Opinion: The NFL, Pricing Themselves Right Out of Our Homes
The NFL is a mainstay in most every family home TV on Sunday and sometimes on Monday night and Thursday night throughout the football season. I love the game. I played the game and enjoy the competitive spirit that encompasses most of us five months a year.
It was announced this week that the NFL wants to double the TV rights fees on the networks that carry the games starting with the 2022 season. The football yearly calendar starts around mid March so the NFL wants to get the deals done by March of this year.
To give you a little background the NFL gets $1.2 billion from the Fox network each year and for an additional broadcast of Thursday night games, six total, the NFL receives an additional $660 million from Fox. CBS pays $1 billion a year to carry their games while NBC pays $1.1 billion a year to carry their Sunday Night Football games. ESPN which is owned by Disney shells out $1.9 billion for Monday Night Football and a couple of playoff games. That means the NFL receives close to $6 billion from the networks each year to broadcast football into our homes. Now the NFL wants to double that.
They’re looking for close to $12 billion to broadcast the NFL games into your home. Disney has stated this week that there’s no way they’re paying double what they paid last year. I realize that like all major businesses the NFL lost significant revenue because of the pandemic in 2020 but so did the networks. Production was cancelled, shows were cancelled on their networks and advertising revenue was down. Advertisers who normally advertise in the Super Bowl like Coca-Cola and Budweiser took a pass on this year’s “Big Game.”
I used to sell advertising for major sporting events for a major network. Media buys for advertisers would come down to a CPP (Cost Per Point) buy, meaning you take the rate of a :30 second advertisement on your event and divide it by the projected or actual TV rating and you get the CPP. Media buys were driven by that number which made high-ticket and highly rated sporting events worth the money to advertise and events like the Super Bowl could generate $5.5 million per :30 second ad, as they did in 2020 and 2021.
The ratings for the NFL have been going down since 2010. Ratings are fragmented because of the amount of options we have on our TV sets, apps and devices. The average household TV rating for a regular season NFL football game in 2010 was 17.9, it is now down to a 14.9 rating in 2020. If you were a buyer of a product from a major manufacturer and the product was not as efficient as it was ten years ago would you pay double for that product? Of course not. That’s not how business works.
All of us have experienced sacrifices in this pandemic and have taken less because of it. The NFL is apparently superfluous to that. They want twice as much. That doubling of TV revenue will hit the everyday fan of the NFL with increased fees from the networks to cable carriers who will pass those increases on to us, the consumers. The quality of the broadcasts will be affected and downsized and essentially we’ll be getting a lesser product for more money.
The commissioner of the NFL Roger Goodell was making $40 million dollars a year. Yes I said $40 million. He has agreed back in August to forgo the $40 million in 2020 and cut back some other key NFL executives pay. I appreciate the gesture. He should work on the collective bargaining agreement with the NFL Players Union and have them do the same thing without compromising the integrity of the broadcast of the game.
How the networks will keep afloat and get advertisers to pay increases to cover the cost of doubling the TV rights fees is beyond me. To all of us who love the game, let’s be careful out there and good luck.