There’s a popular belief out there that National Football League TV deals are “loss leaders” for the networks that broadcast them. That means the networks don’t profit from NFL game broadcasts themselves, but because so many people watch, they can use them as a platform to advertise other shows on those networks, which makes those shows more profitable.
It is time for us to dispel this silly notion.
Take NBC, which is broadcasting tonight’s season opener between the New England Patriots and the Pittsburgh Steelers. NBC is currently paying $950 million per year for its Sunday Night Football package. This package includes:
- 17 regular-season Sunday Night games
- 1 Thursday night game to open the season
- 1 Thursday night game on Thanksgiving
- 1 Wild Card Weekend playoff game in prime time
- 1 Division Weekend playoff game in prime time
- The Super Bowl every third year
NBC doesn’t have the Super Bowl this year, but it does have those 19 regular season games and two playoff games.
According to this article on Deadline.com, a 30-second commercial spot during a Sunday Night Football broadcast costs $627,300.
According to this article on Sports On Earth, a typical NFL broadcast features approximately 112 commercials.
If those numbers hold true for Sunday Night Football this season, NBC can expect to collect $70,257,600 per game in advertising revenue this season. Multiply that by 19 regular season games in prime time, and NBC will collect $1,334,894,400 in advertising revenue.
Now subtract the $950 million NBC is paying the NFL in rights fees and about $8 million per game(1) in production costs. That would leave NBC with a tidy profit of $194,894,400 — and that’s before those two prime-time playoff games, during which 30-second commercials are likely even more expensive.
By comparison, ESPN is paying an average of $1.9 billion per year for Monday Night Football, but only collects $400,000 per 30-second commercial. That’s only $851.2 million per year for the 19 NFL games that ESPN airs in a season. ESPN uses its carriage fees — $6.61 per subscriber per month — to make up the difference. ESPN is currently losing 300,000 subscribers per month, which means its monthly carriage fee income decreases by $2.2 million per month. Those subscriber losses are expected to accelerate over the next few years.
Which business model do you think sounds more sustainable in the long run?
(1) A lot of Googling produced shockingly little data on how much it costs to produce a single NFL game. The $8 million figure comes from this article, in which an NFL Network producer estimated that ESPN “didn’t spend less than eight million” on the BCS National Championship game. The actual production costs per NFL game to NBC might actually be a bit less than that.