SBJ/20100405/This Week's News
Goodell sets revenue goal of $25B by 2027 for NFL
Published April 5, 2010
NFL Commissioner Roger Goodell wants the league to reach $25 billion in revenue by 2027, an amount that would mean adding nearly $1 billion in new revenue on average each year until then.
Goodell presented the futuristic figure late last month to owners at their annual league meeting in Orlando. While the number is designed to serve more as an ambitious goal than a true financial projection, it underscores the degree to which the NFL, under the nearly four-year tenure of Goodell, has sought to dramatically expand its business, whether in technology or overseas.
“It has happened in a lot of well-run businesses,” New York Jets owner Woody Johnson said of the kind of revenue growth suggested by Goodell. “If we expend our capital, expand our stadiums, keep renovating and keep all of our capital equipment up to the highest standards, invest in technology, [invest] in the business, it could be done — or more.”
Tripling revenue in a roughly 17-year time frame is something the NFL has already accomplished, though off a much smaller base. Precise comparable revenue figures could not be obtained, but growth can be seen in part by looking at the salary cap, which is based on a percentage of revenue. The cap in 1994 was $34.6 million. After several blockbuster national TV contracts and a surge in NFL popularity, league revenue last year hit $8.5 billion, lifting the cap to $128 million, a more than threefold increase from 1994.
“It is certainly an aggressive number,” Dallas Cowboys Chief Operating Officer Stephen Jones said of the $25 billion figure, “but it is certainly one we would like to get to.”
Tripling revenue over the next 17 years, however, could prove tougher than doing so from the mid-1990s until now. Fox Sports broke the bank in 1994 to become an NFL broadcaster in order to establish the channel’s credibility, and DirecTV was added with its first out-of-home package. Only a few teams are currently in need of new stadiums whereas in the early to mid-1990s, the NFL’s stadium boom had just begun. In addition, the U.S. sponsorship and advertising markets are more fully developed and committed to sports financially than they were in the 1990s, when sports as a business wasn’t the size of industry it is today.
There would have to be similar events — and on larger scales — in the future for a comparable growth rate. Areas that hold potential include Internet, cell phone, satellite and international, as well as the NFL Network.
“If you take the number of fans in the [United] States, 181 million, there is clearly massive upside internationally,” said Mark Waller, the NFL’s chief marketing officer, who is pushing for more foreign games. “We should be measuring our fan growth globally as we do in the U.S., and a key driver will be more games.”
Another area is technology. The league just signed a four-year, $720 million sponsorship/media deal with Verizon that will see both games and the league’s RedZone channel streamed to cell phones. Neither streaming to mobile nor RedZone were options just a few years ago, Johnson noted, saying that the revenue Goodell foresees could come from categories that do not exist today.
In addition, reaching a new labor deal is critical to the desired increase in revenue. The NFL and NFL Players Association are battling over the looming expiration of the collective-bargaining agreement next March, and a prolonged labor stoppage could damage the league. Also, the owners say the game will not grow without an economic deal that allows them to invest with a reasonable rate of return.
The union has responded that it is willing to provide the owners financial credits where the league can prove the money is being used to grow the sport, but to do this the NFL must provide audited financial reports, something Goodell and the owners have said no to so far.