As the National Football League kicks off its 97th season on Thursday night, one thing is clear: Despite a tide of negative publicity in recent years, from cheating scandals to brain trauma fears, the NFL remains a money-making machine.
Total revenue for the league’s 32 teams hit a record $13 billion last year, an increase of 44 percent since 2011. Roughly 60 percent of that money comes from broadcast rights. The remainder is split evenly between gate revenue, with home and visiting teams sharing the spoils, and from things like local sponsorships and stadium naming rights.
To put this in perspective, the NFL’s revenue haul surpassed that of the National Basketball Association ($8 billion projected for the upcoming season) and National Hockey League ($4 billion) combined. Major League Baseball also remains well behind, with 2015 revenue of $9.5 billion. According to Forbes, the average NFL team is worth $1.97 billion as of 2015, a 38 percent increase from the previous year. NBA teams are a bargain in comparison, averaging $1.25 billion, while NHL teams are worth about $505 million.
“More important than sheer profitability is the impressive growth in franchise values,” said David Carter, executive director of the USC Marshall Sports Business Institute, in an email. “Although many owners are concerned with year-on-year financial performance, far more view the quality of their investments by the extent to which their team appreciates in value. And from this perspective, the NFL is certainly in a class of its own.”
In 2011, the league renewed its broadcast rights contracts with CBS (CBS, the parent of CBSNews.com), Comcast (CMCSA), Fox and NBC through the 2022, boosting its revenue by 60 percent over the life of the deal. Walt Disney’s (DIS) ESPN also reportedly pays $1.9 billion per year to broadcast “Monday Night Football,” a 73 percent increase over its previous contract. And earlier this year, CBS and NBC signed a $900 million dollar deal with the NFL to broadcast Thursday night games for the next two seasons.
“If you are even a casual American sports fan, you are conscious of the NFL from nine o’clock in the morning on Sunday until Monday night, and now they have extended that window to Thursday,” said Joe Favorito, a sports marketing expert who teaches at Columbia University.
According to a poll of more than 2,000 sports fans released by Harris earlier this year, 33 percent of all respondent chose pro football as their favorite sport, with 15 percent choosing baseball. This represents a sea change from 1985, when an equal share (24 percent) choose football and baseball. Football also dominates TV: Seven of the 10 most watched last year were NFL games, including the Super Bowl, according to Nielsen.
There are many reasons for the NFL’s ascendancy, including the league’s decision to split revenue from TV contracts, national sponsorships and merchandise deals equally among each team. In the last fiscal year, each franchise received about $222.6 million, giving small market teams like the Green Bay Packers the financial muscle to compete against teams in larger metropolitan areas.
The NFL is also unusual in that it sells the broadcast rights to all of its games to broadcasters as a league, as opposed to other sports where most regular season games are sold through individual teams.
“During the first 15 years of the NFL there was massive instability,” said Victor Matheson, a professor of economics and accounting at the College of the Holy Cross. “Roughly 50 teams played at least one season in the NFL between 1920 and 1935.”
Meanwhile, pro football’s financial strength and popularity show no signs of abating despite concerns about the potential damage to player’s health caused by head trauma.
“Advancements in player safety linked to technology, when combined with the NFL’s diligence and commitment to the sport at all levels, will slow, if not mitigate, any long-term downturn,” Marshall predicted.