NFL Media Rights: A $100 Billion Negotiation

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Friends,

When I started this newsletter seven months ago, I had one main goal: to bridge the gap between traditional sports business analysis and the casual fan. Today’s topic is a perfect example of what I mean — NFL Media Rights.

The casual fan is confused. They ask questions like, why are there so many deals? When are they up? How much does each network pay?

All reasonable, common, and legitimate questions.

Today, I’ll attempt to break it all down in simple terms.

Let’s dig in.

First, let’s get a lay of the land.

The NFL sells their media rights packages through multiple agreements, at least 5 in total, by splitting up games depending on the day/time of the week. For example, ESPN owns Monday Night Football, but NBC owns Sunday Night Football. They both pay different amounts, and the terms of the contract arent always similar.

Why?

The NFL wants to maximize the value.

Here’s where the NFL currently stands:

• Thursday Night Football: Fox

• Sunday Afternoon Games: Fox and CBS

• Sunday Night Football: NBC

• Monday Night Football: ESPN

Furthermore, here’s a good infographic from Axios showing how much each network pays and when their agreement is set to end.

With the NFL’s TV deals expiring after the 2021 and 2022 seasons, they have already begun extension negotiations with Fox, CBS, NBC, and ESPN.

Since their deal ends in 2021, let’s start with ESPN.

ESPN currently pays ~$2 billion annually for Monday Night Football's rights, which is almost double what NBC pays for Sunday Night Football — a slot that averages almost 50% more viewers (~11.5M vs. ~16.8M).

Put simply, ESPN’s deal is rich (for now), and NBC’s is cheap.

Early reports suggest that the NFL has asked ESPN for $3.5 billion per year for Monday Night Football, a 75% increase over their current rate. Sports Business Journal’s John Ourand says ESPN countered at $2.4 billion per year, a 20% increase.

My guess?

They’ll settle somewhere in between. Call it $2.8 billion to $3.2 billion.

As for NBC and Sunday Night Football, the percentage increase will be much more dramatic — most likely over 100%.

For starters, I’m not sure people truly understand how great of a deal Sunday Night Football currently is for NBC. It’s been the most-watched primetime TV show for the last 10 years straight. They average 50% more viewers than Monday Night Football. They have the ability to steal games from Fox and CBS during weeks 5-17 via flexible scheduling.

The craziest part?

They pay half of what ESPN does.

With NBC calling their ability to maintain SNF ownership “an absolute priority,” you can expect an increase of 100%+ — leaving them around $2 billion to $2.5 billion annually.

As for CBS, FOX, and their Sunday afternoon packages, rumor has it they will maintain ownership and pay ~75% increases. That leaves them both just short of $2 billion annually.

For me, the real question comes with Thursday Night Football.

Not only has Fox has made it clear they don’t want to continue with Thursday Night Football, but ESPN, NBC, and CBS don’t seem entirely interested in it either.

The wild card?

Amazon.

Here’s a simple thesis:

• Linear television isn’t the future of sports consumption.

• Amazon already pays for streaming rights to Thursday Night Football.

• Andy Jassy, Amazon’s new CEO after Jeff Bezos stepped down, is a huge sports fan and part-owner of the NHL’s Seattle Kraken.

• Jassy has worked with the NFL before as CEO of AWS and has committed to making sports a priority going forward.

For the NFL, is it too early to consider digital bidders?

Here’s what LightShed Partners Media Analyst Rich Greenfield told Front Office Sports:

Greenfield also pointed out he could see a scenario where Amazon splits the package with the NFL Network and local TV providers. I think that makes a lot of sense.

In the end, the NFL is king, and media rights are currency. We can expect the final numbers to come in around 10-years, $100 billion combined. Maybe slightly less. Maybe slightly more. It all depends on the length of the agreements.

Those are certainly shocking numbers considering the consensus that cable television is “dying,” but the networks don’t really have a choice. As Greenfield pointed out, their “entire economic model” is built on live sports consumption.

For major networks, the decline in cable subs will be worse if they don’t pay up.

Have a great day, and we’ll talk tomorrow.

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