READ - NFL Rights Holders Kick Off Season with Strong Ad Sales Positions
POV Sports Marketing President and CEO Molly Arbogast gives her insights to S&P Global Market Intelligence on the ad inventory available for NFL teams and sponsors in this unprecedented season. Read the original article here.
The NFL started its 101st season on Sept. 10 amid the COVID-19 pandemic, and networks reported strong interest in ad inventory aimed at linear TV's largest audience.
NBCUniversal Media LLC's NBC Sports said it sold out of the ad inventory for its coverage of the "NFL Kickoff" game, recording a double-digit gain in revenue behind average unit pricing near $900,000 per 30-second spot.
Executives also said NBC (US)'s "Sunday Night Football" package is well sold for the first two months of the season, boosted by spending among insurance, pharmaceutical and consumer goods marketers.
Other networks similarly reported healthy demand. Disney Advertising Sales said over 30 new advertisers were on board for ESPN (US)'s presentation of "Monday Night Football." The Disney ad sales group has seen significant growth in the telecom, quick-service restaurants, fantasy sports, financial services and political categories.
Fox Corp. Executive Chairman and CEO Lachlan Murdoch said during a Sept. 10 investor conference that Democratic nominee Joe Biden's campaign is spending substantially on FOX (US)'s NFL coverage, beginning with the Sept. 13 games. Overall, he said FOX's NFL ad sales are pacing ahead of last year.
Sean McManus, chairman of ViacomCBS Inc.'s CBS Sports, on a conference call earlier this week said NFL ad sales are "very brisk," with pacing matching 2019 levels at this stage.
A sports media veteran with knowledge of the network's sales strategies said CBS (US) has sold out the inventory for its opening weekend games and is very tight through September, driven in large part by spending across the insurance sector. This executive also said the NFL ad market is benefiting from spending by the FAANG companies — Facebook, Amazon, Apple, Netflix and Google — with Netflix Inc. at a lower level than the others.
Last season, the networks' coverage of NFL regular-season games attracted a collective $4.48 billion in advertising spending, according to measurement firm iSpot.tv, a 13.8% rise from the 2018 campaign.
Rights renewals
After reaching a new collective bargaining agreement with its players' association in March, the league was expected to usher in a new set of rights deals this year, a process that may have been delayed to some extent by the pandemic.
Murdoch said NFL Commissioner Roger Goodell and the league have focused on getting the season up and running and so rights conversations are at an early stage but "moving along nicely."
The NFL has asked all the broadcasters to think about their current holdings, as well as the other packages and how they would monetize them, Murdoch said. "We're looking at all sorts of options."
MoffettNathanson media analyst Michael Nathanson, forecast significant rights fee renewal escalation ahead. Nathanson estimated the annual collective price tag for new NFL deals with CBS, FOX, NBC and The Walt Disney Co. could rise 57% to $8.82 billion on an annual basis from their current contract levels of $5.62 billion. He pointed to the league's ability to deliver mass audiences and drive affiliate fees/retransmission-consent payments, combined with the potential return of ABC (US) to regular-season coverage and the Super Bowl rotation.
ESPN's contract expires after the 2021-22 campaign, while the other deals conclude after the subsequent season.
The above projection does not take into account DIRECTV's out-of-market Sunday Ticket package or digital coverage. Nathanson does not assume that streaming services ESPN+ or Peacock will be allowed to present games and such rights could be bid on separately. Amazon.com Inc.'s Prime Video simulcasts FOX's coverage of "Thursday Night Football" and has exclusive rights to one game under its new three-year pact.
Game-day impact
Wells Fargo analyst Steven Cahall earlier projected the NFL would lose $3.2 billion, or 19% of its annual revenue base, from game-day ticket sales, concessions and parking sources if it plays before empty houses this season.
That will not necessarily be the case. However, Kansas City's opening-night defense of its title before some 17,000 fans — or 22% of the capacity of Arrowhead Stadium — could turn out to be one of the league's largest crowds this season. At this point, only a handful of NFL clubs have been authorized by local health officials to host reduced stadium audiences.
Additionally, the league could face significant downturns in sponsorship revenue, both nationally and locally.
Molly Arbogast, the founder and CEO of POV Sports Marketing, said some sponsorship deals have game cancellation clauses, while others have substitution conditions, but there is no contract language addressing the shutdown of an entire season. Arbogast anticipates that the clubs could prorate their sponsorship deals, based on any lost games.
Noting that most sponsorship deals cover multiple years, she said "teams will view this as the right thing to do to benefit the long-term relationship with the brand."
Arbogast said with on-site activation and hospitality "pretty much off the table," brands this season will look to increase their emphasis on digital/social executions and national TV campaigns.
Author: Mike Reynolds