Hall of Fame
Join Date: Apr 2004
Six industries hurt by an NFL lockout
I doubt that many owners OR players are concerned with those they may be leaving in the dust.
By Angela Daidone, Investopedia.com
Apr 8, 6:06 pm EDT
Since 1985, professional football has steadily led the field as the most popular sport in the United States. In fact, the most recent Harris poll shows that itís earned a double-digit lead over baseball, long considered Americaís pastime. So itís no wonder that companies are sweating over the owner/player dispute that is threatening to cancel the 2011-12 NFL season. Here is a sampling of industries that will be affected by the lockout.
DirecTV could be the big loser if the National Football League cancels the 2011 season. According to a report by Bloomberg News, the largest U.S. satellite-television provider could lose more than $600 million in revenue this year.
DirecTVís NFL Sunday Ticket, which allows viewers to watch every NFL game, generated between $600 million and $750 million in subscription revenue last season. The football package is not offered by any other satellite-program operator. DirecTV also stands to lose an estimated $100 million in ad sales without NFL games.
But a canceled season would also impact other television and broadcast companies, including CBSís CBS Network, News Corporationís Fox, Comcastís NBC and Walt Disneyís ESPN, all of which broadcast games throughout the season, and would likely see reduced advertising revenue if there are no games to air. ESPN may be especially antsy about a quick settlement; it is reportedly close to a $2 billion renewal for the rights to Monday Night Football beyond 2020, Sports Business Daily reported.
In 2010, 65 of the top 100 watched sporting events in the United States were NFL games, and every TV ad spot for the Super Bowl (which cost as much as $2.8 million for a 30-second-spot last season) was sold out months before the big game.
Yes, fans are always ready for some football Ė even the computer-generated version. Electronic Arts, the maker of the popular ďMaddenĒ football franchise video games, recently said it is going ahead with its Madden NFL 12 edition, despite the NFL owners and players still squaring off at the negotiations table. But a lockout could result in real-life losses of about $165 million for EA, which analysts say could suffer a 50 percent drop in sales. Madden 12 is due on the shelves in August, just weeks before the NFL season usually kicks off.
Vendors, souvenir merchants, tourism
Games bring fans; fans mean sales, whether itís foam fingers, cheese heads or bobble-head dolls. Fans also need a place to stay, especially out-of-towners who travel to watch their favorite team on the road. But with the owners and players in a deadlock, many stadium cities could become ghost towns. The Minneapolis Downtown Council estimates a $9 million loss per home game if the Vikings donít play. Multiply that by eight games, and weíre talking big bucks. (And thatís for a team that went 6-10 last season.)
The trickle-down effect could be even worse. Without customers, stores, hotels, stadium concessions and crews for clean-up and security would not be needed, accounting for countless jobs lost.
An NFL lockout is making the food industry cluck with anxiety. According to the National Chicken Council, football fans consume about 5-10 million pounds of chicken wings during Thursday, Sunday and Monday games in each of the 17 weeks of the NFL season. On Super Bowl Sunday alone, an estimated 450 million wings were consumed.
Soft drink companies, including Gatorade (the official dumped-on-the-head-coach beverage), hawk their products in TV ads and on stadium billboards, resulting in multi-billion sales each year, not to mention moneys spent on exclusive rights to associate their brand with the NFL.
A few examples: Pepsi paid $560 million over eight years; Gatorade forks over $45 million a year, plus marketing costs and free supplies for teams. Companies wouldnít spend those kinds of dollars if the returns werenít worth it, right?
But beer sales would suffer big time, especially for Anheuser-Busch InBev, which is paying $1.2 billion over six years to make Bud Light the NFLís official beer sponsor, starting with the 2011 season, according to Advertising Age. One lost season may translate to an awful lot of suds down the drain.
After inking a deal reportedly worth $1.1 billion to become the NFLís official outfitter, Nike bigwigs are probably breathing a sigh of relief that the contract doesnít go into effect until April 2012. Meanwhile, Reebok, the current outfitter, stands to lose a hefty sum if this season is canceled. And those deals only apply to apparel and uniforms worn by the players and coaches.
Americans spent more than $8 billion on sports logo apparel in 2009 (the most recent data) with pro football claiming a big chunk of those sales approximately $2.5 billion. The recession took a bite out of the retail market in 2010 analysts estimate U.S. NFL merchandise sales dropped to $2.1 billion, and thereís no telling what consumers will do if they canít show off their team colors.
The bottom line
Players and owners are the ones that make the news stories in this NFL mess. But no matter whose side youíre on, the real losers are the businesses that count on those headline grabbers to make their living. Thereís a lot more at stake than collective bargaining issues.