How annoyed were you this summer with the constant banter of the NFL lockout? Listening to report after report of how the players and owners were fighting over more money was annoying to say the least. It’s really hard to feel bad for millionaires. Now it all makes sense why there was so much concern – they knew that the NFL was about to get a huge raise and they both wanted a piece of it.
Back in September the NFL announced an eight year, $15.2 billon extension with ESPN for Monday Night Football. This deal, which included the rights beyond the TV Broadcast was said to be a 73% increase in cost over the previous contract. 73%!!! The fact that ESPN was willing to pay so much for this product validates the importance of the NFL to TV sports programming. It remains one of the few programs that are watched by live viewers continually separating it from dramas and comedies which are typically recorded for a later time.
It was only a matter of time before the NFL worked out similar contract extensions with the other networks as well. That time was yesterday when the league reported that they were about to sign contract extensions with CBS, FOX and NBC raising their rights fees by 60%. These deals are about to average about $1 Billion dollars per year in revenue. Please keep in mind that the old deals with these networks are not up for another 2 years. Coming off the heels of the ESPN deal, however, the networks aren’t in the best position to negotiate. The NFL is definitely in the driver’s seat.
These TV contract extensions are just the beginning. The NFL is also working on a deal that could include rights to sponsor technology such as tablet computers and communications systems used by the players and coaches. It’s basic product placement. TV Viewers will be seeing the coaches and players on the sidelines all gathered around an iPad from Apple Inc. or an Android device by Google, Inc. formulating plays. And if that’s not enough the NFL Network is also looking to expand its current package of seven Thursday night games – additional Thursday night games could actually be sold to another cable or broadcast network.
The NFL is the only sports league in the United States that can negotiate 73% rate hikes and pull it off. In a time when leagues like the NBA are losing money the NFL remains to be profitable. Not only are they are the most watched programming on television they also have a good reputation stemming from their community involvement and fan interaction. Do I still think that a 73% increase is a bit ridiculous? Of course I do. As long as it doesn’t ultimately affect my rates (listen up TV and RADIO reps) I will always believe in the efficiency of advertising with the NFL.