The 2023-2024 National Football League (NFL) opening weekend started on Thursday, Sept. 7, and continues on Sunday, Sept. 10.
The NFL is one of the most successful American sports leagues in history. For all the talk of North America’s Big Three sports (or Big Four, for hockey fans), the reality is that there’s pro football, and then there’s everything else.
The NFL earns the lion’s share of its money with TV deals. Other revenue streams include ticket sales, merchandising and licensing rights, and corporate sponsorships.
Key Takeaways
- The National Football League (NFL) is one of the most successful sports leagues in the United States.
- The league gave up its tax-exempt status in 2015.
- NFL Commissioner Roger Goodell targeted $25 billion in revenue by 2027.
- TV deals are the main source of revenue for the NFL.
- Only one NFL team is run as a nonprofit corporation: the Green Bay Packers.
Despite some recent setbacks, which include controversies about player concussions and the national anthem, the NFL appears to be making more money than ever. However, because of its private status, the NFL does not share its financial gainswith the public.
The league made an estimated $11.9 billion in national revenue during the 2021-2022 season. For additional context, a decade before the pandemic hit, NFL Commissioner Roger Goodell targeted revenue of $25 billion by 2027.
In 2015, in response to mounting criticism for its quickly growing revenue, the NFL gave up its tax-exempt status, held since 1942. The league now exists as a trade association made up of and financed by its 32-member teams. Thirty-one of these teams are owned individually, with the Green Bay Packers retaining its nonprofit status.
The Business Model
The NFL groups its revenue streams into two categories: national revenue and local revenue.
National revenue consists of TV deals along with merchandising and licensing contracts, which are negotiated at the national level by the league itself. This money is then divided evenly among the 32 teams regardless of individual performance. The NFL earned about $11.9 billion in national revenue in 2022, with each team receiving $374.4 million.
Local revenue—which consists of ticket sales, concessions, and corporate sponsors—is earned by the teams themselves. In 2022, the Packers earned $235.9 million in local revenue, an increase of increased just under 2% from 2021.
Big revenues are needed to help manage the high costs of running a professional football team. In 2022, the Packers spent $501.3 million on operating expenses (a 22.3% increase from 2021) A large chunk was used to pay players’ wages ($61 million in 2022), with the rest allocated to stadium upkeep, marketing, and team and administrative costs.
The Dallas Cowboys is the NFL’s richest team, with a value of $9.2 billion as of 2023.
Here is the basic structure of the NFL’s business and how it breaks down:
Massive TV and Streaming Deals
Football is, hands down, the most-viewed sport in the United States, with the Super Bowls being among the most-viewed TV broadcasts in U.S. history.
During the season, NFL games are broadcast live in the United States on Mondays, Thursdays, and Sundays. These games are consistently the highest-rated shows on TV. Therefore, media companies have shelled out big bucks for the rights to broadcast them.
The NFL has TV deals in place with Amazon, CBS, ESPN/ABC, FOX, and NBC running through the 2033 season. People familiar with these deals, announced that they could be worth more than $100 billion. The four TV broadcasters will annually rotate rights to the Super Bowl, while Amazon will get to exclusively stream “Thursday Night Football.”
In December 2022, the NFL announced a multi-year agreement with Google (GOOG), granting YouTube TV and YouTube Primetime Channels the right to exclusively distribute NFL Sunday Ticket to consumers in the United States starting with the 2023 NFL season.
YouTube TV is a subscription streaming service where viewers can watch live and on-demand TV from over 100 channels. YouTube Primetime Channels is a new way for users to subscribe and watch content on the YouTube app. It is estimated that the contract with Google for the NFL Sunday Ticket package will pay the league about $2 billion annually, up from $1.5 billion a year under a previous deal with AT&T's DirecTV.
"YouTube has long been a home for football fans, whether they're streaming live games, keeping up with their home team, or watching the best plays in highlights," said Susan Wojcicki, CEO of YouTube. She added that viewers will also be able to experience the game through YouTube TV or YouTube Primetime Channels.
According to the NFL, as part of the agreement, YouTube and the NFL will facilitate exclusive access to official content and attendance opportunities for select YouTube Creators at key NFL tentpole events.
It is also estimated that for $200 million, the NFL will seek to license the commercial rights for bars and restaurants.
Merchandising and Licensing Deals
Although the majority of its national revenue comes from its monster TV deals, the NFL also makes money by selling companies the rights to sell items that represent the NFL. For instance, the NFL, in partnership with Nike Inc. (NKE), signed a 10-year licensing deal with online sports retailer Fanatics in 2018. This deal makes Fanatics the exclusive manufacturer of all adult-sized, Nike-branded merchandise sold through the NFL’s online store.
The value of this deal went undisclosed, but in all likelihood, it’s pennies compared to the NFL’s TV deals.
Ticket Sales and Concessions
Although ticket sales constitute an important revenue stream for individual NFL teams, they are nonetheless relatively small compared to quickly growing revenue from TV deals (you’re probably noticing a pattern here).
On average, NFL stadiums seat about 70,000 people, and games usually sell out, with the average NFL ticket estimated to cost about $151. This doesn’t leave much opportunity for growth.
The one thing teams can do is choose to renovate their stadiums to add more seats and concession stands. Such renovations are costly and disruptive but usually pay off. NFL teams can also use their stadiums to host non-football events, such as concerts, but opportunities for revenue growth from these events have the same limitations.
Using the above averages, NFL teams can potentially earn over $10 million in ticket sales from a single, sold-out stadium event. However, various expenses must be subtracted from that figure, including payments to athletes or musicians, taxes, and marketing or administrative costs, making the profit significantly lower.
Similar to ticket sales, concessions are peanuts compared to TV deals. Concessions contribute relatively small amounts to the average NFL team’s revenue, but the margins on selling food and drinks at games are extremely high.
Corporate Sponsors
Corporate sponsors pay NFL teams to display their logos on players’ uniforms, TV transitions, merchandise, etc.
The most coveted sponsorships are naming rights to NFL stadiums. According to the Sports Business Journal, the naming rights to So-Fi Stadium in Los Angeles has an annual worth of $30 million a year while the Allegiant Stadium in Las Vegas naming rights are estimated between $20 to $25 million.
Future Plans
TV Growth
Contrary to some claims, TV isn’t dying, at least not when it comes to football. The value of the NFL’s TV deals has skyrocketed in the past few decades; by all accounts, it will likely continue to do so.
Streaming
Although TV is still king when it comes to watching football, streaming is on the rise. Yahoo! became the NFL’s first streaming partner in 2015. Since then, plenty of others have joined the fray, including X (formerly Twitter) and Amazon (AMZN). In 2021, Amazon became the first NFL broadcast partner to bag exclusive rights to a package of games on a digital platform. Amazon reportedly paid $1 billion for exclusive rights to air “Thursday Night Football” on Prime Video.
Google subsidiary YouTube landed a seven-year contract to stream out-of-market NFL Sunday Ticket games. The contract for the NFL Sunday Ticket package will pay the league about $2 billion annually, up from $1.5 billion a year under a previous deal with AT&T's DirecTV.
If the growth of TV deals in the past few decades is any indication, these deals will also continue to grow rapidly over the coming decades.
Gambling
In May 2018, the U.S. Supreme Court decided to let states determine whether or not to legalize sports gambling. Many states have since taken up that option, mindful of the big tax revenues that it could generate—prior to becoming legal, sports betting was estimated to be a $150-billion-a-year industry.
To capitalize on this, the NFL could set up betting parlors in stadiums, partner with established casinos, set up online sports gambling portals, and so on. The possibilities are vast, and there is no way that the growth-obsessed NFL won’t explore as many as it can.
Key Challenges
COVID-19 Pandemic
The global COVID-19 pandemic had a big impact on businesses around the world, and the NFL was no exception. Special protocols were put in place to prevent the spread of the virus and to keep players, coaches, and NFL employees safe. This included the enforcement of mask wearing, regular testing, and social distancing. The league also began limiting the number of people allowed in and around the field on game days, including fans.
Such measures understandably put a dent into the league’s bottom line. The Wall Street Journal estimated at the height of the pandemic that the league could lose as much as $4 billion in revenue. However, with the worst now seemingly over, there’s a general confidence that the league will bounce back quickly from what is being viewed as a minor, temporary setback.
Reliance on Star Power
The NFL relies on its star athletes to keep fans coming back. According to the NFL, the top five players for 2022 were Tom Brady (Tampa Bay Buccaneers), Aaron Donald (Los Angeles Rams), Aaron Rodgers (Green Bay Packers), Cooper Kupp (Los Angeles Rams), and Jonathan Taylor (Indianapolis Colts).
This same logic also applies to popular teams. According to fan-based research, the top teams for 2022 are the Green Bay Packers, New England Patriots, Dallas Cowboys, Philadelphia Eagles, and Pittsburgh Steelers. The Packers are so popular, there is a 30-year wait-list for tickets.
Scandals
The reputation of the NFL has come under fire in recent years. The league has been accused of not only overlooking the risk of players getting brain injuries but also racially discriminating players who had sustained injuries as it assumed Black players started out with lower cognitive function. The league shrugged off claims that its players engaged in domestic abuse and blackballed Colin Kaepernick in 2019 for kneeling during the national anthem to protest racism. An email scandal erupted in 2020 alleging systemic sexual harassment and verbal abuse and led to resignations and investigations.
Should controversies of this nature continue, the NFL risks alienating a big chunk of its fan base.
Who Owns the National Football League (NFL)?
No one individual owns the National Football League (NFL). It is, instead, a trade association made up of individual franchises or teams. Thirty-one of these teams are owned individually, while only one—the Green Bay Packers—is owned by shareholders collectively as a nonprofit.
Is the NFL Losing Money?
The NFL is making money on an overall basis, primarily from lucrative television, streaming, and marketing deals. The global COVID-19 pandemic put a damper on the league’s bottom line, but some experts say that this is only temporary.
What NFL Team Is Worth the Least Amount of Money?
The Cincinnati Bengals, with a value of $4 miilion as of 2023.
What NFL Team is Worth the Most Money?
The team worth the most money in the NFL is the Dallas Cowboys with a value of $9.2 billion as of 2023.
The Bottom Line
The NFL is one of the most successful sports leagues in the United States. Although it is a private entity, which means that it is not obligated to release how much it makes, there is plenty of evidence that it generates an enormous amount of money.
Much of the league’s revenue comes from TV and marketing deals. However, the global COVID-19 pandemic put a dent in its bottom line. Some experts say these was a temporary hiccups and that the NFL will bounce back quickly. That may be true, and the league’s popularity certainly shows no signs of diminishing, although there is still a long way to go to reach the target of $25 billion in revenue by 2027.
