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The Globalization of the NFL Krista Haswell Jason Moore Joe Weber Tom Poe Dan Rousseau.

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Presentation on theme: "The Globalization of the NFL Krista Haswell Jason Moore Joe Weber Tom Poe Dan Rousseau."— Presentation transcript:

1 The Globalization of the NFL Krista Haswell Jason Moore Joe Weber Tom Poe Dan Rousseau

2 The NFL is highly successful in the US market. After unsuccessful attempts to expand internationally, how can the NFL generate additional international interest in the sport and the league to increase revenue?

3 Why did prior international ventures fail? Were there any successes? Why have other US based professional sports leagues found success internationally while the NFL has not? What is the value chain followed by US professional sports leagues? Where does the NFL gain value? What does the NFL do to generate revenue? How can their revenue be increased? Should their revenue generating strategy differ domestically versus internationally? Does the NFL need to popularize American football to be successful internationally? Does this require the NFL to increase or develop international players, teams, or leagues?

4 Why did prior international ventures fail? Were there any successes? Why have other US based professional sports leagues found success internationally while the NFL has not?

5 NFL International League Evolution Intent New league designed to develop NFL players in the spring and spread the game of football Doesn’t compete directly with NFL Partnered with Barcelona Futbol Club League evolved to be used as testing grounds for NFL players, coaches, and referees Effect Low game attendance Best players not sent to league; NFL coaches didn’t want unknown coaches developing talent Partnership failed; Barcelona never gained popularity, got into financial trouble, and disbanded in 2003 League disbanded in 2007 after losing $20 million per year League never consistently produced star NFL players Was the NFL Europe League the same product as the NFL? Did this impact the league success? Is it possible to have a successful venture that is only intended to produce star players that will eventually move to the NFL? World League of America The World League NFL EuropeNFL Europa

6 NFL Europe League Results Did the attendance drop off after the first two seasons because the fans noticed it was an inferior product to the NFL? Does the stagnant attendance growth mean the league failed to build interest in the sport or the product? Were there any successes in this league?

7 Concentration of NFL Europe Teams Could the German market be developing to support the NFL fan base? Why is this market different from the others? Can the German market be expanded further to increase revenues?

8 International Success of Other US Professional Sports Leagues Could a high percentage of international players in a league be the key to international success? If so, what can the NFL do to generate this level of international players?

9 International Success of Other US Professional Sports Leagues BaseballBasketballHockeyFootball International Independent Grassroots Growth Yes No Is grassroots development key to pulling international players to professional leagues? Have independent development efforts aided in the international success of professional sports? Does the NFL need to focus on the grassroots level?

10 International Success of Other US Professional Sports Leagues MLBNBANHL International Strategy Mixture of broadcasting games internationally and grassroots development Broadcast games internationally Play live games internationally Successful?Yes Is a top-down marketing strategy the best way to be successful internationally? Could the NFL experience the same success by using a strategy comparable to the other professional sports leagues?

11 What is the value chain followed by US professional sports leagues? Where does the NFL gain its value? Where are the opportunities for the NFL to gain additional value?

12 Value Chain for US Professional Sports Value is gained in only three specific areas so each is of great importance to the NFL. Where does the NFL currently gain its value and how is its value proposition impacted by international strategy? League Value Production of the game Sale of Merchandise Acquisition of Talent

13 Step 1: Acquisition of Talent for US Professional Sports How does talent enter a league? How are skills developed before entering a pro sport? Where does talent come from? DraftIn childhood through family interest or participation in organized sport Domestic Players Free AgencyIn high school and/or university team play International Players TradesGrassroots efforts to promote sport Development Leagues Minor Leagues Other Pro Leagues Acquiring the best talent increases value of the league. The NFL already has the best talent available because there is a lack of international leagues from which to find players. Are there other opportunities to find talent or should the NFL focus on other steps in the value chain? Typically not sources for NFL talent

14 Step 2: Production of the Game for US Professional Sports Production of the Game TechnologySeatingTV Broadcast Mascots and Cheerleaders Hype Stadium Amenities Half-time Shows Better fan experience = better value for NFL through increased revenue The NFL can exploit advancements in technology to bring more of the fan experience to those not in attendance. In what ways can the NFL enhance game production to appeal to a greater audience abroad?

15 Opportunities through Technology NFL Mobile Television RadioInternet Video Games The NFL can continue to benefit by advancements in technology because technology increases the NFL’s exposure. Which technology provides the best opportunity to fuel growth? Which generate the most revenue?

16 Step 3: Sale of Merchandise for US Professional Sports Increased stadium generated sales and TV rights could expose the NFL to a greater audience and provide additional value through an increase in sale of team paraphernalia. With a limited number of games and attendance, is the best way to increase value through increased sales of TV rights abroad? Television rights (most value for NFL) Stadium generated sales (Inc. Sales=Inc. Revenue=Inc. Value) Team paraphernalia 1 2 3

17 Financial Comparison of US Professional Sports Leagues Operating Margin MLB8.15 NFL13.2% NBA9.9% NHL5.9% Higher operating margin indicates better profitability. Average team value is also a strength of the NFL. The NFL must consider the impact on both when considering an international strategy. Why is the NFL’s operating margin so much higher and can it be sustained with international expansion?

18 Ticket Sales Comparison of Professional Sports Leagues MLBNFLNBA NHL Average Game Attendance32,51668,03417,49717,476 # of Regular Season Games per Team Average Ticket Price $ $ $ $ Less games = less costs incurred in production of games throughout the season Less games = ability to demand a higher ticket price The number of games directly impacts the value of the NFL. Each game is more important to the NFL than to the other leagues because higher attendance is concentrated in fewer games. In terms of international expansion, how can the NFL capitalize on the value provided by each game?

19 What does the NFL do to generate revenue? How can their revenue be increased? Should their revenue generating strategy differ domestically versus internationally?

20 NFL Revenue Streams NFL Licensing Fees & Merchandising Sales (Includes Sponsorships) Television and Media Rights (National & Local) Ticket Sales (All stadium-generated revenues, ex: concessions) Should the NFL focus on all three revenue streams, a combination of the three, or just one? Which revenue stream stands to have the biggest gain from international expansion?

21 NFL Ticket Sales (includes stadium generated revenues) NFLMLBNBANHL Total Ticket Revenue$1,257,500,000$2,007,000,000$1,050,900,000$1,047,300,000 Total Games Played in Season Average Revenue Per Game $4,912,109$825,925$854,390$851,463 Average Ticket Price$72.20$25.40$48.80$48.70 NFL Ticket Price Compared to Other Leagues n/a2.85X1.48X The NFL is able to generate more revenue per game and demand a higher premium for its tickets by having substantially fewer games than other US professional sports teams. Adding additional games risks causing the NFL to lose its ticket premium advantage, resulting in little to no revenue increase.

22 NFL Licensing Fees and Merchandise Sales The small portion of international sales indicates that the NFL has an opportunity to increase this revenue stream substantially. To capitalize on this opportunity, the NFL must be exposed to a greater and more attracted international audience. Total Merchandise Revenue $1.6877B

23 NFL Broadcasting Revenue Breakdown of Total NFL Revenue Broadcasting revenue generated by television provides the most revenue for the NFL and given that there is substantially less international demand, it can be assumed that international broadcasting generates a smaller portion of overall revenue. By not focusing on the dollar amount of broadcasting revenue generated internationally in the short-term, could trying a “push” strategy, where international TV networks or satellite stations carry all regular season games, have the potential to generate additional interest in the NFL abroad, thereby helping the NFL in the long term?

24 Broadcast Revenues vs. Number of Games As with ticket prices, the NFL is able to demand a premium for its broadcasting rights by having fewer games compared to other US professional sports leagues. Adding additional games might not actually increase revenue. Does the NFL have any opportunities to increase broadcasting revenues or have revenues in this category topped out? With the NFL sharing all national and local broadcasting revenues among the teams, would an international team be able to contribute at the same level as domestic teams?

25 Total Revenues of US Professional Sports Leagues The NFL has earned so much revenue without large international positions like its peers. Does this mean the NFL has maximized US revenues? Does the NFL need to expand internationally with these revenues?

26 Does the NFL need to popularize American football in order to grow their international presence? Does this require the NFL to increase or develop international players, teams, or leagues?

27 Timeline of International Exposure Oct 1866 Jan 1879 Apr 1891 Jul 1903 Oct 1915 Jan 1928 Apr 1940 Jul 1952 Oct 1964 First NFL Football Game Outside of North America 1976 NFL’s first international exhibition game in Canada 1950 China introduced to basketball 1883 Japan introduced to baseball 1867 Cubans introduced to baseball 1866 How can the NFL expand their product into international frontiers when football itself has been lagging other sports? Why has it taken so long to internationalize the game of football? Football Lags in International Exposure

28 Average Equipment Cost per Player by Sport Is the high cost associated with playing football hurting the international expansion of the sport? Could this be why the sport isn’t played outside of the US?

29 International Leagues and Teams LeaguePlayer Development SourceTeams outside USInternational player impact MLB Minor leagues associated with MLB College Baseball US Youth development programs Professional leagues abroad through free agency (Japan) Developmental camps (Latin America and South America) Yes NBA College Basketball Professional leagues abroad (Europe and China) Development academy/camps (Europe) Yes NHL College Hockey Professional leagues abroad (Europe, Russia, Canada) Yes NFL Mostly CollegeNo Is an existing infrastructure necessary in order for the NFL to gain access to a global talent pool? Given its success, does the NFL need international players?

30 NFL International Ventures ProductDescriptionMeasures of successResults Super Bowl Televise single championship game event 800 million viewers across 150 countries watched the 1997 game Most international viewers are thought to be expatriate Americans; some interest globally to watch the highest level of play SUCCESS Preseason/Exhibition Games played abroad Hold exhibition games outside USA; first game played in Canada in 1950, 1976 in Tokyo, American Bowl Games of little significance/meaning; no real strategy around expansion of product FAILURE The World League/ NFL Europe Created to spread game beyond USA and develop players, coaches, and officials After initial introduction in 1991 average game attendance dropped below 20,000 after 1992; championship game attendance was better when rivalry involved (Germany) Partnership with Barcelona Dragons failed. Barcelona never gained popularity, got into financial trouble, and disbanded in 2003 FAILURE International Development Practice Squad Started in 2004 to expose foreign born players to the NFL Has not developed talent into NFL players FAILURE International Series Hold regular season games outside US, introduced in 2005 (Mexico City), (London) Record numbers at game in Mexico City and 20% increase in revenue from Mexico; television viewership in UK doubled by 2010 Success in target marketsSUCCESS International success has only been achieved through single game events showcasing the highest level talent. Should the NFL schedule more regular season games abroad?

31 NFL Changes Its International Strategy Played first regular season game in Mexico in 2005 Mexico Played regular season games in London between 2007 and 2010 London Revenues from Mexico increased 20% in the following years. Television viewership in London doubled by Regular season games played abroad = increased international interest where played How can the NFL duplicate this success?

32 Germany…Formula For Success? Germany is the only other market where there is a significant youth development program for American football, resulting in interest despite the lower quality NFL product offered. If youth are introduced to the sport of football, will they be more receptive to the NFL? Youth Development Leagues NFL Europe Professional Games Higher attendance and increased interest

33 Strategy for International Success Increased grassroots development of American Football Increased outward exposure to NFL games NFL International Success Both initiatives are necessary for the NFL to find the highest possible success in international markets. How can the NFL execute this strategy?

34 Recommendations – Top-Down ProposalValue ImpactedBenefit Play a few regular season games in Mexico, England, and Germany Production of Game Sale of Merchandise Exporting the NFL’s best product (regular season games) provides the best opportunity to increase demand for the game. Use the internet and mobile devices to bring the NFL to international markets Production of Game Sale of Merchandise The advancements in mobile technology and widespread use of the Internet provide the NFL an opportunity to market the league without the costs of physically bringing the league to new markets. Expand NFL TV broadcasts internationallyProduction of GameBroadcast revenue is a key component of the NFL revenue stream and the NFL should capitalize on additional markets. It is a low cost approach to expanding the reach of the NFL. Modify production of game to relate to the local international culture Production of GamePreference of international fans must be taken into account to create a wider appeal. Don’t add additional NFL games to regular season just to play internationally Production of GameThe NFL generates considerable value through its strategy of high ticket price/low number of games.

35 Recommendations - Grassroots ProposalValue ImpactedBenefit Invest in youth development of the game of football internationally. Sale of Merchandise Acquisition of Talent (Long-term) By expanding the knowledge and enjoyment of the sport, the NFL could realize increased demand in the broadcasted games and merchandise. Incentivize independent football ventures internationally Acquisition of Talent (Long-term) Sale of Merchandise This is a long-term strategy to build the fan base and provide the possibility of international players. Refrain from creating International LeaguesAcquisition of TalentPrevious leagues have not been successful and there is no evidence that indicates that these will be successful in the near future.


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