Editor's note: this is the second in a multi-part series examining the issues the NFL and its players are facing as they negotiate a new collective bargaining agreement. For Part One, click here.
The NFL faces the same issues
regarding Internet and multimedia revenue streams that Hollywood producers and
writers faced in 2007 and 2008. The owners, like Hollywood producers, would like
nothing more than to make as much money as possible without having to pay the
players/actors. It's cheaper now to CGI something than to actually pay someone to do it.
The NFL — through
the NFL Network and online content — are able to re-purpose content that
they've already paid players for to make more money. Would a diehard Colts fan pay for an online archive of every Colts game from the past 50
years? Would they watch an NFL Network marathon of "Top 5 Manning-Brady
The NFL owns NFL Films and the owners, essentially, own
the NFL. How much could they make off of that if there was a lockout and there
was no live option? They have extensive archives and unlimited possibilities.
They may have to pay the players something,
but it would be a small portion of what they make overall.
In general, television revenue is making up a smaller percentage of overall
media revenue. Streaming services such as Netflix and Hulu have made it
difficult for TV-only revenue streams to survive and flourish. The
revenues from TV contracts are still the biggest contributors to league coffers
and will be for some time, but those revenue streams will not be as lucrative
At issue is also the fact that the players are now asking for a percentage of
total revenue, not just revenue from ticket sales, merchandising, and
television contracts. As other revenue streams continue to grow, a piece
of the total pie will be larger and will force the owners to share more revenue
with the players.
The NFL Network already runs 24/7/365 coverage of a sport that only plays two
days out of the week five months a year. How difficult would it be for them to
run content throughout the year without that 48 hours a week for five months a
year to talk about? What if they were able to pay players that are struggling to
make ends meet to make appearances? Some individual teams may suffer, but the
collective would prosper and the players — the most important part of this
equation — would continue to suffer.
Clouding all this is the fact that the television networks have "guaranteed"
the owners revenues from 2011 games, even if those games are not played, in the
form of loans. If the games are never played, the owners will need to
repay the networks for any lost programming, but the fact remains that those
loans give the owners an additional buffer and a very powerful ace in the hole
when it comes to negotiations. They will be able to wait the players out
in the event that the lockout stretches into the start of the regular season.
In addition, the NFL Network has signed deals with the AFL and CFL to broadcast
those games to their audience. That will give football fans a way to watch live
football action, even if it isn't NFL action.
The central point here is that the owners have more options than the
players at this point. The players have one option: Pay for play. The stars and
superstars will still have sponsorships to fall back on, but that's less than
five percent of the league.
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