NFL's revenue dip in pandemic significant, but not crippling
New York Giants co-owner John Mara could have been speaking for all in the tight-lipped world of NFL finances by saying his club’s pandemic-induced losses in revenue have been substantial but not crippling.
The biggest positive in this season of COVID-19 might not be measurable: the value of finishing on time in Tampa with the Super Bowl between Tampa Bay and Kansas City on Feb. 7.
“They got all the games in,” said Marc Ganis, co-founder of Chicago-based consulting group Sportscorp and a confidant of many NFL owners. “They got ’em all in on time, within the 17-week window. That’s enormous.
“We’re not taking it for granted, but the effort that was necessary by tens of thousands of people, family members, to make that happen, the sacrifices that were necessary, the union stepping up together with the league, that’s an incredible accomplishment done without bubbles.”
The biggest negative, said Ganis, was revenues on the lower end of what was hoped since the majority of stadiums either didn’t have fans at all or just a few thousand at most.
In keeping with a previous estimate that revenues could be down by at least $100 million for each of the 32 teams, Ganis says the league missed out on $3 billion to $4 billion while playing in the pandemic. But Mara says the losses are manageable.
“It was a huge financial hit for us this year, no question about it,” Mara said. “But it’s not going to affect our ability to be active in free agency or to do what we have to do to improve the team. Hopefully this is a one-year thing and we’ll be able to have fans back in the building next season.”
It remains to be seen whether a legacy of cooperation will last between owners and the union after essentially negotiating two collective bargaining agreements in a matter of months.
The first was a new 10-year agreement that passed on a close vote by the players just as the pandemic was gripping the country. In retrospect, it looks like a good move given the financial uncertainty with ongoing COVID-19 concerns.
The second was a plan for playing in the pandemic, including an all-virtual offseason and the players’ demands to dump preseason games and be tested daily while accepting limits to social interaction in their personal lives.
Another part of the negotiation was assuring the salary cap would be no lower than $175 million per team, with the league holding out hope of keeping it much closer to the 2020 figure of $198.2 million.
“None of us are going to be surprised that there’s going to be a significant drop-off from overall revenue,” union executive director DeMaurice Smith said. “I’m just happy that we have a floor for the cap next year. And because of that floor, teams at least have a solid number in order to figure out how to restructure contracts, if that’s what they want to do.
“One effect of the 2011 CBA was to allow teams to carry over money from previous years and put that money into the salary cap this year. And if there was ever a time where I was glad that we negotiated for that carryover effect, it’s now.”
With the majority of revenue tied to national TV contracts that benefit all teams equally, the NFL was well-positioned to handle the pandemic as long as games could be played.
While the TV ratings were down 7% during the regular season, Ganis said the NFL actually widened the gap with other pro sports leagues and non-sports entertainment.
Other experts also say the ratings don’t matter much because the league is poised for more huge TV contracts in the next couple of years. The next rounds of deals are likely to start at more than $10 billion annually and grow from there.
“So the NFL, its position as the top broadcast property in the United States actually got stronger,” Ganis said. “But they don’t make more money off of that. That just helps going into the negotiations for the next media deal.”
While the Dallas Cowboys led the NFL in attendance during the pandemic at nearly 30,000 fans per game, America’s Team also had the most to lose. Forbes magazine estimated Dallas took in by far the most stadium revenue in the league at $621 million in 2018, the most recent year analyzed.
The view from outside the NFL is quite a bit different, though, Ganis said. There aren’t rich teams or poor teams, just rich players and richer owners, with millions around the U.S. dealing with their own much more dire financial pictures.
“Nobody is going to cry for teams that are worth an average of $2 billion,” Ganis said. “And they’re not asking for people to feel sorry. And no one’s going to cry for players who are going to get reductions in salaries over the next two or three years.
“Both the league and the players association recognize that there was something going on much bigger than their own interests. They did the right things the right way, and they gave the country a sense of normalcy that it desperately needed in the early fall and winter.”