The NFL's Multi-Billion-Dollar Decision

The NFL has officially agreed to add a 17th regular-season game to the schedule starting next year, but what does this mean for overall player salaries?

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Friends,

The new Collective Bargaining Agreement (CBA) that was negotiated and signed last March allowed the NFL to add a 17th regular-season game as early as this year, contingent on their ability to negotiate at least one new media rights deal.

Now, after announcing over $100 billion in new broadcast agreements this month, the NFL has done just that — officially adding a 17th regular-season game to the schedule starting next year. This will be the first significant regular-season schedule change since the NFL jumped from 14 to 16 games in 1978.

NFL commissioner Roger Goodell called it “a monumental moment in NFL history.”

Here’s what you need to know (Source):

  • The NFL will keep one bye week, expanding the season from 17 to 18 weeks.

  • Given the CBA states that NFL players cannot be asked to play more than 20 combined regular season and preseason games, the NFL will reduce the preseason to three games.

  • The season will begin on September 9th, with the postseason starting on January 15th and the Super Bowl played on February 13th — one weekend later than normal.

  • The 2022 Pro Bowl will be played on Sunday, February 6th — one week before the Super Bowl.

  • All 32 clubs will be required to lay internationally at least once every eight years.

  • The NFL is permitted to schedule up to four neutral-site games per year in a country outside the United States, with an initial focus on Canada, Europe, Mexico, South America, and the United Kingdom.

Furthermore, here’s an early look at the week 17 matchups added to the calendar for next year.

While many NFL players have voiced their displeasure with the NFL’s decision to add a 17th game, both publicly and privately, let’s be clear — they agreed to the additional game as part of their 2020 collective bargaining agreement.

The CBA was over 450-pages long, and ratification requires a simple majority vote, but you get the point, once the deal was approved last year, NFL players knew this was happening sooner than later.

Why?

Because it’s all about the money.

The NFL just locked in $105 billion over the next 11-years from their broadcast partners—almost a 100% increase from their previous TV deal—with their decision to add a 17th regular-season game as a key part of the negotiation.

But TV is just one part of the equation…

Here is how much the top 5 teams (revenue-wise) pulled in from stadium operations in 2018 (Source).

  1. Dallas Cowboys: $621 million ($77M per game)

  2. New England Patriots: $315 million ($39M per game)

  3. New York Giants: $262 million ($33M per game)

  4. Houston Texans: $218 million ($27M per game)

  5. New York Jets: $218 million ($27M per game)

Given this list accounts for tickets, concessions, sponsors, parking, merchandise, and more, you can reasonably expect that a team like the Dallas Cowboys will immediately see a $77M revenue increase with an additional home game.

If you want to check where your team ranks, here’s the full list from Forbes.

The Chargers, Rams, and Bengals have moved stadiums since so their numbers probably arent accurate anymore. Still, taking total “Team Stadium Revenue” and dividing it by 8 games (traditional # of home games) should give us a good idea of how much revenue each team brings during a home game (Source).

That’s obviously interesting, and I think surprising to many people, but there’s another part no one is talking about.

Under the current CBA, players receive 48% of total NFL revenue, but with the season being extended to 17 regular-season games, that number contractually moves up to 48.8%.

That might seem small, but with the NFL expected to be making ~$20B-plus in annual revenue in the coming years, that .8% difference would bring in about $160M in additional revenue for the players. After it’s divided amongst the players, it might not make a huge difference for guys like Patrick Mahomes and Tom Brady, but still, $160M is $160M — it certainly helps.

Ultimately, the salary cap has declined for the first time ever due to COVID-19, but with the NFL rapidly expanding their future revenue projections, don’t expect that to last for long.

NFL players will be required to play an extra game this year, but given the overall salary cap is dictated based on a percentage of league-wide revenue, more money for the owners means more money for the players also.

Have a great day, and we’ll talk tomorrow.

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