The NFL’s success isn’t built on the usual economic formula for running a profitable business.
In most businesses, profits don’t usually go up if sales don’t go up. In the NFL, however, it doesn’t matter one bit that TV ratings have been stagnant overall since 2015 and even fell 2% this past season.
That’s because the league had record gross revenues last year of $23 billion, according to the Sports Business Journal.
After all, each team will get $418 million from league national media, sponsorship and other revenue, plus the revenue the clubs generate locally that they don’t have to share.
And the national revenue dwarfs the $279.2 million that each team has to pay the players, so huge annual profits are almost guaranteed. Last year, each team got a $381 million share of league revenue, so the individual share shot up almost $40 million just in one season.
There are several reasons why revenue continues to grow despite stagnant viewership. The major reason is that in the era of cable, streaming and social media, the viewers have many choices so no shows get the kind of ratings and mass audience like M*A*S*H, Cheers and All in the Family used to receive in the 1970s and 1980s. But the NFL still has its core audience, so its games remain the most viewed events on TV — and the networks are willing to pay big money for them.
And while the NFL knows it will be challenging to reach Commissioner Roger Goodell’s goal of $25 billion in league revenue by 2025, the league always seems to find new ways to increase revenue with a possible 18-game regular season and new broadcasts rights deals on the near-horizon.
Nobody will be surprised if the NFL’s revenue keeps going up regardless of whether the ratings go up.