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The NFL Brings In Nearly $2 Billion In Annual Sponsorship Revenue
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Hey Friends,
The National Football League (NFL) is a massive business.
They will pull in more than $16 billion in revenue this year. They have media deals in place that pay $110 billion over the next decade, and they continue to dominate the attention of virtually all sports fans in America, with 75 out of the top 100 most-watched US TV broadcasts last year being NFL games.
Top-100 Most-Watched US TV Broadcasts 2021
NFL: 75
NBA: 0
NHL: 0
MLB: 0
The NFL averaged 17.1 million viewers per game during the 2021 regular season — that’s significantly more than the MLB World Series, NBA Finals, or NHL Stanley Cup Final.
2021 Average Viewership
NFL Regular Season: 17.10 million
MLB World Series: 11.75 million
NBA Finals: 9.9 million
NHL Stanley Cup: 2.52 million
But I think most probably know that the NFL dominates American sports by now.
The interesting part is that they are continuing to expand their lead, with Jabari Young at CNBC reporting this morning that the NFL is set to bring in nearly $2 billion in sponsorship revenue this season.
For context, that’s about 40% of the NHL’s total expected revenue this season.
I recommend reading the full breakdown from Jabari, but here’s a summary of the parts that caught my attention.
Growth of NFL sponsorship money…
"The National Football League is nearing $2 billion in partnership fees, the most in professional sports.
Agreements from betting firms and technology companies helped the NFL lure a record $1.8 billion in sponsorship revenue, sports partnerships consultancy firm IEG told CNBC. The NFL’s figure is a 12% increase year-over-year from $1.62 billion it made in the 2020 season. It pulled $1.47 billion from sponsorships in the 2019 season.
Sports gambling companies, casinos, and lotteries saw the most significant spike in NFL sponsorship agreements. DraftKings, FanDuel, and Caesars became sportsbook partners in 2021 after the companies struck five-year pacts worth just under $1 billion combined. The NFL also landed secondary deals with BetMGM, WynnBet, FoxBet, and PointsBet.
Partnership deals with the NFL usually run from three to seven years and cost a minimum of $10 million per year for smaller companies. More prominent firms could pay more than $200 million per year.
Verizon has one of the more prominent NFL deals and paid the league over $300 million annually. Last September, the communications company agreed to a new 10-year deal with the NFL and added 5G rights. But the new deal doesn’t include live streams of games, making it less valuable. That also means the NFL’s mobile rights are also up for grabs.”
Leading sponsorship categories…
“Although gambling sponsorships saw the biggest increase in the NFL’s 2021 season, tech deals ranked first in absolute dollar figures for 2021, led by Microsoft. The tech giant has an on-the-field deal with the league, which uses Microsoft’s Surface tablet. That agreement is worth roughly $100 million per year, according to IEG data.
Gambling deals ranked second, and alcoholic beverage deals ranked third.
Last December, the NFL renewed its deal with Anheuser-Busch, which pays the NFL more than $250 million per year for beer and hard seltzer rights. The company lost control of hard alcohol rights, which Diageo took over for a reported $30 million per year.
The NFL put its wine and champagne rights up for auction but has yet to strike a partnership for that category.
“They’ve cut those categories (tech and alcohol) pretty fine,” said Laatz, calling the NFL’s sponsorship money a “runway revenue train.” He then projected the NFL would endure a “finer cutting of categories” in the future to grow deals in the U.S.”
Leveraging international markets…
“Although the NFL’s total sponsorship revenue increased significantly, the bulk of that growth went to league-wide sponsorships, which grew 23%. NFL clubs only took in 4% additional revenue in rights fees year-over-year.
To grow revenue streams for clubs, the NFL is taking a page from the National Basketball Association’s playbook and allowing teams to leverage international markets. Last month, the NFL permitted 18 teams to market their intellectual property in 26 territories, including Canada, Germany, Mexico and the United Kingdom.
But it could be a while before teams see real traction in that department.
Laatz said he’s “skeptical” of the NFL’s overseas plan, which the league labeled the “International Home Marketing Areas.” The NFL has tried to grow its product in London with its annual games, and Germany has shown interest in the NFL.
But those sporadic overseas games may not be enough to vault the NFL into international prominence loik the NBA.
“There’s a big difference between playing games internationally, which the NFL has clearly done, and having a prominent NFL footprint to grow the sport overseas,” Laatz said.
Still, to get a sense of the value a U.S.-based sports club can earn from international deals: The Golden State Warriors – one of the most popular NBA teams abroad – agreed to a multi-year global rights sponsorship with crypto platform FTX for roughly $10 million total.
Laetz believes NFL teams’ deals could be even more lucrative.”
The NFL’s approach to crypto…
“Meanwhile, the NFL is taking a wait-and-see approach toward deals in the cryptocurrency space.
Last October, at the NFL’s owner meetings in New York, officials told CNBC that crypto-related deals are still being examined. Laatz called it the “sideline model” – as in, the NFL waits to see how other institutions maneuver.
“They’re careful about not getting into speculative arrangements that can cause backtracking,” said Laatz.
While the NFL stalls on crypto deals, companies are pouring millions into the NBA.
In addition to the FTX-Warriors deal, crypto platform Coinbase agreed to a $192 million deal over four years with the NBA. On the team level, the Los Angeles Lakers landed a $700 million naming rights deal with Crypto.com. And the Portland Trail Blazers landed the NBA’s first crypto jersey patch deal.
Outside basketball, Major League Baseball added a crypto patch agreement for its umpires, and individual NFL players like Tom Brady are also striking crypto deals.
But Laetz says the delay won’t really matter, given the NFL’s ample revenue growth. “The thing they are leaving on the table right now is risk.”
So for those keeping score at home, here’s how the NFL’s sponsorship revenue has trended over the last several years.
NFL Annual Sponsorship Revenue
2019: $1.47 billion
2020: $1.62 billion
2021: $1.80 billion
That’s a compounded annual growth rate of roughly 10%, which seems pretty solid given COVID-19 significantly impacted fan attendance during that period.
But when you zoom out and look at other sports leagues, it might not be as impressive.
For instance, the National Basketball Association (NBA) recorded nearly $1.5 billion in sponsorship revenue during its 2020-21 regular season, according to IEG.
That’s about 10% less sponsorship money than the NFL saw during the same time, despite averaging a significantly smaller audience size and total revenue base.
Now there is nuance to this, of course. The NBA has incredible star power. They have a higher number of overall games each year. They have a wider variety of sponsorship assets, and the league has much more global appeal than the NFL.
Still, my guess is that most people would expect the NFL to have a much larger sponsorship revenue base than the NBA, given that they have been able to monetize their product & IP at a rate that is 2-3x greater than the NBA historically.
A large part of this is the NFL’s unwillingness to venture further out the risk curve.
Sure, they have recently signed billion-dollar deals with sports gambling companies and have even teamed up with Dapper Labs to launch an NFT product similar to NBA Top Shot.
But they have mostly sat back and watched as virtually every other major professional sports league ventures into new categories & creates additional sponsorship revenue streams.
Take crypto, for example. Major League Baseball signed a deal with FTX to become the league’s official cryptocurrency exchange partner. Crypto.com purchased naming rights to the Lakers home arena for $700 million. Coinbase was named the NBA’s official crypto partner, and the UFC & Formula One will make hundreds of millions of dollars from their sponsorship with Crypto.com.
As for the NFL, they have decided to play the patience game, essentially saying they don’t believe the immediate revenue upside is worth the long-term risk associated with a new and fast-growing industry.
My guess is that those deals will eventually start to happen. The crypto industry has been around for most of the last decade, and prices are definitely volatile, but that means the exchanges that the NFL will be working with will be printing more money than ever.
Ultimately, the NFL is in a strong position. They have the highest viewership numbers of any North American professional sports league, and they quite literally own one out of the seven days of the week.
If and when they decide to add crypto sponsors or jersey patches, there certainly won’t be a shortage of brands knocking on their door asking for contracts.
Have a great day, and we’ll talk tomorrow.
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