Last year the NFL earned over $9 billion in revenue, half of witch was from television rights. Prior to this month, the NFL was set to receive their share of television revenue next season, even if there was no football season. Because of the way the contracts were structured, networks such as CBS, FOX, NBC and ESPN were still going to have to shell out over $4 billion combined, without receiving a football season in return to broadcast. However, this past month judge David Doty ruled in court that the terms of the television contract violated rules of the CBA between the NFL and NFL Player's Union. The ruling said an agreement for networks to pay the NFL in the case of a lockout violated the CBA agreement to negotiate broadcasting terms "in good faith." The television networks will not have to pay the NFL if the lockout continues and games are lost.
This dilemma raises other questions. How will this affect the television networks as well as advertisers? For most of the television networks that air football, it is their biggest draw for both ratings and advertising dollars. Most networks already have advertising campaigns in place, so it will be interesting to see how already agreed to commercial deals play out in the event of no football season. Being that sports themselves bring in some of the biggest television revenue, stations such as FOX and ESPN who have a number of other sports should be able to weather the storm. NBC, however, could take a larger hit. Their Sunday Night Football received tremendous ratings, but was also one of the very few large draws for the network.
Another question that is being raised is the possibility of replacement players. Although a little early for serious speculation, the NFL did have three weeks of replacement player games in 1987. This would give the networks football to show, however I am not sure the revenue would be the same for a sub par product.
For the businesses who have media and advertising rights with the NFL, their advertising campaigns are typically the most well funded and most integral to their overall marketing strategy. Advertisers are also set to take a major hit if there is no football. Just as the television networks are trying to figure out what to air incase of no football, businesses are also trying to find other outlets to invest in for their advertising campaigns.
If the lockout goes into next football season, many more than just the NFL teams and its fans are affected. All of the networks, advertisers, and those who have bought into the NFL in some form of media rights will have to look elsewhere. Currently, it is a waiting game for everyone.
Sources
NFL Lockout Hits Media Giants
http://www.cnbc.com/id/42074000/
What Will the Networks Show if Their is No Football
http://www.dailyfinance.com/story/media/what-will-the-networks-show-if-theres-no-football/19880281/
Networks, Advertisers Call New Plays Amid NFL Strife
http://online.wsj.com/article/SB10001424052748703576204576226562745064154.html
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