Investment Opportunities in the Sports Industry: National Football League

Introduction

This is the first in a series of articles about the sports industry. The goal will be to describe investment opportunities in the sports industry as well as also providing background information and expertise about sports leagues, teams, athletes, brands, media and other relevant topics. We will examine and discuss a wide variety of sports, including amongst others the Super Bowl, NBA All-Star Weekend, 2012 London Summer Olympics, 2014 World Cup in Rio de Janeiro as well as emerging sports technology trends.

Background

In regard to the most popular sports in the world, both soccer and basketball have the most global appeal. Other international sports such as rugby and cricket also draw a massive TV audience. Over 1 billion people tune in to global sports events such as the World Cup, Olympics, Rugby World Championships, Cricket World Championships. In comparison, about 111 million tuned in to the Super Bowl in the US last year. But, in regard to overall revenue, the NFL story in the US is an amazing success story (revenue projections are stated below).


The premiere event for the NFL will be the upcoming Super Bowl, which will be played on Sunday Feb 5th in Indianapolis, Indiana. The game will feature the New York Giants vs the New England Patriots. This game will attract a large TV audience, particularly since it will have teams from two of the US's five biggest markets -- New York City and Boston.

Domestic Market

NFL, or American football, is the leading sport in the U.S., which remains the number one sports market in the world in regard to total revenue. The key revenue driver for the NFL is the TV deals with the broadcast and cable networks.

Recently, the NFL announced that they have renewed their TV deals with their partners -- CBS, Fox, NBC and ESPN. For the past few years, the networks have paid the NFL approximately $4.3 billion in rights fees. But, the new deals, which will take effect for the 2014 season, the total rights fees will jump to nearly $7 billion a year.

In a period when many TV content deals are shrinking in size, it's staggering that the NFL will be able to generate a 60% increase in rights fees. Why is that? It's because Sports remains the most valuable type of "reality TV." In the past, one could record a game on their DVR or VCR and try to watch it a later date and time. But now, thanks to the internet, mobile devices, smart phones, tablets, Facebook, Twitter, etc, there's an immediate flow of information. Thus, live Sports remains a very popular and important method for brands and marketers to connect to the consumers.

International Expansion

In regard to global and international expansion, there are numerous business opportunities -- for the NFL as well as for marketers and media companies. The NFL still does not generate huge interest outside of the US. The NBA, on the other hand, has done a superb job of creating international partnerships with numerous global brands and media partners.

The NFL is intent on growing its sport internationally. They now stage an annual game in London and they have played in both Tokyo and Mexico City. The NFL did want to schedule the "China Bowl," but they canceled it in order to focus on the games in London. But, with the growing interest of Sports in China as well as the growth of the middle class (and their disposable income), the NFL definitely will focus on increasing their presence in the greater China markets.

This will be a work of progress for the NFL but they are a marketing powerhouse and they will get it right in China. What specific opportunities are there for investors in China? There's plenty of opportunities to help grow and expand the powerful NFL brand for the greater China markets. There's numerous licensing and media opportunities (for teams, players and brands).

The NFL presently does not have a team in the 2nd largest US market, Los Angeles. But, this will most likely take place in the next few years. Since LA does serve as a gateway to Asia, perhaps there's an investment opportunity for a Chinese investment group? Also, the NFL is interested in expanding its operations. There could be an NFL Asia league in the not-too-distant future. If that were the case, there'd be a plethora of investment opportunities, including facilities, teams, sponsorships, suites, ticketing, etc. We will drill down on these topics in the coming months.

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We will drill down on these topics in the coming months. I look forward to any feedback and input.

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Jimmy Lynn

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