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The Business Behind The NFL Draft
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Hey Friends,
The National Football League (NFL) is the largest and most profitable sports organization globally, and nothing illustrates this more than the annual NFL draft.
The first draft was held in 1936 at the Ritz-Carlton Hotel in Philadelphia. There were only 81 players selected, compared to 262 today. And that year’s first overall selection, Heisman winner Jay Berwanger, turned down the opportunity to play professional football and decided to become a foam rubber salesman instead.
Needless to say, the NFL certainly wasn’t what it is today.
But nearly 45 years later, a new all-sports cable network called ESPN launched, and they approached NFL Commissioner Pete Rozelle with a question — can we broadcast the league’s annual draft?
At first, Rozelle was confused. He asked why anyone would want to watch him read names off a list “like a phone book.” But he eventually agreed, and ESPN officially televised the NFL Draft for the first time in 1980.
Fast forward 45-years, and the NFL draft has turned into one of the biggest and most anticipated sporting events of the year. Mock Drafts dominate the news cycle for more than five months straight. Camera crews travel all over the country to watch individual players work out at their pro day, and each NFL team has an entire staff of scouts dedicated to draft prep for more than eleven months each year.
But the business behind the NFL draft is even more fascinating.
The annual draft was held at Radio City Music Hall in New York City from 2006 to 2014. About 50 players showed up each year. They worked with media and sponsors on promotional appearances leading up to the event and then celebrated with their family, friends, and fans after watching their NFL dreams come true.
Yet the event has become even bigger since the NFL decided to hit the road in 2016.
Since then, the draft has been held in Chicago, Philadelphia, Dallas, Nashville, and Cleveland. And it has quickly turned into one of the most significant events in sports globally.
For example, the 2019 NFL Draft in Nashville (Pre-COVID) had more than 600,000 people in attendance, and the city estimates that it produced nearly $225 million of economic value to the city.
NFL Draft Annual Attendance
And consider this — more than 15.5 million watched the first round of the NFL draft on television in 2020. That’s more viewers than the NBA Finals, the NHL’s Stanley Cup Final, and MLB’s World Series….all to watch someone read names off a list.
But this year’s draft is in Las Vegas, and it might end up being the largest one yet.
The city spent nearly $3 million building out the infrastructure. They expect more than 600,000 people (a record) to attend the event over three days, and they are even placing the red carpet on a temporary stage within the Bellagio fountain.
Here are a few renderings of the setup.
The economic impact of an event like the NFL draft is often debated. And rightfully so. Many projections overstate tax revenue and fail to understand that local attendees have financial budgets — if a Las Vegas resident goes to the draft and spends money, they also probably go out to dinner or a movie one less time.
But Las Vegas is a global entertainment destination, and many visitors for next week’s NFL draft will be coming from out of town. That’s good news for the city, and it gives them the opportunity to see an outsized return relative to previous host cities.
But the more interesting part to me is how the NFL deals with this going forward.
The event is free to attend right now, and the NFL doesn’t charge host cities or require all that much of them in return. I don’t know if that will change in the future, but it certainly wouldn’t surprise me.
My guess is that the NFL believes this has become a super important asset and will look to intelligently monetize it as such in the future. But we’ll see what happens.
I hope everyone has a great day, and we’ll talk tomorrow.
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