The NFL has more than 16 billion reasons to carry on amid COVID-19

Jason Owens
(Amber Matsumoto/Yahoo Sports)
The NFL depends on multiple revenue streams for itself and its broadcast partners to generate roughly $16.5 billion. Some are more at risk than others to COVID-19. (Amber Matsumoto/Yahoo Sports illustration)

Through three weeks of the regular season, the NFL’s plan to play games amid the COVID-19 pandemic appeared to be working.

Then reality struck.

An outbreak consumed the Tennessee Titans. Cam Newton hit the COVID-19/reserve list. Games were postponed. Schedules were overhauled.

Since then, the new normal of the NFL season has set in with the Carolina Panthers and Atlanta Falcons the latest franchises forced to shutter their facilities because of COVID-19 cases.

How can the NFL move forward amid outbreaks?

As the inevitability of an airborne pandemic’s impact on a sports league that travels from city to city was realized, it raised a significant question — how can the NFL carry on with its season as the United States faces a fall wave of coronavirus cases?

The answer: Any way it can.

While teams are facing losses in the billions due to limits on fans in stadiums, there are billions more to be made by continuing to fill Sunday, Monday and Thursday TV schedules with games.

A closer look at the numbers explains exactly why the NFL is risking the health and well-being of its players beyond the normal hazards of football — and why players are willing to sign up for that risk for their share of the pie.

What’s at stake for NFL in 2020?

The NFL operates largely as a collection of private businesses, so a precise breakdown of the NFL’s collective finances isn’t publicly available. The Green Bay Packers are publicly owned and provide a glimpse into the league’s finances thanks to their obligation to report.

Those numbers, along with reports on the NFL’s revenue streams, paint a rough picture of the stakes the NFL plays for. In 2020, the revenue at stake for the league was somewhere in the neighborhood of $16.5 billion. That’s a pre-pandemic estimate.

League revenue is generated under two umbrellas — national revenue and team revenue. Each revenue stream faces its own COVID-19 challenges.

$5.5 billion-plus in team revenue

Team revenue is generated by ticket sales, merchandise, concessions, local sponsorships and other game-related revenue streams. This is the revenue most at risk to the coronavirus. Forbes — which annually ranks franchises in terms of total value — reported in May that teams collectively generated $5.5 billion in local revenue in 2018.

Two years and two state-of-the-art stadiums in Los Angeles and Las Vegas later, and that number promised to go higher in 2020 — before COVID-19, of course.

All teams are not created equal in terms of local revenue. The Dallas Cowboys — which annually top Forbes’ franchise value list — have the most at stake. Forbes reported that the Cowboys generated $621 million in local revenue in 2018, making up roughly 2/3 of its league-leading total revenue of $950 million.

This explains why team owner Jerry Jones and the NFL tolerate the health risk to fans by inviting a league-leading 24,000 fans per game (so far) to AT&T Stadium. COVID-19 regulations under Texas Gov. Greg Abbott help the cause.

Fans watch as the Atlanta Falcons play the Dallas Cowboys at AT&T Stadium in the first half of an NFL football game in Arlington, Texas, Sunday, Sept. 20, 2020. (AP Photo/Ron Jenkins)
The Cowboys are preserving what they can of their league-leading local revenue largely generated on game days. (AP Photo/Ron Jenkins)

By comparison, the then Las Vegas-bound Oakland Raiders generated a league-worst $77 million in local revenue in 2018. With Allegiant Stadium opening its doors in Las Vegas this season, that stream was expected to see a significant bump.

The stands in Las Vegas will remain empty after team owner Mark Davis made the decision to keep fans out for the entire season.

So how will the Raiders make money this season? And what about the Los Angeles Rams and Chargers playing in front of empty seats at SoFi Stadium?

$9.5 billion-plus in shared revenue

That’s where national revenue comes into play. And that’s what the NFL is fighting hardest to maintain through the pandemic. National revenue is generated by broadcasting rights and national merchandising and licensing deals. And unlike local revenue, every team gets an equal split of the pie.

According to Sportico analysis of Packers financial filings, that pie was worth a record $9.5 billion in 2019. That added up to $296 million for each of the NFL’s 32 franchises on top of the local revenue that they generate. The bulk of that money comes from broadcast rights. The NFL collects roughly $6 billion in rights fees annually from its broadcasting partners that include CBS, NBC, ABC, ESPN, Amazon and Verizon.

(Verizon is the parent company of Yahoo Sports.)

The Wall Street Journal reported that in 2019, NFL games generated $4.94 billion in advertising revenue for its broadcast partners.

Streaming rights and packages like the NFL Sunday Ticket also factor into the NFL’s national revenue package. So do sponsorship deals like the one that allows Pizza Hut to brand itself as the official Pizza of the NFL.

The NFL has shown consistent year-over-year growth in national revenue, with Sportico reporting an 8-percent jump from 2018 to 2019. Apply that figure to 2020, and national revenue jumps to $10.26 billion.

As long as games keep being played and broadcast on TV, that revenue is largely protected. That is why the NFL is jumping through logistical hoops and amping up its COVID-19 rhetoric on a weekly basis.

NFL’s new COVID-19 reality

As the Titans’ outbreak that eventually saw a reported 24 confirmed COVID-19 cases took hold, the NFL on Oct. 5 threatened teams that don’t follow COVID-19 protocols with game forfeitures. If a team doesn’t follow protocols and an outbreak forces the NFL to adjust the schedule, the league reserves the right to hand the offending team a loss and carry on with the rest of the schedule.

Meanwhile, the league announced that it was open to delaying the Super Bowl and adding an 18th week to the regular season to accommodate schedule adjustments. Last week, it canceled the Pro Bowl, potentially opening up another weekend for meaningful football to be played.

Some teams like the Cowboys and Jacksonville Jaguars are preserving a portion of their local revenue by allowing fans in limited numbers. Others like the New Orleans Saints and San Francisco 49ers have lobbied to do so in the face of local COVID-19 restrictions.

In short, the NFL is doing everything it can to preserve each of the 256 games on its regular-season schedule as teams work to preserve local revenue. If the league has to move games, it will. If an outbreak makes it logistically impossible for a game to be saved, the NFL has reserved its right to enforce a forfeit.

A game here or there could be lost before the season’s over. But one thing is abundantly clear. Barring an outbreak of catastrophic proportions, the NFL season will go on, and TV revenue will be preserved.

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