TV Markets and the Expansion of Sports – Part 3

The role of TV markets in the potential expansion of professional sports has been well documented in the first two parts of this series. The first part dealt with the potential expansion of the NBA, the second part dealt with the potential expansion of Major League Baseball, and this third part of the series will deal with the potential expansion of the National Football League (NFL).

 

The focus on the NFL is timely, since the expansion discussion was again central to the media coverage of the league recently. The NFL began playing regular season games in London calling them the “International Series” beginning in 2007 (www.nfl.com). The most recent game in London was played on October 27, with the San Francisco 49ers taking on the Jacksonville Jaguars.

 

In the media events leading up to this game in London, NFL Commissioner Roger Goodell spoke openly about the determination for the NFL to place a team in London and Los Angeles. He added that he did not care which city went through the process first, but that they are both targeted areas for the NFL to have a presence within in the future (www.cbssports.com).

 

The initial expansion talk for the NFL began around the Super Bowl in 2012 when the Commissioner discussed the league expanding from 32 to 34 teams. In recent months, the NFL owners committee has stated that they like the league at 32 teams and that any changes would most likely come by relocation of struggling franchises.

 

 

Current Situation

The NFL is currently made up of 32 teams split into two conferences of 16 teams each. In each conference the teams are split into four divisions of four teams each, so the schedule is perfectly balanced. The alignment makes sense and they have an excellent system for rotating the schedule for inter-conference and inter-divisional games.

 

The NFL is the most watched sport in the United States, and has a huge level of interest that dwarfs the other members of “The Big Four” major sports leagues. The number of people to support and watch additional NFL teams is there, so the debate will always rage on about potential expansion of this tremendously successful league.

 

The NFL frequently has seven or eight of the Top 10 most watched television events every year. The Super Bowl, of course, is the most watched television event on the calendar in the United States. It has set records in recent years for TV viewership, which some reports have speculated is driven by the recession in the U.S. and more people staying home to watch it in smaller groups.

 

Sunday Night Football on NBC is the most watched network primetime show every year. The importance of the medium of television to the NFL is very crucial for an expansion market, more so than with other sports.

 

Potential Expansion Markets

 

The potential for expansion in the NFL is a much shorter list than for the other leagues because the league has publicly stated that it does not want to expand much beyond the 32 franchises they have currently. This is also due to the fact that the owners do not want to split the revenue sharing “pie” too much further.

 

Here are the most likely candidates for an NFL expansion franchise:

(TV markets data courtesy of www.stationindex.com , Metro population data courtesy of www.census.gov and the Fortune 500 data courtesy of www.money.cnn.com )

  • Los Angeles, CA – The largest city and the largest TV market without an NFL team. It has been on the NFL expansion radar screen for a long time. At one point the city had two NFL teams that both left, which is why support for a replacement franchise lagged for many years.

TV Market Rank: 2nd

Metro Population Rank: 2nd

Fortune 500 Company HQ: 10 (in general area)

 

Synopsis/Outlook: The Los Angeles bid is a very likely expansion or relocation destination for an NFL franchise or two. The population density, the huge TV and media market, and the corporate sponsorship capabilities are definitely sufficient to support 2 teams. The plan at this point would be that those two teams would share a stadium similar to the Giants and Jets currently. The downtown stadium plan supported by AEG has lost support politically and will not happen. The City of Industry plan is still on the table and is the most likely site for a future state of the art NFL stadium. The temporary stadium would most likely be the Rose Bowl in Pasadena until the new stadium construction is completed. The most likely relocation candidates would be the Oakland Raiders (who have a major stadium issue with the Coliseum and no public dollars to fix it in Oakland), St. Louis Rams (who have an “out clause” in their lease after next season and are fighting with the city of St. Louis over a renovation plan for their current stadium), and the San Diego Chargers (they are just a couple of hours down the road and they have been working on a new stadium deal for over 15 years now). The NFL and the owners have all made statements indicating that they will be in L.A. sooner rather than later. One final note, MSG Network interviewed former basketball legend and current L.A. Dodgers part-owner, Earvin “Magic” Johnson during halftime of the NY Knicks game recently, and he publicly stated that he wanted to help bring an NFL team to Los Angeles. When high profile men with money and connections start talking about their desire to do it, we have all seen that it is only a matter of time before it gets done.

 

  • San Antonio, TX – The second largest city in the country by population without an NFL team. The city has a diverse group of potential fans, and the area is known for being very loyal to their other professional team, the Spurs of the NBA.

TV Markets Rank: 36th

Metro Population Rank: 25th

Fortune 500 Company HQ: 5

 

Synopsis/Outlook: Many reports I have read throughout the media reference sources from within the NFL that believe that San Antonio and Toronto are the only other markets outside of L.A. which could successfully support an NFL team. The issues with San Antonio and a potential bid for expansion are still numerous: the city is in the territorial rights zone for the Dallas Cowboys, the metro population is good but the suburbs are non-existent, the TV market is good but not great (though the NFL has current franchises in much smaller TV markets), and the stadium is problematic as well. In order for a bid to be successful, Cowboys owner Jerry Jones would have to approve the move into his territory (he has made statements of support in the past). The right ownership group would have to emerge with enough capital to compete against the Cowboys (who are immensely popular in the entire state) and the Houston Texans (who play about a 2 hour drive away). The final piece is the stadium, they have the Alamo Dome currently, but it was built several years ago. It would need by some estimates between $100 million to $500 million in renovations to be an NFL level facility. Most people believe that for a San Antonio bid to be accepted, the Alamo Dome would be used as a temporary home while a brand new stadium would be built for the NFL team. The government willpower and support is there to undertake that project, they have a growing economy, and the corporate sponsorship for such a venture is there as well. If the right pieces fall into place, this is also a very likely future expansion location for the NFL.

  • Toronto – Intriguing potential expansion opportunity for the NFL to fully integrate into Canada.

Synopsis/Overview: The TV market and other demographic data are not applicable for this Canadian city. The potential bid does have some very strong attributes. Toronto has a very diverse population base which appeals to the NFL and their strategic interest in growing the sport internationally. The city currently hosts one regular season game each year under an agreement with the Buffalo Bills. The game in Toronto regularly plays to a sold out crowd, so the demand is there for the NFL product in Canada. The other potential avenue outside of expansion is the potential for the Buffalo Bills to relocate to Toronto. However, the City of Buffalo just committed a huge amount of money and resources to the renovation of Ralph Wilson Stadium and the Bills signed a new lease in Buffalo as well, making that relocation rather unlikely. The stadium in the short term would be the Rogers Centre (formerly the SkyDome) and then a new stadium would be built for the expansion NFL franchise. Corporate support would not be an issue, nor would the right ownership group. A solid potential bid.

  • London, United Kingdom – The London bid is gaining tremendous momentum at this point. It would bring the NFL into the global stage faster than the other major U.S. sports leagues.

Synopsis/Outlook: The situation in London is similar to Toronto, the TV markets and other demographics do not apply. The NFL has an “International Committee” which has been studying the potential for international growth of American football for years now. Some sources inside the NFL in the reports throughout the media say the committee should be named “the London Committee”. London is really the only viable option for international expansion. The corporate support, with London being a major financial and commercial hub in Europe, would be excellent for a future NFL franchise. There are fans who question why the NFL would want to put a team in London and believe that it is a bad idea. If you take away all the other positive attributes about the city, the only statistic needed for the rationale behind why the NFL wants to have a full time presence in London is: population. Some estimates have the population of London within city limits at 9.7 million, the greater metro area estimates are 13 million to 21 million people (courtesy of the Greater London Authority). The NFL is not currently in LA, so after the New York/New Jersey metro area, the next largest metro area the NFL has a franchise in is Chicago at approximately 9.5 million people (www.census.gov). The potential expansion to London would add another market with the population base of New York or Los Angeles. That offers the NFL a very unique way to expand the league into a very large marketplace. The bid would be solid as the team would have several potential ownership groups and they could play at Wembley Stadium at least initially. In fact, Fox Sports, reported over the weekend that the London based professional soccer club, Tottenham Hotspur, is proposing to build a brand new 65,000 seat stadium that could be shared with a future NFL franchise. When that sort of project is being proposed it validates that the NFL and the city of London have had several behind the scenes meetings about the expansion possibilities there. The relocation route could be another potential avenue into London, with the Jacksonville Jaguars being the most likely franchise for relocation there, according to several media reports. The owner of the Jaguars, Mr. Khan, has ties to London and the Jaguars have the lowest merchandise sales in the NFL. They also currently play in the league’s smallest market, Jacksonville, and they have committed to playing 3 games in London over the next 3 years.

 

Final observations

 

 

The NFL is the most popular professional league in the United States, and it is poised to expand into a few of the remaining markets left that they have not tapped. In my opinion, I think the NFL needs to be in Los Angeles, the game translates so well to the medium of television and it makes no sense to not have a franchise in the second largest TV market in the country.

 

Furthermore, I think the league would do very well with a team in San Antonio, but I do not think it will happen for a long time. The Toronto move is less likely now that the Bills are staying in Western New York, and the London move is complicated. On the surface, I understand why they want to make the move over to London, but logistically that would be a major headache for the NFL.

 

Every U.S. based team that played over there would have to have a bye week the following week, and the London based team would have to fly over here and spend three to four weeks straight on the road in various regions of the U.S. (Northeast, Midwest, etc.).

 

An additional consideration is the conversion rate of the currency, if the contracts for the players are in U.S. dollars, and they are living during the season in London and using the Euro, that is going to be a problem. London is also one of the most expensive cities to live in, so most of the players would opt to leave their families back in the U.S., which I think will definitely impact how the team in London would be able to attract top players to sign to play over there.

 

So each expansion possibility has unique issues here, even the L.A. bid, it will be interesting to see what the future holds for the NFL. The next part of this series will focus on the National Hockey League (NHL) and the potential for that league to expand, which is very realistic in the near future.