SBD/January 31, 2014/Leagues and Governing Bodies

NFL's Plan To Reap $25B By '27 Depends On Lucrative Media Rights Deals

The NFL "hopes to achieve" $25B in revenue by '27, up from about $10B now, and if it happens, the NFL "would have more income than the gross domestic products of dozens of small countries and would be in the same financial district currently occupied" by McDonald's, Nike and Goodyear Tire, according to data cited by Brent Schrotenboer in a front-page piece for USA TODAY. Chicago-based Navigate Research said that the current $10B pie is "roughly sliced four ways," including about $5B for media rights. However, Navigate Research predicts that such media revenue "could reach" $17B by '27. That "ambitious projection assumes that live NFL games will continue to be a golden goose for networks and their advertisers." Analysts said that the road to $25B "probably requires some variation" of the following: more new and upgraded stadiums, more weeknight games, more televised content, and more new markets to enter. Moving existing teams "from weak markets into bigger, vacant markets might give team owners a better way to increase their shared revenue as opposed to adding more franchises to the 32-team league." The NFL's TV contracts "soon will be worth" around a total of $7B annually, with "most of them starting this year and lasting" through '22. NFL Media COO Brian Rolapp said of what happens after '22, "It's a new day after that. We'll just have to see. A lot of things we do digitally along the way are a great experiment for us to see what the world will look like. We will be prepared one way or the other to be able to shift to where the consumer is" (USA TODAY, 1/31).

A TAXING ISSUE: A DENVER POST editorial notes U.S. Sen. Tom Coburn (R-Okla.) is "pushing a bill to strip professional sports organizations" of their tax-exempt status, "calling it a loophole" that amounts to about $10M in lost revenue annually and up to $109M over 10 years. The editorial: "We think Coburn's bill makes sense -- not because tax-exempt status is preposterous on its face but because of the NFL's bloated front-office salaries." The NFL represents 32 teams, which "make billions of dollars on ticket sales, TV contracts, etc." That money "is taxable," but the league office that is not-for-profit "earns its money not from lucrative TV deals but through its membership dues -- which accounted for just over a quarter of a billion dollars in revenue" in '12. That money "pays for league office salaries, rent and officiating." The "hitch in the NFL's defense of this structure is those salaries," as compensation for "eight top executives alone totaled" $57M in '12. Those "sky-high salaries legitimize Coburn's reform effort" (DENVER POST, 1/31).
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