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Billionaire Watch

The NFL: The Golden Goose of American sports

Despite a steady decline in viewership, loss of matchday revenue due to the Covid-19 pandemic, the NFL is still making unbelievable revenue.

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America loves its sports, there are no two ways to say it. The average American loves sport, and follows at least 2 teams, especially in his vicinity. Americans pride themselves in their Big Three (American Football, Baseball and Basketball), and while these sports have a cult following on North American shores, they also enjoy wider global appeal, especially the NBA.

The National Football League is however the golden goose, with its annual Super Bowl tournament, a one-off game attracting remarkable viewership and even more astronomical numbers. Names such as Vince Lombardi and Tom Brady have made the sports more popular, but the NFL offers much more than nostalgia. The ROI for potential investors is quite the proposition, given that the potential reach is in billions of people.

There are 32 member teams but only Green Bay Packers retains its non-profit status. The other 31 teams are privately owned. Despite controversies over player concussions and the national anthem, a steady decline in viewership, loss of matchday revenue due to the Covid-19 pandemic, the NFL is still making unbelievable revenue. During the 2019 season, it made an estimated $15.26b, a 5.4% increase from the $14.48b generated the previous year. According to the Commissioner, it is also targeting a revenue of around $25b by 2027.

In this article, we highlight how the NFL makes its money.

TV is King

Most of the revenue the NFL generates is from TV, because American football is the most-viewed sport in the US. Media companies shell out top dollar to show these games on live TV, as they are consistently ranked the highest rated. Games are broadcast live on Mondays, Thursdays and Sundays. To put this into proper context, the Super Bowl accounts for 19 of the 20 most-viewed TV broadcasts in U.S history.

Companies such as CBS, NBC (owned by Comcast), ESPN, and Fox have deals with the NFL, with an agreed 7% annual raise, meaning that the NFL is guaranteed to net at least $3.1b per year by 2022.

Licensing and Merchandising Deals

Apart from its massive TV deals, the NFL sells licensing and merchandising rights to companies so that they can sell items that represent the NFL. In 2018, the NFL, in cahoots with Nike, signed a 10-year licensing deal with online sports retailer Fanatics to make the brand the exclusive manufacturer of all adult-sized, Nike-branded merchandise through the league’s online store. Although the value of this deal is undisclosed, there are indications that it doesn’t come close in terms of worth to the mammoth TV deals.

Concessions and Ticket Sales

NFL Stadiums sit at least 70,000 people, and oftentimes, these stadiums are not enough to sit the throng of people that want to experience matchday action live. In 2000, an NFL ticket was priced at $30, though as of last year, it was sold at $151. While there is also an average increase in price of 7% annually, these prices pale with what is accrued from TV.

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In order to increase revenue from ticket sales, teams have renovated their stadia to provide a premium experience. Concessions are given to food vendors, although the margins are quite minimal compared to the sale of soda and beer, which generate up to 90% markup. Averagely, an NFL team earns about $8m, of which 8% is profit, with about 55% going to pay musicians or athletes, 10% for general stadium administration, 5% to the coaching staff and 5% in taxes. Concerts and non-football events are also an avenue to make money, but there are also limitations for growth.

Sponsorships

Uniforms, TV transitions, and merchandise are a key source of corporate sponsorships as brands and major companies pay NFL teams to display their logos on these media. However, naming rights to stadiums are the most coveted. The Met Life in New York and the AT&T Stadium in Dallas have naming rights that are worth $19m a year, according to the New York Times.

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There are plans for the future…..

Like all properly-run businesses, the NFL is also projecting long-term as it seeks to conquer new landscapes and secure even more viewership in the US, and spread its tentacles all over the world into uncharted territories. It has plans for increased TV deals. Streaming is also not left out, as these deals will continually be on the rise in the years to come. Gambling will also become more significant in terms of revenue, although the league body is officially against it.

The NFL could decide to partner with established casinos and set up betting parlours in stadiums. With American sports gambling being worth a reported $150bn annually, the opportunities are endless, and the NFL could tap into this.

Last Words…

The earning power of the NFL is mind-boggling with the potential to be more. It has become one of the most successful sports leagues in the world and doesn’t look like it will rest on its laurels anytime soon. The structure, organization, and fan love mean it will continue to rake in remarkable numbers.

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While Covid-19 and steady declining viewership mean that the bottomline will be affected, there is still enough going on for the league to ensure that it will stay on course for its large profits forecast.

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Around the World

Elon Musk loses an estimated $6bn after a Tesla car accident killed two people

Elon Musk’s net worth dipped by $6 billion following a tragic Tesla car accident that killed two people.

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Elon Musk, Tesla, SEC, Stock, Twitter, COVID-19: Tesla’s Elon Musk to produce ventilators as fast-spread of disease lingers

The second richest man in the world, Elon Musk, witnessed his wealth shed an estimated $6bn after a Tesla car was involved in an accident that led to the death of two people.

Tesla stocks dropped by 3.8% after the news of the crash went mainstream. The resultant effect on Elon Musk’s wealth was a $5.71bn loss in a single day.

READ: Google threatens to remove its search engine from Australia due to media code

The Accident

Two men lost their lives on Saturday night in Houston when their 2019 Tesla model car slammed into a tree. Police authorities on sight claimed the car might have been on autopilot due to the sitting position of the corpses.

They also struggled to put out the fire from the Tesla car and even called Tesla for help. The death of the two men has sparked a heated argument between Tesla and its critics. Autopilot or not?

Although police officers’ assertion that the car may have been on autopilot remains unconfirmed, it has raised serious uncertainty about the safety of Tesla’s autopilot feature and Tesla’s critics are not backing down on this.

READ: Dealers explain why ‘Tokunbo’ Cars are expensive

Elon Musk reacts

Elon Musk has reacted to the news, insisting that the autopilot feature in the crashed vehicle was not enabled. According to him, the Wall Street Journal’s coverage of the accident was not professional.

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READ: Meet the 39 years old Chinese billionaire electric car maker 

 

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What you should know

Elon Musk is now worth $183bn following the recent drop. He closed the gap on Amazon’s Jeff Bezos to $4bn early last week. The gap has widened to $14bn today.

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Billionaire Watch

TikTok’s 38 year-old founder is worth $35.5 billion – Here’s what we know

At 38 years old, Zhang Yiming is the 39th richest man in the world.

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TikTok a video sharing app was named the most downloaded app of the first quarter of 2021 but not much is known about its founder. The app now has over 689 million active users worldwide according to statistics from oberlo.com. It has also been downloaded over 2 billion times on App Store and Google Playstore. It is arguably the most popular video-sharing app out there and the numbers keep growing.

TikTok was able to grow at a faster rate than Facebook and Instagram since its startup. The man behind this massive success is currently worth $35.5 billion and he is our person of interest today.

READ: TikTok to relocate headquarters to London following approval by UK ministers

Meet Zhang Yiming, the founder of Bytedance 

38-year-old Zhang Yiming is the CEO and Founder of ByteDance, the parent company of TikTok. Zhang Yiming majored in microelectronics and software engineering at Nankai University. He worked for various tech startups including Microsoft before settling to start his own company.

The billionaire leads a very secretive lifestyle. He founded ByteDance back in 2012 and steered it all the way to financial success. He is currently worth $35.5 billion but his net worth is well on its way to doubling based on recent valuations.

ByteDance has two main flagship products – Toutiao, an AI-backed news aggregator and TikTok which he founded later after the success of Toutiao.

READ: US government to ban WeChat and TikTok from app stores

Revisiting the success of  TikTok 

Last year Zhang Yiming’s ByteDance was regarded as the most valuable startup in the world. TikTok became the most downloaded iOS app worldwide in the first quarter of 2019, according to the US research app Sensor Tower.

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TikTok is available in 155 countries and in 75 languages.

READ: Folorunsho Alakija’s net worth drops below $1bn. A few things to know about her

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Impressive valuation 

Bytedance’s first major valuation was in 2018 where it was valued at $75bn according to Forbes. This was followed by another valuation which put it at $140bn according to CB Insights.

The latest 2021 valuation places ByteDance at over $250bn according to the South China morning post.

Zhang Yiming owns a quarter of ByteDance and with this recent valuation, his net worth is set to grow to $60bn according to experts in the field.

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READ: China will not accept any Microsoft-TikTok deal

Donald Trump scare 

The former president of the United States was on the verge of banning TikTok in the country. He claimed the App has ties to the Chinese government. This would have been a setback giving that the application is quite popular among US millennials and Gen Z. Donald Trump lost his re-election bid and very little has been said by the Biden administration on the issue.

What you should know 

  • At 38 years old, Zhang Yiming is the 39th richest man in the world. His parents were civil servants.
  • The popularity of TikTok in the United States has raised concerns from US regulators.

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