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This past weekend the Floyd Mayweather vs. Conor McGregor fight aired on pay-per-view television and reports are 6.5 million people paid $99 or more for the fight, including four million in the United States. That windfall of cash, as much as $650 million in revenue before tickets, sponsorship, and ancillary revenue streams are all added into the equation, means Mayweather-McGregor is now the most lucrative pay-per-view event in American history.
Numbers like those are eye-opening and they have to leave sports leagues, TV executives, and business people across the sporting arena wondering if they are leaving way more money on the table by continuing to put their top events on broadcast or cable television. Especially when broadcast and cable television networks are experiencing huge challenges to their business models.
Why should leagues give their best products to someone else to produce and monetize when, in theory, they could take their top products and make much more money by going direct to consumers themselves? The success of Mayweather-McGregor got me thinking — what if the NFL decided to put the Super Bowl on pay-per-view at the end of the next round of television contracts in 2021? How much money would the Super Bowl be worth on pay-per-view than it is now on “free” TV?
Presently the NFL rotates the Super Bowl around its three major broadcasting partners — Fox, CBS, and NBC. According to media sources, the Super Bowl produces roughly $500 million in ad revenue for each of those networks. The Super Bowl itself isn’t auctioned off independently, it’s a part of the television packages Fox, CBS, and NBC all buy from the NFL each year. (Fox pays $1.1 billion a year for the NFC and playoff games, CBS pays $1 billion a year for the AFC and playoff games, and NBC pays $950 million a year for Sunday Night Football and playoff games. ESPN also pays $1.9 billion a year for Monday Night Football and an additional $100 million for one playoff game. The Thursday Night Football package sells for a combined $450 million, $225 million each from CBS and NBC).
If four million American households were willing to pay $100 for the Mayweather-McGregor fight, how many households would pay for the Super Bowl if it were only available on pay-per-view?
I asked a top television executive who is incredibly good at his job to put a guesstimate on how many people would pay for the Super Bowl compared to Mayweather-McGregor. He said he believed it would be at least four times as popular as this fight. (He pointed out that last year’s Super Bowl featured Atlanta and Boston. If just 30% of the TV markets in those cities bought the Super Bowl on pay-per-view then that’s three million viewers by itself). Assuming that number is roughly accurate, this would mean the Super Bowl could do 16 million pay-per-view buys in the United States. At $100 per purchase, we’re talking about $1.6 billion just for the Super Bowl by itself.
Given the Super Bowl produces around $500 million in revenue now, this means the NFL is leaving a billion dollars or more in revenue on the table by allowing the game to air on “free” television.
From a purely business perspective shouldn’t the NFL consider putting the Super Bowl on pay-per-view in the near future? Sure, there would be ample complaints and social media anger if the NFL took the game off “free” TV and fewer people would watch on pay-per-view than watch on “free” TV now, but shouldn’t the NFL’s goal be to make as much money as possible? And while I’m sure there would be tons of people taking to social media demanding a boycott, ultimately that boycott talk would fizzle. Particularly when players pointed out that the added Super Bowl revenue produced goes to the players and the owners. We don’t expect players to take less money than they’re worth, why should the league that employs those players take less than its worth?
Plus, the NFL could still put every other game on “free” TV and then set up pay-per-view for the big game itself. It’s not as if people are lacking in free NFL options now. (Inevitably people will Tweet about piracy, but most people don’t pirate the games. And even if millions do, that’s still a rounding error when you’re talking about an extra billion dollars in revenue.)
Personally, I think it’s a no brainer, the NFL should put the Super Bowl on pay-per-view.
What’s more, why wouldn’t other leagues look at this and consider the possibilities as well? The Southeastern Conference’s CBS TV contract expires at the end of the 2024 season. CBS’s SEC TV package includes the top game every week and the SEC title game. How much money could the SEC make if they put their top game every week and the SEC title game available only as part of a pay-per-view package?
Right now that entire package of rights sells for $55 million to CBS. It’s the best deal in sports, wildly undervalued relative to the current market.
Are there four million households nationwide that would pay $100 a year for a pay-per-view telecast of the SEC game of the week and the SEC title game for an entire season? (That’s the same number as bought the Mayweather-McGregor fight.) That’s roughly 16 games, or $6.25 a weekend.
Four million households seems way too low, right?
What if you told those same subscribers that those games would now be commercial free too? Do you think SEC fans might be willing to pay $6.25 a game just to avoid having to sit through an hour or more of commercials in every big game? If there were no commercials an average SEC football game would be over in 2.5 hours, maybe even two hours. As is, the games often last four hours.
If so, and I think four million total subscribers is very conservative, the SEC is leaving $345 million a year on the table at current market prices.
Sure, fewer people would watch the games on pay-per-view than on “free” TV, but the modern media marketplace isn’t going to be about attracting casual viewers, it’s going to be about monetizing your hard core fans. Look at Outkick, in a little over a week we have done nearly $100k in Outkick VIP subscriptions. (Go buy them, by the way, they’re $99, you get a free tshirt and we’re having a VIP event in Atlanta this weekend). Sure, the majority of Outkick readers aren’t paying for Outkick VIP yet, but the people who love Outkick the most are.
And every brand shouldn’t be chasing the casual fan, they should be chasing the diehard fans. Because the future is in monetizing your diehard fans, not the ones who watch because they don’t have anything better to do.
And is there any sports audience more rabid than NFL and SEC fans?
I don’t think so.
And unlike Mayweather-McGregor which is a one off event, fans would sign up and subscribe every year for pay-per-view offerings from the NFL and the SEC.
How about the college football playoff contract when that’s up in 9 years? Can you imagine the value if the playoff were expanded to eight teams and put on pay-per-view? How many fans would pay $100 or more to get every college football playoff game without commercials? It’s a potential gold mine, worth billions of dollars if the playoff went straight to consumers.
In the meantime, if the NFL and the SEC offices are smart, and I think both are, the Mayweather-McGregor result ought to be starting conversations in league offices. Because if Mayweather-McGregor can do $650 million in one fight, what could the Super Bowl or the SEC’s top games do in a pay-per-view market?
And based on the results for Mayweather-McGregor, it’s time for the NFL and the SEC to seriously consider taking their product direct to their fans and making all the money themselves.