We know NFL players make a substantial amount of money every year. In fact, the highest paid NFL player of 2022 is Green Bay Packers veteran Aaron Rodgers, with a $50 million salary this season. 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 to counter the backlash.
Does the NFL make a profit from TV?
NFL teams generate national revenue through things like TV contracts, as well as 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 broadcast and watched on television more than most other programs.
The league is also expanding its digital distribution in recognition of the fact that streaming is the way of the future. The NFL recently inked a $2-billion deal with YouTube to host Sunday Ticket.
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 covid-19 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 usually 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 team’s profit.
Like NFL players, NFL teams make big profit for sponsors
The NFL makes billions of dollars from corporate sponsorships. This ranges 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.