If the prospect of a NFL-free 2011 has football fans scrambling for the Cymbalta, advertisers are facing an even more disheartening reality. According to media buyers, clients that invest a good chunk of their TV budgets in NFL games now face the daunting task of trying to find a replacement for the only game in town.
Talks between players and owners have not resumed since the March 11 lockout, and while a hearing that could potentially restart the clock on the 2011-12 NFL campaign is scheduled for April 6, most insiders believe a resolution won’t be reached until later this summer.
In a worst-case scenario, the loss of the NFL will wipe as much as $3 billion in ad revenue off the books at CBS, Fox, NBC and ESPN. Fox has the most skin in the game, generating north of $975 million in ad dollars with its Sunday NFC package. Per industry estimates, NBC hauls in some $850 million with its prime-time Sunday Night Football showcase while CBS’ AFC coverage churns up around $825 million.
Per terms of its rights deal, ESPN’s Monday Night Football carries the lightest spot load, with ad sales adding up to around $175 million. (The ratings generated by MNF allow ESPN to charge cable and satellite TV operators the highest carriage fee in the business—$4.40 per sub per month. By way of comparison, TNT charges the second-highest affiliate fee at $1.03, per SNL Kagan estimates.)
Obviously, the first thing clients stand to lose should the NFL fail to materialize this fall is reach. According to Nielsen ratings data, pro football in 2010 accounted for eight of the top 10 most watched programs on TV, and a ninth, CBS’ Undercover Boss, was the beneficiary of a Super Bowl lead-in. On the cable side, ESPN claimed each of the top 10 slots and 15 of the top 20 with its Monday Night Football juggernaut.
In the event of a no-show, the broadcasters would stand to lose between 25-30 percent of their fourth-quarter 18-49 ratings points. ESPN could face an even greater deficiency; per MagnaGlobal analysis, Bristol could lose as much as 54 percent of its nightly 18-49 deliveries in the absence of Monday Night Football.
Buyers will look to mix and match in order to make up for those vanished GRPs, as it is frankly impossible to make a wholesale swap. “We’ve had contingency plans in place with our clients for 12 to 18 months now. The thing is, you just can’t replace the NFL audience one for one,” said Shane Ankeney, evp, managing director, Initiative U.S. “There may be a fair amount of programs with a male skew out there but certainly nothing that can stand alone. So we’ll be looking at a combination of other opportunities.”
League partners are particularly vulnerable. Last year, Anheuser-Busch InBev supplanted MillerCoors as the official beer of the NFL, plunking down $1.2 billion for a six-year contract. Pepsi-Cola has a standing annual commitment of $70 million while Gatorade’s association with the league is worth $45 million.
“The clients that look at football as a way to draw a big audience aren’t nearly as concerned as the folks on the other side of spectrum, the sponsors that truly look at NFL as a partner,” Ankeney said. “For clients with deeper partnerships with the NFL, those impressions will be difficult, if not impossible, to replace.”
Most agencies seeking reach will look to snap up relevant prime-time avails, but marketers that lock in on the younger male demos are increasingly eyeing the digital space. “You’re not going to garner the ratings that are lost with any replacement programming,” said Hank Cohen, CEO of KSL Media. “If there is no football to watch in those dayparts, fans are going to migrate to digital platforms. In a sense, they’ll use the Web as a means to counterprogram.”
Cohen said he’s paying close attention to the opportunities afforded by automotive, travel and financial sites. While portals and news providers may seem a fair substitute for live game action, the lack of football is likely to have a diminishing effect on sports sites. (With no statistics to track, the $2 billion fantasy football market will be gutted. This in turn is likely to drag on top-trafficked sites like ESPN.com, Yahoo Sports and NFL.com.)
If NFL games are knocked off the calendar, the demand for college football will be tremendous. This would put ESPN in the catbird seat, given that it and broadcast sibling ABC control roughly 90 percent of NCAA football regular-season GRPs and carry 33 of the 35 bowl games. Trouble is, college games cannot be rescheduled for Sundays and Monday nights, which leaves the traditional NFL dayparts wide open.
“We haven’t seen how the nets will fill those time slots, but we believe consumers will devote a significant amount of that time to online pursuits,” Cohen said. “And there will be a significant spike in on-demand viewership. Sunday could be the day everyone catches up with all the prime-time programming they’ve captured throughout the week.”
If one thing is certain, the lessons of 1987 have not been forgotten. During the last work stoppage, the NFL staged three weeks of games featuring unskilled replacement personnel. According to commissioner Roger Goodell, the league won’t subject fans to that sort of exhibition. “We have not had any discussions or consideration of replacement players,” Goodell said last week at the NFL’s annual meeting in New Orleans. “That’s not in our plans.”
All told, some $9.3 billion in TV, sponsorship and concession dollars is at risk, which may be why at least one owner is confident that a season-saving resolution will be worked out with the league’s locked-out labor force. “It’s going to be a few months here, but we’ll be playing this year,” Tennessee Titans owner Bud Adams told John Glennon of The Tennessean. “I guarantee we’ll be playing.”
Buyers are also trying to remain upbeat. “We’re telling our clients to use this as an opportunity to lessen commitments in the TV sports arena and really start to look at ways they can remain top of mind,” Cohen said. “In an entrepreneurial market, the challenger brands are going to look to connect with the customer in an environment that will motivate them to sales . . . So, we expect to see a greater transfer of dollars to targeted online sites.”
In the near term, advertisers are holding out hope that they’ll be cutting NFL deals in May. However, given that talks between the NFL and the players aren’t expected to resume until after the court hands down its decision on the preliminary injunction, the outlook on the upfront remains cloudy.
“It certainly could have an impact on the market,” Ankeney said. “If we’re at a place where the lockout is still going on and it doesn’t seem that they’re any closer to a resolution, then I expect you’ll see a lot of dollars moving into other areas. Obviously, only time will tell.”