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SBJ Football: NFL Not Immune To Pandemic Economics


This is our last SBJ Football newsletter for a couple of months. We’re going on hiatus now that the draft is over and we’re into a (relatively) slow time on the NFL calendar. I hope you found reading it as rewarding as we found writing it, and I look forward to coming back this summer. In the meantime, watch SBD, SBJ and our other newsletters for continued close coverage of all things football, and you can speak to me directly at bfischer@sportsbusinessjournal.com.

 

NFL COMES BACK TO EARTH WITH PAYROLL CUTS

  • For a few hours on Wednesday, the NFL appeared to be untouchable. The plaudits for the remote NFL Draft hadn’t died down, and that morning the league announced a new streaming deal with Amazon, reportedly at a significant increase over the $65 million annually generated by the previous package. That, plus the $140 million or more generated by the sale of two new Wild Card games, gave the clear impression that the offseason books were strong in spite of the pandemic.

  • But then the league gave the bad news. As I broke on Twitter, the NFL permanently cut its pension contributions by one-third, and will furlough employees who can’t work from home for an indefinite period. Also, workers with six-figure salaries are getting open-ended pay cuts between 5% and 15%. Commissioner Roger Goodell also is taking no salary at this time. It was a shock to many in the NFL orbit, who believed there was little worry to reason, at least in the short term.

  • It’s hard to square. No doubt, receipts are down at the NFL -- licensee payments aren’t happening, and sponsors whose own businesses are distressed are probably seeking relief. But unlike every other league, the NFL hasn’t missed any actual games. In fact, it is coming off a wildly successful Super Bowl in South Florida and has adopted a business-as-usual mindset unique in the sports business. Many operators have cast payroll actions as the last option during the pandemic, but some of Goodell’s remarks in his cuts memo suggest this is more about future projections than a current cash crunch: "It is clear that the economic effects will be deeper and longer lasting than anyone anticipated and that their duration remains uncertain.”

  • Later on, Goodell said: "Our league has great strength and has shown its resiliency time and again. But part of that strength is the result of careful planning and a willingness to act responsibly.” About that planning, it’s hard to avoid the conclusion reached by Sports Illustrated’s Michael Rosenberg, who wrote: "For all the talk about a 16-game season and getting back to normal, the NFL is acting like it expects something else.”


JOINT EFFORT DELIVERED FANS TO GOODELL'S BASEMENT AT DRAFT

  • How did the NFL bring over 1,000 fans virtually into Roger Goodell’s basement for last week’s draft? The project was a joint production between Culver City-based fan experience company The Famous Group and experiential display design firm Quince Imaging, writes SBJ's Thomas Leary. Together, the firms were able to moderate and coordinate nearly 1,200 fans into the three-day broadcast using proprietary software.

  • For nine years before this, Famous Group has produced social and experiential content on the draft, and for the first time this year worked on the “Inner Circle” activation that saw draftees take photos with 25 in-person fans immediately following their selection. That idea served as the catalyst to bring fans virtually into this year’s draft once Las Vegas was canceled. Famous Group Exec VP Andrew Isaacson: “Things changed very quickly. We went ahead and pivoted with the league to give something back to the fans that could happen virtually.” Isaacson said the most difficult aspect came from live audience coordination. “The real-time ability to not only moderate those fans, but also if they had low bandwidth … Some of these fans were dialing in from remote parts of the country without the best internet connection. We had to be on our toes to make sure that the broadcast stayed clean and that we represented these fans in the best way that we could.”

  • Famous Group CEO Jon Slusser told his team of 50+ that they were “key to bringing” Goodell energy throughout the broadcast. Slusser: “It’s something that everyone was learning as we were going. … These are 14-16 hour days for our staff.” Isaacson said fans “bring the energy, the gravity, the importance” to an event like the draft. “It’s a lot of pressure to try something new," he said. "The entire team felt like we couldn't let the league and the fans down.”

  • Isaacson said the virtual experience could be key to sports’ eventual return if fans are absent from venues. Isaacson: "Leagues and teams are all after the same thing. ‘When can we play, and when we do, how do we bring fans into this?’ In talking with the majority of leagues and teams over the past month, it’s become really clear that the solution is not to bring more content out of the arena, but instead, how can you bring fans into the arena -- even if it’s virtually.”

 

HOW TWO TEAMS ARE HANDLING SPONSORSHIPS DURING SHUTDOWN

  • In March, the Broncos’ sponsorship marketing team enlisted the alcohol delivery app Drizly to send sponsor product to their clients at U.S. Bank, another sponsor, just before a Zoom happy hour. Another time, the Broncos helped sponsor Otterbox ship gift cards to every other team sponsor for incentives or giveaways to improve employee morale during the crisis. Then, Broncos GM John Elway recorded an inspirational speech for health care workers at partner UCHealth.

  • Down in Houston one morning, the Texans bought breakfast from local sponsor Whataburger -- breakfast taquitos -- and had them delivered to 500 workers at the Kroger warehouse (another partner) as they kept stores stocked. The Texans also took every sponsor's educational or community program -- most of which revolve around shuttered schools -- and made them digital in an effort to keep it all going.

  • Both the Broncos and Texans gave me a look inside their local sponsorship programs during the pandemic, a challenging time when teams and companies want to keep generating value together, but have their usual paths limited -- either by stay-at-home orders, budget restrictions or a need to suspend usual marketing messages. Both clubs have set up websites to share good ideas for companies looking to give back and connect with fans, and are looking for ways to facilitate sponsors’ COVID-19 responses and maintain connections.

  • Broncos Senior Director of Partnership Marketing Sandy Young calls the team's digital hub the “Broncos Boost.” Young: "We’re just trying to keep the Broncos front of mind, and find when we’re able to boost morale and give them a sense of community." In Houston, programs like the breakfast giveaway hit all the right buttons, said Senior VP/Corporate Development Greg Grissom. "It was a win-win," he said. "We spent cash with our restaurant partners, and then that benefits people who are still working as a thank you.”

 

STREAMING DELIVERS BIG BOOST FOR ESPN'S NFL DRAFT AUDIENCE

  • Streaming was a big factor in driving the audience growth for ESPN during this year’s NFL Draft, according to SBJ’s Austin Karp. Streaming on ESPN digital platforms accounted for 21% of the total audience for ESPN across the three days of the event. That was up 21% from last year. Across the three days of the event, total streaming was up 160% from 2019 in terms of average minute audience (841,000 viewers vs. 323,000). OTT devices drove the growth, with a 202% uptick (758,000 vs. 251,000). Thursday’s Round 1 saw ESPN streaming jump 180% from 2019 (1.833 million viewers vs. 654,000). Just looking at OTT device streaming, Round 1 saw a 228% uptick (1.652 million viewers vs. 504,000).

  • There also were some strong upticks at the local level for the TV broadcast (three networks). NFL hotbed New Orleans, which consistently leads the way for local game ratings during the regular season, was the top market for the draft over three days, averaging an 11.7 local rating. That figure is up 41% from 2019. Coming in at No. 2 was Birmingham (9.4 rating), as 15 players were drafted between Alabama and AuburnPhiladelphia was No. 3 with an 8.6 rating. In terms of growth among markets, Atlanta (8.2 rating) led the way with an 84% jump from 2019. Also seeing gains over 50% were Portland (+77%), Denver (+75%), Philadelphia (+54%), and Detroit (+52%).

 

  


SPEED READS

  • NFL Network’s Peter Schrager said Roger Goodell will lean on his usual ownership reps (Robert KraftJerry JonesArthur Blank) for advice on how to proceed with the upcoming season, but the Panthers’ David Tepper has also emerged as a “big voice and a new voice.” Schrager told The Ringer’s Bill Simmons: “The question is, 'Does (Goodell) end up having to speak with 50 different state governors?' … What might be good for the Kansas City Chiefs and Clark Hunt might be a totally different deal with John Mara and Christopher Johnson. That’s going to be the crux of this. Can the Giants and Jets play home games? I’m not sure that’s a possibility if this is still raging in that area.”

  • Seven workers at the Allegiant Stadium construction site have now tested positive for coronavirus, but the Las Vegas Review-Journal’s Ed Graney doesn’t expect a halt in productivity, even if that number is likely to go up. Graney told the “Vegas Nation” podcast, “There’s no way it’s only seven. … I will believe it when I see it though when they shut this thing down. The number would have to get really, really high. The governor has been pretty clear that this, in his mind, is an essential business.”

  • The 2011 NFL lockout in a “surprising way” could serve as a “road map for teams and players that have to navigate an unprecedented off-season that has been disrupted by the coronavirus,” writes the Wall Street Journal's Andrew Beaton. Just like back then, teams and players “have to prepare for football’s uncertain future without getting to meet or practice in person.” Ron Rivera, who was heading into his first season as coach of the Panthers, said of 2011, “The biggest lesson I learned, was just be ready because the first time I met my team was the day we opened training camp.”

  • Jordan Love, who largely flew under the national radar during his college career at Utah State, saw Instagram followers jump 281% and Twitter followers leap 419% after his surprise selection by the Packers with the No. 26 pick in the NFL Draft, according to data from SportsAtlas, which is SBJ's research, insights and data arm. Those increases are by far the largest for any player drafted last weekend. Top pick Joe Burrow, despite a high-profile season at LSU, still saw double-digit gains coming out of the draft, as did No. 2 pick Chase Young and No. 3 pick Jeff Okudah. Check out which other draftees saw big social media gains during the draft.

 

 

 

 

Enjoying this newsletter? We've got more! Check out our "SBJ Unpacksnewsletter focused on the impact of coronavirus on the sports industry.

Something on the football beat catch your eye? Tell us about it. Reach out to either me (bfischer@sportsbusinessjournal.com) or Austin Karp (akarp@sportsbusinessjournal.com) and we'll share the best of it. Also contributing to this newsletter is Thomas Leary (tleary@sportsbusinessdaily.com).