How NFL Teams Make Money?
The NFL has been a staple in American sports since 1920. Even after the President condemned the NFL. Then there were the TV ratings that took a nosedive in 2016 and 2017 But it’s still proving to be a big success for all 32 NFL teams and their owners. 28 NFL teams are valued over $2 billion
So how is it that these teams are worth so much?
To answer that you have to look at how hard it is to start your own franchise, the last time an NFL franchise was started was back in 2002. It’s rare to start a new NFL team but when it happens owners have to pay something known as a franchise fee. Some NFL teams have been around since the National Football League started in 1920 back then the franchise fee was about 100 bucks, by 1960, the Dallas Cowboys had to pay a million dollars to enter and in 2002 the Houston Texans, which are the newest team to join the league, paid $700 million. Some NFL teams are still owned by the same families who started their franchise nearly a century ago. The Chicago Bears were founded for $100 in 1920 by George Halas and as of 2018 the team is still in the family, it’s owned by his 95-year-old daughter Virginia McCaskey and it’s now worth an estimated $2.9 billion and let’s say you want to buy your own NFL team, most recent sales have been in the billion-dollar range. The Buffalo Bills went for $1.4 billion and in 2018 the Carolina Panthers were sold for a record $2.2 billion.
So what kind of return are teams getting back from their billion-dollar investment?
The Green Bay Packers are a non-profit corporation, the only one in the league, they made $454.9 million in 2017. The other 31 teams are privately owned but Forbes releases the valuation for all 32 teams across the league each year. The values are based around each NFL team stadium along with revenue of historical transactions, non-NFL events held at the stadiums as well as purchase and investment offers for each team. In 2017 Forbes said the Dallas Cowboys generated $864 million in revenue, the New England Patriots made $593 million and the New York Giants made $493 million. But a lot of that income isn’t generated by the team itself, it actually comes directly from the NFL, for the 2017/2018 season the NFL generated a revenue share of over 8 billion dollars from TV deals merchandising, and licensing deals, that’s known as the national revenue and no matter how well or how bad your team does teams split the national revenue evenly thirty-two ways, meaning teams around the league received more than $255 million from the NFL in 2018. But that’s just one way a team generates income, there’s also something called local revenue, that’s everything a team generates itself. For the 2017/2018 season the local revenue for the Packers made up about 43% of the team’s total revenue ticket sales and stadium attendance are part of the local revenue, not only do NFL teams make money on game day but they can also make money from non-NFL events by renting out the stadiums for concerts, live events, and tours. The Green Bay Packers spent more than $370 million to upgrade including adding thousands of seats to the stadium. Since renovations began back in 2010, the Packers have seen ticket sales jump from $48 million to $71 million. But game attendance isn’t the only source of revenue for teams. There are also a lot of corporate sponsors, some teams like the Philadelphia Eagles have over 40 corporate sponsors. In the 2017/2018 season, the NFL sponsorship revenue totaled more than 1.3 billion dollars. These sponsorship deals range from putting company logos on practice jerseys, renting out retail space and stadiums to landing the sole naming rights to NFL stadiums themselves, the New York Giants and New York Jets share a stadium called MetLife Stadium. And the asking price for the naming rights? Well according to the New York Times that deal’s worth an estimated $19 million a year for 25 years which remains one the highest naming rights deals in the NFL
Teams may be generating hundreds of millions of dollars each year but there are a lot of expenses that come with it, of the $454.9 million that Green Bay Packers made in the 2017 and 2018 season more than $420 million dollars went to expenses, most of it went to player costs which made up $212.7 million that year, stadium upkeep, marketing, team costs, and general administrative costs totaled $208 million. So after all the bills are paid, the Green Bay Packers are left with an operating income of $38.5 million. The Cowboys Patriots and Giants have huge expenses that eat up a large chunk of yearly revenue too. The Cowboys’ operating income is $365 million, the Patriots is $235 million and the Giants is $149 million. But not every NFL team is rolling in cash. Some NFL teams find themselves strapped for money with large overhead costs for their teams. Just take the Detroit Lions, the team had total revenue of $361 million in 2017, but according to Forbes, the team had an operating income of $4.1 million. Another issue weighing down on the NFL, a drop in popularity among up-and-coming sports fans and players. In the wake of the concussion debate, more than 67,000 fewer high schoolers are playing football today than in 2009. But that controversy isn’t affecting the NFL’s bottom line. It’s still seeing revenue growth from the 2016 season to the 2017 season the NFL’s national revenue grows nearly 5%.
So despite all the controversy, it may be a while before NFL teams take a hit.