Show of hands, how many of you watched any part of an NFL game this weekend? Better yet, how many discussed it with friends and family? OBJ scored in his first game back in New York, Antonio Brown caught a TD from TB12 in his first game for New England, 4–5 starting QBs were injured and will be out for long periods of time. I personally consider American football to be my 4th favorite sport (baseball, hockey, and “real” football round out my top 3), yet there I sat on Sunday, laptop and TV showing different NFL games and following my two fantasy football leagues. Popular? You betcha. But, have you ever been curious as to just how profitable the NFL is? How it compares to other major sporting leagues worldwide? Other Fortune 500 companies? Let’s take a look.
First, below is a chart demonstrating the revenues for the top 6 sports leagues in the world:
As you can see, the National Football League is head and shoulders above the rest, nearly doubling its closest competitor in the National Basketball Association. So, what’s the breakdown of these profits? First, the NFL divides it’s revenue streams into “national” and “local”. Let’s dive in:
National Revenue
The first and most profitable stream of national revenue is TV deals. Forbes posted this great article detailing a $26 billion deal that was completed back in 2011. This deal gives companies like NBC, CBS, Fox, and ESPN the rights to their signature programs (SNF, MNF, and various playoff games/Super Bowls). The reason these deals are astronomical in price is simple, the NFL is must see entertainment. Consider this- since television became mainstream in the United States (I’m talking the 1960s folks), the NFL is responsible for 19 of the 20 highest viewed television programs. 19 of the top 20! This chart from Wikipedia puts this data on display perfectly. I’m not sure it’s possible to fully wrap ones head around that fact- of all the television programs ever brought to a television set (the Seinfeld finale, Friends finale, The Office finale, every NBA/MLB/NHL game 7, think of how popular these are!), the National Football League has raked in the most viewers for 95% of the top 20 most watched programs. Absolutely astounding, pure domination in the entertainment industry.
The other stream of revenue on a national level comes from licensing deals. Although this revenue stream may not come with the sexy statistics, it is important to note that the NFL is able to charge companies for putting its logo on their gear. For example, Nike and the NFL signed a deal with Fanatics in 2018 that made Fanatics (or the Nike website) the only place to buy official adult-sized NFL jerseys. Not nearly as profitable as the TV deals, but interesting nonetheless.
Local Revenue
Local revenue streams are earned by the teams themselves, with the main stream of revenue being ticket and concession sales. Again, peanuts compared to the massive TV deals, but noteworthy regardless. As anyone who enjoys watching live sports has noticed, these ticket prices are nothing to scoff at. And don’t get me started on the beers. Selling a Bud Light for $11.50 is a very easy way for an NFL owner to make $11.48. That’s why we sneak in fifths of Jack Daniels! That’s right NFL, if you’re reading this, I have snuck in astronomical amounts of alcohol into your facilities. HA! As I wear my Patriots jersey and winter hat, and drink my Jack and Coke out of my Patriots travel mug, all of which I overpaid for. Shit, they always getcha. Another quick side note, NFL teams can utilize their stadiums for non-NFL events, like concerts and other gatherings.
This local revenue is why teams like the Dallas Cowboys, New England Patriots, and Pittsburgh Steelers can earn more for their owners then the Jacksonville Jaguars and Tampa Bay Buccaneers. Better product on the field leads to more fan support. More fan support leads to more tickets sold. More tickets sold leads to more beers consumed at $11.50 a pop, and so on. Certainly, jersey sales and TV deals do play a role in team by team net worth (I have seen every Cowboys game on Fox since 1992), but my point remains- local revenue streams can play a big role in team earnings.
One last side note for those interested, according to the latest CBA (Collective Bargaining Agreement), the owner/player profit split is around 52/48. This means that for every $100 earned, $52 goes straight to the owner(s) of the team and $48 goes to the players. Also keep in mind each team usually has 1–4 owners, while there are 52 players on a roster and a 10 man practice squad. Fair? That’s up for debate, but it’s the deal the players union signed.
The NFL has done a fantastic job at dominating it’s market (Sport/Entertainment). The advertising, the permeation of youth sports, the TV deals, we can argue about why it has dominated all day. The fact remains, football has become more than a sport to us. It is culture, especially in the Southern United States. Entire towns will shut down on Friday or Saturday to watch their local high school or college play. All of this being said, just how valuable is the NFL in the big scheme of things? How does it compare to the sharks of capitalist America? Let’s take a look at it’s revenue compared to some Fortune 500 companies:
As the chart above demonstrates, the NFL isn’t doing too shabby. More profitable than major insurance players like Unum and international brokerage firms like TD Ameritrade, but clearly less profitable than some major players in the business world (Coca Cola and Nike). This chart does not include any of the top 75 Fortune 500 companies, listed here. If listed as a public/private company, the NFL would fall right around the #200. For reference, companies like Amazon, Walmart, Apple, and Exxon Mobile come in with yearly revenue in the $300 billion area. There’s a bit of perspective for you as well- Walmart reported over $500 billion in revenue in 2018. Ridiculous numbers.
There you have it, a brief rundown of the business side of America’s favorite sport. Next time you watch a game, keep a keen eye on all of the marketing and entertainment that goes into them. The endless commercials, the NFL logos everywhere, the self-promotion for next weeks games, etc. You may start to see the game from a different angle- as a targeted consumer more so than a hardcore fan. After all, you’re paying these guys big bucks for these guys to keep you entertained. Enjoy it.
-B. Francis
References: Investopedia, NY Times, USA Today, Fortune Magazine, Wikipedia