Spending Money to Make Money With the NFL

With the NFL season in full swing, it's a good time to evaluate some of the partners of the most popular sport in America. All the companies I'll mention had to pay to become partners with the NFL, but the relationships are considered beneficial relationship for all parties involved, and all stand to continue to benefit from the league's popularity.

Television partners
First and foremost, the television rights to broadcast NFL games are the most expensive of any sport in the United States, with its four major television partners -- Disney's (NYSE: DIS  ) ESPN, CBS, Comcast's (Nasdaq: CMCSA  ) NBC, and News Corp.'s Fox paying a combined $3 billion a year for rights to broadcast the games each week. If you include NFL Sunday Ticket, provided by DirecTV (Nasdaq: DTV  ) , annual television rights approach $3.8 billion.

Company

Rights Fee

Advertising Revenue

Future Super Bowl

CBS $622.5 million $825 million 2013
Fox $712.5 million $975 million 2014
NBC $650 million $850 million 2012
ESPN $1.1 billion $175 million* N/A
DirecTV $700 million $750 million** N/A
Total $3.785 billion $3.575 billion  

Source: AdWeek.
*Also receives fees from cable subscription fees.
**Subscription fees from NFL Sunday Ticket.

What do the networks receive for spending the money to broadcast the games? Some of the most highly watched programs every week, which allows the broadcast companies to sell lucrative advertising slots. In the case of DirecTV, Sunday Ticket allows the company to sell the prospect of being able to view every Sunday afternoon football game, a package that no other provider can offer. This advantage provided a unique opportunity to attract new customers, as DirecTV began offering free NFL Sunday Ticket to new customers who signed up before the start of the football season.

The true prize of these deals is the Super Bowl. In fact, with 21 of the top 46 television broadcasts of all time, the Super Bowl is particularly lucrative for the network broadcasting it. For example, the recent Super Bowl featured more than 40 commercials that cost up to $3 million for 30-second spots. With the "Big Game" alternating among NBC, CBS, and Fox from year to year, they all have a chance to cash in on the game.

The NFL in other media
Sirius XM
(Nasdaq: SIRI  ) extended its contract with the NFL in November, allowing the network to broadcast every NFL game through 2016. In addition to broadcasting all games beginning with this season, the station broadcasts various other programming year-round relating to NFL football.

Beyond Sirius XM, Verizon (NYSE: VZ  ) is the exclusive provider of NFL Mobile, allowing football fans (on its network) to watch select Thursday and Sunday night games, as well as listen to live broadcasts of every game. You can also follow the news of your favorite teams and receive live coverage from the NFL Network, unchaining football fans from their televisions.

The NFL is also present in one of the biggest-selling video game series of all time, with Electronic Arts (Nasdaq: ERTS  ) having licensed the exclusive rights to the images and players of the NFL since 2005 in its Madden NFL franchise. At the time, the deal caused Take-Two Interactive (Nasdaq: TTWO  ) to stop publishing its 2K series of football games, making Electronic Arts the only producer of an NFL football game every year, an exclusivity that is expected to continue through at least 2013.

Are you ready for some football?
The companies that partner with the NFL are diverse, with other revenue sources beyond the league. Whether you're watching games this fall at home or from your favorite casual dining establishment, one of these companies will be providing you the with what you need to enjoy the product.

Comment below with your Super Bowl picks this year, or add these companies to My Watchlist.

Fool contributor Robert Eberhard will try to catch as many Patriots games as possible this year but owns no shares in any company mentioned here. Follow him on Twitter, where he goes by @GuruEbby. The Motley Fool owns shares of Take-Two Interactive Software. Motley Fool newsletter services have recommended buying shares of Walt Disney and Take-Two Interactive Software. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 01, 2011, at 10:43 PM, Cakes03 wrote:

    We were tempted into switching to DirecTV for the free Sunday ticket until we researched all the details. Not a big fan of signing a 2 year contract for television. It was interesting to me that ESPN is the only network who's advertising revenue didn't cover their fees.

  • Report this Comment On October 02, 2011, at 12:38 AM, XMFTheGuruEbby wrote:

    ESPN can afford to not cover its fees because it makes money on a per subscriber basis in addition to ad revenue. Each cable and satellite subscriber pays a few cents to ESPN/ABC each month when they pay their cable bill.

    Thanks for reading!

    TMFGuruEbby

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