Will Anything, Ever, Threaten the Bottom Line?
It appears that no matter the real or perceived business threats, the NFL’s inexorable march to unrivalled prosperity continues. With key metrics all pointing north and viewership records being set on a weekly basis, it is becoming increasingly difficult to project any crisis/scandal/tragedy/calamity that could have a long-term effect on the NFL’s mass popularity and profitability.
Let’s look at three potential threats—contentious labor relations, declining on-field product and concussion concerns—and analyze how these concerns, damaging to most brands, are inevitably muted by the roar of the football-loving masses.
Labor problems
The NFL has many partners (broadcast networks, sponsors, licensees, etc.) yet its most important partner is the collective representative for the players, the NFLPA. This partnership—although the players have no equity in the business—has been characterized by a lack of trust and even personal dislike among leadership in recent years. Since the resolution of the 2011 CBA, virtually every measure raised by either side (save for a revised drug policy including HGH testing) has been met with resistance and/or litigation.
Normally a contentious management-labor situation is problematic for sustained success and outside investment in the business, yet this relationship has actually fostered investment. The reason is the length of their agreement: The bickering parties are actually in the middle of an extraordinary 10-year contractual relationship, the longest CBA term of any of the major sports. The 10-year term, with no opt-outs for either side, gives owners cost certainty with their largest expense—player costs—as they aggressively negotiate network and sponsor agreements (they know how to aggressively negotiate) and already-staggering franchise values continues to climb.
Beyond the 10-year term, other terms of the labor agreement actually serve to bring more interest in the league. Casual fans, and even non-fans, have found Goodell’s “judge, jury and executioner” powers to be interesting for their one-sided nature. And the offseason’s missteps involving Tom Brady did nothing to diminish interest in the game; it appeared to be quite the opposite, as what I have facetiously (I think) referred to as the Deflategate Marketing Plan has worked splendidly. Imagine another business where its process was exposed as unfair after its highest-profile organization’s highest-profile employee was under scrutiny for cheating, and the business’s popularity and value actually increased?
Goodell’s CBA-prescribed disciplinary powers continue with resistance to any suggestion for independent arbitration. That could change, but only with a reciprocal “give” from the union, and they do not have much left to give.
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The Product
As the product suffers, interest in it only seems to grow. There appears agreement across all fronts—fans, media, even coaches—that the level of play is down this season, even dramatically deemed unwatchable by some (who, of course, are watching). The perceived causes for it are several, but one theory often mentioned is the reduced amount of practice time for players in the offseason. However, we are now in the fourth season following these reduced offseasons, with many more scheduled before a potential change. The CBA negotiation was between the owners and the players; coaches—who constantly lament the lack of instruction time in the offseason—were not consulted.
Also contributing to the perceived lower quality of the product this year have been weekly officiating gaffes (some game-deciding) and interminable conferences and replay reviews. The third team on the field continues to be a story, lessening the value of the product between the first two teams.
This diminished product, however, is playing to a growing audience. In an age where network television ratings are suffering and consumers are cutting the cable cord, NFL games are rare programming immune from a changing marketplace. Last month the NFL programmed a Thursday night game between the Jaguars and Titans—the league’s least-marketable matchup—as if to say to the television world, “It doesn’t matter, they’ll watch.” And we did.
My concern: the time. Despite the flourishing television ratings, the one area that I believe the NFL must address is the time it takes to watch a game. Were I to be named Commissioner (not that I’ve been asked) I would figure out a way to deliver a product with 11 minutes of action and 60 minutes of playing time in (a lot) less than 200 minutes. There are times it seems like we are watching commercials with a few clips of football interspersed in.
I know, I know: The hour or so of commercials is necessary for networks to justify the massive rights fees, and the NFL has its own promos and public service announcements to show. However, I am sure smart people from the league, the advertising community and the networks could come up with a solution. Soccer—even at the Premiere League level—manages to stage 90 minutes of playing time in a two-hour block, integrating advertising seamlessly.
Ratings have clearly not shown this to be a problem but it may grow into a concern, as an increasing number of younger fans want to consume the NFL in smaller chunks. And speaking of younger fans, imagine how many more of them would see the end of Sunday, Monday and Thursday night games if somehow the product were reduced to two hours.
Again, this appears to be more my issue than one with any measurable effect on the league, but there needs to be an understanding that fans do have other things to do with our lives. Speed it up!
Concussions
The one area that I have thought could potentially shake the crown of the NFL’s monarchy is that of concussions and head trauma. Although the league has been on a positive trajectory since 2009 with rules changes, safer protocols, independent trainers and medical timeouts (save the recent debacle involving Case Keenum) concussions and their long-term effects are part of an inherently violent game.
From the league perspective, there have been three issues facing them in this area: (1) legal exposure; (2) negative public relations; and (3) a potential reduced labor force.
The NFL is in the process of putting a bow on the concussion lawsuit filed by thousands of its retirees, with the judge having approved a projected payout of $765 million and without coverage for CTE (unless the player died prior to approval date of April 22, 2015). The threat of billions of dollars of legal exposure will be avoided by a deal that will cost each owner roughly $25-30 million, much of it covered by insurance. And, perhaps most importantly for the NFL, there is no admission of liability. Although legal liability looks to be resolved, the perception of moral liability will continue, especially with the movie Concussion focusing on the NFL’s concealing negative long-term effects of playing football. As with the earlier documentary League of Denial, it will not be a good look for the league. The NFL has already started to use talking points of the movie portraying a different era of concussion treatment and awareness. While true, it is the era for which they are settling a lawsuit admitting no liability.
As to the “sky is falling” views about football’s eventual demise due to its brutality, I don’t see it. Sure, there will be more parents not allowing sons (and daughters) to play football, but labor supply for professional (or college) football has never a problem. Having worked in an NFL front office where thousands of players’ highlight tapes and DVDs are sent in each year along with players begging for workouts at their own expense, there are many more potential players than there are jobs. Football is not going away.
Beyond the optics, here is the reality: There are tens of millions of us who will (1) watch these heartfelt stories of players suffering, or League of Denial or Concussion and lament the callous NFL, then (2) turn on the games. American football has a pull over fans similar to what I witnessed with soccer while living in Europe. The sport is metaphorically mainlined into our veins at an early age.
The crises keep coming for the NFL—head trauma, domestic violence, declining product, labor strife, trumped-up charges about deflated footballs, and alignment with Daily Fantasy Service which may or may not be “gambling”—without diminution of popularity or profitability. If they program it—and they always will—we will come. I know that, you know that, and the NFL knows that.
The inexorable march to continued popularity and prosperity continues.
