The National Football League has been one of the most iconic sports in the United States for the past century. I personally love the game of football. Not just the sport, but the culture behind it. Talking about it with friends in the halls as we pass, staying up until 4 a.m. in the morning to watch my team play, even all of the press and drama that covers the sport. Most Mondays I wake up with a headache because of sleep deprivation, but it’s all worth it when my team is undefeated. But recently, I’ve been learning that money is going to ruin the game I love.
Here’s the deal – the NFL makes a lot of money. Last year, the NFL brought in just a little over $9 billion according to Bloomberg.com, and by 2027 the NFL plans to increase its revenue to $25 billion. What is a football league going to do with that kind of money? How on earth do they make that kind of money in the first place? What makes football a billion dollar business?
Sponsors are a huge contributor to the NFL’s revenue. Just look at the average annual value for their top five sponsors this year. Verizon, a cell service carrier in the United States, paid/is paying the NFL over $250 million to have their name branded with the NFL logo. Why would companies want to invest all of that money for a logo? Because it is one of the best forms of effective marketing.
According to CNN, the last game of the season, Super Bowl XLIX, brought in an average audience of 114.4 million people. That is the largest audience in television history. With that many people watching one game last year, it’s no wonder that companies are willing to dish out that kind of cash for their name to be branded with the NFL. It seems like Roger Goodell, the NFL commissioner, and the NFL executives will do anything that they can to increase profits, according to Monet Burke of Forbes.
Roger Goodell is pretty good at his job. He constantly brings in more and more money to the league and is bringing in more attention. That’s his role as commissioner right? Goodell made a little over $44 million dollars last year – that’s double what the highest paid player in the league (Aaron Rodgers) makes. Goodell’s salary contract is $3.5 million, but his bonus check in 2015 paid for the rest of the $44 million. John Vrooman, a professor at Vanderbilt University released a 31 page report saying that the way that the NFL is set up economically is going to ruin not only the game, but also the economy. It brings in millions in terms of money, media and attention. All in the hands of Roger Goodell. It’s no wonder that he wants to bring in $25 billion dollars. He makes bank!
Another reason Goodell is able to make that much money is because the league is currently tax exempt. Yes, that means they don’t have to pay any government taxes. Since the league is technically registered as a non-profit firm, they are exempt from paying taxes. But here is the best part: the NFL recently just filed to pay taxes. Since the league’s 32 owners already pay taxes on their profits, the NFL decided that it was easier to declare as a profit maximizing firm and pay taxes on their profits according to Jonathan Clegg of the Wall Street Journal. Roger Goodell figured it was better to forfeit the tax money than have the headache of the press and PR that the NFL gets. Not only that, but it gets their foot in the door with congress and lobbying.
The government has recently started to intervene with the NFL and their annual revenues. In the last few years, fantasy football has exploded with interest and money. Fantasy football is when fans put together a hypothetical team of real players in the league. Depending on how well they perform in their weekly games, the participants earn points for all of the stats that they attribute. The market for fantasy football has expanded dramatically over the last decade with new ways to win millions of dollars with two major companies – FanDuel and DraftKings. These two companies payout over $10 million dollars a week in winnings according to CNN Money.
On Nov. 10, the New York Attorney General declared that these two companies violate the sports betting laws in the United States. There are only three states that allow sports betting in the U.S.: Delaware, Oregon and Nevada. The NFL is so heavily interested in fantasy sports because they can turn a substantial profit. It draws an audience to even the worst teams in the league, because they can watch their fantasy players perform in the games. It brings an average of $1.4 million extra viewers for all the games which turns out to be, according to John Oliver, an extra $1.5 billion for the NFL.
For more on daily fantasy, click here to see a feature that John Oliver did on the subject.
Finally, the new idea of NFL International is alluring. Just eight years ago, football expanded to the United Kingdom and the country took the sport by storm. Turns out Brits love the pigskin. It started out having one game in the prominent Wembley Stadium, but the NFL just signed a deal to have three games every year until 2020 and the Jacksonville Jaguars must play in at least one of the games.
Some say that the idea of a team relocating or even an expansion team on the European continent would just ruin the game or the sport. Others such as Sports Illustrated’s Jenny Vrentas say that the NFL should expand saying that it will be a benefit to the U.S. economy, and an overall benefit to the game. She even went on to say how much it could bring international communities together.
The NFL is interested in moving the team across the pond in hope of a market boom. According to the International Business Times, the NFL made over $32 million just in ticket sales alone. Imagine the endless possibilities of moving the league overseas. It works because teams only play once a week. It just means longer flights for the teams that are playing in London or the home team visiting back to the United States. But with the luxurious planes that the athletes are accommodated in, I don’t think that will be a big issue.
Although this is an underlying problem for the sport and the economy, there is no obvious solution to fixing the structre of the NFL. If one is not found soon, the sport will be lost by men in suits rather than men in helmets.