The NFL Has TV Over A Barrel, With No End In Sight

The NFL’s dominance over TV is no mystery, and the industry pays the price for that. The league’s current deal pays $111 billion over the course of 10 years.

In exchange, TV also receives significant benefits: More reach, revenues and better ad outcomes than any other programming. iSpot data notes that during last season, the NFL accounted for 24% of Big 4 network TV ad impressions, against about $7 billion in spend.

The upside for media partners, of course, is that while the NFL eats increasing amounts of the TV landscape, they were at least a long ways off from having to renegotiate those contracts. I say were because on Wednesday, NFL Commissioner Roger Goodell told CNBC that the league could renegotiate its TV rights as soon as 2026; four years before the current opt-out clause would bring that conversation to the table.

Goodell noted that would require all parties to want to start up those negotiations early. But really, what choice do they have in the matter?

Being in the NFL business is mandatory for the Big 4 networks at this point, and the same could be said for ESPN (which the NFL now owns a 10% stake in). If they — or streaming partners Amazon Prime Video and Netflix — don’t want to renegotiate right now, the league can just wait for the opt-out clause and go elsewhere, since there’s arguably no amount of money a tech or media company would balk at to be in the NFL business.

If you’re one of the league’s media rights partners, though: Why would you want to enter into renegotiation talks next year?

The only real upside for media partners is getting ahead of what could be even greater increases in rights fees down the road. So you lock in rates at 2026 values, and cross your fingers those age well as the TV landscape shifts beneath you.

That last point is the biggest problem, though. Why should rights holders renegotiate NFL rights this many years early, when there’s no predicting just what that TV landscape will look like?

For all we know, linear TV will actually be on death’s door, with streaming having fully taken over (this is actually likely, to be honest). These networks could change owners multiple times between now and when these games actually appear.

There’s also the wildcard of what the Trump administration can get away with when it comes to coming after broadcasters for being “against him” (as he’s stated alongside Jimmy Kimmel Live’s short-term suspension). If the president is able to make any of those threats materialize, the networks’ businesses could find themselves in fundamentally different waters in the 2030s while paying for a significantly more expense NFL deal.

And that’s before accounting for the potential for pharma leaving TV and the greater impact of addressable advertising that will take over NFL inventory as it gets more streaming-centric (and it will in any new deal).

As the Warner Bros. Discovery-NBA drama has shown, though, these leagues are not going to wait for existing partners to pony up for increased media rights. They have their chance to retain rights for a certain window, and if they appear unwilling to meet the new dynamics of demand, the leagues move on to a party (or parties) that will.

Amazon has been aggressive in growing its position as a live sports platform, specifically on the back of the NFL. If NBC, CBS or Fox hesitate, Amazon is right there to jump in with richer coffers and an ability to pick up a larger share of the league package (much like it’s already done with the NBA). If not Amazon, Netflix is sitting right there as well, as is YouTube — and both also have existing relationships with the NFL as it is.

So where does this leave the issue?

The NFL is obviously eager to secure itself well into the next decade, under the current conditions: It’s the most valuable TV property out there, no matter where it’s appearing. And while younger audiences are taking in a lot of sporting events via highlights, there’s no telling how that evolves. The NFL cashes in while it’s the undisputed king of TV, and it’s the job of the media partners to figure out what that TV actually looks like at the end of this new deal.

Perhaps the league leaves some money on the table as a result. But considering it’s already floating renegotiation talks four years before the current opt-out clause, what makes anyone think they won’t just do the same thing next time around if they feel like they’re outpacing the value of the deal again?

One thing the NFL’s never been shy about — especially under Goodell — is growing revenues. So if they’re interested in renegotiating now, that means the league sees a chance to do that again, whether (network) partners are truly in a great position to pay for it or not.