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Do Networks Make, or Lose Money Broadcasting the NFL? PDF Print E-mail
Written by Maury Brown   
Sunday, 20 September 2009 20:57

NFLEarlier this week, it was reported that in 2008, $2.616 billion dollars were spent on television advertising during the NFL regular and postseason, which included the Super Bowl.

The $2.616 billion total is nothing to scoff at, especially given that the economy slid deeply into a recession in September of last year, but does that mean the networks that carry the NFL made a profit?

In November of 2004, FOX and CBS entered into a six-year extension with the league, which end at the end of the 2011 season. By the end of the agreement, FOX will have paid $4.3 billion, or $712.5 million per year for the NFC games, while CBS will have paid $3.7 billion, or $622.5 million a year.

In August of 2009, NBC extended its contract by two years for Sunday Night Football through 2013. The original deal was for six-years. NBC’s contract $650 million annually.

The big daddy of them all is ESPN, which ESPN has an eight-year contract for approx. $1.1 billion per season.

The NFL Network, the broadcaster owned by the league pays zero in rights fees.

So, how does it all add up?

Select Read More to see how much revenues broadcasters pay in rights fees for the NFL compared to television advertising revenues.

Calculating Revenues Lost or Gained by Networks Showing the NFL
Network Rights Fee (Annual)
CBS $622.5 million
FOX $712.5 million
NBC $650 million
ESPN $1.1 billion
NFL Network $0
Total Rights Fees $3.085 billion
2008 NFL Television Ad $ $2.616 billion
Difference ($496 million)

 

So, based on the total, NFL broadcasters took a nearly $500 million hit in 2008 when comparing rights fees to television ad revenues. But, broadcasters say (whether it is entirely true, is uncertain), that based upon ad dollars collected for programming around NFL broadcasts, or sub fees, as is the case with ESPN, they make up the difference. The logic being that advertisers bookend NFL broadcasts – programs that run before or after games will garner a bump in viewership due to games.

Still, nearly a half-a-billion dollars in losses seems a difficult balance to offset with pre and post-game programming advertisement dollars. The words “loss leader” seems to ring true, and that was 2008.

This season should be an interesting look inside television advertisement budgets as a whole for the industry as belt tightening, due to the recession, have hit some sectors hard. How that impacts the NFL is uncertain, but it’s very possible that TV ad dollars will be down for 2009, especially with the government running General Motors, having the highest regular season advertising total, and second overall to only A-B InBev which spent heavily on the Super Bowl.


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Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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