MIAMI GARDENS, FL - FEBRUARY 02: A detail view of the NFL crest and logo is seen in game action during the Super Bowl LIV game between the Kansas City Chiefs and the San Francisco 49ers on February 2, 2020 at Hard Rock Stadium, in Miami Gardens, FL. (Photo by Robin Alam/Icon Sportswire via Getty Images)
Many sports fans know this saying—there’s the NFL and then there’s everyone else. That’s how mighty and dominant the National Football League is compared to other sports. With the market, dominance comes vast revenues.
With mega revenues comes huge salaries for the commissioner, coaches, and players. Indeed, Roger Goodell is one of the best-paid league executives, earning an average of $40 million a year. But where does this money come from?
The NFL knows how to make money, even if it relies primarily on these six sources.
Huge TV Deals
The NFL is heavily invested in TV deals, both at national and local levels. But there are good reasons for this. The league produces quality content, and its games are some of the best-rated shows on TV.
As an example, 19 of the 20 most viewed TV shows in US history are Super Bowl Games. Naturally, that means the NFL deserves to get paid big bucks–$3.1 billion a year from CBS, NBC, and Fox. Together, these brands will have paid the league $39.6 billion by the time their joint contract expires in 2022.
ESPN, by contrast, paid $15.2 billion in 2014 to broadcast Monday night football until 2021. In the same style, Fox has a $3.3 billion contract to air Thursday league games from 2018 to 2022. The rights exclude Thanksgiving Thursday and at least seven games that will be broadcast on the NFL network.
Interestingly, the competition for NFL TV deals keeps stiffening. Amazon wants a bigger share after netting a one game per year deal. As a result, experts project the next TV deals could be worth as much as $5 billion per year.
Corporate Sponsors
Corporate sponsors earn the NFL at least $1 billion each year. Stadium naming rights bring in the most money. Organizations such as AT&T and Met Life pay up to $10 million to have their brands associated with stadiums for the New York Giants and the Dallas Cowboys.
Besides stadiums, organizations also pay millions to have their names plastered on players’ logos or to sponsors NFL TV shows. Another way the league earns income is through merchandise sold in partnerships with retailers.
Looking forward, corporations will continue to contribute a significant chunk of pro-football’s annual income. To expand more, below are some of the league’s top sponsors and how much revenue they bring:
- Verizon–$300 million
- Anheuser-Busch–$230 million
- Nike–$120 million
- Pepsi–$100 million
- Oakley–$75 million
- Amazon–$75 million
Ticket Sales
The average NFL stadium seats 70,000 people. Assuming each team charges $100 per ticket, it leads to $7 million per match. It’s a lot of money, but significantly less compared to what the league earns from TV deals.
Nonetheless, ticket prices keep increasing. So, even if they don’t contribute much, they will continue to help bulge the deep pockets of NFL finances. Again, franchises are constantly expanding their stadiums.
The Packers, for example, have spent over $370 million in stadium development during the last decade. But luckily, the effort is paying off. They earn an average of $70 million annually from ticket sales.
Streaming and Gambling
The NFL has been experimenting with streaming as an income source for a while. First, it entered a deal with Yahoo Sports in 2015. Then it brought in Verizon before partnering with Amazon. In most of these deals, the league has generated roughly $20 million per streamed match.
Of course, the league now also streams some of its matches. So, should it turn out to be more profitable than TV deals, the future of NFL games will be online.
Streaming aside, another valid income source is gambling. Since 2018, states can legalize sports betting without interference from the Federal Government. At least a dozen jurisdictions have already legalized the sector.
That means you can join licensed bookmaker sites such as Bet365 and claim a bonus to bet free of charge. It also means you should expect more gambling partnerships between the league and bookies.
As a testament, the NFL will allow franchises in states where gambling is legal to setup in-stadium betting booths as soon as the upcoming season. Gambling won’t be allowed within stadiums as of yet but bookies could use these sections to educate fans about their products.
Non-TV Licensing Deals
Without TV deals, NFL would probably not be a profitable league. Still, it makes hundreds of millions from non-television agreements like its10-year deal with Nike in 2018. Through the agreement, the apparel manufacturer will create branded products sold through the league’s online store.
In the same year, it partnered with Fanatic to help promote all the products Nikes would make for the league. The NFL didn’t disclose the specifics of both deals.
Another vital income source for the league is advertising deals, mainly during big games. The super bowl, for example, attracts millions of dollars in ads made by major corporations.
Precisely, the league makes up to $2.2 million for an ad of 30 seconds. And that’s not the maximum amount. Sometimes companies pay up to $5 million to have their ad aired for 30 seconds.
Investments and International Growth
Let’s face it. The NFL has been awful at expanding its brand worldwide. It tries launching a European league in the 90s and failed terribly. However, it’s back to expanding it income through international means.
For example, it now hosts at least four games in London and one in Mexico every season. Then it has a host of employees spread out across the world. Their goal is to find growth opportunities for the league.
Similarly, the NFL spends most of its domestic investments on growth opportunities. It wants to expand its dominance in American sports, whether through sponsorships or TV deals. Of course, it understands its biggest resource is its employees.
In fact, the league has often been accused of over-relying on star power to earn income. Star names such as Tom Brady and Aaron Rodgers are crucial in increasing the league’s ratings so much that ratings go down when star players are injured.
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It is quite possible that the NFL will play its 2020 season without spectators in its stadiums. What would that mean in dollars and cents for the league?
The NFL would lose $5.5 billion of stadium revenue (the sum of tickets, concessions, sponsors, parking and team stores)—or 38% of its total revenue—based on figures for the 2018 season (ranking below). But the impact on the individual teams would vary greatly. For example, the Dallas Cowboys and the New England Patriots would lose over half their total revenue while the Buffalo Bills, the Tennessee Titans and the Cincinnati Bengals would lose less than one-third.
A season without fans would also hurt the players. In March, the league agreed to a new collective bargaining agreement that allocated 47% of football-related income to the players in 2020 and 48% in 2021.
Keep in mind that the Raiders are scheduled to move into a new stadium in Las Vegas this season, as are the Rams and the Chargers in Los Angeles. In normal circumstances, each of these teams would have generated far more stadium revenue this coming season. So, too, would the Tampa Bay Buccaneers, who signed Tom Brady during the off-season and have seen ticket sales spike.
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