Due to its status as a private entity (a trade association to be exact), the National Football League (NFL) is not mandated to make its financial information publicly available. That said, one of its 32 member teams, the Green Bay Packers, is structured as a publicly-owned non-profit, making public reporting necessary. This window allows for some degree of insight that can then be extrapolated to the other teams and the entire league. (The other 31 teams have individual or small-group ownership models.) Investopedia has a great overview of the NFL business model, and below is a bare bones breakdown.
The NFL has two types of revenue sources, national and local. National revenue is negotiated by the league as a whole, and such revenue is divided equally among all 32 teams. Local revenue is negotiated by individual teams at the local level. This latter type of revenue can vary significantly from market to market.
Examples of National Revenue Sources
- TV deals. Large television networks pay massive amounts of money for the right to broadcast NFL games. This avenue accounts for over half the league’s revenue.
- Merchandising and licensing deals.
- NFL Enterprises. This bucket consists of revenue generated by the NFL’s own TV networks and website.
- Corporate sponsorships (think “official beer of the NFL”).
- Ticket sales. 40 percent of gross ticket sales go to the NFL. This fact explains why the league cares about the stadium and ticket prices in a place like Buffalo.
Future revenue sources that are expected to increase over time include gambling and streaming.
Examples of Local Revenue Sources
- Ticket sales. 60 percent of gross ticket sales stay with the local team.
- Local corporate sponsorships, including stadium naming rights.
- Concessions and parking.
- Local media deals.
A Case Study
As above, financial data regarding the Packers is public information. The following represents their figures from the 2019 fiscal year:
- National revenue of $296 million. This figure represents 1/32 of national revenue, which indicates that for the NFL as a whole, revenue generated at the national level was about $9.5 billion.
- Local revenue of $210.9 million. Assuming the same for all teams (which is not the case), then for the NFL as a whole, revenue generated at the local level would be about $6.7 billion. Adding this number to the $9.5 billion figure above, total revenue for the NFL would be $16.2 billion.
- Total revenue (national + local) of $506.9 million.
- Total expenses (player salaries, stadium maintenance, marketing costs, other administrative costs, etc.) of $436.6 million.
- Operating profit of $70.3 million ($506.9 million minus $436.6 million).
Under the current NFL business model, by generating more local revenue, teams in larger markets such as Dallas could have considerably more operating profit. But, of course, it goes without saying that ComposeMD is impressed by only one team—the Buffalo Bills.
