5 Reasons Football Is the Cash Cow of American Sports
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Version 0 of 1. Editors' pick: Originally published Sept. 8. Ticket sales, exclusive media rights and lucrative athlete endorsements are just a few of the elements that contribute to the substantial impact the sports industry has on the U.S. economy. While there are many games that contribute to the industry's growing bottom line -- one that is projected to reach $73.5 billion by 2019 -- few come close to making the impression that football does. The National Football League (NFL) generated $12 billion in revenue during the 2013-2014 season, and the top 100 college football programs alone generated nearly $5.6 billion in combined revenue during the 2014-2015 season. Those are remarkably high numbers, and clearly demonstrate the sport's economic influence. Here are five reasons football is the cash cow of sports: 1. Monday Night Football Monday Night Football has been a cherished tradition for more than 40 years. In the late 1960s, NFL Commissioner Pete Rozelle had a vision of expanding the Saturday night game schedule into a weekly prime time spot. By 1970, Rozelle had negotiated a contract with ABC (now a part of Disney (DIS) ), and Monday Night Football lived on the network until 2005. In 2006, the program moved to ESPN (also Disney), which was better positioned to turn a profit on NFL telecasts because of its ability to collect subscription fees from cable and satellite providers in addition to selling commercials. ESPN saw so much success with the program that it signed a massive $15.2 billion blockbuster deal with the NFL in 2011, with the highlight of the contract being an eight-year extension of Monday Night Football. Beyond the media rights deals associated with Monday Night Football, it's important to consider the consumer spending the tradition drives as well. Viewing parties -- whether at private homes or out at restaurants and sports bars -- involve a substantial amount of drinking and eating on a night that isn't typically known as a "party night." If you look inside a Buffalo Wild Wings (BWLD) on a Monday night during football season and compare that to a Monday night outside of football season, you'll likely notice a stark contrast. With Monday Night Football, the NFL drives mass consumption on a weeknight, fueling the economy and keeping fans engaged until the next weekend game. 2. Jersey and Fan Apparel Sales The NFL didn't have an "official" jersey maker until 2000, when Reebok signed a deal for exclusive rights to on-field apparel. From there, the market has taken off and shows no signs of slowing. There are few fan groups willing to shell out $300 for a jersey that looks identical to one worn by a professional athlete, but NFL fans are one of those rare factions, which is exactly why Nike (NKE) bet big to oust Reebok and become the league's official gear maker in 2012. When Nike introduced its first NFL uniforms in 2013, its men's training line raked in $2.5 billion in sales for that fiscal year. Furthermore, Nike excelled in an area where Reebok failed -- jersey styles for women and kids, which now account for nearly half of all jerseys sold at Fanatics.com, an official apparel sales partner of the NFL. Nike also went on to capitalize on fantasy football by marketing the jerseys of individual standout players from teams that don't otherwise generate much attention. Clearly, Nike considers the NFL to be a solid investment, as it recently renewed its contract through the 2019 season. Another significant licensing deal that demonstrates the power of the NFL in driving consumer spending is with Majestic Athletic, an apparel designer and manufacturer that we work with here at Onestop Internet, where I am president and CEO. Majestic has been the licensed fanwear apparel provider for the NFL since 1989 and has seen such success with the partnership that it recently signed a multi-year contract extension. The NFL's influence on consumer purchasing is largely unmatched, and as someone who works with apparel brands every day, I don't foresee that changing anytime soon. As such, we'll continue to see apparel manufacturers fight for the right for exclusive partnerships for years to come. |