How The NFL Makes Money

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导读：COMPANIES IN THIS ARTICLE： GME，NRL, ALV

Television. It can turn naturally inquisitive minds into drooling zombies. Or it can provide sonic accompaniment in an otherwise quiet and lonely living room. Beyond that, the medium is almost single handedly responsible for making the National Football League the largest sports enterprise in the world.

Football Is Life

By any measure, the NFL is the most successful sports league in history. For all the talk of North America’s “Big Three” sports (or to appease hockey fans, Big Four), the reality is that there’s pro football, and then there’s everything else. The most-watched television programs in history, without exception, are Super Bowls of various years. The NFL’s imprint on the public consciousness is so powerful that TV coverage of the annual draft draws far, far more viewers than the average baseball League Championship Series game does. Even the spring announcement of the upcoming NFL season’s schedule is a media event. The NFL’s is not dominant on just a national level, either. Consider that the highest-grossing soccer league in the world, England’s Premier League, only generates roughly half the revenue of the NFL.

It wasn’t always this way. The NFL was popular from the 1960s through the 1990s, but not dominant to the point of exclusion. In this millennium, the NFL has adopted an aggressive marketing strategy dedicated to turning non-fans into dilettante fans, casual fans into knowledgeable fans, and hardcore fans into obsessive fans. During football season, the most-watched programs on TV are Sunday NFL games. NFL games take place in cavernous stadiums that draw an average of 70,000 fans per game, making these the most highly-attended sports league games in the world, except for auto racing. However, ticket sales are little more than a rounding error on a typical NFL team’s balance sheet. It’s TV that drives the train. In a huge nation where only 31 cities field teams, over 90 percent of self-described NFL fans have never attended a game.

Smaller Than You Think

But publicity alone doesn’t account for magnitude. Compared to its sporting competitors the NFL is, if you will, in a league by itself. Compared to other business ventures, the NFL is a middling enterprise about the size of your average regional tool-and-die manufacturer. NFL revenues were about $9.5 billion in 2014.

GameStop Corp New (GME) took in $9.3 billion last year. And GameStop is only the 311th largest company in the United States by revenue, sandwiched between Spam purveyor Hormel Foods Corp (HRL) and car parts manufacturer Autoliv Inc (ALV). The NFL is by no means a true titan of commerce. And of course, the league’s revenue is generated by 32 teams. Your average NFL team grosses less than $300 million annually.

Wal-Mart Stores Inc. (WMT) takes in more money in 5 hours than your average NFL team does all year. In fact, Walmart operates a store in suburban Miami that generates as much revenue as the Miami Dolphins do (the Walmart location wasn’t built with taxpayer funds, either). Yet the NFL and its teams wield vastly disproportionate influence. Why?

Largely because of personalities. The NFL forbids corporations from holding majority stakes in its teams, which means that its owners are a handful of prominent billionaires adept at currying public favor. (“Build me a stadium, or I’m moving this team to Los Angeles.”) Half the owners in the league inherited their teams, and a couple of the remaining ones haven’t been in existence long enough to be bequeathed to the next generation. League commissioner Roger Goodell might be lambasted in the press and among the public, but the criticism is of no consequence. His job really only has two purposes: increase revenue, and keep at least 17 owners happy at any given time. By those measures, he’s easily the best commissioner in sports. (League revenue was $6.5 billion in 2005, the year before Goodell took office.)

Blink and You’ll Miss Something

Again, the primary catalyst is television. Almost two-thirds of the league’s money comes from one uniform source: TV revenue, practically all of it national. Every few years the NFL renegotiates its television contracts, leading to a scenario whereby representatives of NBC, CBS, Fox and ABC (under its sports arm, ESPN) race to see who can throw the most money at the aforementioned billionaires.

At this point, the league almost sells itself, building on its history of success. This year’s Super Bowl drew 114 million viewers in the United States, and, as is tradition, supplanted the previous year’s as the most-watched TV program in history. However, that means that close to 200 million Americans didn’t watch the Super Bowl, which a) is pretty amazing and b) gives an already ascendant league plenty of room to grow.

The NFL’s goal is simple: make the product as easy to consume (i.e., watch from the comfort of your couch or a sports bar) as possible. For the first 50 years of its existence, NFL games were played almost exclusively on Sundays. In 1970 the league conducted a brazen experiment – engage the one broadcast TV network that didn’t yet carry games (ABC, at the time) with a weekly Monday night telecast. Monday Night Football became and remains a cultural phenomenon. A few decades after its successful debut, some executive in the NFL offices looked at a calendar and noticed that that left 6 days per week without nationally televised prime-time football—a veritable desert just waiting to be colonized. Currently the NFL broadcasts games 3 nights a week (Sunday, Monday, and Thursday) in addition to the traditional slate of Sunday matinee games. If there’s a saturation point, we don’t seem to have reached it yet. CBS’s Thursday night games averaged 16 million viewers last year, ESPN’s Monday night games over 13 million, and NBC’s Sunday night games 21 million.

Even secondary endeavors, such as the NFL’s official fantasy football operations, serve a purpose beyond the modest revenue they directly generate. They keep fans invested all week (and all season) long, turning the NFL from a part-time entertainment vehicle into a full-time compulsion.

The Bottom Line

It’s hardly an original thought to point out that the NFL is the ideal sport for television. It takes dozens of cameras to properly capture the 22-man controlled chaos, and the frequent stoppages in play make it easy to replay the action from different angles (and, more importantly, insert commercials.) As people continue the trend of consuming more of their entertainment at home, and as long as pro football itself remains a once-weekly endeavor (meaning that each game is of huge significance, relative to other sports), the NFL will only continue to grow in popularity.

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