Why the NFL Cares About the Ratings Drop

As many of you have probably heard, the NFL has suffered a ratings drop this year, one that has many in the sports world scratching their heads.  The NFL, a league that has dominated the top Nielsen ratings, has never really struggled with viewership or interest in its product.  However, with its fewest number of viewers since 2012 and a ratings drop as severe as 11% this season, it seems easy to question whether or not the NFL is losing its seat atop the highest ratings of TV broadcasts.   The main talking points around this issue is what’s causing the drop, why are those reasons causing it, and can anything be done about it.  However, the need for the NFL to be “approved” by these ratings is more curious to me, as well as whether they will actually have an effect on the NFL’s ability to make copious amounts of money every year.

Ratings are an important method for networks, and more importantly advertisers, to gauge broadcasts’ national interest.  This gauge then allows advertisers to show their products in front of either as many people, or as many of the right people, as possible in order to drive sales.  This gauge is important to networks because they can then turn around and charge higher prices for airtime on highly rated broadcasts, and lower prices on lower rated broadcasts. Additionally, if a broadcast is continually low in the ratings, but is consuming a traditionally ratings-high time segment (say 9:00-10:00 pm), the network can either move the show or cancel it.  When it comes to sports this concept is often hard to apply from the perspective of a fan.  Top level professional sports leagues, like the NFL, MLB, NBA, have been televised for as long as the technology has been available.  Most people don’t know what it’s like to root for their favorite team without either being there or seeing the scores in the next day’s paper for the simple reason they haven’t been alive long enough to witness it.  The world’s first live televised sporting event was the 1936 Olympics in Berlin, and the US’s was a college baseball game between Princeton and Columbia in 1939.  The NFL had only been around for 19 years, and there were only 10 teams, none of which were on the west coast.  Therefore, TV and sports consumption have been linked together since their inception.

It seems hard to imagine any of today’s major sports leagues getting cancelled on television, but that is possible.  By no means am I suggesting that’s ever really going to happen, but it is something that sports fans everywhere refuse to consider.  So when the NFL, and by extension sports writers, get flustered about a drop in ratings, they have somewhat of a right to be.   If the NFL is not on TV, it doesn’t make money, and if the NFL doesn’t make money, well, the world might just stop spinning.  Doomsday scenarios aside, this drop is scary to NFL executives and owners.  The issue does not lie in its momentary occurrence.  The issue lies in its possible recurrence.  If the ratings continue to drop, or even if they just drop and then stabilize, the blissful days of a net of almost $40 billion in broadcast contracts may be over.  This mess becomes simplified when we imagine the NFL as a shelf product.  In order to “buy” this product, people watch it on TV.  If less people are watching on TV, less people buy the product.  Now the retailers (NBC, CBS, FOX, and ESPN) have to charge lower prices for this product, in the form of less advertising money.  In order to keep their margins, they have to buy the product for less money, meaning these broadcast contracts go down, and the NFL loses money.  Once again, this year’s drops aren’t going to make that happen, but it does explain why this is, or rather could be, a big issue.

At the same time, the enormity of the conversation around the drops is somewhat hysterical.  The NFL still fills a good chunk of the top 10 Nielsen ratings for each TV category.  The 2014 Super Bowl rated a 47.5 with 114 million viewers (that’s 36% of the population).  Account for Super Bowl parties and well, everybody may have been watching.  Jokes notwithstanding, the NFL isn’t having a crisis; it’s seeing some indication that there may be an issue that if not solved within let’s say, the next 4 years, the NFL will leave a lot of money on the table (the broadcast contracts expire in 2022).  This touches on an opinion I’ve always held about the NFL, but never really mentioned all that much: the NFL thrives on approval.  It’s no secret that the NFL is the most popular sports league in America, but I think that sometimes the NFL, as an entity, likes to hear it.  I mean everyone who is the best at anything likes to be reminded of their achievement, so in that sense the NFL is no different than the rest of us.  But where our sense of achievement gets actualized by the praises of our peers, the NFL’s gets actualized by ratings, and fewer people right now are singing the NFL’s praises than usual.  At the risk of sounding like the jealous kid stewing in the periphery, boo-hoo for the NFL, I hardly sympathize for them.  They will bounce back in rating once the postseason rolls around because frankly, Americans will be thankful for a distraction from whatever Donald Trump tweeted last.  And from then on it will business as usual for the NFL, striding back up to the very top of the Nielsen ratings, which might I remind you they are still very close to.

Many have said that the ratings drops are due to some combination of the presidential election, the crackdown on celebrations, and social issues surrounding the NFL (concussions, domestic abuse, etc.).  While these may be true, and this issue might not be an issue at all, it does give an opportunity to investigate the NFL’s handling of its internal affairs and public image, as we now have some concrete evidence of their effects.   If the ratings didn’t drop, and instead went up, what’s to provoke the NFL to do anything about the issues it faces.  Money drives action in the capitalist society we live in, and these ratings’ effect what the NFL does next is the embodiment of that.

Picture courtesy of For The Win/USA Today

Posted by Alby

Ride or die Oakland Athletics fan. I enjoy sports talk of any kind, but I find that sports business often gets overlooked. Additionally, I am huge movie guy; am from California/New York, but think Montana is the best state in the Union; and Classic Rock is the soundtrack to everything.

Website: http://Check%20Down%20Sports

This article has 2 Comments

  1. Huh? If any company suddenly loses 10% of the previous years’ customers for no known reason, panic ensues. I don’t why the NFL should care any less than a Fortune 500 company about the interest in its product. I highly doubt the owners care about “approval” — they care about the bottom line an the long-term viability of their product.

    1. The reason why the NFL shouldn’t really panic is that there are several temporary reasons for the drop this year that numerous other articles have mentioned, i.e. the election, concussion issues, domestic violence. Additionally, the NFL signs contracts with broadcast companies to televise their games, and these contracts don’t end until 2022. If the the ratings rebound, which everybody assumes for the most part, the new contracts in 2022 will most likely continue their trend of going up in value. A Fortune 500 company on the other hand would care more because more of their profit is tied to pure product consumption. The NFL doesn’t make that much more or less than they otherwise would because tv viewership is down. Keep in mind that tv viewership is only one measure of interest. There has been no indication of a decrease in attendance, merchandise sales, or any other mode of profit for the NFL this year. In the short-term, the only ones suffering, if at all, are the broadcast networks as their ad prices might be falling a little bit.

      The approval bit comes from the fact that despite these drops the NFL is still one of the most watched programs on television and it still isn’t particularly close. So quite a to-do has been made of something that most likely wont have much of an effect on their bottom line nor the long-term availability of their product. Yet somehow, this topic continues to be raised at NFL press conferences and even from the commissioner himself. Thus, if those two things were the only thing they cared about, this would be a non-issue, maybe mentioned in one or two articles and as an afterthought at press conferences, yet its currently a top-of-the-ticket item.

      Hope this answers some of your questions

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