The National Football League (NFL) is one of the biggest sporting organizations in the world and vast amounts of money pour into its coffers.
As a result, cities and local communities benefit massively from the presence of NFL stadiums and facilities in their location. The stadiums trigger a flurry of economic activity, creating jobs in architecture and construction, and improvements in the local infrastructure, such as in public transport and real estate development. They also create jobs at the stadium, such as roles in security, catering and facility management, and the stadiums are open outside of the football season for other events.
Local businesses, especially in hospitality and tourism, also benefit because they experience more demand during the football season. Every game brings in thousands of fans, some from other areas, who spend money on retail, accommodation, hospitality and more. It’s a big win for local economies. Below is a look at the financial and business side of the NFL itself, including the general financial health of the organization, how it makes money, NFL contracts, especially the salary cap, and future economic trends the NFL could trigger.
Dollars in the billions
The sums of money the NFL generates are staggering. The organization is estimated to have generated around $20 billion in total revenue for the 2023 season. In 2022, the figure was $18.6 billion.
TV deals are a huge money spinner for the league. Past deals between the NFL and CBS, Fox and NBC have earned the organization up to $3.1 billion each year before their expiry.
Corporate sponsorships are another contributor to the NFL’s robust financial health. They provide the organization at least $1 billion annually. Stadium naming rights generate especially big bucks for the league.
Ticket sales are also a sizable earner, bringing in millions per match, supposing each ticket costs $100. Additionally, streaming deals have been earning the NFL around $20 million per game, and then there’s sports betting. The organization has taken advantage of sport betting legalization to create another lucrative source of income for itself. Sports fans are checking the NFL lines, placing wagers and engaging with the sport even more.
Getting down to business with the teams
The franchises in the NFL make a great deal of money from their presence in the league. Last year, teams received an average payout from the league of around $404 million, up from the average of $374 million of last year.
Signing players
The draft is an exciting time for players, teams and fans alike, as everyone watches to see what deals will unfold. Will there be big signings? Who will stay on at a team, and for how much?
Of course, when players sign for a team, they and the teams have to obey certain rules, terms and conditions. Clubs will also sweeten the deals with incentives.
The salary cap
The salary cap in the NFL is a big factor in determining players’ salaries. The salary cap tends to increase each year and is a limit on the amount of money teams can spend on players’ salaries. This includes their base salary and bonuses. For 2024, it’s $254.5 million.
Of course, some teams exploit loopholes in the system to get round this. In the case of signing bonuses, for instance, the club will pay the money upfront but pro-rata it over the length of the contract, saving cap space.
The purpose of the salary cap is to keep the NFL fair by placing the same spending limitations on all teams, rather than allowing rich owners to buy better players simply because they have the money to. The salary cap also limits financial risk.
Incentives
The contracts of some NFL players feature bonuses if they player achieves certain statistics, and these incentives can affect the decisions of some of the players. A defensive linesman may receive an extra million, for instance, if they achieve 10 sacks in a season, or a kicker may earn themselves a half-a-million bonus if they kick a field goal rate above 90% that season. Players may step aside or make certain plays to allow their colleagues to earn the bonus.
What economic trends could the NFL trigger?
Stadium development lends a huge economic boost to cities and communities and could see US cities make better use of their space if a team is looking to relocate. Some may even consider the reintroduction of a team’s home ground back into the city, rather than on the outskirts of a city.
This could also trigger more rapid growth in real estate activity. Political figures in some US states have noted that whenever a sports stadium is being built, development activity speeds up.
The NFL generates billions of revenue that allows it to enjoy rude financial health. Even though the organization entertains lots of different ways to bring in money, it takes care to ensure fairness between the teams, making the NFL competitive to play in and more enjoyable for fans to follow.