The NFL utilizes a number of different types of revenue sharing methods. Retained revenues and shared revenues are the two main types of revenue sources for NFL franchises. Retained revenues, consisting of revenue generated and kept by individual teams, include 60% of stadium (gate) receipts for home games, naming rights, sponsorships, luxury suite revenue, concessions and local broadcast rights. Retained revenue totaled an estimated amount of nearly $2 billion or between $51 to $55 million per team between the 2001-2002 season.
The building of new stadiums and the selling of stadium naming rights has contributed enormously to the revenues of NFL franchises. This trend has continued to grow within the league over the last several years. In addition, the NFL is experiencing an overwhelming wave in new stadium construction and is on pace to replace nearly all of the existing stadiums in the next several years. From 1990 to 2004 19 new stadiums have been built for a total of $6.3 billion for the same period.3 However unlike stadiums constructed in the past, there has been a dramatic shift toward private financing of stadiums costs from 80% public vs. 20% private financing between 1990-2000 to a 54% public vs. 46% private financing ratio.
The primary source for shared revenue in the NFL is through national broadcast rights fees, 40% of away game ticket sales, and licensing. The current media agreement with the NFL is part of an eight year contract that totals $17.6 billion which began in 1998.4 The NFL shared revenue totaled an estimate of $2.6 billion for an average of $72 million per team for the 2001-2002 season. The total estimated revenue produced by the NFL overall for the 2004 season was approximately $6 billion, providing an estimated $187 million per team. However, the NFL was valued at over $24 billion, which was based team valuations for 2002.
With regard to the value and the purchasing of NFL teams, Robert McNair, current owner of the latest expansion team, the Houston Texans, made the highest bid for the franchise at $700 million. This increase is astronomical in comparison to the entry for a new NFL franchise in 1976 when the Tampa Bay Buccaneers and Seattle Seahawks cost $16 million each.
The NFL's marketing enterprise has also generated substantial revenue for the league. NFL Properties, Inc., founded in 1963, made an estimate of $4 billion in sales for the 2000-2001 season. NFL Properties shares all annual revenue with each of the 32 NFL franchises equally, as well as the league office and NFL Charities.5 As a result of sales from NFL Properties, each NFL franchise received an estimate of $4 million in revenue during the 2000 season. However, over the past few years NFL Properties's licensing base has been reduced due to competition and consolidation among commercial vendors and retailers within the sporting industry.
Future trends in generating revenue for the NFL point towards Internet and broadband media rights. The NFL signed an extensive media agreement with Viacom, America Online, and Sportsline.com, Inc., which is reportedly worth $110 million over five years, a 5.6% increase over ESPN's three year $10 million contract.6 This agreement increased the NFL's annual earnings from $3.3 million to over $22 million. (sited by www.loc.gov)
The NFL is a business behind the scenes but as a fan all I’m worried about is my chiefs winning a super bowl.
-chieffan81
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