It all has to do with the same factor that drives the success of the NFL playoffs over the other major American sports: the television rights. With the NFL’s television revenues expected to reach $25 billion by the year 2023 that amount will only increase if the league doesn’t drastically reduce the number of games that will be televised on the networks.
But while the NFL’s television revenues will only increase, the league’s value will drop dramatically once it has been reduced to a rarified, small-market league. That’s the same logic that has led to the downfall of other major American sports leagues. The NFL has always enjoyed an extremely high level of marketability, thanks to its popularity and proximity to every major city in the country. It’s the same reason why the NFL’s two most popular franchises — the Redskins and the New York Mets — are still thriving after leaving their respective markets, much to the chagrin of their fans.
As the sports leagues around the world have lost fan-interest by reducing their live audiences, the number of big-market leagues has steadily grown. The new TV deal between the National Football League and NBC could be the most lucrative in history for live-TV sports leagues. The deal with NBC, the most-watched live sports league in history, is only expected to increase from now until 2023, including the final four years of the deal. So as the NFL prepares for a second straight playoff season, the odds of the league achieving financial success are very slim.
“If the NFL has to have a smaller television deal so that it can sell smaller games of football when it has no more than 12 teams, you can bet that it’s going to be an incredibly difficult job for the league,” says David Newman, principal analyst at the Forrester Research Group.
Another problem, analysts say, is the NFL is still in a precarious financial situation. According to reports, the league has $11 billion in debt, $5 billion of which comes from its current television deal that has just reached its five-year limit, according to NBC Sports. But there could be many reasons for the league to run into trouble before the contract expires. Major advertisers are also still waiting for a return on the billions they invest in live events. And while other leagues could get away with smaller deals, the NFL’s current TV deal, which will take effect this summer, will likely come at a high price if the NFL is unable to renegotiate and reduce its debt.
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