The NFL's business conundrum

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By Mark Maske
Saturday, September 18, 2010

The NFL has spent decades working to make itself the nation's leading television sport, an effort that has yielded billions of dollars in network contracts and TV ratings that are the envy of every other pro sports league.

But as ratings continue to soar early in the new season, the NFL is facing a new business dilemma: declining attendance at the games themselves. The NFL expects attendance to drop for a third straight season and is projecting that as many as 20 percent of its regular season games will be blacked out on TV in the home team's market when stadiums fail to sell out 72 hours before kickoff.

League executives and franchise owners say they're concerned that the sport has become so good to watch on television, especially in the age of big screen, high-definition TV, that many fans are choosing in a tough economy to avoid the traffic, crowds and costs of going to stadiums in favor of watching in the comfort of their living rooms.

"We would have our heads in the sand if we ignored the trend," said Eric Grubman, executive vice president of NFL ventures and business operations. "We've spent 20 years building an at-home alternative that we think is nothing short of awesome. But we don't want to do that at the expense of our in-stadium experience. We still think a stadium is the best place to watch a game."

NFL Commissioner Roger Goodell said at an offseason owners' meeting that "the issue for us is we are our own competitor," noting that features such as high-definition TV and the NFL Network's RedZone, which allows viewers to monitor multiple games simultaneously "do make it attractive to watch on television. . . . Our challenge is to continue to make it exciting for people to come to our facility."

The number of blackouts is nowhere near the level of previous decades, and the NFL remains television ratings gold. TV ratings last season were up 15 percent over 2008 numbers. The trend continued in the opening week of this season. The NFL's season-opening game Sept. 9 between the Minnesota Vikings and New Orleans Saints drew 27.5 million viewers on NBC, the most since the league began playing its opening game on a Thursday night in 2002.

Last Sunday's late-afternoon game on Fox (mostly Packers-Eagles) drew 28 million viewers, the most ever for a Week 1 Sunday game. The Washington Redskins' opening triumph over the Dallas Cowboys last Sunday night on NBC had 25.3 million viewers, a record for a Sunday night game.

Overall it was the NFL's most-watched opening weekend since 1987. The Saints' and Redskins' victories were the two highest-rated prime-time shows on television that week.

David Carter, executive director of the Sports Business Institute at the University of Southern California, called the ratings more good news for the NFL, an $8 billion-a-year enterprise that earns about $4 billion annually from its national TV deals with Fox, CBS, NBC, ESPN and DirecTV.

"If you're off a few percentage points in attendance but finding a way to monetize consumption of the product in other ways, I think you're okay," Carter said. "It would be different if attendance was down and consumption was down. But that's not the case. Consumption is up."

Leah LaPlaca, ESPN's vice president of programming and acquisitions, called the NFL "the ultimate reality television." She said the sport's TV viewership and live attendance are "complementary" because fans want a shared experience, whether it's watching a game in a stadium or on TV in a group setting. A full stadium makes for good TV because it conveys the excitement of the event, she said.

"There's no doubt from a television perspective, we love to see full stadiums," LaPlaca said.


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