Chart of the Week #37: The Resilience of NFL Revenue Growth

In honor of the opening weekend of the 2024-25 National Football League (NFL) season, we wanted to highlight one of the most compelling financial attributes of NFL franchises: the resilience of revenue growth.

Apart from COVID, NFL franchises have consistently grown revenue at a rate of 8.6% per annum since 2001. Not only have they grown revenue, but have been able to do so with very low volatility (5.3% st. dev.) relative to other U.S. equity sectors and even done so during periods of economic weakness.

Why?

Even compared to other live entertainment events and properties, the NFL generates a significant portion of its revenue from contracted streams. ~85% of a club’s revenues in a given year are comprised of media rights, licensing rights, sponsorship, and suite license revenues. Each of these revenue streams are typically contracted out years in advance, often with annual escalators, making these sources highly recurring and resilient.

~85% of a club’s revenues in a given year are comprised of media rights, licensing rights, sponsorship, and suite license revenues. Each of these revenue streams are typically contracted out years in advance, often with annual escalators, making these sources highly recurring and resilient.

The new media rights deal, which the NFL signed with FOX Sports , CBS , ESPN , NBCUniversal , and Prime Video & Amazon MGM Studios in March 2021 guarantees the league $110 billion over 11 years, or ~$312 million per franchise per year on average. (This doesn’t even include a deal with YouTube for NFL Sunday Ticket, which is contracted for $14 billion over 7 years, nor upsold packages for exclusive marquee games!) Networks are willing to make these long-term commitments in order to ensure continued access to must-have content that is considered critical for customer engagement and retention for linear distributors and for subscriber acquisition for streaming distributors. Just one of the many examples of the power of NFL media rights was Peacock ’s exclusive AFC Wild Card Game in January 2024, which, per Antenna, was the single biggest subscriber acquisition moment ever measured.

NFL franchises also benefit from high-value sponsorship and continued demand for premium seating. Premium sponsorships such as naming rights are typically contracted from 10 – 30 years. Franchises have also become adept at staggering sponsorship contract renewals in order to manage any potential ‘sponsorship cliff’ and many contracts have the flexibility to allow franchises to preemptively renew or extend, which can help franchises manage turbulent market conditions. With respect to seating, new NFL stadiums typically sell their highest-priced suites and premium seats over 7 to 15 year terms (with some contracted for up to 20 years), which provides an additional source of long-term revenue visibilty.