The revenue tidal wave is on its way
The players could be the unhappy ones if they underestimate NFL revenue growth.
I hate hearing the term describing the NFL labor talks as “billionaires fighting millionaires” for more money. For the average working fan it may appear that way. But for all you fans who are members of a union it’s not much different than what happens in your own labor negotiations.
I like to remind everybody watching and even criticizing this labor negotiation that each one (1)% of the current allocated revenues is close to $100 million dollars based on a predicted $9 to 10 billion in revenues for 2011/12. Furthermore, those dollars are divided by two small groups: Only 32 for the owners and roughly 1700 for the players. Thus, the net impact of each percentage point is significant to each side. Big business deals like this one take time, patience, and will have its share of expected pains throughout the process.
ICONRoger Goodell sets the NFL revenue goal for 2027 at $25 billion.
What’s really at stake here is the revenue value of each percentage point in about 5, 10 and 15 years from now. The owners have an idea of what’s coming down the pike and that’s why they opted out of the current deal. Roger Goodell recently stated that the revenue goal for 2027 is $25 billion dollars. Many experts think that the $10 billion in projected 2012 revenues could be doubled in about 6 to 8 years. Therefore, each percentage point in 2018 could be worth as much as $200 million. That’s $6,250,000 million per owner, per year. For the players, that’s roughly $118,000 per player, per year.
With revenue growth coming from more diversified distribution platforms such as Google (Youtube) for digital, Comcast (Versus) and Turner for even more game packages for TV, continued growth of the NFL network, and potentially the addition of Apple and Research In Motion (aka Blackberry) for the Ipad and Playbook respectfully. In addition, if a team in the Los Angeles market becomes a reality, the media rights for the market alone could contribute close to a billion dollars per year. If you think I’m crazy just look at what the Pac 10 scored from ESPN and Fox for their TV rights. We all know that deal was all about football.
The fact of the matter is that every tech and media distribution company wants a part of the NFL. Just look at what Verizon paid to get in to the party. The owners have done an excellent job in growing revenue and will continue to do so. The players have to be extremely careful of what they give up or give back in terms of revenue sharing because several years from now it will be increased significantly and exponentially worth more. When the tidal wave of new revenues hit the coffers, it may be the players opting out of the CBA when each percentage point will translate in to $250 million dollars per year. If they, the players, underestimate the future revenue growth there will be recurring labor unrest sooner than later.
So lets give this process a little bit more patience as the labor pains we are going through now may lead to 10 or 15 years or more of labor peace, harmony and riches for both sides.
Follow me on Twitter: @jackbechta