National Football League's Revenue-Sharing Model

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In 2001, the National Football League reaped total revenues of about $4 billion. In less than 15 years later, the league has more than doubled this value (Jozsa, 2014). To further analyze the causes of such success, deriving the sources of cash flows is critical. According to Pelligrino, the five primary sources that drive value for professional football teams are ticket sales, merchandising, advertising, venue, and licensing. It is important to note that the NFL practices a revenue-sharing model, where each franchise obtains a portion of revenue from the listed sources. Ticket Sales. Ticket sales are one of the prominent income streams. Due to high demand, NFL teams increased their tickets on average from 2009-2012 by 7%. However in 2014, average tickets prices were $84.43, which are 3% less than the previous year’s price. (Jozsa, 2014). Many franchises including the San Diego Chargers, St. Louis Rams, and Jacksonville Jaguars have struggled to fill their seats in recent years due to poor team performance and the preference to watch games comfortably at home. Despite this, each team generates about $51 million in ticket sales. Along with the…show more content…
Stadiums in the league carry capacities between 65,000-85,000. A large venue offers numerous sources of revenue. Larger stadiums attract more fans, and more fans consume more food and beverages. Vendors at the venue are able to increase prices and sell other types of merchandise as well. According to Forbes, the Dallas Cowboys, Washington Redskins, and New York Giants earned over $75 million per year from premium seating at their stadiums. Individual teams may price their merchandise and concessions quite differently from other teams. For example, the Green Bay Packers tend to keep their prices at par with the leagues averages despite their success as a franchise to maintain community satisfaction and involvement (Jozsa, 2014). Despite these price differences, larger and modern stadiums earn more

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