By Eddie Gonzalez
Even as COVID-19 rates continue to rise across the country, the sports world is gradually opening back up. MLS has seen its share of complications, but the league is back underway, even amid a rash of positive tests. The WNBA and NBA bubbles have had their own set of difficulties, but basketball’s return to play is imminent. The MLB has eased into the process of their return after an elongated labor stalemate. The UFC had their first set of “Fight Island” events in Abu Dhabi. Top Rank Boxing is holding events in Las Vegas. Even The Basketball Tournament (TBT) finished its million-dollar tournament with strict guidelines and precautions to keep everybody as healthy as possible.
Now, the biggest league in the country is working to figure out just how they’ll operate in the most unique set of circumstances in the league’s history. Even with a labor battle of their own between the NFL and the NFLPA, we can expect that there will be an NFL season this year in some way, shape or form.
As both sides deliberate over everything from the frequency of testing, to opt-outs for at-risk players, to the very definition of an “at-risk” player, both sides have been adamant publicly and privately that they want to play football. J.J. Watt publicly declared “we want to play” while listing a host of unaccounted for issues. The mantra then became a hashtag, with players from all over the league airing out their grievances. Patrick Mahomes, Odell Beckham, Richard Sherman, Drew Brees, Russell Wilson, Aaron Donald and many more joined the fray by tweeting out their concerns and proclaiming #WeWantToPlay. The league has announced a series of protocols and procedures for when training camps begin this week and teams begin on-field preparations for the season, but many issues remain unanswered.
Even with ongoing deliberations, it’s seen as an inevitability that training camps will begin this week. Rookies are set to arrive at camp on Tuesday, quarterbacks and injured players on Thursday and all other players on July 28th, as mandated by the league’s collective bargaining agreement. Additionally, rookies from the Houston Texans and Kansas City Cheifs, the two teams set to face off in the league’s opening game September 10th are scheduled to report to camp on Monday.
While the financial ramifications ring loudly as the league and the NFLPA work towards a resolution, health is paramount for the union as they continue to voice their concerns in conference calls with players, according to ESPN. The players have pushed for daily testing, an issue rebuffed by the league, and they’ve also fought to eliminate the preseason entirely. It’s unclear if the league is planning to meet the NFLPA’s demands, or implement additional measures to help keep the player’s families safe, but the common refrain is the league expects to play the season as scheduled.
Even with training camps beginning this week, thanks to the built-in advantage of being able to sit back and watch the rest of the sporting world’s trial and error, the NFL does have some wiggle room and time to prepare. But it’s the league’s unique financial landscape helps afford them that privilege as well.
Back in May, NBA commissioner Adam Silver stated 40% of the league’s revenue was generated by game nights in arenas. As such, even a small portion of a season without fans was going to be a massive hit to the league’s finances. The NFL isn’t so firmly tied to the paying spectator every Monday, Thursday and Sunday.
According to The New York Times, the NFL generates “about three-quarters of its $15 billion in annual revenue from the sale of national broadcast rights, sponsorships and merchandise.” As such, they’re not as reliant on “ticket sales and local revenue than other professional sports leagues.” Still, the Times estimated the NFL stands to lose between $2-4 billion without fans in stadiums this year. The now-Las Vegas Raiders, LA Rams and LA Chargers stand to be especially hurt financially this season as they’re set to open new multi-billion dollar stadiums in their respective cities, with zero fans to fill them with. Increased gameday revenue is exactly why Raiders owner Mark Davis and Rams owner Stan Kroenke were so bullish about having new stadiums, and relocated their teams in order to secure them.
Davis has been vocal about wanting to bring fans to games anyway, and has opposed the NFL’s decision to tarp off the seats closest to the field as a safety measure. Even with that vocal frustration, the Raiders pulled in an astronomical $549 million in revenue thanks to the personal seat licenses they sold to season ticket holders in Vegas. The one-time PSL fees ranged in price from $500 to $75,000 depending on the section the seats were located, and were only expected to earn the team around $250 million. But that more than doubled when the PSLs sold out, and the number continues to increase as season ticket holders pay their PSLs off via payment plans.
If the inability to see the Raiders in person in their inaugural season in Las Vegas has stymied the team’s buzz with fans in Sin City, it’s hard to tell. The Raiders have secured three separate local television deals to pump various bits of exclusive content to the local Fox, CBS and ABC affiliates. It seems that, in the short term at least, the Raiders have been able to supplement their financial losses and maintain local excitement for the city’s long-awaited NFL debut.
Some are wondering if the league can bridge their revenue loss gap in other ways. Increased access and content could be sold for a massive fee, setting up a glimpse at the types of content that could be available to the highest bidder in 2022 when the league’s TV rights are up for renewal. Rates are expected to double for Sunday games, and with new viewership habits and a ton of suitors in the ultra-competitive content wars, Fox, NBC, CBS and ESPN will face a ton of competition from new and deep-pocketed suitors Amazon, Apple, Netflix and Google.
Any massive dip in revenue will not only hurt the league’s bottom line this year, but will also change the overall forecast going forward. The league’s salary cap is directly tied into their annual revenue, so a sizable loss this year would mean a steep drop of up to $70 million in the cap next year. That could cause major roster construction issues and mean pay cuts for players who were expecting new paydays. This would be the opposite of the much ballyhooed “cap spike” the NBA saw alter the landscape of the league in the summer of 2016 when their new TV deal was set to begin. This led to overpriced free agent decisions, which caused ripples years down the road for some ill-managed teams in a rush to splurge.
Of course, NFL players are pushing for the league to spread those losses out over several years, as to not completely decimate the salary cap immediately, instead causing slight drops. The owners want to rip the band-aid off, take the loss now and gradually build the cap back up as revenue gets back to normal.
While some teams are fighting to have fans, even at 25% capacity in stadiums, local ordinances probably won’t allow that going forward. Cities like Philadelphia have already stated fans won’t be allowed in their stadiums and arenas until at least February 2021. In New Jersey, the state that houses both the Jets and Giants, outdoor gatherings are currently capped at just 500 people. The state’s governor, Phil Murphy, has previously gone back and forth on whether he believes there will be fans at NFL games in the state this year. Elsewhere, California, which houses three teams, is rolling back reopening plans, a bad sign for the potential of fans at those games.
Ultimately, revenue loss will be inevitable, even as the NFL has safety nets that other leagues could only hope for. The league will have to figure out if they can supplement those losses with new revenue streams, or simply accept them and find creative ways to lessen the burden going forward. Safety remains paramount, and with roster sizes that dwarf other sports, there remains faint skepticism that even if the financial complications can be sorted out, the 2020 NFL season is still not a sure bet to see completion. Just like the other leagues, all signs point to them making best efforts to try, and the NFL proving their cultural and financial worth as the world looks for something to keep them entertained. This is all just in time for a new TV/content deal where they can cash in on that worth, and assuage all of the financial hardship they’re sure to see in the near future. Like usual, even in the face of temporary doom, it appears the NFL is going to make its way through this just fine.