Forget deflategate, this is what NFL fans have been waiting for. Later tonight, the NFL season kicks off with the defending champion Patriots taking on the the Pittsburgh Steelers. It’s a highly anticipated game, and one broadcasters like NBC are happy to see one Tom Brady play in because of the ratings he can bring in.
NFL games are big business for broadcasters, as advertisers love the fact viewers mostly watch sports live, and therefore sit through commercials (instead of skipping them on their DVRs). Commissioner Roger Goodell and the NFL are reaping the benefits. The league pulled in a cool $7.2 billion in broadcast rights last year.
In fact analysts are proclaiming live sports as a possible savior for the broadcast business model. Yahoo Finance’s Mike Santoli isn’t going to go that far, but he does point out its importance to the broadcast industry’s bottom line. “Sports is the one bankable, live real time viewing occasions that T.V. has left, and it doesn't seem like very quickly that's going to change,” he says in the attached video. Santoli believes what’s happening is the broadcast industry is essentially “shrinking” its economic footprint to live sports and news to a certain degree.
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But that doesn’t mean media companies are sitting pat either. Broadcasters like CBS (CBS) are bringing some games online for free, while Fox (FOXA) and Verizon (VZ) are streaming live games too, but for subscribers only. Even Yahoo Finance’s corporate parent Yahoo (YHOO) is getting in the game, streaming the Jaguars and Bills game live from London on October 25th, for free.
There are some distinctions, however. “CBS is an over the air broadcaster, they're not eating away very directly at some paid T.V. bundle that somebody would otherwise be buying,” Santoli notes. The big moment will be when ESPN (DIS) takes it’s massive amount of content in a purely “over the top” offering, as they call it, but really Santoli says we’re in an extented experimentation mode at the moment. “Ultimately I do think that that weekly or bi-weekly big screen experience does have legs for the moment,” he observes.
But it’s not just broadcast revenue, merchandise, and ticket sales alone that comprise the football industry in the U.S. There’s also the shadow, off the books world of sports betting. The American Gaming Association estimates it to be a $95 billion industry in football alone, of which only 4% is wagered legally. It’s a hidden market in the U.S., one that’s being called a “sleeping giant.”
Santoli likens the NFL’s situation to a “chicken or the egg” analogy-- does the heavy interest in the NFL games result from heavy betting on the sport, or does the sport’s inherent popularity drive massive betting. While commissioners like the NBA’s Adam Silver are looking to embrace the future of sports betting, the NFL’s position is clearly anti-gambling. Although Santoli believes fully legalized gambling wouldn’t be the sole driver of the the sport’s financial future, he believes it’s effects are clearly seen now.
“For example look at [interest in] out of market games, and pay for the packages of out of market games,” he says. Sports betting, and fantasy sports in particular, have been a “tremendous growth driver” for the sport, and aren’t going away anytime soon… legal or not.