National Football League

The NFL's upcoming money crunch: What it means for Saints fans

Published Jun. 30, 2017 6:28 p.m. ET

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HOUSTON, TX – AUGUST 28: General view of Fox Sports television camera operator during an NFL preseason game between the Houston Texans and Arizona Cardinals at NRG Stadium on August 28, 2016 in Houston, Texas. The Texans defeated the Cardinals 34-24. (Photo by Joe Robbins/Getty Images) *** Local Caption ***

For the average Joe and Joanne out there, what happens when your paycheck stays the same and your bills go up? Something’s got to give right? That’s in essence, an issue that will become larger for the NFL and its fans in the very near future. So, how will it impact Saints fans?

Television viewership is down. Not just for sports or for the NFL but across the board. You could say it’s due to fragmentation. Fragmentation means that viewers have many more options to choose from on televison these days. They also have many more media options.

Millennials are more likely to be watching YouTube, their Twitter and Facebook feeds, and podcasts and video blogs. Add to that the increasing number of cable and streaming options, and it adds up to fewer folks watching traditional TV.

This year’s Emmy awards broadcast on ABC airing on September 18th was down 22% in viewership from last year going up against the NBC Sunday Night Football’s Vikings/Packers game. That game however, was down in viewers by 15% from last year’s game which aired opposite the Emmys.

In general, viewership for the NFL is down across the board. Maybe the millennials will mature into football lovers down the line. But for now the numbers are terribly concerning for a number of reasons.

NFL Salary Cap

In recent years the NFL’s per team salary cap has risen 10-12% annually. In 2016 the cap is $155.27 million. Much of the revenue in the NFL comes from TV deals.

The NFL, in their current deal collects an average of about $3 billion a year each from NBC, CBS, and FOX. Additionally, ESPN kicks in another $1.9 billion a year. The current deal runs through 2022.

Ad Revenue

SANTA CLARA, CA – FEBRUARY 07: A fan holds up a ticket to Super Bowl 50 outside Levi’s Stadium on February 7, 2016 in Santa Clara, California. (Photo by Andy Lyons/Getty Images)

The networks get financial return on their investment in the NFL by selling advertising. Advertisers are keen to spend big here because the NFL has historically been a ratings bonanza, and more people are likely to watch sporting events live rather than on DVR where they can skip ads. More eyes mean even more money.

Viewership for NFL games this season is down by about 6-8% from last year. If that trend continues, it could be a very different negotiation between the NFL and the major networks for the next big deal.

Profit margins should begin to shrink for the networks, as they find it harder to charge current ad rates for a declining viewership.

So how will this affect the average Who Dat?

Ticket Price Increases

In 2014, the average cost of an NFL ticket was $84.43. For the Saints, the average price was $84.87.

If viewership of NFL games continues to trend downward and ad revenue starts to fall off, and NFL salaries continue to increase at current levels, the offset in revenue will have to be made up somewhere. Eventually, that burden typically falls on the fans.

The NFL is reaching a tipping point where the current revenue model will have to be reviewed. Big television deals will become less lucrative, and the fans will be expected to pick up the slack.