Booming NFL Looks Ahead With ‘Healthy Paranoia’ After Media Deals
The NFL will finish this season with eight more years of labor peace, $130 billion in new media deals and soaring valuations. Attendance and sponsorships are up. TV ratings are dominant. So what’s next for the world’s richest sports league?
On the Friday before Christmas, NFL chief media and business officer Brian Rolapp started his day with a pair of morning meetings—one to discuss flexible timeslots for Week 18 games, the other to brainstorm possible uses for blockchain technology.
The day before, the NFL had announced YouTube as the next home of its Sunday Ticket package. The seven-year, $14 billion deal was the last major piece in what has been Rolapp’s biggest priority over the past few seasons. The NFL’s domestic media rights, the most valuable in sports, are now locked in for the foreseeable future, in a series of deals worth more than $120 billion.
With the two central pillars of the league’s commercial success wrapped up through at least 2030—those negotiations came on the heels of a new 10-year labor accord signed in 2020—Christmas came a few days early for the world’s richest sports league. For Rolapp, however, the first order of business on this Friday was to get started on what’s next.
“Whether that’s changes in the media landscape, changes in how people spend their time, acceleration of technology, geopolitics, the economy, everything is under this state of change,” said Rolapp, who expects the next 10 years to alter the NFL’s business more than any prior decade. “Every sport will have to deal with that, and we have the luxury of dealing with it from a position of strength, which many people aren’t afforded. So there’s very much a healthy paranoia here, to not squander that advantage.”
The advantage is significant. In addition to the media deals, league-wide sponsorship is at record levels, and in-game attendance this season was higher than it has been in 18 of the past 19 years. The NFL accounted for 82 of the 100 most-watched TV broadcasts in America last year, a number that’s increasing. The most recent team to sell, the Denver Broncos, were bought by the country’s 10th richest person for $4.6 billion, the most anyone’s ever paid for a sports team.
Commissioner Roger Goodell has long held a target of $25 billion in revenue by 2027. The league is at roughly $19 billion right now, and while escalators in the media deals will help, there’s more needed to reach that target.
“When you are as visible and as big a business as the NFL, there is always more to do,” said longtime NFL consultant Marc Ganis.
So where, specifically, is the NFL focusing its resources? Sportico spoke with league executives and team personnel to discuss the next tier of priorities.
While the big broadcast deals are done, the league is still exploring other media opportunities, both domestic and abroad. According to Rolapp, that starts with direct-to-consumer efforts. The NFL has been instrumental in supporting the legacy TV model, but fans are increasingly opting for digital offerings. Leagues of all sizes are working to meet that demand.
Last year the NFL launched NFL+, a streaming service that offered limited live games on mobile. The league has also begun to dabble in the sale of low-latency feeds, a valuable commodity for sportsbooks across the globe.
Then there’s non-game content. To accelerate those possibilities, the NFL recently invested in a joint venture alongside Skydance Sports, whose parent company is behind blockbuster movies such as Top Gun: Maverick, and the upcoming Mission: Impossible film.
“The fan experience 15 years ago was largely centered solely around the game day experience—Was it safe? How was the parking? How was the play on the field?” Cleveland Browns COO David Jenkins said in an interview. “Today it’s much more about a 365-day relationship. So how do we engage those fans year-round and give them the products that they want?”
The NFL is currently seeking a strategic partner to invest in the league-owned media portfolio, which includes NFL+, NFL.com and NFL Network. Those assets are valuable to the league, but the changing economics, particularly for cable networks, have pushed the NFL to reevaluate their future.
League executives discussed strategic investments with nearly all of the streaming companies that held talks to buy Sunday Ticket, including Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL), according to multiple people familiar with the talks. “We think we need more content, more digital expertise and more distribution,” Rolapp said. “And we’re still looking for all of those things.”
There isn’t much about the business of other leagues that makes NFL owners jealous, but the NBA’s overseas runway is one of them. The NBA spent decades pouring money and resources into growing the league’s commercial presence in far off places. In China, for example, it started with a CCTV deal in the late 1980s, and now the league boasts more than 800 million fans in that country. While the growth isn’t linear—Daryl Morey’s 2019 tweet supporting Hong Kong protestors cooled the relationship significantly—the NBA currently has a multibillion-dollar opportunity in the world’s most populous country.
The NFL’s efforts, at least so far, have borne less fruit. The league is playing five games outside the U.S. next year, and many around the NFL expect that number will grow over the next decade, particularly as it also focuses resources on Mexico and Brazil. In addition to overseas games, the league is also allowing individual teams to pursue more significant partnerships in foreign markets of their choosing.
It’s unclear just how big the opportunity is for the NFL. Unlike basketball, American football is not a popular sport for young athletes outside the U.S., and the NFL’s player base is almost entirely North American. Some owners disagree on how much to focus to place on international opportunities, but all agree that it is a long-term investment, much like the NBA’s was back in the 1980s.
The international games also help the NFL’s business back home. The 9:30 a.m. ET start times are convenient for fans in London, but they also help the NFL normalize another TV window back in the U.S. It’s a playbook the league used with the Thursday night games, which started in 2006, and were incubated on NFL Network before becoming a $1.3 billion/year property.
“People weren’t initially sure if Thursday Night Football would work,” Rolapp said. “We grew it over time, using our network, and when we realized it worked from a competitive standpoint, we brought it to broadcast. Now it’s a really valuable package with Amazon. So there’s a method to this madness.”
The NFL was early to launch its VC arm, 32 Ventures, which it seeded in 2013 with $32 million—$1 million from every owner. In 2019, it added another $64 million, and the fund now includes equity in companies such as Genius Sports, Sportradar, Fanatics, Skillz, and NoBull (plus the SkyDance partnership). The motivation is simple: The NFL believes its partners realize massive valuation growth just by aligning with the shield, and owners are seeking a way to more directly share in that accretion.
While some owners believe that they should pursue venture investing on their own, not as a league, the group voted last year to seed 32 Equity with another $160 million—$5 million from each franchise. Like the international growth, 32 Equity has a long-term time horizon. Owners are sacrificing money now, often offered in the form of cash, for the opportunity to reap bigger rewards on the back end.
“If you want more explosive growth, it comes from avenues like 32 Equity,” Los Angeles Rams COO Kevin Demoff said in an interview. “To dabble in that is great, and it’s the right time to focus on it. Those are great projects when you have labor peace and media peace.”
The next wave of stadium projects include some of the league’s most important markets, such as Chicago, Washington D.C. and Denver. It’s an evergreen topic, but it’s taken on new importance because of the soaring costs related to these developments. That’s partially due to labor and supply chain issues, but also because of the requirements of modern NFL venues. The last two to open—SoFi Stadium in Los Angeles and Allegiant Stadium in Las Vegas—cost a combined $7.5 billion.
The league has its own credit facility to help teams finance stadium construction. The current program, the G-4, was established in 2011 and has given teams up to $200 million. Many feel that number is insufficient for 2023 and owners have discussed the possibility of increasing those limits, possibly to $300 million, according to someone familiar with the talks.
The NFL is the only major U.S. league that hasn’t altered its ownership rules in the past few years to allow private equity firms to buy passive minority stakes in teams. It’s in keeping with the league’s strict bylaws, which include tight debt limits and a minimum 30% stake for controlling owners—double the NBA’s requirement. NFL ownership remains, by design, a more exclusive club.
As franchise valuations soar, however, pressure will mount for the NFL to welcome PE funds. The switch would make it easier for owners to take money off the table, potentially offset the growing stadium costs, and broaden the pool of billionaires capable of buying into the league.
It may also help with succession planning. The average NFL owner is nearly 73 years old, by far the oldest of the major U.S. leagues, and the aging cohort has prompted a number of questions, many of which Sportico explored in a recent five-part series. The growing consensus around the league is that PE firms will eventually be welcome, but that it could be years before the change is made.
“I don’t sense any immediate pressure,” Demoff said. “I’m sure there are plenty of owners that would like to do it. And like most things in life, it’s probably better to do things when you don’t have to, rather than when you need to.”
Perhaps the biggest story of the NFL offseason is the one that league insiders are least willing to discuss publicly. Washington Commanders owner Daniel Snyder announced late last year that he had retained Bank of America to explore a possible sale of the NFL team. It was welcome news for many Commanders fans, and others around the league; Snyder’s ownership has been marred by accusations of harassment, congressional hearings, independent investigations and an increasingly cold relationship with many of his fellow owners.
During typical high-profile transactions, such as the Broncos sale last year, NFL owners and high-ranking officials eagerly keep tabs on the process. With the Commanders, however, the approach appears slightly different.
Many around the NFL say they’re taking a more hands-off approach to Snyder’s process. The thinking: Don’t rock the boat. Owners don’t want to do anything that Snyder might perceive as pressure to unload the team.
The league’s biggest upcoming business challenge may be none of these things. Many around the NFL say the biggest benefit of the current stability is that it will help the league be flexible for the inevitable unpredictable hurdle.
Who could have predicted that, in 2018, president Donald Trump would put the NFL in his Twitter crosshairs? Or two years later, that a pandemic would upend the global economy? Damar Hamlin’s sudden collapse last month required immediate mobilization, for which the league drew justifiable praise and criticism.
“COVID was as good a test as you can get, for us as an organization and as a league,” Jenkins said. “And I think both the league and the clubs responded very well. I feel very confident, with the types of experts that we have, that we can navigate different issues going forward, even those that are hard to plan for.”