The Economics Behind The NFL’s Pay-To-Play Super Bowl Pitch

September 24, 2014 Nemes Random

The National Football League might bring in $10 billion in income a year, however it is still pinching pennies.

Numerous weeks earlier, as the NFL notified Katy Perry, Rihanna and Coldplay that they were the leading candidates to carry out at the Super Bowl XLIX halftime show, the league asked a minimum of some of the acts if they would share some of their future trip income, or make some other monetary contribution, in exchange for the gig, according to individuals knowledgeable about the matter.

The reason: the NFL– which takes in about $5 billion a year from media and tv rights deals, according to sports-marketing research company Navigate Research– was looking for a means to defray the halftime program’s production costs, which have actually grown to $10 million, up from $8 million a few years ago, according to a men and women familiar with the matter.

Till recently, the league’s offerhandle the halftime program’s title sponsor has actually covered these production expenses, according to another person knowledgeable about the matter, so that the program basically cost the league nothing. The NFL declined to say whether that is still the case. PepsiCo Inc., the halftime program’s sponsor considering that 2013, declined to divulge its sponsorship expenses.

The NFL doesn’t pay artists an efficiency fee however does cover their production and travel expenditures. None of this year’s candidates are likely to agreeaccept pay, according to individuals familiar with the matter.

ManyThe majority of the cash the league gains straight from the Super Bowl comes from product and ticket sales, given that the broadcasters normally offer the advertising. The NFL sells the rights to transmit the Super Bowl as part of an overall package that includes every game – and such TV deals account for many of the NFL’s annual earnings.

The league grosses about $40 million to $50 million from Super Bowl ticket sales, according to an individual familiar with the matter, and millions more from Super Bowl memorabilia. The NFL’s net profit from the Super Bowl has typically amounted about one-third of its gross income, this person said.

Its expenses consist of making up players for their involvement in the game, an amount that will total about $7.5 million for the 2015 Super Bowl. It must also pay the league workplace personnel, game-production costs and expenditures surrounding other Super Bowl week events.

Halftime show expenses started to intensify in 1993, when that year’s performer, Michael Jackson, handled to keep audiences tuned in, regardless of the lack of competitive stress in the video game itself. The Dallas Cowboys crushed the Buffalo Bills 52-17 in Super Bowl XXVII, with an 18-point lead at the half.

In previous years, viewers had actually had the tendency to alter the channel halfway with such lopsided blowouts. The 1992 halftime program, for instance, was an event of winter season entitled “Winter Magic.” Former Olympic champs Brian Boitano and Dorothy Hamill skated around on sheets of Teflon on the field; singer-songwriter Gloria Estefan sang for shows finale.

BecauseEver since, the league has actually made a point of enlisting big-name artists as the centerpiece of the halftime program to drive ratings, though the actual games have also been drawing even more audiences as they’ve become more competitive and the league’s popularity has risen.

See likewise:
NFL to Coldplay: Pay to Play the Super Bowl WSJ

Economics,

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