No college football could greatly blunt the NFL salary cap impact of no fans

One of the biggest football stories in the country Monday had nothing to do with the Seattle Seahawks or the NFL, but rather were the multiple reports that a decision to postpone or cancel the 2020 college football season is on the brink of being made. According to reports, there is a very real possibility that the college football season is scuttled as a result of the coronavirus, and that at this point, according to multiple athletic directors at Power 5 schools, it’s simply a matter of when, not if, the games will be cancelled.

Many fans may find this frustrating, as the incidence of death among young, in shape college students is extremely low, but what universities and conferences across the country are finding is that death is far from the only negative outcome for their student athletes. For example, the Big Ten has already found at least five athletes who are suffering from myocarditis after recovering from COVID-19, which is an inflammation of the heart muscle that sometimes occurs after a viral infection. Myocarditis is what landed Boston Red Sox pitcher Eduardo Rodriguez on the sideline for the 2020 MLB season after his bout with COVID-19, and it has now been found across multiple sports in multiple NCAA conferences.

This is in addition to the reports regarding other issues, such as the breathing issues suffered by Xavier Thomas of Clemson. Thomas, a twenty year old defensive end for the Tigers, will be redshirting this season after battles with COVID and strep throat left him out of shape and unable to get back into shape because of breathing issues.

He’s the second young defensive end in the hard South to publicly report how bad things were. Travez Moore, a redshirt senior at LSU had the following to say after his own illness.

This all combines to creates significant financial risk to the universities, which in turn is expected to many to lead to the cancellation of the 2020 college football season. Lower divisions have already seen the FCS Playoffs for this fall cancelled, following the cancellation of Division II and Division III championships last week.

Thus, with it appearing very likely that the college football season may not happen, there are suddenly a whole lot of extra television spots available that could be filled by NFL games. Whether the NFL will go to extremes and fill Friday and Saturday with football is unknown, but it would create the potential for the league to flood the airwaves with non-stop football from primetime on Thursday night through Monday night every week with football, which could help mitigate the financial impacts of no fans in the stands.

As a starting point, it’s obviously necessary to understand what the financial impact of no fans in the stands means for the NFL. The Wall Street Journal estimated no fans could cost the league $4B in revenues, while The Ringer put the number somewhere between $2B and $5.5B. Those numbers are in line with the estimates from OverTheCap.com back in the spring, and mean the league will likely have a several billion dollar revenue shortfall to address. For those wondering exactly how much money the league generates from ticket sales, here’s a table of the average price per ticket and average attendance per team from 2019.

Those numbers do not include the revenue generated on beer and hot dogs sold at a 3000% markup, the cost to park or revenue from luxury box sales, so the $1.72B total is also a vast underestimate.

However, with the college football season potentially not taking place, the league could potentially make up some of the lost revenues through additional broadcasts, and the question becomes how much? To address that question, a very ballpark approach will be used to get a rough estimate.

To get an estimate for the amount of television revenue that could be generated by the league, the simplest method is likely to pull the numbers from the standalone Thursday Night Football broadcasts, and then to apply those to any additional broadcast slots. It’s known that FOX pays $550M per year for the right to broadcast eleven Thursday games each season, putting the primetime value at $50M per game. That means that any new time slot into which the league decides to broadcast games could be in that range.

Therefore, if the NFL wanted to fill the primetime Friday spot with an NFL game and three time slots on Saturday each and every week, then it would be somewhere in the neighborhood of $200M each week over the seventeen week season. That would represent just under $3.4B in potential new revenue from adding four games to the television broadcast cycle each week.

Those are not the only revenues the league generates from Thursday Night Football, though, as Amazon has also reportedly paid $130M per year for the right to stream 11 Thursday games each season. Applying that amount to each of up to four new game slots could see somewhere in the neighborhood of roughly half a billion dollars in new revenue. Putting that half billion together with the $3.4B from above would land the league in the neighborhood of $4B, which is in line with where many estimates put the expected revenue shortfall.

However, if the league were to create four new broadcast slots, two things would likely happen. First, the networks which broadcast on Sunday would likely push back that they would then have fewer games on Sunday, diminishing the value of those broadcasts. Thus, they’d likely push to get lower pricing for the rights to Saturday games or some sort of pricing reduction for the Sunday right. That means it could be unlikely for the league to see the full $50M in pricing for these rights when considering the net effect.

In addition, there would likely be push back from DirecTV, which currently pays $1B per season for the rights to the Sunday Ticket. DirecTV pays that $1B because each week they have the exclusive nationwide broadcast rights for anywhere from eight to thirteen games. If those numbers were reduced to four to nine exclusive games each week, it would obviously reduce the value of the Sunday Ticket, and would likely lead to some sort of reduction to the amount of revenue generated by the Sunday Ticket package. That, again, creates a net effect on revenue that would be a little lower for the league, possibly to the tune of a few hundred million over the course of the season.

So, putting it all together, the league could likely make up somewhere in the ballpark of half to two thirds of its anticipated revenue shortfall through the creation of new broadcast slots this season. It won’t change the salary cap in 2020, but it could certainly blunt the impact of a decrease in 2021 through 2024 in a material way.