SBJ/Feb. 29-March 6, 2016/Leagues and Governing Bodies

NFL halfway to $25B goal

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NFL Commissioner Roger Goodell established a goal for the league six years ago to secure $25 billion in annual revenue by 2027. The league is set to speed past the halfway mark of that highly touted objective in 2016.

League revenue will shoot past $13 billion this year, according to projections tied to recently publicized figures. It’s also the second straight year league revenue will increase by more than $1 billion, fueled in large part by increases in broadcast contracts.

When Roger Goodell set the goal in 2010, league revenue stood at $8.5B.
Photo by: GETTY IMAGES
When Goodell set the goal in 2010, league revenue stood at $8.5 billion, and it took three years to add the first extra $1 billion to the sum. Sluggish local revenue growth in the wake of the 2008 global financial crisis and the 2011 player lockout made Goodell’s goal appear distant, if not fanciful. That has turned around sharply, with teams aggressively marketing and filling stadiums and finding new sources of revenue in areas like digital.

The 2016 revenue projections are deduced from player payments; the league does not disclose its revenue figures.

NFL Players Association Executive Director DeMaurice Smith, speaking at the Super Bowl, told reporters that the salary cap plus benefits amount for players would come to about $200 million per club this year, which would be a $19 million increase over 2015. He said the benefits amount could be as high as $45 million per club, making the cap around $155 million.

The new league year begins on March 9, by which time the formal salary cap and benefits figures for 2016 will be set.

Over 32 teams, that $200 million sum means the NFL will be paying players $6.4 billion in 2016. Under terms of the NFL collective-bargaining agreement, players get between 47 percent and 48 percent of nearly all revenue — so across the 32 teams, that computes to between $13.3 and $13.6 billion in league revenue for the coming year.

The true league revenue figure is even higher. Some revenue is not shared — and in fact, an arbitrator recently ruled the league had improperly shielded about $100 million of revenue from sharing. Also, the Minnesota Vikings are opening a new stadium this year, and the Miami Dolphins’ stadium renovation will be complete. Not all of the revenue that will come from those stadium projects can be calculated at this point so as to be reflected in the cap for 2016. Instead, some of that revenue will carry over to 2017 because of how the cap accounts for local revenue.

Other revenue for 2016 that may not be reflected in player pay this year but would carry over to the 2017 cap includes any streaming fees for the league’s “Thursday Night Football” package. The league may have owners vote on a deal in that regard at their annual meeting next month.

Additional jolts are expected in the years to come, as well. The Atlanta Falcons’ new stadium opens in 2017, and the new stadium in Los Angeles opens in 2019. Many teams are raising ticket prices, as well, even those teams that have not done so for some time, including the Tampa Bay Buccaneers and Jacksonville Jaguars. That may bode well for the league ultimately getting to Goodell’s target.

Team sources said local revenue was not a major contributor to the more than $1 billion increase in revenue seen leaguewide over the past year. But teams are seeing new opportunities in areas like digital, the sources said. Examples would be programming for websites and mobile app developments, and ad sales that can in turn be generated from that.

The team officials declined to talk publicly about the private league and team financials.

TV money also continues to fuel the revenue increase for the league. The 2016 season will be the third year of the league’s TV pacts with ESPN and network partners Fox, CBS and NBC, and those deals contain accelerators to increase payments annually.

“[The increase] is primarily coming from national [revenue], particularly broadcasting increases,” said Marc Ganis, a sports consultant with close ties to the league, of the revenue gain.

More media-generated revenue lies ahead before 2027, as well. The NFL’s contracts with NBC, Fox and CBS (Sunday rights) expire in 2022; its deal with ESPN ends in 2021. That means another round of negotiations in the years to come, likely contributing even more toward the $25 billion goal.

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