How the NFL Makes Money: TV, Tickets, and Sponsorships

The National Football League (NFL) is the most successful American sports league in history. For all the talk of North America’s Big Three sports (or Big Four for hockey fans), the reality is that there’s pro football, and then there’s everything else.

In 2015, the NFL gave up the tax-exempt status it had held since 1942 in response to mounting criticism for its quickly growing revenue. The league now exists as a trade association made up of and financed by its 32 member teams. Thirty-one of these teams are owned individually, with the Green Bay Packers retaining its non-profit status.

The NFL earns the lion’s share of its money with TV deals. Other revenue streams include ticket sales, merchandising and licensing rights, and corporate sponsorships.

Despite some recent setbacks, which include controversies about player concussions and the national anthem, along with the effects of the global COVID-19 pandemic, the NFL appears to be making more money than ever. But because of its private status, it is impossible to know exactly how much the NFL makes.

The league made an estimated $12.2 billion during the 2020 season, which represented a drop from the approximately $15 billion-plus believed to have been generated in 2019. This decline was attributed to the COVID-19 pandemic and marked the end of 15 consecutive years of revenue rises. Before the pandemic hit, NFL Commissioner Roger Goodell targeted revenue of $25 billion by 2027.

The Business Model

The NFL groups its revenue streams into two categories: “national revenue” and “local revenue.” 

National revenue consists of TV deals along with merchandising and licensing contracts, which are negotiated at the national level by the league itself. This money is then divided evenly between the 32 teams regardless of individual performance. The NFL earned about $9.8 billion in national revenue in the fiscal year (FY) ending March 31, 2021, with each team receiving $309 million, according to shareholder filings from the Green Bay Packers.

Local revenue—which consists of ticket sales, concessions, and corporate sponsors—is earned by the teams themselves. In its FY ending March 31, 2021, the Packers earned $61.8 million in local revenue, a 70.7% drop on the previous FY due to COVID-19.

Big revenues are needed to help manage the high costs of running a professional football team. In its FY 2021, the Packers spent $410 million on expenses. A large chunk was used to pay players wages, with the rest allocated to stadium upkeep, marketing, and team and administrative costs.

This is the basic structure of the NFL’s business. Here’s how it breaks down.

Massive TV deals

Football is, hands down, the most-viewed sport in the U.S., with the Super Bowls being among the most viewed TV broadcasts in U.S. history.

During the season, NFL games are broadcast live in the U.S. on Mondays, Thursdays, and Sundays. These games are consistently the highest-rated shows on TV, so media companies have shelled out big bucks for the rights to broadcast them.

The NFL currently has TV deals in place with the likes of Amazon, CBS, ESPN/ABC, FOX, and NBC running through the 2033 season. People familiar with these deals, announced in March 2021, told CNBC that they could be worth more than $100 billion.

As part of the agreement, the four TV broadcasters will annually rotate rights to the Super Bowl, while Amazon will get to exclusively stream “Thursday Night Football.”

Merchandising and Licensing Deals

Although the majority of its national revenue comes from its monster TV deals, the NFL also makes money by selling companies the rights to sell items that represent the NFL. For instance, the NFL, in partnership with Nike, Inc. (NKE), signed a 10-year licensing deal with online sports-retailer Fanatics in 2018. This deal makes Fanatics the exclusive manufacturer of all adult-sized, Nike-branded merchandise sold through the NFL’s online store.

The value of this deal went undisclosed, but in all likelihood, it’s pennies compared to the NFL’s TV deals.

Ticket Sales and Concessions

Although ticket sales constitute an important revenue stream for individual NFL teams, they are nonetheless relatively small compared to quickly growing revenue from TV deals (you’re probably noticing a pattern here).

On average, NFL stadiums seat about 70,000 people, and games usually sell out, with the average NFL ticket estimated to cost about $151. This doesn’t leave much opportunity for growth.

The one thing teams can do is choose to renovate their stadiums to add more seats and concession stands. Such renovations are costly and disruptive but usually pay off. NFL teams can also use their stadiums to host non-football events, like concerts, but opportunities for revenue growth from these events have the same limitations.

NFL teams earn about $7 million, on average, in ticket sales from a single stadium event. However, various expenses must be subtracted from that figure, including payments to athletes or musicians, taxes, and administrative costs, making the profit significantly lower.

Like ticket sales, concessions are peanuts compared to TV deals, contributing relatively little to the average NFL team’s revenue, but the margins on selling food and drinks at games are extremely high.

Corporate Sponsors

Corporate sponsors pay NFL teams to display their logos on players’ uniforms, TV transitions, merchandise, etc.

The most coveted sponsorships are naming rights to NFL stadiums. According to The New York Times, the naming rights to Met Life Stadium in New York and the AT&T Stadium in Dallas are both worth $19 million a year.

Future Plans

TV Growth

Contrary to some claims, TV isn’t dying, at least not when it comes to football. The value of the NFL’s TV deals has skyrocketed in the past few decades; by all accounts, it will likely continue to do so.

Streaming

Although TV is still king when it comes to watching football, streaming is on the rise. Yahoo became the NFL’s first streaming partner in 2015. Since then, plenty of others have joined the fray, including Twitter, Inc. (TWTR) and Amazon.com, Inc. (AMZN), which in 2021 became the first NFL broadcast partner to bag exclusive rights to a package of games on a digital platform. Amazon reportedly paid $1 billion for exclusive rights to air “Thursday Night Football” on Prime Video.

If the growth of TV deals in the past few decades are any indication, these deals will also continue to grow rapidly over the coming decades.

Gambling

In May 2018, the Supreme Court decided to let states determine whether or not to legalize sports gambling. Many states have since taken up that option, mindful of the big tax revenues it could generate—prior to becoming legal, sports betting was estimated to be a $150 billion a year industry.

To capitalize on this, the NFL could set up betting parlors in stadiums, partner with established casinos, set up online sports gambling portals, and so on. The possibilities are vast, and there is no way the growth-obsessed NFL won’t explore as many as it can.

Key Challenges

COVID-19 Pandemic

The global COVID-19 pandemic has had a big impact on businesses around the world, and the NFL is no exception. Special protocols were put in place to prevent the spread of the virus and to keep players, coaches, and NFL employees safe. This includes the enforcement of masks, regular testing, and social distancing. The league also began limiting the number of people allowed in and around the field on game days, including fans.

Such measures understandably put a dent into the league’s bottom line. The Wall Street Journal estimated at the height of the pandemic that the league could lose as much as $4 billion in revenue. However, with the worst now seemingly over, there’s a general confidence that the league will bounce back quickly from what is being viewed as a minor, temporary setback.

Reliance on Star Power

The NFL relies on its star athletes to keep fans coming back. According to the NFL, the top five stars for 2021 were Patrick Mahomes (Kansas City Chiefs), Aaron Donald (Los Angeles Rams), Aaron Rodgers (Green Bay Packers), Derrick Henry (Tennessee Titans), and Travis Kelce (Kansas City Chiefs).

But when the league’s biggest stars begin to fade, so do TV ratings. This was the case, for example, in 2017 when many of the league’s most popular players were injured—J.J. Watt, Aaron Rodgers, Andrew Luck, Rob Gronkowski—stuck with bad teams—Russell Wilson, Von Miller, Eli Manning—or both, like Odell Beckham Jr.

This same logic also applies to popular teams. When few popular teams make the playoffs, fewer fans watch.

Scandals

The reputation of the NFL has come under fire in recent years. The league has been accused, among other things, of overlooking the risk of players getting brain injuries, shrugging off claims that its players have engaged in domestic abuse and sexual assault, and blackballing Colin Kaepernick for kneeling to protest racism.

Should controversy of this nature continue, the NFL risks alienating a big chunk of its fanbase.

The Bottom Line

The NFL is one of the most successful sports leagues in the U.S. Although it is a private entity, which means it isn’t obligated to release how much it makes, there is plenty of evidence of the enormous revenue it generates.

Much of the league’s money comes from TV and marketing deals. But the global COVID-19 pandemic is putting a dent in its bottom line. Some experts say that these are temporary hiccups and that the NFL will bounce back quickly. That may be true, and the league’s popularity certainly shows no signs of diminishing, although there is still a long way to go to reach the target of $25 billion in revenue by 2027.