What Lockout? NFL Business Thriving

Four months ago, the NFL season was in jeopardy.  Nearly 3,000 jobs and $160 million in local economic impact were at risk in each NFL city.

Today, the league is enjoying one of its most successful campaigns in recent memory.  All it took was the prospect of missing games because of the lockout.

Fans this year are watching NFL broadcasts in record numbers.  Through the first nine weeks of the season, Fox is averaging a network-record 19.8 million viewers per game, while CBS is having its second-best season since reacquiring the NFL in 1998.  ESPN has committed $1.9 billion a year to extend Monday Night Football rights through 2021; and no TV partner has had more success this year than DirecTV, whose NFL Sunday Ticket product led to 327,000 new subscribers in the 3rd quarter, the company’s best quarter in seven years.

On the sponsorship front, PepsiCo signed a 10-year extension of its deal for a total of $2.3 billion, Marriott signed on as the league’s exclusive lodging partner, and the United Services Automobile Association became the NFL’s first official military appreciation sponsor.

With NFL sponsorship revenue expected to increase 15% this season, league-wide revenue could reach a record $9.5 billion.  That would make the NFL bigger than Fortune 500 companies eBay, Whole Foods and Visa.  Not bad for a business that nearly shut down for the year.

TV: The Driving Force Behind College Football

One of the main reasons college athletic conferences are pursuing expansion is money – in particular, TV money.  The Pac-12 Conference a couple months ago announced it will create a national TV network plus six regional affiliates.  The networks, which will generate millions of dollars for member schools, will carry about 850 conference events annually.

To see how a conference TV network can positively affect Pac-12 schools, look no further than Washington State.  The Cougars have the second-smallest operating revenue in the conference at just $39 million.  That’s well below the Pac-12 average of more than $60 million per school.  However, once the new TV revenue starts flowing in, Washington State could use part of the money to fund an $80 million renovation to its football stadium, which is the smallest in the conference.

Although realignment has gotten crazy, at least this Washington State move shows tangible results from the madness.

 

If realignment is maddening, this story is downright quirky.

In one of the more unusual sports business moves of the year, CBS, ESPN and NBC made a “three-network” TV rights trade.  The driving force behind for the deal was CBS, who wanted to show next week’s big Alabama-LSU showdown in primetime.  The problem was that CBS only has the right to one SEC primetime game per year, and the network already aired Alabama-Florida at night.  ESPN holds the conference’s remaining primetime rights.

Per the deal, ESPN is allowing CBS to show the game in primetime in exchange for “future considerations,” the TV equivalent of a player to be named later.  However, with the Alabama-LSU game moving from the 3pm time slot, CBS needed to find a new game.  So it dealt rights to the November 19 game between TCU and Colorado to NBC’s Versus channel for rights to tomorrow’s Army-Air Force game.

I like this move for several reasons.  First, kudos to CBS for thinking outside the box.  Getting Alabama-LSU moved to primetime should be huge for ratings.  ESPN, knowing that Arkansas-South Carolina will draw marginal interest at best, possibly has leverage to showcase a more high-profile SEC game next season.  Meanwhile, Versus gets a TCU game, which should draw more viewers than sub-.500 Air Force and Army.

Thought the deal may be complicated, the takeaway here is that rivals can always find a way to work together.