THE BUSINESS OFTHE NFL

MBA 6900:MACRO & MICRO ECONOMICS FOR MANAGERS

Dijana Rahic, Doug Scalia & Gina Micek

PROFESSIONAL SPORTS IS A $750 BILLION BUSINESS

THE NFL : THE QUEST TO KEEP PROFIT FROM ERODINGTHE NFL RANKS AS THE WORLD’S MOST VALUABLE SPORTS PROPERTY AT AN ESTIMATED $4.5 BILLION

THE HISTORY• 1892 – WILLIAM HEFFELFINGER BECOMES THE FIRST

PROFESSIONAL FOOTBALL PLAYER• THE ARIZONA CARDINALS ARE THE OLDEST

CONTINUING OPERATION IN FOOTBALL• 1902 THE FIRST WORLD SERIES OF PRO FOOTBALL HELD• 1922 GREEN BAY PACKERS HAD SUCH LOW

ATTENDANCE THAT LAMBEAU WENT BROKE• 1936 – FIRST DRAFT• 1939 – FIRST NFL GAME TELEVISED• 1967 – FIRST SUPER BOWL (RETROACTIVE)

THE NFL DRAFT• 1936• WORST TO THE BEST• HELD IN HOTEL BALLROOMS• FIRST TELEVISED IN 1980• 1995 – DRAFT BECOMES A MAJOR ENTERTAINMENT SPECTACLE

NFL DRAFT• CASE STUDY - CADE MASSEY & RICHARD THALER• OPPORTUNITY TO INVEST IN TEAMS FUTURE• USE OF GAME STRATEGY TO CHOOSE PLAYERS WISELY• PROFIT MAKING & VALUE

SOURCES OF REVENUE•TICKET SALES•MERCHANDISING•VENUE•LICENSING•ADVERTISING

BROADCAST- SPORTS TELEVISION•MOST LUCRATIVE SECTOR OF

THE SPORTS INDUSTRY•BUILDS SUSTAINABLE

COMPETITIVE ADVANTAGE FOR NFL – INCREASING ECONOMIC VALUE OF FRANCHISES•NFL EARNS CLOSE TO $4

BILLION IN RIGHTS FEES ANNUALLY

COLLECTIVE BARGAINING

•WHO ARE THE WINNERS?•WHO ARE THE LOSERS?

THE SUPER BOWL• MINNEAPOLIS SET TO HOST THE SUPER BOWL LII (52) IN

2018• SUPER BOWL MARKS THE BEGINNING OF PROFESSIONAL

SPORTS YEAR • DECISIONS MADE IN ALL SPORTS INCLUDING ADVERTISING

AND MARKETING BUDGETS, TICKET PRICES, HOSPITALITY, FACILITY UPGRADES AND MERCHANDISE TRICKLE DOWN FROM SUPER BOWL

• MAJOR CONTROLLABLE FACTOR FOR NFL, INCREASING DEMAND THROUGHOUT THE FRANCHISE OFFERINGS

THE SUPER BOWL• ECONOMIC IMPACT FOR HOST CITY - $300-400 MILLION•DIRECT TIES TO CORPORATE AMERICA•53 NATIONAL CORPS GAINED $257 MILLION AVG STOCK

VALUE AND $13.6 BILLION IN TOTAL ECONOMIC VALUE AFTER ANNOUNCING SPONSORSHIP DEALS

•HOST CITIES GO THROUGH AN ELABORATE BID PROCESS

THE SUPER BOWL• LOCAL AND STATE GOVERNMENT

INVOLVEMENT• INCLUDES PROVISION OF FIRE,

POLICE, AMBULANCE AT NO COST TO NFL

• AT THIS TIME, ONLY CITIES WITH NEW STADIUMS WIN BIDS

• COSTS ESTIMATED BETWEEN $30 AND 70 MILLION

• ESTIMATED 30 MILLION POUNDS OF SNACK FOODS CONSUMED ON SUPER BOWL SUNDAY

STADIUMS• PUBLIC & PRIVATE PARTNERSHIPS HAVE

FUNNELED MORE THAN $6 BILLION TO CITIES AND THEIR SPORTS FACILITIES• EXCELLENCE IN STADIUM DESIGN

SPEARHEADED BY SPECIALIZED ARCHITECTURAL FIRMS• BRANDS A COMMUNITY AND DRIVES LOCAL

ECONOMIES• FRANCHISES AND STADIUMS ADD TO CITY’S

ATTRACTIVENESS AND COMMUNITY PRIDE NFL Commissioner, Roger Goodell poses with Vikings

fans

THE FUTURE OF THE NFL• NFL’S VISIBILITY IS YEAR-ROUND WITH NFL COMBINE, NFL DRAFT, NFL KICK-

OFF, SUPER BOWL AND THE INTERNATIONAL SERIES HELD IN LONDON• EXPANSION INTO EUROPE AND LATIN AMERICA• MORE VARIETY OF FAN ENGAGEMENT• STADIUMS AND FRANCHISES AS A PLACE FOR COMMUNITY ENGAGEMENT

AND SOCIAL RESPONSIBILITY• DEALING WITH THE ADVERSE SELECTION OF INDIVIDUALS WHO PLAY WELL

BUT DISCREDIT THE FRANCHAISE.

REFERENCES• FORBES, HOW TICKETMASTER AND THE NFL HAVE FIXED THE PRICE OF SECONDHAND TICKETS, 9/18/2014• FORBES, SUPER BOWL XLVIII PRICING: A LESSON IN DEMAND ELASTICITY, 9/19/2013• FROEB, L., MCCANN, B., SHOR, M., WARD, M., (2016) MANAGERIAL ECONOMICS, BOSTON, MA:CENGAGE LEARNING• HORROW, R. & SWATEK, K., (2011), BEYOND THE SCOREBOARD: AN INSIDER’S GUIDE TO THE BUSINESS OF SPORT,

CHAMPAIGN, IL: HUMAN KINETICS• KIM, MICKEY. "ANALYSIS OF 2012 NFL DRAFT OFFERS INVESTMENT LESSONS." INDIANAPOLIS BUSINESS JOURNAL, 28

APR. 2014: 21. GENERAL ONEFILE. WEB. 15 MAY 2015. HTTP://GO.GALEGROUP.COM/PS/I.DO?ID=GALE%7CA367544670&V=2.1&U=CLIC_STKATE&IT=R&P=ITOF&SW=W&ASID=7F6DD6196C5AB8A9F0A4D38BFF3F0EC5

• O’BRIEN, K., (2013), BELICHICK WAS RIGHT! ECONOMICS AND THE NFL DRAFT, RETRIEVED FROM THE BOSTON GLOBE HTTP://WWW.BOSTONGLOBE.COM/IDEAS/2013/05/04/BELICHICK-WAS-RIGHT-ECONOMICS-AND-NFL-DRAFT/ZJJMGDSKJLDFMNB7XXBCQK/STORY.HTML

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