Why Billions of TV Dollars Are at Stake as NFL Closes in on a New Labor Deal

Expanded regular season and playoffs could double the league’s TV money, experts say

The NFL is close to stiff-arming a major obstacle as it seeks to win billions of dollars from TV networks that crave professional football.

The league is at the goal line for a new collective bargaining agreement with its players, which would ensure labor peace for the next 10 years. Though it still needs to get approval from the players — which is far from guaranteed — the NFL is hopeful it can complete the new deal before it signs new TV contracts with its media partners.

The proposed agreement would incorporate the biggest change to the NFL schedule in 20 years: the expansion of the playoff field from 12 to 14 teams and the addition of a 17th game to the regular season. Not only would a new labor deal remove the specter of a potential work stoppage from hanging over the TV rights negotiations, but those extra games could see the league double the $6.5 billion it currently gets from its TV partners.

“If they do get an extra set of playoff games, they’ll be able to create a lot of additional packages,” Lee Berke, president and CEO of sports consultancy LHB Sports, told TheWrap. “I think you get close to doubling your current rates.” But the NFL needs to get its players on board with the idea that extra games in an already violent sport is a win-win for both parties.

Even with the lofty income it already gets from its media partners, NFL owners have consistently looked for ways to boost revenue. For years, an expanded regular season has been viewed as the best way to accomplish that goal. Even though many of the league’s most prominent and influential players have strongly argued that adding games puts them at further risk of injury, it looks all but certain the owners will get their way.

Berke argues the NFL would still be looking at a major price increase even if they can’t persuade players to suit up for more games.

“If they don’t get the 17th game and the (extra playoff games), everything is as it is, you know, as of this year, and then I think the rights fees go up by 50-60% on average,” Berke continued. That would represent a similar price jump from the last time the NFL cut new rights deals in 2011, when it grew its haul by more than 60%. Since then, the NFL added a new Thursday night franchise, which put more money into the league’s coffers. Fox is paying more than $3 billion for five years, with Amazon chipping in an extra $65 million a year.

The NFL’s current TV rights contract with ESPN for “Monday Night Football” expires in 2021, with the rest of its deals, including DirecTV’s NFL Sunday Ticket package, up for renewal the following year.

And the timing of those negotiations gives the NFL an added incentive to push through a new labor deal a year early. “There’s no question the league wants the certainty of a labor deal,” Berke said. “But whether it happens this year or next year, a labor deal is gonna get done.” A deal now “helps in terms of the margin improving,” he added.

Patrick Crakes, a former Fox Sports executive who now works as a sports media consultant, pointed out that every rights contract typically has language that accounts for the potential of a lockout or strike. “Every NFL deal has language about work stoppages to protect networks. As long as that language is still there and figured out, network partners may be fine extending” without a an agreement, he said. “They want a longer-term deal.”

The NFL is the most popular programming on TV, with its nationally televised broadcasts routinely topping 20 million viewers. The league is coming off two years of ratings growth for the regular season, and reversed a backward viewership trend for Super Bowl LIV earlier this month. “From a media standpoint, the NFL is still going to be the NFL,” said Berke. “They’re still going to do extremely well going forward. It’s just a question of how much.”

The NFL isn’t the only major sports league that will have to renew its media contracts. Major League Baseball has its own media rights deals expiring with ESPN and Turner in 2021 as well. The next few years will give a good indication into how the NFL and other professional sports leagues view the health of the legacy TV model.

There is increased interest from sports leagues in carving out streaming rights packages. Both Amazon and Twitter have signed streaming-only deals for “Thursday Night Football” in the last few years, and CBS All Access has rights to the NFL and college football games that air on the local CBS stations. The NBA is in the middle of its own ratings troubles as its core audience, which is younger than most sports leagues, continues to shun pay-TV packages. That has caused NBA commissioner Adam Silver to admit the league’s traditional delivery mechanism may need to change.

“We’re going to learn a lot about where Tier 1 sports rights are going to live over the decade with this deal, because it’s a read on what the league thinks new digital players are able to deliver on reach and commitment to exclusive rights,” Crakes said.

Tim Baysinger

Tim Baysinger

TV Reporter • tim.baysinger@thewrap.com • Twitter: @tim_bays

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