SBD/March 4, 2011/Marketing and Sponsorship

NFL Labor Watch: Potential Lockout Threatens Billions Of Dollars In Advertising

Advertisers spend more than $3B annually for ads during NFL games
An NFL lockout "would jeopardize the more than $3 billion a year that advertisers spend for commercials during NFL games," according to analysts cited by Lauren Schuker of the WALL STREET JOURNAL. One media exec said that advertisers "could move their dollars to other 'marquee' programming such as college football, golf or prime-time dramas and situation-comedies, but there likely wouldn't be enough ad inventory to absorb that money." Some advertisers "might also choose simply not to spend." Most marketers "won't commit to NFL advertising until April or May, when the networks usually sell commercial spots for the coming season." If the NFL "still hasn't reached a deal with its players by later this spring, advertisers could delay buying for the season until later in the summer." But media execs and analysts said that marketers are "still likely to commit to buying spots on the NFL games." And in the case of a lockout, marketers "could always try to shuffle those ad dollars elsewhere" (WALL STREET JOURNAL, 3/4). MEDIAWEEK's Anthony Crupi wrote the NFL "plays such a critical role in the TV marketplace as a whole that even the loss of a handful of games could have a catastrophic impact on the spring upfront." One sports sales exec said that the "hard-won lessons" of NFL work stoppages in '82 and '87 "were not likely to be forgotten." The exec: "As was proven in the past, replacement programming doesn't work. It became a landscape of illegitimate sports. College football would be the first to benefit." Crupi wrote in a "full-on apocalypse scenario, the broadcasters would stand to lose" 25-30% of their Q4 ratings points in adults 18-49. And while "football-targeted dollars would likely fall to college games, the NHL and baseball, sponsors with a marked NFL presence would need to shift money to prime-time entertainment" (MEDIAWEEK.com, 3/3).

HITTING THEM WHERE IT HURTS: The WALL STREET JOURNAL's Matthew Futterman notes the NFL "makes money from three main sources -- tickets sales, broadcast fees and corporate sponsors." A lockout, if it occurred, "would likely have a drastic effect on ticket revenue and money from sponsorships, as the league is forced to cancel games and companies take their sports-marketing dollars elsewhere." For sponsors and broadcast companies, "losing the NFL would mean losing the most reliable, albeit expensive, tool for reaching TV's largest audience" (WALL STREET JOURNAL, 3/4). Baker Street Advertising Exec VP & Exec Creative Dir Bob Dorfman said that if a lockout does happen, the networks will have "big chunks of time to fill with programming that ... 'will be nowhere near as valuable as football games'" (CNNMONEY.com, 3/3).
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