Writers of Pro Football Prospectus 2008

25 Jul 2010

Added Revenue From an 18-Game Regular Season

I thought I'd try to take a look at how much extra money the NFL would make from the switch from a 16-game to 18-game regular season. The numbers are really, really rough, and I'd appreciate input from anybody who can provide intelligent input, but my bottom line best guess is a less than 6 percent revenue increase.

Posted by: Tom Gower on 25 Jul 2010

34 comments, Last at 27 Jul 2010, 5:57pm by Jerry

Comments

1
by Shattenjager :: Sun, 07/25/2010 - 11:36pm

Interesting reading. I can't give you "intelligent input," but it was eye-opening to see how the numbers, rough though they may be, actually shake out.

2
by Temo :: Mon, 07/26/2010 - 1:35am

I also can't give you intelligent input, but I can annoy you by pointing out your overuse of the phrase "almost certainly".

/sorry

3
by Jerry :: Mon, 07/26/2010 - 2:50am

First, I think he [Goodell]'s right (shudder... I hate acknowledging that) that there really is a level of popular discontent over the 4-game preseason, especially from media people and season ticket holders who feel like they're getting screwed. These people, especially the latter, are probably wrong...

Huh? How are season ticket holders not getting screwed by having to buy two exhibitions?

9
by TimTheEnchanter (not verified) :: Mon, 07/26/2010 - 8:32am

I would guess the argument is that the current season ticket price represents the sum of value of the preseason games (which are overpriced) and the regular season games (which they would argue are somewhat underpriced). Instead of a hypothetical $1000 season ticket package representing ten $100 games as it says on the tickets, it realistically represents something like two $40 preaseason games and eight $115 regular season games.

11
by DZ (not verified) :: Mon, 07/26/2010 - 9:42am

Except that one of the two preseason games has almost no value at all.

Tickets to the fourth preseason game are hard to GIVE away in Indianapolis, because Manning doesn't even dress.

Paying full price for that ticket is the biggest scam in the NFL. As for the fact that regular season games are underpriced, I disagree.

The team is essentially trading the certainty of income for the ability to charge more for tickets. Fans have to pay for those tickets months before the actual game, which certainly offsets at least in part any degree to which they are underpriced.

Besides in most markets, not all the games actually sell for more than face anyway. Maybe a game or two, but not all of them.

13
by dbostedo :: Mon, 07/26/2010 - 10:12am

"Paying full price for that ticket is the biggest scam in the NFL."

I disagree. I don't really understand why people care what price is technically charged for preseason. I look at it this way :

Let's say someone pays $1000 for season tickets, or $100 per game. If that person thinks that the pre-season games are worthless, then they are really paying $1000 just for the regular season games. So in terms of what they are buying, they are willing to pay $1000 for just the regular season games.

If you then lowered the price of the two preseason games to $10 and upped the regular season the compensate, that same person would still be willing to pay $1000 for the regular season games, so it really doesn't matter what price they put on the pre-season tickets.

If the team lowers the pre-season price, and ups the regular season price (ignoring PR and psychology) it shouldn't affect their ticket sales at all, because people have already shown how much they are willing to pay for the whole package.

It might not quite work that way if fans don't look at it that way as a whole package - so psychology/PR would be involved. But if I'm a season ticket buyer, and I think the pre-season games are actually worthless (or worth less) then I'm already, in a sense, paying more for the regular season games.

14
by DZ (not verified) :: Mon, 07/26/2010 - 10:30am

Right. I understand that, however that means you are paying a premium for season tickets. In markets that sell out every game before the season, that's a good thing.

In markets that don't, only a fool would buy season tickets. It's better to wait until after the preaseason and the purchase a year's worth of games or just buy the game seats individually.

I'm a season ticket holder in Indy now, so it's fine to say "season tickets just cost more", but I also was in 1997 when there was no advantage to buying them. For franchises struggling to sell season tickets, this is a major draw back.

21
by Dennis :: Mon, 07/26/2010 - 1:23pm

Although you get better seats if you buy season tickets, plus some other perks. Is it worth paying the extry $200 or whatever for the preseason games? For some people yes, for others no.

23
by tuluse :: Mon, 07/26/2010 - 4:01pm

Markets that don't sellout every game is like what? Detroit after 8 years of Millen and Jacksonville?

24
by DZ (not verified) :: Mon, 07/26/2010 - 5:38pm

Not every market sells out every game before the week its played, even if they do sell out every week.

25
by tuluse :: Mon, 07/26/2010 - 6:17pm

True, but in many cases you are paying way over face value for the tickets then.

27
by Jerry :: Tue, 07/27/2010 - 2:01am

Let's say someone pays $1000 for season tickets, or $100 per game. If that person thinks that the pre-season games are worthless, then they are really paying $1000 just for the regular season games. So in terms of what they are buying, they are willing to pay $1000 for just the regular season games.

Let's assume the NFL cuts back to one home exhibition per team. If they stay with a 16-game regular season, the ticket cost falls to $900, or $112.50 per regular season game. If they go to an 18-game schedule, it's still $1000, but that's $111.11 per regular season game. Either is a better deal than $125 per regular season game.

31
by dbostedo :: Tue, 07/27/2010 - 11:19am

"If they stay with a 16-game regular season, the ticket cost falls to $900, or $112.50 per regular season game."
What I'm saying is there's no reason for the season ticket price to fall in that case. If a very popular team got rid of both their home preseason games, people would still pay the same $1000. Since they think the preseason games are worthless anyway, that's essentially what they're doing. The teams would be silly to cut the price of season tickets in line with the reduction in preseason games.

Now the move to an 18 game season WOULD be interesting for season ticket holders, since presumably they'd be getting another REAL game instead of an exhibition. Would any team be bold enough to try to charge more, when already putting full price on the exhibitions? Or do teams really just look at it as "10 home games" already, regardless of the type of game?

I feel like the NFL does look at it that way. On Mike and Mike, the lead negotiator for the NFL mentioned that they play 20 games a year already, so whether it's 18 regular with 2 preseason, or 16 regular with 4 preseason, it's not much difference.

34
by Jerry :: Tue, 07/27/2010 - 5:57pm

The Steelers were (one of) the last team(s) to add a second home exhibition game. When they did, season ticket prices went from 9*(single game price) to 10*(single game price). In the unlikely event that they go from ten to nine home games, I'd expect a similar drop in price.

If teams charge more because of a ninth real game, they'd be admitting that they overcharge for exhibitions. There's no reason to do that, especially when ticket price increases are so common anyway. (I'm paying a bit more than twice as much now as I did when Heinz Field opened.)

4
by Pat Swinnegan (not verified) :: Mon, 07/26/2010 - 2:53am

Interesting article! It's very neat to see this sort of projection, which no one else seems to have attempted. While a 6 percent increase in revenues does seem piddling, two observations may be in order. First, I imagine clubs are more interested in a number that's even harder to project, namely their increase in profit. Second, it's been proposed that the League's true goal in expanding the regular season is to create additional games to be played outside of the U.S. in an attempt to grow the NFL brand worldwide. If that goal were actually viable (which I doubt) then it would have the potential to add much more than 6% to League revenues, at least in the long term.

5
by fyo :: Mon, 07/26/2010 - 3:44am

Second, it's been proposed that the League's true goal in expanding the regular season is to create additional games to be played outside of the U.S. in an attempt to grow the NFL brand worldwide. If that goal were actually viable (which I doubt) then it would have the potential to add much more than 6% to League revenues, at least in the long term.

I think you're very wrong on the "viability" issue of growing the NFL brand worldwide -- and I think all the facts support my stance.

NFL is already tremendously popular outside the US. My knowledge extends particularly to Europe, but the trend there is quite clear. The regular season games in London sell out instantly, there's a growing interest in "American football" at all levels, and broadcast rights have been increasingly secured by pay channels.

The latter is a frequent occurrence in Europe when a sport or event becomes popular. It's hard to compare the European TV market with the US (there are no "affiliates" and the number of non-cable channels is extremely limited with the main difference between non-free channels being what they cost distributors and whether or not they are part of the "basic" packages for consumers).

I actually think NFL is being short-sighted by going with premium channels for European rights. Similar to the situation in the US, this might result in more revenue NOW, but the audience for those channels is going to be a lot less. In other words, it's a good move to make if you're in a stable market, but if the goal is to aggressively grow market share, it's not a good move at all.

Still, we haven't quite seen the consequences of this move yet and the trend thus far has, as I've stated, been quite clear: Solid growth in popularity.

22
by Bright Blue Shorts :: Mon, 07/26/2010 - 2:59pm

I'm of the opinion that the real story behind the increase is to be able to expand internationally. Perhaps they negotiate from 18 games down to 17 and agree that all teams will play a game somewhere abroad on neutral territory. The increase to be made from all the merchandising and foreign TV rights is way above 6% I'm guessing.

26
by Pat Swinnegan (not verified) :: Mon, 07/26/2010 - 7:07pm

I'll concede that I think American football has the capacity to fill a niche in Europe, much as Formula One racing occupies a niche in America. But I think the growth of each is limited by the fundamental fact that it's hard for a sport to garner a whole lot of popularity in a given country without any nationals of that country in starring roles – or at least participating. (Just look what Yao Ming did for the NBA in China.)

All that having been said, the NFL could probably still stand to rake in a lot more cash by filling the aforementioned niche... In fact, judging by your comments, it sounds like they're beginning to do so already.

32
by Bright Blue Shorts :: Tue, 07/27/2010 - 12:10pm

IIRC there was a stat a few years back that American football ranked as the 5th most popular televised sport in the UK - I could be wrong but it was certainly higher than expected. This is a country which has football, rugby, cricket as its national sports; along with tennis (Wimbledon), golf (The Open), F1 (British Grand Prix) as well as a love for athletics and crown green bowling!

33
by Sander :: Tue, 07/27/2010 - 12:48pm

There's a number of problems with going for non-pay channels. The first is that live sports on regular cable TV are actually very rare outside of Champions League soccer and international soccer. There's no real room for American Football as a free live game. The second is the time of day: Where an early afternoon game airs around 1PM in the States, it airs around 7-8PM in Europe. Evening games like Monday Night Football are a disaster as they start around 2AM. That's never going to be doable for a lot of people. So then it comes down to airing match summaries, but match summaries alone are a tough way to build an audience.

Also, I'm not even sure the rights are largely distributed to pay channels. I know they are in the UK, but in the Netherlands (where I live) the rights fall to ESPN America, which for some distributors falls under a basic package while others (including mine) bundle it with other sports pay-channels.

6
by FooBarFooFoo (not verified) :: Mon, 07/26/2010 - 4:06am

If the FO stats are as crappily founded and incomplete as that article, I want my money back for FO Almanac 2010.

That's the crappiest article I have ever seen linked (does it mention dollars for internet based broadcasting rights? nope) from this site.

Jesus, your quality bar seems to be way lower than I thought.

8
by Tom Gower :: Mon, 07/26/2010 - 8:21am

There's a reason I wrote it up on my blog and not here: because I freely admit it's really, really speculative.

Right now, though, I don't see any money coming in directly from internet broadcast rights, so I didn't address it directly. I also ignored radio broadcast rights, which do produce some money though nowhere near as much as TV broadcast rights.

15
by fek9wnr (not verified) :: Mon, 07/26/2010 - 11:33am

I thought it was really informative and interesting, mostly because this is an area in which numbers aren't easily available and analysis is rare. Sure, the numbers are really rough, but some information is better than none at all. FO has defined their brand as providing more statistical analysis than other sources. For in-game numbers, that means more technical stats and analysis, because you can get standard game stats from any numbers of sites. For an area like team revenues, I think it's acceptable to lower the bar just a touch, because I don't see this analysis being done anywhere else.

19
by spenczar :: Mon, 07/26/2010 - 1:18pm

There's this thing called orders of magnitude. TV revenue is probably two or three orders of magnitude larger than internet revenue, so you're complaining about missing the projection by something like 0.005%.

7
by billprudden :: Mon, 07/26/2010 - 8:05am

Sir -

Very interesting and much appreciated. Thank you for your effort and the post.

Bill

10
by TimTheEnchanter (not verified) :: Mon, 07/26/2010 - 8:54am

Since the 18 game schedule is sometimes mentioned along with an extra bye, this would give network partners 3 extra weeks of regular season games instead of only 2. It also opens up the possibility of aligning the schedule for a Sunday-Before-Presidents-Day Super Bowl every year, making it even more of a "holiday" than it already is and potentially giving slight increases in viewership and other revenue-generating activities around the event since many people will have the following day off from work.

That said, the argument still stands that revenue per regular season game (and thus the players' per-game share) would likely be lower.

17
by Karl Cuba :: Mon, 07/26/2010 - 12:32pm

Additionally, from the perspective of the players' union, changes would have to be made to increase the size of rosters, which they would like.

12
by Brandon (not verified) :: Mon, 07/26/2010 - 10:06am

Having an extra bye (off week) would probably result in additional revenue since the fans of that team would most likely watch a different game.

offsetting this a tiny bit is the lost local TV revenue for the 2 pre-season games.

Lets call it a small bump up to a 6% (insted of a 5.67%) bump up in revenue.

Interesting article! Thanks for posting it.

16
by MJK :: Mon, 07/26/2010 - 11:34am

Very interesting read. Incomplete, of course, but pointing out things that maybe don't occur to the common person, and well worth reading because of that.

18
by Joseph :: Mon, 07/26/2010 - 1:04pm

Interesting conclusion, Tom. With the balanced schedules, I see NO reason to expand to 18 games. The schedule, alignment, etc. MAKE TOO MUCH SENSE!
I hope you're right that this is only a negotiating tactic. However, if the NFLPA is aware of this (and they probably are), why would they accept this? Are larger rosters (i.e., more jobs) worth the cut in pay overall? Cause let's face it--more players=less money for everyone to pay for that player. If you raise the salary cap & floor to pay for, say, 5 extra players, all that means is that NOBODY (except those 5) gets any more $$--and the owners will look to shield more income from the player's pie, which means a LOWER cap/floor, which equals LESS BIG CONTRACTS!! Unless a rookie cap is put in place, that means less money to go around--so why would either the players OR the owners want this?????

20
by spenczar :: Mon, 07/26/2010 - 1:20pm

I really enjoyed this. It was very well thought out and carefully put together with a lot of attention paid to its own inadequacies, which is "almost certainly" the most important part of approximations (and statistical analysis!) which makes it much better than most of the sports journalism out there. Convinced me to read your blog regularly.

28
by JMM* (not verified) :: Tue, 07/27/2010 - 7:18am

6% is not a trival revenue increase. The base number is large. The incremental cost of the increase is relatively small. If it moves profits by 2-3% of sales that is a major play.

Banks don't accept %'s, they insist on $'s. Don't draw conclusions on a single digit % when a reasonable effort can describe the cash.

29
by Tom Gower :: Tue, 07/27/2010 - 9:46am

(1) It's a roughly $14 million increase on revenue of $248 million.
(2) I was looking at the question through the prism of labor negotiations, where the players will make the argument that the NFL wants to increase the most onerous part of their workload by 12%. If my less than 6% calculation is close to right, the NFL in the 18-game season effectively asking the players to work more for a lesser per-game wage. I think the players would object to the 18-game season even if they got paid the same per-game wage (i.e., their comp went up 12%), but they're really not going to like that.

30
by Temo :: Tue, 07/27/2010 - 10:11am

I think the players would object to the 18-game season even if they got paid the same per-game wage (i.e., their comp went up 12%), but they're really not going to like that.

Would they, though? We're talking about players who play through the most debilitating physical ailments so they can keep their jobs.

I have little in the way of empirical data for saying this, but I believe if they did in fact get 12% more in wages for 12% more work. But they would in fact object due to two reasons:

1) The reason you just mentioned (6% wage increase, not 12%... actually probably less than 6%, truthfully)
2) Most players (ie, not roster filler players) usually think of their salary in terms of per-season pay rather than per-game pay. In other words, while your typical cubicle jockey is on a yearly salary and would object to working from 9-6 instead of 9-5, the contractor on an hourly rate is much less likely to hate the extra hour. I believe most football players, and especially the ones with union power, have the mentality of the former.