Once the confetti falls, the Vince Lombardi Trophy is hoisted and fans in a cold-weather city risk frostbite to line the streets during their team's victory parade, the NFL and its players will get down to the very ugly business of hammering out a new collective bargaining agreement by their March 3 deadline. If that doesn't happen -- and the two sides aren't exactly close on a deal -- next season and Super Bowl XLVI in Indianapolis are in serious jeopardy.
Think a dark year can't happen? Ask baseball fans who spent October raking leaves when the World Series was scrapped by a strike in 1994 or hockey fans who spent a year without the Stanley Cup when the NHL locked out its players in 2005.
|Football teams' lockers could go empty in the upcoming season if the NFL and players can't hammer out a new collective bargaining agreement by March 3. But that emptiness would just symbolize billions in lost revenue.|
"The idea of taking the definitive American entertainment event off the schedule would resonate much greater than the cancellation of the Stanley Cup and World Series," says Rick Horrow, sports business analyst and chief executive of Horrow Sports Ventures. "The NFL is now an $8.5 billion to $9 billion-annual-revenue business and if we're talking about canceling a Super Bowl, we're talking about canceling a season as well, so the NFL would stand to lose all of that revenue."
That annual revenue would put the NFL somewhere between Nos. 272 and 260 on the Fortune 500. At the high end, it would outrank eBay (EBAY)
The league's revenue base is growing, too, as Nielsen says NFL TV viewership is up 8% since last year and 20% since 2008. Research firm IBISWorld says that ratings boost should lift the NFL's revenue 15.3%, to as much as $9.8 billion, after the league renews its contract with Disney's
To advertisers and networks -- the latter of which invested $4 billion in the NFL this season through league contracts with ESPN, NBC
The Super Bowl alone generates roughly 10% of the NFL's advertising take, with ad rates climbing steadily until 2007 before hovering around $3 million per 30-second ad. Since a Nielsen-estimated 153.4 million people watched all or part of last year's Super Bowl, making it the most-watched television program in history, Fox is charging advertisers more than that $3 million per ad this year. The Super Bowl ad has become so important that 13 companies -- or 33% of all Super Bowl advertisers -- spend 10% or more of their company's annual marketing budget on their ads.
"You have beer, automotive and financial services advertisers all heavily invested in the NFL," says Jon Swallen, vice president of Kantar Media. "All of that represents a lot of marketing elements that could get wiped out by a strike."
That translates to a huge loss for the network unfortunate enough to have the NFL's rotating Super Bowl broadcast rights during a lockout year. NBC is on deck. After setting records for 30-second ad prices and ad revenue ($213 million) when it last aired the event in 2009, it has a lot to lose -- especially considering that last year's average audience of 106.5 million viewers eclipsed 2009's average by nearly 8 million viewers. And that sum still pales to the amount Indianapolis stands to lose in host revenue.
"There are dire consequences on so many levels," Horrow says. "The Super Bowl is now generating $300 million to $400 million of economic impact in each host region, so that would be at risk, and the advertising is now selling for $100,000 a second -- and that's not replaceable by another event."
No, it isn't. According to Kantar, the amount of ad revenue generated by five games of last year's World Series ($191.2 million) couldn't surpass the $205.2 million raked in by last year's Super Bowl -- not counting pregame and post-game ad revenue. The NCAA Men's Basketball Final Four? Its three games have outearned the Super Bowl only once in the past five years -- $168.4 million to the Super Bowl's $151.5 million in 2007 -- and it took a more than $120,000-per-ad drop in Super Bowl ad prices to make it that close.
That's why Barclay Card (BCS)
Companies who've hired NFL players as spokesmen may be getting jittery as well, with IBISWorld forecasting that the NFL will account for 41% of the $24 billion sports franchising industry this year. With quarterbacks Peyton Manning, Tom Brady and Drew Brees ranking among Horrow's Top 10 endorsement-earning athletes, and earning as much as $15 million annually from product sponsorships; a lockout would rob the NFL of both players and pitchmen.
"One of the things that's very clear is the power of the NFL in our $27 billion marketing and endorsement world," Horrow says. "Of the top 100 most powerful athletes, more than a quarter are NFL players -- the most of any sport." The actual figure: 27.
The biggest hit of an NFL nonseason in 2011, however, would land right on the chin of the folks off the field and beyond the cameras' range. Food service contractors such as Aramark and Centerplate, whose employees pour the beers and heat the hot dogs during the NFL's 256 regular-season games and 11 playoff games, would lose the roughly $300 million it makes each year from NFL games, or a full 1% of its $30.3 billion industry, according to IBISWorld. Meanwhile, bars and clubs that show NFL games would lose a 33% bump in revenue on football Sundays and roughly $560 million in revenue throughout the season -- pouring 3.3% of annual bar revenue down the drain, by IBISWorld's estimates.
Coupled with a potential $50 million drop in revenue for the NFL's ticketing partners at Live Nation Entertainment
"The league and the NFL Players Association certainly have their work cut out for them," Dmitry Kopylovsky, sports franchise industry analyst for IBISWorld, said in a statement. "A stoppage of play could prove irreparable for the careers of many NFL players and cause significant damage for several associated businesses."