How Much Do the NFL and TV Partners Make a Year?
The NFL makes over 7 billion a year for the NFL Sunday Ticket, the NFC, the AFC, Monday Night Football and Thursday night football television packages from CBS, NBC, Fox, DirecTV and ESPN/ABC.
ESPN pays $2 billion a year for Monday Night Football and one wild card NFL playoff game that airs on ABC and ESPN.
Fox pays $1.1 billion a year for the NFC television package and its playoff games.
CBS pays $1 billion a year for the AFC television package, its playoff games, and an additional $230 million for five Thursday night football games.
NBC pays $950 million for Sunday Night football, some playoff games, and an additional $230 million for five Thursday night football games.
In addition to this, Fox, CBS, and NBC all rotate the Super Bowl every three years, which is a massive revenue generator worth several hundred million dollars a year.
Finally, DirecTV pays $1.5 billion a year for the NFL Sunday Ticket.
Add it all up and the NFL is making roughly $7 billion for its football games just off television rights. The explosion in TV revenue is why the NFL's salary cap per team has soared from $36 million a year in 1994 to $167 million a year for 2017.
But how much, if anything, do all these networks actually make off NFL games? Forbes has an interesting article that projects total ad revenue per game and totals up everything for the 2016 season. Here's their NFL Ad Revenue projections (including playoffs) for the 2016 season.
Fox: $1.44 billion
NBC: $909 million
CBS: $867 million
ESPN/ABC: $285 million
(DirecTV's business model here isn't that complicated, but it's much different than the network models. DirecTV figures that in addition to the $500 million or so they make off selling the NFL Sunday Ticket to the two million yearly subscribers for the network, they also need to have at least 1 million people sign up for DirecTV that otherwise wouldn't. Because then DirecTV gets 12 months of subscriptions off of offering the NFL Sunday Ticket.)
Now these numbers are estimates, but what immediately jumps out at you is that in non-Super Bowl years it would appear that Fox, NBC, and CBS are all roughly breaking even on the NFL television packages. Every third year Fox, NBC and CBS get an additional $400 million or so off carrying a Super Bowl. Given that putting on these games has to cost several hundred million a year, NFL games are not huge money makers for Fox, NBC and CBS.
But look at the ESPN/ABC number, wow.
ESPN/ABC pays $2 billion a year for the NFL and only makes $285 million back on advertising revenue. Given that you're talking about a couple of hundred million a year to produce these games, you're talking about ESPN losing $2 billion a year on the NFL.
So how in the world can ESPN justify paying the NFL $2 billion a year?
The cable bundle.
ESPN makes roughly $8 a month from each of the 88 million cable and satellite subscribers it has in the country. That adds up to over $8 billion a year in revenue. The problem with the math here is that ESPN is losing millions of cable and satellite subscribers a year. This is why I continue to say that cable sports rights fees are a bubble. The Fox, NBC, and CBS payments to the NFL require some semblance of connection to economic reality -- the networks have to make their payments connect somewhat to what they can make off advertising. ESPN, meanwhile, is simply handing over your cable subscriber fees to the NFL. The airing of the games themselves on ESPN costs the network nearly two billion a year.
In fact, how much does Monday Night Football and the resulting NFL programming on ESPN cost each of ESPN's 88 million cable and satellite subscribers a year?
$19.50!
Think about that for a minute, every single cable and satellite subscriber in the country is paying $19.50 a year, whether they watch or not, for Monday Night Football and ESPN's NFL content. Given that average viewership for a Monday Night Football game is around 12 million, that means that the vast, vast majority of cable and satellite subscribers in this country are paying nearly $20 a year for content they never watch.
So what happens when these TV deals expire?
Well, the NFL's money from Fox, CBS and NBC is probably safe when the next TV deal starts getting hammered out in a few years. Now the amount of money each of these networks pays might not increase as much as it has been because the networks all have to avoid losing too much money on NFL games, but the amount of money on the table isn't going to go down when it comes to network television.
But here's the big question that I've been asking for a couple of years now -- can ESPN, which is losing hundreds of thousands of subscribers a month, still afford to pay $2 billion a year for Monday Night Football in the next television deal? And that leads to several more questions: Is it possible ESPN might have to shift these games to ABC in order to make a competitive bid? And if that happened would ESPN still be able to justify the $8 a month that every cable and satellite consumer pays for the network? Would the NFL take less than $2 billion if there is no other cable bidder who can approach what ESPN pays? Or could Facebook, Google, Apple, Netflix or some other large tech company decide to enter the sports business and fundamentally alter the league's economic trajectory?
The sports rights bubble has popped when it comes to cable sports exclusivity. And as you can readily see from the above data, ESPN's business model is much different than CBS, Fox, and NBC's.
With the cable bundle fraying what happens in the years ahead is by far the biggest story in sports.