NFL coming out of pandemic as the big winner

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Because they are community-owned, the Green Bay Packers’ books are open to the public.

Last year, Green Bay’s share of the NFL’s revenue distribution was US$296-million. That revenue is largely drawn from TV contracts and divvied evenly among all 32 clubs.

Meanwhile, the NFL’s salary cap is headed down because of pandemic pressures. It’ll be US$182-million next season.

So before an NFL team takes the field, before it sells a parking space, prints a ticket or pours a beer, it is more than a hundred million bucks in the black.

And that was on the old TV contracts. This week, the league signed a new tranche of deals. They reportedly total US$105-billion over 11 years.

Amazon is so desperate to get in on the action it is giving the league a billion bucks a year to stream Thursday Night Football, the property none of the other suitors wanted to get stuck with. That’s in the neighbourhood of US$65-million a game for the likes of Jacksonville vs. Detroit.

When numbers like this get tossed around, commentators like to say things such as “unprecedented.” But this is all extremely precedented.

For most of a generation, the sports business has been tidal. The tide came in and never went back out. It just kept rising.

In the process, it floated all boats. Some boats floated higher than others. But the real nugget, club valuations, only went one way. It didn’t much matter which sport you decided to plant your flag in. The only trick was jumping on the chance to buy.

For instance, the Sacramento Kings. Tech mogul Vivek Ranadive bought a majority share in the club in 2013. That deal valued the NBA franchise at about US$500-million.

At the time, the Kings were the most cursed team in the NBA, playing in its worst arena, servicing the least major-league city in the United States and possibly the universe. There are no distressed assets in the major leagues, but the Kings were pretty close. Why leash yourself to this pig?

Ranadive’s answer: money. He said he expected the club to be worth “billions of dollars” in the near future. People laughed at him. The Kings’ current value – US$1.8-billion and headed north.

Are you fading a bit after that blizzard of numbers? Yeah, me too. That’s the reason you and I aren’t rich – we share the peasantry’s low tolerance for math.

But once you’ve achieved a certain level, math no longer matters. Your money finds more money. Again, I’m not sure how. If I knew, I wouldn’t tell you.

For a while there, sports was a fixed slot machine. All you had to do was wangle your way into the casino and you were guaranteed a jackpot.

Not quite as much any more. For the first time in a long time, we can begin speaking of winners and losers in the business of sport.

If the NFL has won the pandemic, the NHL is fading at the back. We say there are four major leagues in North America. Financially, it’s more like three majors and one major-minor. The past year cemented that.

For the first time since the turn of the century, according to Forbes, the average value of an NHL franchise fell.

It’s only down 2 per cent on average, but it’s the direction that matters, not the amount. The NHL missed a gear going up the COVID-19 hill. Once you start rolling backward, it’s hard to get going forward again.

Then the NHL re-upped its U.S. TV deals. ESPN will replace NBC as its major partner. The money got better. NBC paid US$200-million annually for exclusive rights. ESPN will pay in the neighbourhood of US$400-million for a shared package.

The news was greeted in Canada like some sort of national windfall. In particular, Rogers was delighted that it is now paying roughly the same amount for TV rights as its U.S. counterpart (to reach a potential audience one-tenth the size).

The deal is neither national nor a windfall. The NHL is only Canadian once it steps north of the border. At customs, it slips on a lumber jacket, cracks a Molson Brador and hangs a bunch of “eh’s” on its sentences. If the NHL sat next to you at a bar, you’d move.

In actuality, the NHL is a hipster American. It’s based in New York, vacations in Cape Cod and really, really wants to be liked by the cool kids in Los Angeles. It covets what LeBron James has – to be invited to buy a slice of the Boston Red Sox just because you are an international phenomenon, a crossover meta-star. The NHL might not kill, but it would certainly maim to find itself invited to those sorts of parties.

The new ESPN deal proves how difficult, verging on impossible, that goal has become.

ESPN (through its parent company, Disney) will pay US$2.7-billion annually for its new football deal. That gets it Monday Night Football, a crack at the Super Bowl starting in five years time and a few more games on ABC. It’s 23 or 24 days of live programming a year.

By contrast, the NHL deal gives ESPN hundreds and hundreds of games, including Stanley Cup finals, to be aired across multiple platforms.

The NHL deal is ESPN’s lab rat. It’s using it to test the new strain of televisual sports entertainment. And it will get all this for 15 cents on the dollar for what it paid the NFL.

It’s enough money to live on, but it isn’t anywhere near enough to grow. Not when you’re speaking in modern sports terms. That’s the macro reason club valuations are slipping. It’s becoming clear that while the NHL is a corporate unicorn, its horn is short and stubby and doesn’t have much magic left in it.

What remains to be determined is whether the NHL keeps the pack up front in sight, or begins getting lapped.

There is a very possible world in which the next few years of NHL reporting is centred on devolution and ownership retrenchment, rather than the constant expansion talk we’d got used to. Once you get going the wrong way, things can get out of hand quickly. And there are no new TV deals coming up to rescue the league from any further downturn.

It used to be said how tough a business hockey is. It wasn’t. For a good stretch, hockey was the among the easiest businesses in the world. But it’s going to toughen up soon.