Turkey Day

Posted by on Thursday, November 21, 2019 in National Football League, Sports Econ Blog.

Interview with Athletic. Graphs pdf. Graphs XL.

I’m writing a story for publication ahead of next week’s NFL Thanksgiving games, taking a look at the history and importance of those games for the Dallas Cowboys and the Detroit Lions as the long-time hosts.
One of the primary questions I’m trying to answer is the financial importance of those games today versus the early years of the holiday game, when the NFL and its teams didn’t enjoy the enormous shared broadcast rights revenue and other gargantuan sources of income.
My read of the situation is that while they still generate nice revenue for Detroit and Dallas, they’re perhaps not as critical for making the budget as they might have been 30 or more years ago.
Today, it feels as if the holiday games are more brand building/sustaining exercises and goodwill efforts for charitable endeavors than for selling enough tickets and beer to earn a profit. I believe that teams now each share more than $200 million each just from the TV deals, so game day revenue is largely additional income. Am I on track?

You are on the right path. 
With 2018 revenues of $15 billion the NFL is the most valuable sports league in the world largely because it is the most egalitarian. Former Browns/Ravens owner Art Modell characterized the League collective as a monopoly cartel:
“We are a bunch of fat cat Republicans who vote socialist on football.”
(Art Modell, former owner of the Cleveland Browns/ Baltimore Ravens)
The “League-think” financial structure of the NFL coincided with the inception of TV in the early 1960’s and it has since co-evolved and vertically integrated with TV media. 
The extensive revenue sharing in the has created a risk-free NFL cartel where the League has become the perfect portfolio, where each team’s financial expectations are blended with competitors with exactly the opposite win/loss fortunes.
This includes Cowboys GM Tex Schramm’s prescient marketing scheme of the Dallas Cowboys (as America’s team) playing the Thanksgiving game in 1967 at the time of the AFL-NFL merger. (No other team wanted the inconvenient Thursday afternoon time slot.)
I have attached the brief history of the League think philosophy (pub 2011) and updated financial information on the NFL.
The graph comparing the exponential growth rate of 11.4% for the exclusive NFL franchise values to the 5.4% rate of the competitive S&P 500 provides clear evidence of the monopoly power of the NFL cartel.


National Football League Financial Summary

Local Revenue. Gate 15% of total and shared 66/34. Venue revenue 25% is unshared. Local media is relatively insignificant.

National Revenue. National media 60% total, pool-shared. Nine years, 2014-22 FOX, ABC/ESPN, CBS, DirecTV: $205M annually per club.

Forbes Financial Analysis 2018: NFL Average Value/Revenue = $2,855M/ $452M = 6.31

2018 NFL Revenue. $14.476 billion.

Local/National split roughly 40% local /60% shared National

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