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The NFL

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The NFL

J. R. B. (Initials used per student request).

Excelsior College

Business and Management Capstone

Dr. Emilsen Holguin

June 24, 2022

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The NFL has been around for over 100 years in the United States. In September of 1920,

the NFL was composed of 14 charter teams that were spread out through 13 towns in Ohio (NFL

100, n.d.). The league was originally known as the American Professional Football Conference

was only made of the Ohio leave. After a month of its official beginning, Buffalo and New York

league was added to in which they changed the name of the league to American Professional

Football Association (History of the National Football League, n.d.). In the 1960s the America

Football League and the National Football League combined as to we know now as the National

Football League (NFL). The NFL mission is “We unite people and inspire communities in the

joy of the game by delivering the world’s most exciting sports and entertainment experience”

(Mission and values, 2019). In this document, I have taken a look at the business side of the

NFL and identified the areas of strengths, weaknesses, opportunities, and threats. I conclude the

report with some recommendations to improve organizational performance.

Strengths

The NFL strengths is the ability to generate money from TV deals, merchandising,

licensing contracts and ticket sales to name a few. “The NFL groups its revenue stream into two

categories: national revenue and local revenue” (Eckstein, 2022). National revenue comes from

TV deals, merchandising and licensing contracts and the local revenue is ticketing, concessions,

and corporate sponsors. The NFL is constructed of 32 teams and the most current TV deals was

$100 billion in which it is divided evenly to each team through 2033 (Eckstein, 2022).

“According to Forbes, the Dallas Cowboys are the NFL’s riches team, with $800 million in

revenue and operating income of $280 million in 2021” (Eckstein, 2022). The second strength

that the NFL has is their fan base in the United States. The NFL has the biggest attendance

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compared to any other sports league, more than 66 thousand spectators per game. The counts

190 million fans in the U.S. and 63.7 million in other countries. The communications mix

theory is a great example of the strengths of the NFL. “The communication mix involves all the

tools you use to communicate with your customers or potential customers. This could be

through advertising, social medial, product packaging, direct marketing, websites, events,

exhibitions – the list goes on!” (Marketing Theories – The Communications Mix, n.d.).

Weaknesses

A weakness that the NFL has to deal with is the health of the players while active or

retired. The main backlash that the NFL gets is with head trauma. “Over the last few years, the

NFL’s injury focus was to address the alleged mismanagement and under-diagnosis of

concussions—which the NFL eventually settled a class-action lawsuit by former players”

(Shilstone, 2021). Football is rated as the top ten more dangerous sports in the world. In game

rules have been implemented to minimize the collisions that players encounter. Lifetime health

for former players has been mention by the CBA, no real traction has be made as of yet (No

lifetime healthcare for NFL plyers: Why it wasn’t even on the table, 2020). Another weakness in

the NFL is equal opportunity. The NFL has been criticize since their birth of not having enough

diversity in their head coaching positions. The Rooney rule was put in place in 2003 to try and

level the NFL head coaching job field. Any NFL team that has a head coaching job vacancy will

at least interview one or more diverse candidates (NFL, 2022). Organizing principle theory can

be related to this NFL weaknesses. “An Organization may develop a complex set of principles,

strategies, policies and procedures but it typically only chooses a single organizing principle”

(Spacey, 2016). Policies is tied to both of these weaknesses of the organization because changes

need to be made to these policies.

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Threats

One major threats that can impact the NFL is the future is a major pandemic like the

COVID-19. According to the The effects of NFL revenue loss, there was a loss of as much as

$100 for each of the 32 NFL teams (2022). The major impact in the decrease of revenue was the

attendance of people in the stadiums in which produces about $7 million a game. The second

threat is other sports teams catching up to the NFL’s popularity in the United States and stability

of teams in one location. NBA is a very popular sport that is gaining traction because of its

visibility outside the United States. Some teams throughout the NFL’s existence have been

moved from one city to another. The Marketing Environment theory would be one that can be

used in this situation. “The marketing environment is considered as part of the marketing

planning process and explores various internal external forces that might affect a business and its

capacity to operate” (Marketing Theories – The Marketing Environment, n.d.).

Opportunities

International exposure is one opportunity that the NFL can expand on. Every year the

NFL has one gave in a country abroad and this year the Ram, Buccaneers, Dolphins and 13 other

teams will be playing abroad (Benjamin, 2021). The NFL is trying to be competitive in the

international level and expand its fan base for more revenue. Another opportunity is giving all

players a partnership deal with major brands. Nike currently majority rights holder of the NFL

with all 32 teams uniforms and sideline apparel. It also has individual contract with some major

players like Odell Beckham Jr and Baker Mayfield (Liberto, 2019).

Summarizing the SWOT analysis:

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• One of the NLF strength is the ability to generate money from TV deals, merchandising,

licensing contracts and ticker sale to name a few.

• The second strength that the NFL has is their fan base in the United States.

• A weakness that the NFL has to deal with is the health of the players while active or

retired.

• Another weakness in the NFL is equal opportunity.

• One Opportunity would be International exposure is one opportunity that the NFL can

expand on.

• Another opportunity is giving all players a partnership deal with major brands.

• One major threats that can impact the NFL is the future is a major pandemic like the

COVID-19.

• The second threat is other sports teams catching up to the NFL’s popularity in the United

States and stability of teams in one location.

Recommendations

Looking at the weakness and threats in the NFL, there a few recommendations that can

possibly fix the problems. The league can put in place a mandatory rotation between minorities

and white coaches for every position. Specifically with head coaching jobs, contracts should not

be longer than 4 years. Retention of employment have to be based on milestones that the team is

trying to achieve. If the milestone is not met, the team is able to fire that individual, the

replacement has to be of the opposite race. This makes it fare for everyone to equal opportunity

to the top job in the league. The league can make this regulation for every top job in the NFL to

include General Manager and Vice President of the teams. Health of the NFL players can be

fixed by the lifetime health policy. The CBA needs to push harder and implementing that all

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players receive lifetime health care. Too many players leave the league and have major issues

that prevent them from having a good quality of life.

The threat of revenue with attendance of the fans can be fixed. If the fans cannot be

attend because of another pandemic, the NFL can make a deal with networks to reduce the price

of the NFL Sunday ticket. By reducing the price from $395 for the season which is six months

to $195 which is about half the price would make up of some losses teams took on the ticket

sales. The NLF can gain a bigger audience buy doing this concept and not only the NFL makes

some money, the networks make money as well. In regards to marketing, the Macro

Environment, which is the influences in wider society can be the key in marketing the league to

keep the interest of the consumer. Unfortunately you have to work with politicians because the

tax payers do end up paying for some of the stadium. Communicating with their law makes in

their city and figure the best way for both parties to make profits. This can be a great way to

compete and stay ahead of the other sports leagues in the country.

The Profitability Ratio is one that can be utilized in this organization. To be more

specific, “The gross margin ratio compares the gross profit of a company to its net sales to show

how much profit a company makes after paying its cost of goods sold” (Corporate Finance

Institute, 2020). One example is the Dallas Cowboys, in 2020 they had gross profit of $520

million dollars and net sales of $800 million dollars which it gives you a gross margin ratio of

.65 (Forbes, n.d.). This means that for every dollar that they generate, they get to retain 65% and

the remaining is for the cost of goods sold.

Conclusion

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The NFL has been a great business for the last 30-40 years. In its beginning with only 8

teams and now currently has 32 teams. In any business like the NFL, revenue is key to the

organization surviving and the NFL has done that for years. Each team with an average earning

of $800 million a year and operating on a $280 million dollar cap budget, qualifies as a

successful business. The popularity has increased their demand in TV deals and other

endorsements for bigger pay days. The NFL does have its flaws that at times it put the

organization in a bad situation like equal job opportunity for minorities. Health care can be a

challenging and expensive to incorporate for both parties to be happy. Changes are being made

and continue to be made to fix its problems. Other sports league do threaten the NFL as far as

taking some fan base and jeopardizing some revenue, but it is still leading in the United States.

Opportunities are there for the NFL to explore and grow as a company worldwide. Opportunities

for the players to have sponsor and other income coming in besides their NFL pay. As an

organization, the NFL is still growing and continues to look for other avenues to produce more

revenue.

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Reference

Benjamin, C. (2021, December 15). NFL announces international market partnerships: Rams in

China, Buccaneers in Germany, Dolphins in Spain. CBSSports.com.

https://www.cbssports.com/nfl/news.nfl-announces-international-market-partneships-

rams-in-china-buccaneers-in-germany-dolphins-in-spain/

Corporate Finance Institute. (2020, September 17). Financial ratios.

https://corporatefinanceinstitute.com/resources/knowledge/finance/financial-ratios/

Eckstein, J. (2022). How the NFL Makes Money: TV is King, Streaming and Gambling on

Horizon. [online] Investopedia. Available at:

https://www.investopedia.com/articles/personal-finance/062515/how-nfl-makes-

money.asp

Forbes. (n.d.) https://www.forbes.com/teams/dallas-cowboys/?sh=1a5e61c71426

History of the National Football League. (n.d.) American Football Database.

https://americanfootballdatabase.fandom.com/wiki/History_of_the_National_Football_Le

ague

Liberto, D. (2018, March 28). Nike, NFL extend partnership through 2028.

Investopedia. https://www.investopedia.com/news/nike-nfl-extend-partnership-through-

2028/

Marketing theories – The marketing environment. (n.d.). Training Courses & Accredited

Qualifications for Professionals.

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https://www.professionalacademy.com/blogs/marketing-theories-the-marketing-

environment/

Mission and values. (2019, May 30). NFL.com. https://www.nfl.com/news/mission-and-values

No lifetime healthcare for NFL players: Why it wasn’t even on the table. (2020, February 26).

RSN. https://www.nbcsports.com/northwest/seattle-seahawks/no-lifetime-healthcare-nfl-

players-why-it-wasnt-even-table

NFL 100. (n.d.). NFL.com. https://www.nfl.com/100/original-towns/

Shilstone, M. (2021, November 24). Retired NFL players carry considerable damage into life

after football. wwltv.com. https://www.wwltv.com/article/news/health/retired-nfl-

players-carry-considerable-damage-into-life-after-football/289-e99ab972-6762-4a91-

ab1a-30e4296d2432

Spacey, J. (2016, October 11). What is an organizing

principle? Simplicable. https://simplicable.com/new/organizing-principle

The effects of NFL revenue loss. (2022, January 18). American Football

International. https://www.americanfootballinternational.com/the-effects-of-nfl-