Presentation on theme: "The Globalization of the NFL"— Presentation transcript:
1The Globalization of the NFL Krista HaswellJason MooreJoe WeberTom PoeDan Rousseau
2The NFL is highly successful in the US market 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?
3Why did prior international ventures fail. Were there any successes 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?
4Why did prior international ventures fail. Were there any successes 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?
5NFL International League Evolution 1991199419972006World League of AmericaThe World LeagueNFL EuropeNFL EuropaIntentNew league designed to develop NFL players in the spring and spread the game of footballDoesn’t compete directly with NFLPartnered with Barcelona Futbol ClubLeague evolved to be used as testing grounds for NFL players, coaches, and refereesEffectLow game attendanceBest players not sent to league; NFL coaches didn’t want unknown coaches developing talentPartnership failed; Barcelona never gained popularity, got into financial trouble, and disbanded in 2003League disbanded in 2007 after losing $20 million per yearLeague never consistently produced star NFL playersWas 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?
6NFL 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?
7Concentration 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?
8International 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?
9International Success of Other US Professional Sports Leagues BaseballBasketballHockeyFootballInternational Independent Grassroots GrowthYesNoIs 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?
10International Success of Other US Professional Sports Leagues MLBNBANHLInternational StrategyMixture of broadcasting games internationally and grassroots developmentBroadcast games internationallyPlay live games internationallySuccessful?YesIs 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?
11What is the value chain followed by US professional sports leagues 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?
12Value Chain for US Professional Sports League ValueProduction of the gameSale of MerchandiseAcquisition of TalentValue 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?
13Step 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 sportDomestic PlayersFree AgencyIn high school and/or university team playInternational PlayersTradesGrassroots efforts to promote sportDevelopment LeaguesMinor LeaguesOther Pro LeaguesTypically not sources for NFL talentAcquiring 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?
14Step 2: Production of the Game for US Professional Sports TechnologySeatingTV BroadcastMascots and CheerleadersHypeStadium AmenitiesHalf-time ShowsBetter fan experience = better value for NFL through increased revenueThe 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?
15Opportunities through Technology NFLMobileTelevisionRadioInternetVideo GamesThe 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?
16Step 3: Sale of Merchandise for US Professional Sports (most value for NFL)Television rightsStadium generated sales(Inc. Sales=Inc. Revenue=Inc. Value)Team paraphernalia123Increased 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?
17Financial Comparison of US Professional Sports Leagues Operating MarginMLB8.15NFL13.2%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?
18Ticket Sales Comparison of Professional Sports Leagues MLBNFLNBANHLAverage Game Attendance32,51668,03417,49717,476# of Regular Season Games per Team1621682Average Ticket Price$$$$Less games = less costs incurred in production of games throughout the season Less games = ability to demand a higher ticket priceThe 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?
19What does the NFL do to generate revenue What does the NFL do to generate revenue? How can their revenue be increased? Should their revenue generating strategy differ domestically versus internationally?
20Licensing Fees & Merchandising Sales Television and Media Rights NFL Revenue StreamsNFLLicensing 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?
21NFL Ticket Sales (includes stadium generated revenues) MLBNBANHLTotal Ticket Revenue$1,257,500,000$2,007,000,000$1,050,900,000$1,047,300,000Total Games Played in Season25624301230Average Revenue Per Game$4,912,109$825,925$854,390$851,463Average Ticket Price$72.20$25.40$48.80$48.70NFL Ticket Price Compared to Other Leaguesn/a2.85X1.48XThe 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.
22NFL Licensing Fees and Merchandise Sales Total Merchandise Revenue $1.6877BThe 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.
23NFL Broadcasting Revenue Breakdown of Total NFL RevenueBroadcasting 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?
24Broadcast 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?
25Total 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?
26Does 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?
27Timeline of International Exposure Football Lags in International ExposureCubans introduced to baseballNFL’s first international exhibition game in Canada1866Japan introduced to baseball1950China introduced to basketballFirst NFL Football Game Outside of North America186718831976186618791891190319151928194019521964How 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?
28Average 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?
29International Leagues and Teams Player Development SourceTeams outside USInternational player impactMLBMinor leagues associated with MLBCollege BaseballUS Youth development programsProfessional leagues abroad through free agency (Japan)Developmental camps (Latin America and South America)YesNBACollege BasketballProfessional leagues abroad (Europe and China)Development academy/camps (Europe)NHLCollege HockeyProfessional leagues abroad (Europe, Russia, Canada)NFLMostly CollegeNoIs 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?
30NFL International Ventures ProductDescriptionMeasures of successResultsSuper BowlTelevise single championship game event800 million viewers across 150 countries watched the 1997 gameMost international viewers are thought to be expatriate Americans; some interest globally to watch the highest level of playSUCCESSPreseason/Exhibition Games played abroadHold exhibition games outside USA; first game played in Canada in 1950, 1976 in Tokyo, American BowlGames of little significance/meaning; no real strategy around expansion of productFAILUREThe World League/ NFL EuropeCreated to spread game beyond USA and develop players, coaches, and officialsAfter 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 2003International Development Practice SquadStarted in 2004 to expose foreign born players to the NFLHas not developed talent into NFL playersInternational SeriesHold 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 2010Success in target marketsInternational success has only been achieved through single game events showcasing the highest level talent. Should the NFL schedule more regular season games abroad?
31NFL Changes Its International Strategy MexicoPlayed first regular season game in Mexico in 2005LondonPlayed regular season games in London between 2007 and 2010Revenues from Mexico increased 20% in the following years.Television viewership in London doubled by 2010.Regular season games played abroad = increased international interest where playedHow can the NFL duplicate this success?
32Germany…Formula For Success? Youth DevelopmentLeaguesNFL Europe Professional GamesHigher attendance and increased interestGermany 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?
33Strategy for International Success Increased grassroots development of American FootballIncreased outward exposure to NFL gamesNFLInternational SuccessBoth initiatives are necessary for the NFL to find the highest possible success in international markets. How can the NFL execute this strategy?
34Recommendations – Top-Down ProposalValue ImpactedBenefitPlay a few regular season games in Mexico, England, and GermanyProduction of GameSale of MerchandiseExporting 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 marketsThe 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 internationallyBroadcast 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 culturePreference 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 internationallyThe NFL generates considerable value through its strategy of high ticket price/low number of games.
35Recommendations - Grassroots ProposalValue ImpactedBenefitInvest in youth development of the game of football internationally.Sale of MerchandiseAcquisition 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 internationallyThis 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.