We know NFL players make a substantial amount of money every year. In fact, the highest paid NFL player of 2021 is the Kansas City Chiefs star, Patrick Mahomes with a $45 million salary. It’s clear how the players make their money, but how do NFL teams make money? Where does that money go?
Football is one of the most popular sports in the United States. People watch it on TV, they bet on it, they travel to the games, and they keep up with it online. Many teams financially benefit from their fan following.
What is a tax-exempt status and why did NFL teams give it up?
A tax-exempt status means that an organization does not need to pay federal income taxes entirely or in part. Some examples of organizations that have this status could be charities or non profit organizations. NFL teams held this status from 1945 until 2015.
In 2015, the NFL willingly decided to end their tax-exempt status and begin paying taxes. Some argue that the NFL made the switch to avoid more PR disasters, especially considering that the economic gains weren’t substantial enough as the backlash.
Does the NFL make a profit from TV?
NFL teams make a national revenue through things like TV contracts, as well as a local revenue. NFL teams have multi-billion-dollar contracts with television providers, meaning they make a hefty sum through television. While the television industry is dwindling in many regards, this is not the case with the NFL. Games are broadcasted and watched on television more than most other programs.
According to Nielsen’s data, ratings are, in fact, up in 2021. Viewership is up 17% in comparison to last year, which likely explains why NBC, CBS, ESPN/ABC paid $100 billion to renew their media contracts.
— NFL Media (@NFLMedia) November 3, 2021Viewership Numbers Through Week 8 of the 2021 @NFL season —
*16.5 million avg. viewers per game (TV+Digital) — up +9% YoY
*NFL games are 45 of the Top 50 shows on TV since the start of the 2021 season pic.twitter.com/66ohkOHToB
Do NFL teams make profit from ticket sales?
Apart from a team's national revenue is their local revenue, which comes from things like sponsorships, merchandise sales and ticket sales. Typically, NFL teams make an operating profit from ticket sales, but coronavirus threatened this trend. The local revenue fluctuates more greatly than the national revenue, as it depends on things like how a team performs one year or which teams gets more sponsorships. Teams that perform well or have big names are likely to sell more merchandise.
Although an NFL team typically makes well over $1 million in ticket sales per game, the money is distributed between different groups. For example, some of the money is distributed to players, athletes, musicians, stadium administration, coaching staff, and taxes in addition to the teams profit.
Much like NFL players, NFL teams make big profit for sponsors
The NFL makes billions of dollars from corporate sponsorships. This ranges from everything from having corporate logos on uniforms to merchandise, all the way down to naming rights. Stadiums like the MetLife Stadium in New York and the AT&T stadium are rumored to be worth almost $20 million a year.
