2017/03/02

NFL TV Ad Revenue Hits Record $3.5 Billion Despite Drop In Ratings

The NFL’s silly season is upon us where star players cash in with massive contracts. This week’s lucky winners included Pittsburgh Steelers wide receiver Antonio Brown (four years, $68 million) and Kansas City Chiefs safety Eric Berry (six years, $78 million). Both deals set records for their respective positions.

NFL teams can afford these huge paydays thanks to the wheelbarrow of TV money the 32 NFL teams get each year. CBS, Fox, NBC and ESPN/ABC paid roughly $5 billion last year for the rights to NFL games (DirecTV, NFL Network and foreign deals kicked in another $2 billion). The haul helped push the average NFL value to $2.34 billion with profits likely to top $100 million per team in 2016.
Super Bowl LI produced record ad revenue for Fox. (Photo by Ronald Martinez/Getty Images)
But what about those networks, which struggled all season with falling ratings from the presidential election, concussion concerns, boring games, loss of star players and a half dozen other excuses bandied about weekly? Turns out they survived the 8% ratings decline for the regular season just fine. Ad revenue hit a record $3.5 billion, up 3% over 2015, according to research firm Standard Media Index.

Fox led the way with an estimated $1.44 billion thanks to their turn in the rotation hosting the Super Bowl last month. The first overtime Super Bowl in NFL history produced record revenue of $392 million, up 10%, with the average ad rate for 30-second spots at $4.6 million, per SMI (the oft-bandied-about $5 million rate is the list price with many sponsors able to cut a better deal). Ad rates on Fox during the regular season averaged $551,497, up 4%.

ESPN provides the most interesting example. It generated only $285 million, including one game on ABC, for its rights to Monday Night Football and one Wild Card game. It is a far cry from the $1.9 billion yearly average ESPN pays NFL for TV rights or twice as much as NBC's Sunday Night Football (NBC also gets the Super Bowl every three years for its $950 million per year). ESPN though benefits from its dual revenue streams of advertising and affiliate fees. ESPN costs cable providers $7 per month, according to SNL Kagan, with a portion of that hefty fee attributed to the Worldwide Leader in Sports' position as the home of Monday Night Football.

The Super Bowl gets all the attention for its sky-high ad rates, but the NFL’s conference championship games also generate big money thanks to what are typically the second and third biggest TV audiences of the year. The AFC Championship had an average of 48 million viewers, while the NFC game had 46 million. The networks pulled in $131 million (FOX/NFC) and $113 million (CBS/AFC) for the games per SMI.

Networks loaded up the last week of the NFL regular season with “makegoods” in cases where the networks did not reach rating guarantees for advertisers. Week 17 featured 33% of ads as makegoods, but this was a decline from the 36% in 2016.

Below is a breakdown of the numbers in SMI’s latest NFL research. All figures are estimates.
2016 Regular Season Ad Rates (excludes January games)
NBC: $630,244 (+4% over 2015)
Fox: $551,497 (+6%)
CBS: $435,001 (+4%)
ESPN: $301,733 (+1%)
Playoff Ad Rates
Wildcard: $713,059 (+11% over 2015 playoffs)
Division: $970,060 (+13%)
Conference: $1,694,472 (+8%)
Super Bowl: $4,596,863 (+0.6%)
Total NFL Ad Revenue (including playoffs)
Fox: $1.44 billion (+48% over 2015)
NBC: $909 million (+17%-added more Thursday night games)
CBS: $867 million (-35%-hosted Super Bowl for 2015 season)
ESPN: $263 million (-4%)
ABC: $22 million (-11%)
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