With media deals complete, NFL eyes over $100 million per year for its data rights

About 30 minutes after the National Football League announced its new 11-year media rights deal this week, New England Patriots owner Robert Kraft praised his commissioner Roger Goodell.

Kraft, the chairman of the league’s media committee, had plenty of reasons to compliment Goodell. He just delivered NFL team owners more than $100 billion in media rights fees. Kraft was so thrilled he said working with Goodell on this negotiation was “one of the most enjoyable experiences of my professional career.”

Kraft added: “He treats his position as being the custodian of the league’s long-term best interest. When coupled with his unique strategic business acumen, we’re able to get outcomes like this one. We are very fortunate to have him as our commissioner.”

Goodell has locked in a decade of NFL labor peace and TV deals. Now, he’ll oversee the league’s data rights which fuel sports betting. The NFL could seek over $100 million per year for its new data rights agreement according to people familiar with the situation.

The people said the NFL would try to align its new data rights deal with media deals. The individuals spoke with CNBC on condition of anonymity due to privacy concerns. One of the people said the NFL could even seek up to $250 million, as its data rights continue to lead U.S. sports betting hauls.

The NFL currently has a data agreement with Sportradar and has equity in the firm dating back to 2015. Terms of that deal are undisclosed but the parties are currently in talks to extend the agreement, the people said.

Sportradar is a data and integrity company that gathers sports data like live play-by-plays and operates the NFL’s next generation stats using Amazon technology. The firm has deals with sports gambling companies to provide data used to set betting odds. Sportradar is using the SPAC, or special purpose acquisition company, route to enter the public market.

The company also extended its deal with the National Basketball Association last October. Under its previous deal, it paid the NBA about $41 million per year. Chicago-based Stats Perform is also one of the more notable data firms.

The NFL did not make an official available to discuss the matter and Sportradar declined to comment.

As for the broader media rights deal that was inked on Thursday, here’s what stands out:

Networks who had the NFL’s Thursday package won’t entirely lose out on the game entirely, as the two teams playing in the game will have the contest available on broadcast and Amazon will need to pay for production costs.

That can get expensive, but Amazon’s video ads will benefit. In a note to clients, Morgan Stanley analysts wrote that Amazon’s video ads are the fastest-growing part of the company’s roughly $20 billion ad revenue. And now that it has football exclusively, rates could increase. The tech company trails only Google and Facebook for digital advertising market share.

“The Amazon deal is particularly interesting as it shows how important live sports content is in the streaming wars,” Bill Wise, CEO of advertising software company Mediaocean, told CNBC via email. “It also demonstrates Amazon’s continued foray into advertising and, with that, its unique capabilities to close the loop across screens and all the way down to purchase.”

“For advertisers, the imperative is clear,” added Wise. “You have to be thinking omnichannel and marketing your brands consistently across screens to connect with fragmented audiences.”

With Disney once again in the rotation to broadcast Super Bowls, it will now be able to capitalize on the highest-viewed U.S. sporting event and the money that comes with it.

Ad spots for the 2021 Super Bowl were around $5.5 million per ad. For the 2020 game, Fox pulled in more than $400 million from Super Bowl spots. Once it’s time for Disney in 2026, that rate could surpass $7 million per slot. Disney will also have a Super Bowl in 2030 as part of its $2.7 billion per year agreement.

The NFL’s Covid-19 Super Bowl in February attracted 96.4 million viewers watching the Tampa Bay Buccaneers beat the Kansas City Chiefs, 31-9. Though NFL viewership has declined, the game remains a draw for marketers.

“Linear TV is still a mainstay on brand advertising budgets and the Super Bowl offers reach like no other event in the world,” said Wise.

Had Fox kept the Thursday package, it might’ve paid close to $3 billion total for NFL rights if you count the $660 million per year it currently spends for the TNF package. Advertising data firm MediaRadar estimates Fox’s 2020 NFL games generated approximately $2 billion in national advertising most of which comes from its Sunday afternoon games.

“It’s the weakest of the packages,” longtime television executive Neal Pilson said of TNF. “Not a surprise that none of the networks wanted it and it’s not a surprise that Amazon stepped up to take it.”

But unloading NFL rights comes with a cost for Fox. Dropping TNF could impact the network’s retransmission fees from distributors and Fox station affiliates in 2024, who may push to pay less without the NFL on Thursdays.

Said Morgan Stanley: “Our assumption is Fox’s existing retransmission contracts will not be affected by losing this content. Clearly, once these agreements are finalized and Fox enters negotiations with MVPDs and Fox station affiliates for new distribution contracts there may be a cost to shedding TNF.”

But one of the interesting parts of the new rights deal is the network’s FoxBet gambling asset becomes an official sportsbook of the league, “if, and when, the NFL approves official sportsbook operators for its officially licensed intellectual property,” according to a Fox Sports press release.

It puts Fox in prime position to capitalize on popular NFL wagers as the league continues to explore the sports betting space and helping network partners, too. And once the NFL organizes its role in sports gambling, Kraft’s praise of Goodell should only intensify as more revenue will roll in.

“We’re going to find ways which we engage fans through legalized sports betting,” Goodell said of assisting media companies with gambling. “But we’ve retained those rights and we’re going to look to see where those opportunities lie and how we’ll be working with our network partners. But we fully expect that they’ll be engaged in all of our activities going forward.”