes to football. The value of the NFL’s TV contract has increased dramatically over the last several decades and is expected to do so indefinitely.
Streaming
Although while watching football on TV is still the norm, streaming is becoming more popular. In 2015, Yahoo! signed on as the NFL’s first streaming partner. Amazon.com Inc. and Twitter Inc. (TWTR) are just a few of the several parties that have entered the war since then (AMZN). The first NFL broadcast partner to get exclusive rights to a selection of games on a digital platform was Amazon in 2021. For the exclusive right to broadcast “Thursday Night Football” on Prime Video, Amazon allegedly paid $1 billion.
A seven-year deal for the streaming of NFL Sunday Ticket out-of-market games was signed with the Google subsidiary YouTube. Under the NFL Sunday Ticket package arrangement, the league will get approximately $2 billion yearly, up from $1.5 billion under an earlier agreement with AT&T’s DirecTV.
These arrangements will also continue to expand quickly over the next decades if the expansion of TV deals over the last several decades is any clue.
Gambling
The US Supreme Court ruled in May 2018 to leave it up to the individual states to decide whether or not to authorize sports betting.
26 With that option’s potential to bring in significant tax revenues—sports betting was predicted to be a $150 billion business before it was legalized—many jurisdictions have now adopted it.
The NFL may take advantage of this by opening bookmakers in its stadiums, collaborating with well-known casinos, creating online sports betting websites, and other strategies. The NFL, which is obsessed with expansion, will undoubtedly investigate as many of the many opportunities as it can.
The epidemic of COVID-19
The worldwide COVID-19 epidemic has had a significant effect on enterprises all across the globe, including the NFL. To stop the infection from spreading and to protect NFL staff members, players, and coaches, special precautions were put in place. This involves enforcing mask use, routine testing, and social seclusion. The number of spectators permitted on and around the pitch during games was also restricted by the league.
Naturally, such actions hurt the league’s financial position. During the height of the epidemic, The Wall Street Journal predicted that the league may lose up to $4 billion in income. 30 But, there is a broad optimism that the league will rapidly recover from what is being seen as a modest, short-term setback given that the worst seems to be behind it.
Using just Star Power
The NFL depends on its top players to draw in new viewers. The NFL listed Tom Brady (Tampa Bay Buccaneers), Aaron Donald (Los Angeles Rams), Aaron Rodgers (Green Bay Packers), Cooper Kupp (Los Angeles Rams), and Jonathan Taylor as the top five players for 2022. (Indianapolis Colts). 32
The NFL named Patrick Mahomes of the Kansas City Chiefs, Aaron Donald of the Los Angeles Rams, Aaron Rodgers of the Green Bay Packers, Derrick Henry of the Tennessee Titans, and Travis Kelce as its top five players for 2021. (Kansas City Chiefs).
Popular teams also follow this reasoning. The Green Bay Packers, New England Patriots, Dallas Cowboys, Philadelphia Eagles, and Pittsburgh Steelers are the top teams for 2022, according to fan-based research. There is a 30-year waitlist for tickets because the Packers are so well-liked.
Scandals
In recent years, the NFL’s reputation has been under scrutiny. The league has been charged with ignoring the danger of brain damage in addition to racially discriminating against injured players because it believed Black players had worse cognitive ability from birth. 3536 The league has dismissed allegations that some of its players have abused women, and in 2019 it suspended Colin Kaepernick for his protest of racism by kneeling during the national anthem. 3738 2020 saw the emergence of an email controversy that included allegations of pervasive sexual harassment and verbal abuse.
The NFL runs the danger of losing a sizable portion of its fan base if conflicts of this kind persist.
The National Football League (NFL) is owned by who?
The National Football League is not owned by a single person (NFL). Instead, it is a trading organization made up of several clubs or franchises. Just one of these clubs—the Green Bay Packers—is held collectively by stockholders as a nonprofit; the other thirty-one teams are owned individually.
Is the NFL in the red?
Overall, the NFL is profitable, mostly because to lucrative broadcast, streaming, and marketing partnerships. The league’s financial performance has been affected by the worldwide COVID-19 outbreak, although some analysts believe this is simply a temporary setback.
Which NFL franchise has the lowest market value?
The NFL franchise with the lowest market value is the Cincinnati Bengals, according to Forbes. According to estimates, the club earned $114 million in operating income and $462 million in revenue during the 2021 season.
Which NFL club is the most valuable?
The Dallas Cowboys are the NFL franchise with the highest market value. According to Forbes, who values the Cowboys at $8 billion, the club had an operating income of $466 million and generated revenue of $1.1 billion for the 2021 season.
the conclusion
One of the most prosperous sports leagues in the country is the NFL. There is enough proof that it earns a tremendous lot of money, despite the fact that it is a private corporation and hence not required to disclose how much it makes.
The Broadcast and marketing arrangements provide a large portion of the league’s income. Unfortunately, the worldwide COVID-19 outbreak hurt its financial position. Several observers claim that the NFL will swiftly recover from these short-term setbacks. That may be the case, and the popularity of the league does not seem to be declining, but there is still a long way to go before the league reaches its goal of $25 billion in revenue by 2027.