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Sunday, August 24, 2014

It’s nice to be the NFL

Tony Paradiso

Football season is finally approaching, and soon the king of American sports will begin playing meaningful games. Baseball may still enjoy the designation of “America’s pastime,” but it is no longer the most successful sports enterprise in the country. That distinction has passed to the NFL.

In fairness, it should be noted that despite the juggernaut that the NFL has become, it pales in comparison to what the rest of the world considers football. Soccer’s revenues far exceed that of the NFL, and it boasts the richest sports club on the planet in Manchester United. And I suppose that given that the game is actually played with one’s feet, it also has a legitimate claim on the football label. ...

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Football season is finally approaching, and soon the king of American sports will begin playing meaningful games. Baseball may still enjoy the designation of “America’s pastime,” but it is no longer the most successful sports enterprise in the country. That distinction has passed to the NFL.

In fairness, it should be noted that despite the juggernaut that the NFL has become, it pales in comparison to what the rest of the world considers football. Soccer’s revenues far exceed that of the NFL, and it boasts the richest sports club on the planet in Manchester United. And I suppose that given that the game is actually played with one’s feet, it also has a legitimate claim on the football label.

But if we exclude soccer – which is easy to do if you live in this country – our version of football reigns supreme. Despite playing only a 16-game season as compared to baseball’s 162, the National Football League generates more revenue than baseball: a total of $10 billion a year.

The last Super Bowl garnered an audience of 112.2 million. The most-watched World Series games of all time generated an audience of less than 30 million. The Super Bowl also commanded a record $4 million for a 30-second commercial, and in the U.S. the game has become by far the biggest television event of the year.

By way of comparison, last year’s Academy Awards drew a mere 43.8 million viewers; the 56th Grammy Awards registered a meager 28.5 million.

It’s nice to be the NFL. So nice they have been able to lure some of the biggest names in entertainment history to perform during the Super Bowl halftime show for free. Notable music icons such as Michael Jackson, Madonna and the Rolling Stones have all played pro bono for the purveyors of football.

The NFL does foot the bill for the production costs, which are substantial. The shows have become so elaborate that sources familiar with the event peg the production costs at $10 million.

If you assume a 20-
minute halftime show, that comes to $500,000 per minute. That would be ridiculous if not for the enormous advertising returns. Let’s see, $500,000 a minute to hold the audience’s attention so you can charge $8 million a minute for ads. I could live with that.

But evidently, the numbers have put the NFL in a foul mood. Several weeks ago, the league informed Katy Perry, Rihanna and Cold Play that they were the leading candidates to perform at Super Bowl XLIX. Though it’s unlikely any of the three entertainers could tell you the value of XLIX, I suspect they can count the future incremental CD and concert ticket sales that would result from a quick halftime set.

For many years the Super Bowl halftime show has been one of the most lucrative opportunities for the music industry. In recent years performers have scheduled concert tours so they could put tickets on sale immediately following their appearance.

Beyonce announced her “Mrs. Carter Show” tour right after her halftime performance in 2013. According to trade publication Pollstar, that tour grossed $188.6 million, more than any other world tour besides Bon Jovi’s. Well, who can compete with Bon Jovi? Bruno Mars used the same strategy. His “Moonshine Jungle” tour grossed $98.3 million. And those totals don’t include increased sales of CDs or downloads.

Given the rewards music artists can potentially reap from the NFL’s gracious invitation, this year pro bono won’t cut it. You’ll have to pay for the privilege to play during the game’s bathroom/beer break. The league has asked at least some of the acts if they would consider sharing a portion of their future tour income or offer some other financial remuneration in exchange for the gig.

You really have to lack shame to make such a request. I get the rising production costs, but don’t forget the halftime show is a sponsored event. Pepsi, last year’s sponsor, will underwrite the upcoming show, and something tells me that the NFL didn’t offer that for free.

OK, did anyone notice my little economic sleight-of-hand?

Right, the NFL doesn’t get the $4 million for the ads – the broadcast network does. So my comparisons were unfair to the NFL. The league has to settle for whatever they can eke out of merchandise and ticket sales. That amounts to a lousy $40 million-$50 million, not including the revenue they generate from selling said broadcast rights.

Of course, the league does have other incidental costs associated with the game. It has to pay the league office staff, game production costs and expenses related to Super Bowl week events. And then there are the players, who are estimated to receive $7.5 million for next year’s game.

I think the players are really getting shafted in this entire affair. They have to split an insulting $7.5 million approximately 106 ways. The winners get more than the losers, but on average that comes to about $70,000 per player. That’s only about $1,200 per minute of game clock time, and they have to work up a sweat – unlike the suits in the league office. If I were a player, I’d consider that unsportsmanlike conduct.

Tony Paradiso is a marketing and management expert. His website can be found at www.tonyparadiso.com.