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Friday, May 24, 2024

NFL-Netflix Deal Could Set Stage for Mother of All Cash Grabs

  • The league could opt out early of current rights deals—and charge more money.
  • The NFL can opt out of its current media deals after seven years.
Kirby Lee-USA TODAY Sports

The NFL’s landmark Netflix deal puts the chess pieces in place for what could be the league’s biggest business gambit of all: opting out early of its current media-rights deals that will pay a combined $110 billion through 2033. That would likely force desperate legacy media partners such as CBS, Fox, NBC, and Disney’s ESPN to pony up even more in rights fees to keep their only must-have programming from being gobbled up by giant streamers like Netflix, Amazon Prime Video, and Google’s YouTube. 

Here’s how the mother of all cash grabs could work. The NFL’s current cycle of media-rights deals, signed in 2021, runs from the ’23 season through the ’33 season. But ProFootballTalk reported that all of the deals—repeat, all of them—can be terminated by the NFL after seven years. That means the NFL could throw all of its TV/streaming rights up for grabs after the ’30 season.

With the NFL conjuring new rights deals for Netflix’s Christmas Day doubleheader and Amazon’s Black Friday game out of thin air, would anybody bet against the league exercising those opt-out clauses? Especially when virtually every TV network and streamer spent this week touting their NFL programming to ad buyers during upfront week. 

When it comes to media-rights deals, the NFL is “diabolical,” tweeted Andrew Brandt, the former Packers executive turned executive director of the Moorad Center for the Study of Sports Law at Villanova University. Brandt laid out how the league horned in on the NBA’s longstanding Christmas dominance and is now bringing in Netflix over current rights partners for at least four valuable Christmas Day games that arguably should have gone to one of them. 

“I have no doubt that the NFL will opt out,” Brandt told me Wednesday. “What seemed like home runs for the NFL a couple of years ago now seem like bargains for the networks.”

The opt-opt clauses in its media deals were designed to give the NFL flexibility as it aims for an 18-game regular season and possible game windows, PFT noted back in 2021. But they also give the NFL the contractual freedom to do what it does best: Set up a bidding war for its expensive media packages. With NFL games accounting for 93 of the top 100 most-watched TV shows in ’23, incumbent rights partners will either have to play ball or risk living in the wilderness without live NFL games.

“For the NFL, it is always about having more bidders than packages,” John Kosner, the former ESPN executive turned media consultant, told Front Office Sports in an email. “Should that be the reality in 2029—likely!—I would expect the NFL to opt out of its current media agreements.”

From a strategic standpoint, the NFL’s Netflix deal is a boon for both partners. The league has now assembled a virtual murderers’ row of deep-pocketed media partners that include the four biggest broadcast entities (ABC/ESPN, CBS, Fox, and NBC) and three biggest streamers (Netflix, Amazon, and YouTube). No wonder the league wants to sell off its NFL Media operations: It has seven media partners clamoring to produce its games and studio programming.

For Netflix, the world’s biggest, most successful streamer with 260 million customers, it’s the beginning of its long-awaited move into live sports rights. There’s no trophy more valuable than NFL game rights. This could open the door for Netflix to bid on other major sports leagues, as well as continue its move into sports documentaries via Peyton Manning’s Omaha Productions, which will follow up the Quarterback docuseries with Receiver this summer.

There are still questions about Netflix’s agreement to stream an NFL doubleheader this Christmas Day and at least one yuletide game in 2025 and ’26. How much will Netflix pay the NFL? They won’t say. But figure at least $50 million to $100 million per game. Who will produce and call the games? Netflix wouldn’t comment on that either on Wednesday. 

Whatever the answers, there’s little doubt the NFL-Netflix deal is another “crossing the Rubicon” moment, says Kosner. From now on, legacy media companies will have to look over their shoulders for Netflix, as well as Amazon and YouTube. Things might never be the same.

“For a reported $150M, Netflix materially helps its evolving ad sales business, gains a tentpole on a holiday when all Americans are home, and challenges Amazon, Peacock, and Disney/ESPN+ for NFL streaming supremacy,” Kosner says. “[Netflix] also gets to gauge the impact that premium sports has on its platform. The prediction here: a much better investment for Netflix than its movies. And [it] sets the stage for many more and bigger sports rights investments by Netflix in the years to come.”

As for football fans and viewers, the future will entail more streaming services if they want access to all the games. As NFL reporter Albert Breer noted Wednesday, NFL games will stream this year on Netflix, Amazon Prime, Peacock, and ESPN+.

“There was a time when having an NFL Sunday Ticket and a cable subscription would get you access to every game. That time is over,” Breer wrote.

Michael McCarthy’s “Tuned In” column is at your fingertips every week with the latest insights and ongoings around sports media. If he hears it, you will too.

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