Is the way the NFL does business about to undergo a significant change?
With what looks like a contentious labor negotiation imminent along with the likelihood of an uncapped year for player salaries after next season, and most of the league’s television rights deals and almost all of the league’s corporate sponsorship agreements expiring over the next three years, it surely looks that way.
According to internal league data, contracts accounting for 50 percent of all club sponsorship revenues come due within the next 18 months, so with a recession bringing every economic issue into sharp focus, the question being asked by industry executives gathered in Tampa and Orlando for Super Bowl week was whether the NFL’s golden years were behind it.
There are some easy-to-identify growth areas. Certainly, moving two or more games from its preseason to the regular season would amp up the league’s TV contracts, as would the end of DirecTV’s exclusive deal for the Sunday Ticket package. In addition, the league could open the market to purchase live NFL games domestically via broadband.
Any of those moves would all be fraught with politics, and as one NFL insider reminded us early in the week, the CBA negotiations remain the league’s paramount issue and cannot be overstated. “Everything the league does from the [voluntary] layoffs on down is directly connected,” he said.
Neal Pilson, a former president of CBS Sports who now runs his own media consultancy, believes the NFL still has room to grow.
“NFL Network is the most obvious growth area,” he said. “If they can move it to 70 [million] or 80 million homes [from the current 35 million], they will get significant new revenue without any increase in costs.”
Pilson also said the digital businesses should start generating more revenue in coming years. He said the NFL’s broadcast and cable rights deals should not be affected by the current economic malaise, since they don’t expire for another three years.
“What the NFL is going to take in is not going to be less,” said Mike Trager, a sports media consultant and former chairman of Clear Channel Entertainment’s television division. “There always seems to be someone who wants NFL product.” He agreed that the NFL’s growth phase was not over, “but I certainly think there has been a leveling out. If you’re talking about quantum leaps in revenue, that’s about done.”
It was suggested that maybe it’s just the raw economy that leads to questioning of America’s top sports property. As Commissioner Roger Goodell said at his annual state-of-the-league address, “There’s a tremendous amount of uncertainty; uncertainty clearly breeds fear.”
Businesses dislike uncertainty almost as much as red ink. Still, recall that even with a Super Bowl matchup deemed less than desirable, the NFL’s title game attracted a total of 98.7 million viewers, more than any Super Bowl in history. And while the economy’s effect on the Super Bowl was certainly the topic of the week, as Tom Shine, Reebok senior vice president of sport, put it, “If you would have had a team with a rabid following like the [Philadelphia] Eagles down here, this town would have been nuts and no one would have been talking economics.” The Cardinals’ victory over the Eagles in the NFC Championship cost Reebok $5 million or more.
“People have been saying the NFL has topped out for decades, and every cycle they produce more revenue,” said Octagon President and CEO Rick Dudley, a former NFL marketer. “There’s no doubt the economy has put a halt to their growth trajectory and will even likely result in a flat to slightly down performance over the next 12 to 18 months. [But] I track the success of the game to the number of fans it enjoys and there is no other game in the U.S. that matches the NFL’s fan base. The economy will get better and the revenue growth the NFL has enjoyed will return.”
Still, on the sponsorship side, with so many of the NFL’s largest partners in economic distress, sponsors wondered aloud if the league’s approach would change. “It’s an NFL-controlled event and we’re looking at a [permanent] MasterCard sign. That’s the kind of thing that needs to be addressed,” said longtime Visa sponsorship chief Michael Lynch, referring to static signage at Raymond James Stadium. “We [sponsors] are all going through some rough times and we’re all looking for some adjustments as far as value and showing some flexibility.”
While contentions between property and team sponsors at top league events is not new, we will give the NFL credit for taking care of some of its conflicted sponsors at Raymond James Stadium. League sponsors Coors, Pepsi, Cadillac and Visa were all afforded incremental stadium signage at the game — that while temporary — did not look that way.
Genesco Sports Enterprises co-founder John Tatum noted that the last time the NFL had so many renewals, the Dow Jones Industrial Average was up more than 20 percent over the previous year. “They can’t control the global economy any more than they can control what happens on the field,” said Tatum, whose NFL sponsorship clients include Pepsi, Coors, Motorola, Campbell Soup and Frito-Lay. “They will have to show they will protect sponsors and help build their businesses. The landscape is changing and as the top property, the NFL has to change. A decade ago, we’d do an NFL team deal and they’d throw in Internet rights. A decade from now, the Internet rights may be the most expensive sponsorship right and they might throw in the stadium signage as a bonus.”
| SUPER BOWL GETS TOP VIEWERSHIP NUMBER |
| NBCs telecast of this years Super Bowl scored 98.7 million viewers, marking the most-viewed Super Bowl ever and second most-viewed program of all time. Only the 1983 finale of M*A*S*H (CBS) drew more viewers, with 106 million. Last years Super Bowl, on Fox, previously ranked as the most-viewed Super Bowl. The 42.0 average rating for this years game is down 2.6 percent from last years 43.1 average. One ratings point equals 1.145 million households this year compared with 1.128 million households at this time last year. This was the first Super Bowl for NBC since 1998. Measuring by total reach, meaning a viewer watched all or part of the telecast, this years Super Bowl stands as the most-viewed TV event ever with 151.6 million viewers, beating out the mark of 148.3 million viewers for last years game. Locally, the home markets for the Steelers and Cardinals each scored in the top 10 for local-market ratings. Pittsburghs 53.6 average was up 5.5 percent from last year. The 47.5 average in Phoenix was up 1.1 percent from last years game, which was played in Arizona. Among the nations 10 largest TV markets, only two (Philadelphia and Washington, D.C.) finished among the top 25 of Nielsen Media Researchs 56 metered markets, and the mark posted in each of those top 10 was down from last year, mimicking the decline for the games national rating. |
 MOST-VIEWED SUPER BOWLS |
| Rank | Year (game) | Matchup | Network | Avg.
rating/
share | Avg. no.
of HHs
(000 | Avg. no.
of viewers
(000s) |
| 1 | 2009 (XLIII)* | Pittsburgh 27, Arizona 23 | NBC | 42.0/64 | 48,139 | 98,732 |
| 2 | 2008 (XLII)* | N.Y. Giants 17, New England 14 | Fox | 43.1/65 | 48,665 | 97,448 |
| 3 | 1996 (XXX) | Dallas 27, Pittsburgh 17 | NBC | 46.0/68 | 44,145 | 94,080 |
| 4 | 2007 (XLI)* | Indianapolis 29, Chicago 17 | CBS | 42.6/64 | 47,505 | 93,184 |
| 5 | 1986 (XX) | Chicago 46, New England 10 | NBC | 48.3/70 | 41,490 | 92,570 |
| 6 | 1993 (XXVII) | Dallas 52, Buffalo 17 | NBC | 45.1/66 | 41,990 | 90,990 |
| 7 | 2006 (XL)* | Pittsburgh 21, Seattle 10 | ABC | 41.6/62 | 45,867 | 90,745 |
| 8 | 1998 (XXXII) | Denver 31, Green Bay 24 | NBC | 44.5/67 | 43,630 | 90,000 |
| 9 | 1994 (XXVIII) | Dallas 30, Buffalo 13 | NBC | 45.5/66 | 42,860 | 90,000 |
| 10 | 2004 (XXXVIII) | New England 32, Carolina 29 | CBS | 41.4/63 | 44,908 | 89,795 |
| MARKETS WITH THE HIGHEST LOCAL RATINGS | | Rank | Market (size) | Avg. rating/share | Change from last year | | 1 | Pittsburgh (23) | 53.6/79 | 5.50% | | 2 | Norfolk, Va. (43) | 52.6/72 | 9.40% | | 3 | Jacksonville (47) | 50.6/71 | -2.70% | | 4 | Buffalo (51) | 50.4/68 | 16.10% | | 5 | Richmond, Va. (58) | 49.3/67 | 3.60% | | 6 | Tampa-St. Petersburg (13) | 49.2/70 | 0.80% | | 7 | Fort Myers-Naples, Fla. (62) | 48.1/68 | -5.10% | | 8 | Cleveland-Akron (17) | 47.7/69 | 7.40% | | 9 | Phoenix (12) | 47.5/80 | 1.10% | | 10 | Indianapolis (25) | 47.4/65 | -12.40% | | RATINGS IN THE NATIONS TOP 10 TV MARKETS | | Rank (rank**) | Market | Avg. rating/share | Change from last year | | 1 (46t) | New York | 37.9/58 | -15.60% | | 2 (52) | Los Angeles | 35.3/63 | -2.20% | | 3 (41) | Chicago | 41.1/64 | -1.00% | | 4 (16) | Philadelphia | 46.2/65 | -4.50% | | 5 (26) | Dallas-Fort Worth | 44.2/69 | -4.30% | | 6 (51) | San Fran.-Oakland-San Jose | 35.5/68 | -11.90% | | 7 (45) | Boston | 38.6/57 | -30.60% | | 8 (33t) | Atlanta | 42.6/67 | -4.90% | | 9 (12) | Washington, D.C. | 46.7/70 | -7.20% | | 10 (54) | Houston | 34.3/57 | -7.50% | |
* Statistics reflect live plus same-day viewing.
** Ratings rank among local-market numbers.
Notes: Ratings for Louisville, Ky., were not available among the 56-market field.
Sources: Nielsen Media Research, SBJ/SBD archives |
ROSTER ADJUSTMENTS: Among the league’s sponsorship deals up at the end of March are IBM, FedEx, State Farm and Home Depot.
Sources tell us Home Depot is out as an NFL sponsor, and to be fair, the company has recently jettisoned other large sponsorship assets, including a U.S. Olympic Committee deal that it held since 1992 and a nine-year-old NASCAR league sponsorship. Considering the softness in home remodeling and construction in general, one wonders if a replacement can be found before the economy turns. One of the most indelible images we witnessed during Super Bowl week during the interminable 80-mile commute between Tampa and Orlando, where most licensees and sponsors were housed, was a liquidation house with hundreds if not thousands of near-new construction vehicles parked behind it.
We also hear IBM is walking after six years as a league patron, although Rick Singer, vice president of client executive marketing, said the two sides are still talking. In its time with the league, IBM has engineered a number of impressive “solutions,” including data storage for many NFL teams, developing the league’s online media portal and creating a digital content management system for NFL Films. What would it take for IBM to continue as a league partner? “We’re not asking for more tickets or rights, just the right projects so we can tell the right stories to prospective clients,” Singer said. “Buying our solutions isn’t like buying a car; everything is customized and everyone wants references. So having the NFL or USTA as a reference can definitely be valuable.”
State Farm, which holds presenting sponsorship to the Pro Bowl, is also up and that renewal involves a number of interesting issues. Is the Pro Bowl coming to mainland U.S. (Dolphin Stadium) enough of an attraction for State Farm, especially after the insurer has pulled out of the Florida market entirely? Also open to debate is the value of the Pro Bowl, since it was on network TV when the deal started and will be on ESPN next year, meaning State Farm would likely lose a number of Super Bowl spots urging Pro Bowl tune-in. Would a title sponsorship of the Pro Bowl be enough to renew State Farm?
While Bank of America’s NFL rights and those from Visa aren’t up for another year, we’re told the NFL would like to extend both of those deals before next season, which should be interesting, considering the state of financial services in America. On the telecom front, Sprint has one season left, and while Motorola’s rights run until 2012, both companies are being battered financially, so we’re wondering if Verizon or AT&T might step in eventually.
FedEx also needs to be renewed, but that relationship is a nine-year love affair, even with the company eschewing its usual Super Bowl ad spot this year. “Our platform [FedEx Air & Ground NFL Players of the Week and Year] is as natural and well-established as any we have,” said Nancy Altenburg, FedEx manager of sponsorship marketing.
A possible work stoppage hangs over every renewal, and while some contracts already have relief clauses written in, certainly all of them will going forward.
STEEL CITY NO BOOM TOWN: What does a Super Bowl title mean for a team’s bottom line? In the socialist world of the NFL, the answer is not much. The Pittsburgh Steelers will not become a top-revenue team because they won an unprecedented sixth NFL title. “You don’t make money in the Super Bowl, you lose money in the Super Bowl,” said team owner Dan Rooney. The reason is that most teams burn through the expenses covered by the NFL for the week. “We will have normal ticket raises; just because we won the Super Bowl, we won’t go out and try to gouge,” Rooney said, adding that the Steelers’ 2006 championship produced no more of a revenue boost than a non-championship season.
MUCH ROOM AT THE INN: While it was certainly a diminished economy surrounding the Super Bowl, we weren’t as convinced as some that it was an absolute disaster economically. Hotels seemed to fare as poorly as any businesses in an area depending on the Super Bowl as a gold mine. On two visits to the Ritz Carlton in Orlando, we were offered hotel rooms without asking. We can’t recall an outpost from that upscale chain ever having vacancies during a Super Bowl week.
Fans packed Raymond James Stadium,
but some Tampa hotels weren’t so lucky.
A Florida sports marketer we have known through many Super Bowls was able to use hotel points to secure a room at a Residence Inn in Tampa, and we heard countless stories about blocks of rooms being returned by sponsors and broadcasters. “Hotels definitely took it on the chin,” said Chuck Saulino Jr., vice president at Tampa-based DeBartolo Sports and Entertainment, which sells hospitality, among other sports management offerings. “Most hotels couldn’t make their four-night minimums stick, so by the end of the week they were one-night minimums.”
The unusual availability of hotel rooms fueled a boom in secondary ticket sales between Friday and game time, all fan-driven. Average ticket pricing for Super Bowl XLIII on StubHub, as of Friday, was at a five-year low for the Super Bowl at $2,461, and stayed relatively flat by game’s end at $2,402. But low-end “get in the door” tickets shot back up from less than $1,300 per ticket to more than $2,000 during those final hours, according to numerous independent ticket brokers. StubHub posted a company record, as Super Bowl XLIII yielded the top gross revenue of any single event. Most other sellers reported at least double-digit percentage increases in sales. The bottom line for the hospitality brokers in Tampa? “With the reality of the economy, we came in the black, so we’re happy with that,” Saulino said. “Just not as happy as we thought we were going to be a year ago.”
RADIO ROW: After former WFAN radio drive-time team Mike Francesa and Chris Russo broke up last summer after nearly 19 years together, media watchers were curious to see how the two would react if they bumped into each other along Radio Row at the Super Bowl. Well, no one got to see it.
While Russo hosted his Sirius Satellite Radio show from one of Radio Row’s largest sets, Francesa was set up blocks away in a media hotel, the Hyatt Regency.
ESPN’s Chris Berman was honored with the
Pat Summerall Award at the Legends for
Charity dinner. From left: Mike Golic,
Berman, Summerall and Mike Greenberg.
The situation spurned rumors that Francesa opted to stay away from his former colleague, which WFAN operations director Mark Chernoff called false. “We thought we’d get better guests by being away from Radio Row,” Chernoff said, adding that Francesa and Russo talked “a couple of times” during the week. Francesa asked Russo to join him on-air for his first segment on Monday, but he declined, Chernoff said. “Their relationship off-air is fine. I don’t think there are any issues.” Chernoff described the week as a qualified success. Francesa scored interviews with people such as Bob Costas and actor Kevin James (who also made the rounds on Radio Row). “I don’t know if we will be back on Radio Row next year,” he added. “We take each Super Bowl year by year.”
BOOMING FOR CHARITY: ESPN’S Chris Berman helped net $250,000 for the St. Jude Children’s Research Hospital on Thursday night, when he was honored with the Pat Summerall Award at the Legends for Charity dinner, an event that brought 315 people to the Westin Tampa Harbour Island for a dinner and silent auction. This year, organizers lowered ticket prices from $250 to $150 for the dinner, which lasted nearly three hours. In addition to numerous ESPN executives and on-air talent, attendees included former 49ers owner Eddie DeBartolo, former Bills quarterback Jim Kelly and announcers Pat Summerall, Dick Stockton, Lesley Visser and Brian Baldinger.
Staff writers Daniel Kaplan and Eric Fisher contributed to this report.
