Sunday, March 27, 2011

NFL In Driver's Seat With TV Deals As Rights Deals Projected to Double By End Of Decade

According to a very good Sports Business Journal article, NFL media fees (TV, etc.) are predicted to double to $8 billion annually by the end of the decade. This revenue should help offset some loses associated with new stadiums. This is one reason the NFL is pushing for a greater share of revenue in CBA negotiations.

According to the article written by David Kaplan, 20 NFL teams are playing in stadiums that are new or have been substantially renovated since 1999. The NFL thought it would generate more income with these stadiums. However, that wasn't the case according to Neil Begley of Moody Investors.

"The league felt with the new stadiums there would be a tremendous upswing in pricing, and they would be fine. What happened was a little different. The elasticity in [ticket and premium-seat] pricing wasn’t as vibrant, the recession occurred, and ultimately the plan was largely a failure. As a result of that, they have been bearing a lot of the credit risk without the profit. The upshot is they would like to get a more reasonable portion of the media revenues to cover the risks they have taken.” 

According to Begley, the TV networks are prepared to pay a lot for rights. "The leagues are going to have more leverage than ever before."


David Bank, an analyst with RBC Capital Markets, said TV networks have relied on the NFL's big ratings to save their TV seasons. For example, “Sunday Night Football” was NBC's highest rated broadcast. As well, ESPN’s “Monday Night Football” was the highest-rated cable show.

"This is a really good time for the NFL to negotiate. The league has to be aware of how reliant the networks are [on] the league’s ratings.”

Rich Greenfield, a financial analyst for BTIG, relied on the NFL's TV ratings as evidence that the league’s leverage will get stronger in coming years.
“The NFL clearly has become more important to the TV industry each year,” Greenfield said.
As per Goodell, with player salaries rising faster than incremental rises in revenue, together with stadium debts, the NFL is certain to continue to push for a bigger share of revenue.

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