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9-511-055
REV: NOVEMBER 30, 2010

ANITA ELBERSE

KELSEY CALHOUN

DAVEN JOHNSON

The NFL’s Digital Media Strategy

We are a media company as much as we are a sports company.
— Brian Rolapp, senior vice president of media strategy and digital media for the NFL

In late 2009, the National Football League (NFL) had wrapped up its most-watched season in
twenty years—with games averaging well over 16 million U.S. television viewers. Yet Brian Rolapp,
the NFL’s senior vice president of media strategy and digital media, had little time to celebrate the
league’s latest milestone. As fans across the country were getting ready for a set of playoff games that
would culminate in the 44th Super Bowl, traditionally one of the year’s biggest and most anticipated
events, Rolapp was at work in his New York City office.

After months of in-depth research, Rolapp and his Digital Media team would soon have to present
their strategy for the mobile space at the NFL Owners’ Meeting, where the league’s new strategic
initiatives were debated and, when the time was right, put to a vote. Various potential allies were
vying to replace carrier Sprint as the NFL’s official wireless partner. With the fate of valuable rights
hanging in the balance—such as video highlights, access to live games, and live streaming of the
NFL’s flagship cable channels NFL Network and NFL RedZone—a lot was riding on the team’s
ability to assess the best strategic direction.

Because television rights were at the heart of the NFL’s business model—the NFL’s media
partners, which included the broadcasters CBS, FOX, and NBC, cable channel ESPN, and satellite
provider DirecTV, collectively paid the NFL over $4 billion annually—Rolapp knew he would have
to consider the impact of a wireless deal on the NFL’s overall ability to monetize its content. As
media landscapes were changing dramatically, he wondered about the desirability of working with
broadcasters versus wireless carriers and of forming exclusive versus non-exclusive content
partnerships—and how to balance those considerations with the league’s objective of providing a
compelling experience for as broad a fan base as possible.

Upping the ante was an ambitious goal set by NFL Commissioner Roger Goodell, who wanted the
NFL to reach $25 billion in revenue by 2027—an amount that would mean adding nearly $1 billion in
new revenue on average each year.1 Rolapp realized that Goodell counted on new-technology deals
such as this one in the wireless space to generate the double-digit growth he envisioned. What was
the best course of action?
________________________________________________________________________________________________________________

Professor Anita Elberse, Kelsey Calhoun (MBA 2010), and Daven Johnson (MBA 2011) prepared this case. HBS cases are developed solely as the
basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management.

Copyright © 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

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511-055 The NFL’s Digital Media Strategy

American Football
In American football, a sport played over four quarters, two teams of eleven on-field players each
tried to outscore each other either by running or passing a ball down the field into the “end zone” for
a seven-point touchdown or by kicking the ball through two uprights for a three-point field goal.
When on offense, a team had four chances, so-called “downs,” to advance the ball 10 yards on the
100-yards field, while the team on defense tried to stop them by tackling ball-carrying players,
blocking players, or intercepting a thrown ball. If the team on offense was successful at advancing on
the field, it got a fresh set of downs; otherwise, the opposing team took its turn at offense.

The NFL
The National Football League (NFL) represented the highest level of professional play. The
League was comprised of 32 clubs, divided into two conferences, the American Football Conference
(AFC) and National Football Conference (NFC), with four divisions each. For instance, the New
England Patriots, New York Jets, San Diego Chargers, and Tennessee Titans played in the AFC, while
the Dallas Cowboys, Green Bay Packers, New Orleans Saints, and New York Giants played in the
NFC. Each club played 16 regular-season games, making it 256 games across the league in total. The
regular season usually ran from late September to early January, and was followed by 11 playoff
games, culminating in the “Super Bowl” championship game in early February.

By many measures, football was the United States’ most popular sport, earning it the nickname
“America’s Game” (see Exhibit 1 for a comparison of U.S sports leagues). The NFL had experienced
tremendous growth ever since former Commissioner Pete Rozelle decided to focus on Sunday
afternoons (one of the traditionally least desirable time slots on television), consolidated NFL games
on that day, and branded it “Football Sunday.”2 By late 2009, the league had become the highest-
revenue and most-watched sport on television in the nation, and arguably one of the most successful
entertainment properties in the world.

The first four weeks of NBC’s Sunday Night Football in the 2009 regular season averaged more
than 20 million viewers. Across the entire season, viewership averaged 16.6 million per game.3 The
NFL’s popularity prompted NBC Sports chairman Dick Ebersol to call the NFL “the surest bet in the
television universe” for programmers. “The dominance has been mind-numbing. The NFL is more of
a guarantee of success than if you’ve got Brad Pitt, George Clooney and Angelina Jolie doing a drama
series for the network,” he said.4

The Super Bowl had become an unofficial American holiday. Over 98 million people tuned into
Super Bowl XLIII in February 2009—more than any Super Bowl in history. Nine Super Bowls
belonged to the top 20 highest-rated U.S. shows of all time.5

Organization Each of the clubs was privately held, with the exception of the Green Bay
Packers which was grandfathered into the league as a publicly held company.6 The 31 club owners
and the Green Bay president together elected a Commissioner, a position held by Roger Goodell since
2006, to run a League office and represent their collective interests.

The League office was responsible for ensuring that each club operated within the constitution
and By-Laws of the League. The office also coordinated operations, managed the relationship with
the Players Association (NFLPA) in accordance with the Collective Bargaining Agreement (CBA),
and represented the clubs in “national” business negotiations. Representatives of the clubs voted on
the League’s strategic direction. The League office in turn enforced the implementation of the
strategy on the clubs.

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The NFL’s Digital Media Strategy 511-055

If the League office wanted to get a significant new league initiative approved or implement a
meaningful change in strategy, the office first had to bring the topic before an Owners Committee,
typically consisting of five to ten owners who focused on a specific area (such as Business Ventures,
Broadcasting, Competition, or Finance). While most initiatives were dealt with quickly, more
controversial initiatives could spend years being discussed at the committee level. If the topic
advanced, the NFL held several League Meetings each year where club owners gathered to discuss
and, where necessary, vote on key league initiatives that were brought up by the Committees. The
purpose of the vote was to grant the Commissioner and the League office the authority to enforce the
new initiative. In recent years, a stadium-financing plan that funded the expansion of 20 new
stadiums, the creation of NFL Network, and the idea to bring NFL.com in house were among the
major proposals passed.

Revenues The NFL derived its revenue from national and local sources. National revenues
were generated by the League office, and were primarily driven by media contracts, followed by
sponsorships, and by events such as the Super Bowl. “We are a media company as much as we are a
sports company,” remarked Rolapp. “We are focused on monetizing the game of football as best as
we can, and media rights are a critical source of revenues.” Local revenues were generated by the
clubs: reflecting their local popularity and brand value, these revenues consisted primarily of “gate”
revenue (meaning local ticket sales as well as other game-day items sold in stadiums such as
programs, concessions, and parking), local sponsorships, and local media rights. In the 2009 season,
revenues were expected to total around $8 billion (see Table A for a breakdown of revenues, and
Exhibit 2 for financial metrics for each NFL team separately).

Table A The NFL’s Annual Revenues

Source National Local Total

Ticket Sales -- ~ $2 billion ~ $2 billion

Media Licensing ~ $4 billion -- ~ $4 billion
Other ~ $1.5 billion ~ $0.5 billion ~ $2 billion
Total ~ $5.5 billion ~ $2.5 billion ~ $8 billion

Source: Sports Business Journal 2010, case writers’ estimates.

Controlling Costs and Sharing Revenues In order to maintain competitive parity among
the teams and control costs, and as part of the NFL’s CBA with the players, the NFL implemented a
“salary cap” and “salary floor” as well as an aggressive revenue-sharing agreement. As team rosters
had room for up to 53 players, salaries were a significant expense for any team, and the league
wanted to avoid a scenario in which a handful of wealthy teams would attract all the top players. For
the 2009 season, the salary cap—the maximum amount a team could spend on salaries—was $128
million while the floor—the minimum amount a team could spend on salaries—was just under 88%
of the cap.7

Revenue sharing occurred in three ways:

• National revenue sharing: all national revenue (including the revenue generated from the
Digital Media group) was pooled and split evenly between the teams at the end of the year.8

• Gate revenue sharing: meant to compensate visiting teams for their contribution to
attendance and certain other game-day revenues (such as concessions and parking), all teams

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511-055 The NFL’s Digital Media Strategy

contributed 34% of their total gate revenues to a “visiting teams share” pool which, at the end
of the year, was also divided equally between the teams.9

• Supplemental revenue sharing: focusing on teams’ local income, teams with higher local
revenues transferred a significant part of those revenues to teams with lower local revenues.
In 2009, around $100 million was redistributed under this option alone. 10

Commenting on the revenue-sharing agreement, former owner of the Baltimore Ravens Art
Modell once famously stated, “We’re 32 fat-cat Republicans who vote socialist.” 11

The NFL Brand In its branding strategy, the NFL emphasized values such as integrity,
excellence, community, teamwork, innovation, and tradition. The league felt its brand essence could
be described as “intense” (delivering “edge of your seat, heart-pounding excitement”), “meaningful”
(being “much more than just a game”), and “unifying” (forging “bonds among families, friends, and
even strangers,” uniting “entire cities and even the nation”).

The brand was strong among audiences: the NFL had 181 million fans in the U.S. alone—over 70%
of all Americans, with half of that group considering themselves avid (as opposed to casual) fans (see
Exhibit 3 for more information). Yet the NFL continued to focus on ways to expand its fan base. “One
challenge we face is to turn fans of a particular team into fans of the league—to get them to watch a
second game each week,” said Peter O’Reilly, vice president of fan strategy and marketing. He
added: “Our marketing message has become more aggressive—more intense. Our new slogan is ‘If
you want the NFL, go to the NFL.’ We are promoting the league.”

Broadcast partners played a key role in building the brand. “The NFL only has a small marketing
budget. We buy very little media,” said O’Reilly. “But we receive over $200 million in media from
our broadcast partners as part of the deals with them, in the form of spots we can run during the
games.” Sponsors, in turn, benefited from the NFL’s brand equity. For instance, of the 21% of
consumers surveyed in an ESPN sports poll who indicated they had tried a product because of a
sports sponsorship, 49% did so because the sport sponsored was the NFL—more than twice the
number for the MLB and NBA. And other research suggested that the brand recall of NFL sponsors’
in-game advertisements consistently outperformed those of non-sponsors.

The NFL on Television

In 2009, the NFL had television-rights deals with the broadcasters CBS, FOX, and NBC, cable
network ESPN, and satellite provider DirecTV (see Table B). Exhibit 4 provides more information.

Table B The NFL’s Television-Rights Deals

Network or Provider Medium Term Value

CBS Broadcast 2006-2011 $622 million

FOX Broadcast 2006-2011 $712 million
NBC Broadcast 2006-2011 $600 million
ESPN Cable 2006-2013 $1.1 billion
DirecTV Satellite 2006-2010 $700 million a
Total ~ $4 billion

Source: Television Sports Rights 2007, Sports Business Journal 2006, case writers’ estimates.
a Renegotiated in March 2009, the DirecTV deal was valued at $1 billion per season for the 2011-2014 seasons.

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The NFL’s Digital Media Strategy 511-055

The NFL had a “blackout policy” that prohibited home games from being aired in the local home
market (defined by a 75-mile radius) if an NFL game was not sold out 72 hours in advance.12 Based
on the idea that television was a substitute for in-stadium viewing, the rule was put in place to
preserve a local team’s ability to sell tickets, thereby protecting a primary source of local revenue.
Every year at least one or two games were “blacked out.”13

Television Broadcasting In 2006, the broadcasters CBS and FOX paid an estimated $3.7
billion and $4.2 billion, respectively, to regionally broadcast NFL games through the end of the 2011
season.14 CBS showed all Sunday-afternoon AFC games and all inter-conference games in which an
AFC club was the away team. FOX, in turn, aired all Sunday-afternoon NFC games and all inter-
conference games in which an NFC club was the away team. The arrangement allowed viewers in a
particular market to see their local home team as well as one or two other team match-ups.

NBC entered into a $3.6 billion agreement with the NFL in 2006 to nationally televise Sunday
night games, known as Sunday Night Football.15 NBC had a flexible scheduling agreement with the
NFL whereby, in the last seven weeks of the season, the league would select a Sunday afternoon
game to become a Sunday night game, thus elevating it to be broadcast on a national scale. Because
the league selected the most competitive or otherwise interesting games, clubs could literally “play
their way into primetime.”16

The Super Bowl game rotated annually among CBS, FOX, and NBC. Broadcasting the game could
be extremely lucrative: in 2009, for instance, sponsors paid an average of $2.5 million for a 30-second
advertising spot during the game, far more than the sum paid during regular network programming.

Cable ESPN became the first cable network to broadcast NFL regular season games in 1987. It
took over the prized Monday Night Football time slot from ABC in 2006. The ESPN contract generated
$8.8 billion for the NFL, covered 17 games a season, and lasted until the end of the 2013 season.17 Not
every television viewer had access to ESPN; viewers had to subscribe to ESPN by paying their cable
provider for a bundle of premium cable offerings. Although exact terms were not disclosed, cable
providers were thought to pay ESPN around $4 per cable subscriber per month for the right to carry
its content.18

Satellite In 1994, satellite provider DirecTV paid for the right to show all “out-of-market” CBS
and FOX regional NFL games through a product called NFL Sunday Ticket. DirecTV paid the league
$700 million annually for the rights until 2010, and would pay $1 billion per year from 2011 to 2014.
To purchase a DirecTV subscription, customers could choose from several packages, ranging from
the basic 150-channel “Choice” package for $30 a month to the 285-channel “Premier Package” at $60
a month. The main feature of the latter option was NFL Sunday Ticket. 19 By 2009, an estimated two
million viewers had purchased NFL Sunday Ticket from DirecTV.20

NFL Network and NFL RedZone In 2003, the league established its own cable television
network, “NFL Network.” Among other content, NFL Network aired pre-season games, past NFL
Super Bowls and other NFL “Classics,” shows about coaches, players and fans, and, since 2006, the
annual NFL Draft in which teams selected new players. The league relied on the Emmy-award-
winning NFL Films Group to produce the majority of the content.

“Television is important to our business, so it’s good to have our own beachhead in television for
the distribution of our games. NFL Network gives us that,” remarked Hans Schroeder, vice president
of digital media. Kim Williams, chief operating officer for NFL Network, pointed to another
advantage: “This helps us strengthen our brand and our relationship with our fans.” She added: “It is
also a great tool for content experimentation—the more we know about how consumers are

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511-055 The NFL’s Digital Media Strategy

interacting with our content through different media, the better decisions we can make. And it helps
us in making the NFL a 365-days-a-year, 24-hours-a-day experience.”

NFL Network launched in over 11 million households. By 2006, when it had brought in 35 million
more households, NFL Network made a bold move into live game programming: it began to
exclusively produce and air eight regular-season NFL games as part of a new “Thursday-Saturday
Package.”21 DirecTV offered NFL Network to all its subscribers as part of its basic package.

However, NFL Network ran into some disputes with cable providers such as Time Warner Cable
and Comcast who balked at NFL Network’s relatively high fees per subscriber (which, they felt,
where too high compared to most other channels, also given the low number of live games) and its
insistence to be included in those cable providers’ basic packages (as opposed to bundled only with
other sports content). Tensions continued to simmer in 2007, when millions of fans were locked out of
watching high-profile games because their cable providers had not come to an agreement with the
NFL. Ending a fierce battle over the New England Patriots versus New York Giants game in
December 2007, the NFL eventually agreed to broadcast that game on CBS and NBC in addition to
NFL Network. 22 In late 2009, when NFL Network’s coverage had expanded to 55 million homes,
Time Warner Cable was the only remaining top-five cable provider not carrying NFL Network.23

In 2009, the NFL launched a new network, “NFL RedZone.” Its premise was simple: on Sunday
afternoons, viewers watching the channel could follow multiple games going on at the same time.
The channel would cut to a game from around the league whenever a team was inside the 20-yard
line and about to score. “We created NFL RedZone to be incremental to what our broadcasters were
already doing on Sunday afternoons. It is about additive consumption,” said Rolapp. “We are
positioning it as a premium product, and are distributing it to television households for an additional
fee or as part of a sports package of cable offerings,” remarked Williams, and added she was
“sensitive to the need to market the channel as complementary to the products of broadcast and
satellite partners.”

The NFL’s Digital Media Group

The Early Years
The NFL made its first foray into digital media in 1995, when it formed a partnership with ESPN
in which ESPN was made responsible for the development and operation of the NFL.com website. By
2001, as the Internet’s reach and popularity had grown substantially, the NFL formed its first “New
Media” division, which would later turn into the Digital Media group. It signed AOL and CBS
SportsLine to a five-year agreement to run the site in exchange for rights fees to the NFL. AOL was
made responsible for promoting and marketing the NFL’s online assets, while CBS SportsLine ran
NFL.com and its advertising sales.24

Rolapp joined the NFL in 2003, and by 2005 was heading the Digital Media group. The group
functioned as a division of the NFL and initially consisted of half a dozen people, all based at NFL’s
headquarters in New York City. “We were not given a mandate,” said Rolapp. “There was a
realization that the world was changing. Our broadcast partners were wondering about new models.
We were unsure where the opportunities would be. So we asked ourselves how we should develop
the business.” The Digital Media Group “put a premium on control,” as Rolapp put it: “When
renewing broadcast rights in 2005, we held back many of the digital rights. We figured if partners
want those rights, they should tell us what they are going to do with them and what they are worth.”

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The NFL’s Digital Media Strategy 511-055

Rolapp and Schroeder, then director of business development, soon decided that the NFL would
be better served managing the operations of NFL.com and its other digital media properties in-house.
In Rolapp’s view, that would help the NFL generate higher revenues, learn how to better monetize
content on digital platforms, maintain tighter operational control, and better couple digital assets
with the league’s overall media strategy. Rolapp also decided to let the agreement with AOL and CBS
SportsLine expire. Instead, he convinced team owners to invest in a relaunch and revitalization of
NFL.com ahead of the 2007 season. Rolapp commented:

We had really started a media company. We had already invested in NFL Films and NFL
Network. That got us thinking—we felt we could be efficient in the production of content.
Understanding what our customers want and how they use content puts us in a stronger
position for the next round of talks with our media partners. Managing content across
platforms helps us strengthen our advertising sales function. And we know that our content
can single-handedly drive a new business: when the NFL puts content behind a platform, we
can drive growth for it.”

Schroeder agreed: “The NFL has a pretty good track record of people building businesses around
our content.”

Rolapp and his team distinguished three pillars of their activities: “First, we want to reach fans
through new platforms. Second, by developing rights and products for those new platforms, we can
pursue new partners who are interested in buying those rights and in reaching our fans. Third, new
platforms force our existing partners to compete, which should make our packages more valuable.”
The team took a careful approach to exploiting the new opportunities: “We don’t have to be first, we
have to be right. We are fine with not being the most aggressive of the sports leagues,” said Rolapp.
Schroeder added: “We may have been too deliberate at times, but we haven’t had any missteps
either.”

NFL Digital Media in 2009

In late 2009, NFL Digital Media had around 200 employees. Although revenues were not publicly
disclosed, industry observers estimated the group’s revenues to be well over $500 million.25 Income
largely came from four main sources: advertising, paid content, satellite rights, and wireless rights.

Advertising The NFL employed an internal sales team that sold advertising and sponsorship
across all NFL platforms, including online, wireless, and NFL Network. The team historically sold
advertising on the NFL.com league website—which was operated entirely in house—but not on
individual club websites. However, when the league began hosting some club websites on a platform
shared with NFL.com in 2008, the sales team gained the opportunity to sell a share of advertising on
all websites, while the teams continued to sell advertising in their local markets. In 2009, the NFL saw
an average traffic growth of 41% for team websites on its platform, compared with a growth of 25%
for team sites not yet on the platform. By 2010, NFL.com and its affiliated websites together averaged
10 million monthly unique users. The phased rollout was scheduled to be completed in 2011.

“Fantasy football” accounted for a significant percentage of traffic to NFL.com and other
platforms, and thus of advertising revenues. A game in which participants pretended to be team
owners, assembling a team of players that could help them compete with other owners, and scoring
points based on real-life game play and the actual performance of “their” players, fantasy football
often attracted the most avid fans of NFL content. An estimated 15 million people played fantasy
football globally.26

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511-055 The NFL’s Digital Media Strategy

Paid Content The NFL provided a variety of online products to consumers via subscription
and pay services:

• Provided in partnership with RealNetworks and available since 2003, NFL Field Pass allowed
subscribers to listen to all games live online, for a fee of $10 per month or $40 for the NFL season.

• Giving fans the ability to watch replays of full games online, NFL Rewind cost $15 per month or
$50 for the NFL season.

• Only available to international fans (and geo-blocked in the U.S.), NFL Game Pass gave fans the
ability to buy a monthly or season-long pass to live game and replay video over the Internet. NFL
Game Pass cost $25 per week or $250 for the season.

• Videos of games and highlights as well as NFL Films and NFL Network programming were
available for digital download via platforms such as Apple’s iTunes (at $2 per download) and
Amazon, and available for streaming via services such as Hulu, MySpace, and Yahoo.

Satellite Rights The NFL had sold the exclusive rights to air NFL game audio on satellite
radio to Sirius (now Sirius XM, after Sirius merged with XM) from the 2004 to the 2010 season, when
Sirius was one of two dominant satellite radio distributors (and XM was the other). The deal covered
several forms of compensation, including rights fees and Sirius stock options. However, given the
industry’s recent consolidation as well as Sirius XM’s large debt, the value of the NFL’s satellite radio
rights would likely sharply decrease when the contract was up for renegotiation in 2010.

Wireless Rights The NFL licensed content for mobile phones via exclusive as well as non-
exclusive partnerships. The NFL’s main partner since 2005 had been U.S. wireless carrier Sprint (later
named Sprint/Nextel)—but that partnership could now be coming to an end.

Formulating A New Wireless Strategy

The Wireless Market
The U.S. wireless market was fiercely competitive. In 2009, it had over 285 million subscribers, or
91% of the population, generating over $152 billion in revenues, including $42 billion in data
revenues (stemming from content being delivered over mobile platforms).27 The top four carriers—
Verizon, AT&T, Sprint/Nextel, and T-Mobile—accounted for nearly 85% of total revenues; the top
two—Verizon and AT&T—for nearly 60% of the revenue and more than half of all wireless
subscribers.28 Because the market was saturated, wireless companies tended to focus on capturing
share from other companies while controlling their own churn. Voice services had become a
commodity.

Smart phones (such as Apple’s iPhone) and data services were an area for growth—data revenues
accounted for 63% of the revenue growth for AT&T in 2008, and 72% for Verizon.29 Being the
exclusive carrier for the Apple’s iPhone had played a crucial role in making AT&T the leader in the
U.S. smart-phone market, allowing the carrier to capture over 43% of all smart-phone customers,
compared with 23% for Verizon. Smart-phone customers were especially attractive because they
generally paid higher monthly rates for data plans.30 However, industry analysts were skeptical that
data and services would in the long run stem the declining growth rates. According to Craig Moffett
of Sanford Bernstein, the wireless industry was “collapsing” and “grinding to a halt,”31 while Charter
Equity Research’s Ed Snyder stated “all this talk about data and other services bringing a renaissance
of growth is wrong.”32 And exclusive relationships between cell-phone manufacturers and carriers

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The NFL’s Digital Media Strategy 511-055

could come to an end soon: Apple, for instance, was rumored to be developing a new iPhone that
worked with other carriers’ technology.33

“The mobile phone is the fastest-growing media device there is,” said Schroeder. “Mobile content
is addictive,” added Williams. “If fans can, they will watch our games on a large screen. But if they
cannot, mobile is increasingly an option they consider.” Yet the Digital Media group was also well
aware of the challenges in the wireless space. “The wireless players are killing each other for share,”
Rolapp remarked. “This may be the last gasp for several companies in the space”. Rolapp felt the
situation in the wireless space had many similarities to that in the satellite industry. “This reminds
me a lot of the DirecTV deal,” he said.

The NFL’s Partnership With Sprint

The NFL’s partnership with Sprint/Nextel—a global wireless telecommunications service
provider that was the result of a merger between Sprint Corporation and Nextel Communications—
started in 2005. Originally structured as a five-year deal with a termination option for both parties
during the third year, the deal was valued at $500 million. Sprint agreed to pay approximately $50
million annually to be the NFL’s exclusive wireless partner and an additional $50 million earmarked
for NFL-related advertising and promotion.34 In return, Sprint received the exclusive content rights
to:

• live stream NFL Network programming on Sprint’s mobile television platforms—but

excluding the eight-game “Thursday-Saturday” package of live games;

• offer “out-of-window” video highlights (meaning available after games);

• provide “out-of-window” audio, available after games, as well as “near-live” audio (meaning
audio available during the game after each quarter of play);

• develop an NFL Mobile application, downloadable to a mobile phone that provided access to
the NFL audio and video content in one bundle;

• offer NFL Films video on mobile platforms; and

• provide Sprint-branded personalization content such as ringtones and wallpapers.

These rights were bundled into an offering dubbed “NFL Mobile on Sprint,” (“NFL Mobile”)
which was initially offered as a $6-a-month subscription service for consumers, but after 2006 was
offered as a free service to Sprint’s data subscribers (who paid $15 a month) and Sprint’s “Simply
Everything Plan” subscribers (who paid $100 a month).35 Of the 7 million subscribers who had
compatible handsets and data plans, 1.5 million downloaded NFL Mobile over the life of the deal,
making it Sprint’s highest performing application. It reached 1 million downloads quicker than any
other application in the company’s history, and drove more usage than any other downloadable
application Sprint offered—during the season, NFL Mobile averaged 650,000 weekly unique users.36

The partnership with the NFL further gave Sprint the exclusive sponsorship rights to the wireless
telecommunications category, as well as to the use of NFL trademarks and designations such as
“Official Wireless Partner of the NFL” in their marketing campaigns. “The Sprint deal was largely a
sponsorship deal in year one, but by the end it was predominantly a content deal,” said Schroeder,
and added: “The lines between sponsorship and content licensing deals are blurring.”

Sprint exercised its early termination right after the 2007 season. The deal was subsequently
reconfigured and extended for the 2008 and 2009 NFL season, with several modifications. For

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511-055 The NFL’s Digital Media Strategy

instance, Sprint gained exclusive rights to full-game, live distribution and “in-progress” highlights
for the eight games in the NFL Network Thursday-Saturday package and exclusive rights to national
live game audio on the mobile platform only, while Sprint’s rights regarding all personalization
content switched from exclusive to non-exclusive.

With the Sprint deal set to expire in April 2010, the NFL began discussions with Sprint and other
parties before the 2009 season. “Sprint made NFL Mobile the pillar of their marketing strategy, and it
worked very well for them,” said Rolapp. He approached the upcoming search for a new deal with
confidence: “NFL Mobile now is an asset for us—it is a brand name.”

Determining A Strategic Approach For The Wireless Space

The first step in finding a new wireless partner was for Rolapp’s Digital Media group to
determine a strategic approach. Doing so was far from easy. “We want to be where the fans are, and
have a partner that can deliver the best quality experience for our fans,” said Rolapp, “but at the same
time we do not want to lose sight of the fees we can collect in the fierce competitive landscape of the
wireless space.”

Rolapp’s team faced two major questions. First, the team had identified two types of potential
partners in the wireless space: what Rolapp termed “strategic partners” such as ESPN on the one
hand, and carriers such as AT&T, Sprint, and Verizon on the other. The team had to choose what type
of partner to focus on. Second, Rolapp’s team could structure the deal either as an exclusive or as a
non-exclusive deal. “We do not have one model across all platforms,” clarified Rolapp.

Decisions
Well aware that every deal the NFL made would come to serve as a benchmark for future deals,
Rolapp had gotten up from behind his desk, and paced around his office. “Driving incremental value
requires discipline,” he said. Munching on his favorite snack, fireball candies, he ran the key
decisions to be made through his mind.

What Kind of Partnership To Pursue?

When it came to a strategic approach to the wireless market, Rolapp listed three viable
possibilities on the white board in his office.

1. Pursue An Exclusive Partnership With One Wireless Carrier. The first option was to
again pursue an exclusive deal with a wireless carrier, much like the NFL had done earlier with
Sprint. “This may be the last exclusive deal cycle for us in this sector,” said Rolapp, pointing out that
the wireless industry was changing fast. “The avidity of our fans is amazing, which enables us to be
more selective,” added Schroeder.

2. Form Non-Exclusive Partnerships With Multiple Wireless Carriers. The second

option was to push for a set of non-exclusive deals with wireless carriers, giving each the right to
carry NFL content on mobile phones, but no one party the exclusive right to do so. “An exclusive
deal can severely limit the number of fans reached, as even the biggest carrier can only deliver 20-
25% of the total audience. Non-exclusive deals could help the NFL reach a bigger audience on mobile
devices, much like the current deal structure allows us to do on television,” remarked Schroeder.

3. Include Wireless Rights In Partnerships With One Or More Television Networks.

A third option was to not continue to “carve out” wireless rights but instead work with current or

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The NFL’s Digital Media Strategy 511-055

new broadcasting partners on a joint television and wireless deal. After excluding these rights in the
latest round of negotiations with its broadcasting partners, the NFL could offer the rights to show live
full-game video or in-progress highlights, as well the rights to live video from NFL Network and
NFL RedZone. Rolapp noted that television deals were up for renewal in the 2013 season, and that
the mobile rights could be highly valuable for broadcasters. ESPN, for instance, had its own product
for mobile phones, ESPN Mobile, through which it offered streaming video and other content – NFL
content could significantly enhance the product. Complicating the decision, however, DirecTV held
the wireless rights to live, full-game video for Sunday afternoon games for its subscribers, which
meant that a new wireless deal could not (yet) include full exclusive rights.

How to Present the Strategy at the NFL Owners Meeting?

Once a decision had been made, Rolapp would have to present the strategy to NFL team owners
at the upcoming Owners’ Meeting, before they would vote on it. How could the strategy best be
framed to owners? And how could Rolapp address any concerns the owners may raise?

Significantly upping the ante was a goal that NFL Commissioner Goodell had started to state
internally, and would share with the owners at an upcoming Owners’ Meeting—to have $25 billion in
revenue by 2027. Reaching that amount would mean adding nearly $1 billion in new revenue on
average each year until then. While intended to serve more as an ambitious goal than a true financial
projection, it underscored how much the NFL was seeking to expand its business.37 “How can we
achieve double digit growth? The answer probably lies in part in global markets, and in part in
markets driven by new technology—including the wireless market,” said Rolapp. What was the best
course of action?

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511-055 The NFL’s Digital Media Strategy

Exhibit 1a Key Statistics for the Four Major Leagues: MLB, NBA, NFL, and NHLa

MLB NFL NBA NHL

Number of teams 30 32 30 30
Number of games per year 2,430 256 1,230 1,230
Total attendance in 2009 (M) 73 17 22 21
Total Revenues ($B) 5.9 8.0 3.8 2.8
Average Revenues Per Team ($M) 197 267 126 94
Highest-Revenues Team ($M) 441 420 209 168
(New York (Dallas (Los Angeles (Toronto
Yankees) Cowboys) Lakers) Maple Leafs)
Lowest-Revenues Team ($M) 144 210 88 62
(Florida (Detroit (Memphis (New York
Marlins) Lions) Grizzlies) Islanders)

Source: Adapted from Forbes (“The Business of Baseball,” April 7, 2010; “The Business of Basketball,” December 9, 2009; “The
Business of Football,” August 25, 2010; “The Business of Hockey,” November 11, 2009), MLB, NFL, NBA and NHL
press releases, case writers’ estimates.

a Revenues and attendance figures for MLB and the NFL are for the 2009 season; revenues and attendance figures for the NBA
and NHL are for the 2008-2009 season.

Exhibit 1b America’s Favorite Professional Sports Teams in 2009

# Team League # League % Of Favorite Teams

1 Dallas Cowboys NFL 1 NFL 41%

2 Pittsburgh Steelers NFL 2 MLB 17%
3 New York Yankees MLB 3 NBA 9%
4 Los Angeles Lakers NBA 4 NHL 3%
5 Green Bay Packers NFL
6 New England Patriots NFL
7 Indianapolis Colts NFL
8 Boston Red Sox MLB
9 Denver Broncos NFL
10 New York Giants NFL

Source: Adapted from ESPN Sports Poll 2009.

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The NFL’s Digital Media Strategy 511-055

Exhibit 2 Financial Statistics for NFL Teams

Rank Team Revenues Market Value Operating

b c
($M) ($M) Income ($M)

1 Dallas Cowboys 420 1,805 143.3

2 Washington Redskins 353 1,550 103.7
3 New England Patriots 318 1,367 66.5
4 New York Giants 241 1,182 2.1
5 Houston Texans 272 1,171 36.5
6 New York Jets 238 1,144 7.6
7 Philadelphia Eagles 260 1,119 34.7
8 Baltimore Ravens 255 1,073 44.9
9 Chicago Bears 254 1,067 37.3
10 Denver Broncos 250 1,049 22.0
11 Indianapolis Colts 248 1,040 43.2
12 Carolina Panthers 247 1,037 15.0
13 Tampa Bay Buccaneers 246 1,032 56.1
14 Green Bay Packers 242 1,018 9.8
15 Cleveland Browns 242 1,015 36.1
16 Miami Dolphins 247 1,011 -7.7
17 Pittsburgh Steelers 243 996 17.9
18 Tennessee Titans 242 994 23.3
19 Seattle Seahawks 241 989 34.0
20 Kansas City Chiefs 235 965 47.8
21 New Orleans Saints 245 955 36.7
22 San Francisco 49ers 226 925 21.0
23 Arizona Cardinals 236 919 28.1
24 San Diego Chargers 233 907 24.7
25 Cincinnati Bengals 232 905 49.4
26 Atlanta Falcons 231 831 34.5
27 Detroit Lions 210 817 -2.9
28 Buffalo Bills 228 799 28.2
29 St Louis Rams 223 779 29.0
30 Minnesota Vikings 221 774 17.9
31 Oakland Raiders 217 758 2.2
32 Jacksonville Jaguars 220 725 25.9
Average 267 1,091 36
Total 8,016 32,718 1,069

Source: Adapted from Forbes (“The Business of Football,” August 25, 2010), case writers’ estimates.

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511-055 The NFL’s Digital Media Strategy

Exhibit 3a The NFL’s Fans: Percentage of People Citing a Sport as Their Favorite

Source: Adapted from ESPN Sports Poll 2009.

Exhibit 3b The NFL’s Fans: Time Spent on the NFL By Channel (In Minutes Per Week)

Source: Adapted from OTX Weekly Tracker.

Exhibit 3c The NFL’s Fans: Time Spent on the NFL and Other Sports (In Hours, By Week)

Source: Adapted from OTX Weekly Tracker.

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The NFL’s Digital Media Strategy 511-055

Exhibit 3d The NFL’s Fans: Demographic Composition

Age Group Fans of the NFL Ethnicity Fans of the NFL

7-11 73% African-American 82%

12-17 82% Asian/Pacific Islander 62%
18-24 87% Caucasian 69%
25-34 71% Hispanic 78%
35-44 71% Other 72%
45-54 75%

Source: Adapted from ESPN Sports Poll 2009, Nielsen.

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511-055 The NFL’s Digital Media Strategy

Exhibit 4a The NFL on Television: 2009 Regular Season Averages (In Millions of Viewers)

Source: Adapted from Nielsen.

Exhibit 4b The NFL on Television: Audiences For Major Events (In Millions of Viewers)

Source: Adapted from Nielsen. The numbers reflect audiences are aged 2 and up.

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The NFL’s Digital Media Strategy 511-055

Exhibit 4c The NFL on Television: Ratings For Sports Leagues and Broadcast Networks

Source: Adapted from Nielsen. Ratings reflect the average percentage of U.S. households watching a program. The “Big 4”
Broadcast networks cover ABC, CBS, FOX, and NBC.

Exhibit 4d The NFL on Television: Ratings For the NFL versus the Broadcast Networks

Source: Adapted from Nielsen. Ratings reflect the average percentage of U.S. households watching a program. The “Big 4”
Broadcast networks cover ABC, CBS, FOX, and NBC.

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511-055 The NFL’s Digital Media Strategy

Endnotes

1 Kaplan, Daniel, “Goodell sets revenue goal of $25B by 2027 for NFL,” Sports Business Journal, April 5, 2010.
2 MacCambridge, Michael, America’s Game, Random House, New York, 2004.
3
Sean Leahy, “NFL TV ratings soar; Dick Ebersol says league’s dominance has been mind mind-numbing,”
The Huddle, October 9, 2009. Maury Brown, “2009 NFL Season Highest Viewed in 20 Years,” The Biz Of Football,
January 13, 2010.
4
Sean Leahy, “NFL TV ratings soar; Dick Ebersol says league’s dominance has been mind mind-numbing,”
The Huddle, October 9, 2009.
5 “NFL At Revenue Crossroads,” Sports Business Journal, February 9, 2009.
6
Green Bay Packers Official Website. “2010 Shareholder Meetings,” http://www.packers.com/community/
shareholders/, accessed on July 2, 2010.
7NFL Labor News, Posted February 24, 2010, http://nfllabor.com/category/faqs/, accessed on July 2, 2010.
Mark Maske, “NFL appears headed toward a season without a salary cap,” The Washington Post, December 30,
2009.
8Mark Lawrence, “Football 101: The Salary Cap,” http://football.calsci.com/SalaryCap.html, accessed on
July 2, 2010.
9 Mark Lawrence, “Football 101: The Salary Cap,” http://football.calsci.com/SalaryCap.html, accessed on
July 2, 2010.
10 Chris Mortensen, “NFL to end $100M in revenue sharing” ESPN.com, December 6, 2009,
http://sports.espn.go.com/nfl/news/story?id=4718965, accessed on July 2, 2010.
11 Tom Lowry, “The NFL Machine” BusinessWeek, January 27, 2003. pp. 87-94.
12Emmett Jones, “The NFL Blackout Loophole” Sports Business Digest, http://sportsbusinessdigest.com/
the-nfl-blackout-loophole/, accessed on July 2, 2010.
13 Emmett Jones, “The NFL Blackout Loophole” Sports Business Digest, http://sportsbusinessdigest.com/
the-nfl-blackout-loophole/, accessed on July 2, 2010.
14 “Sports Business Resource Guide & Fact Book: Digital Media Rights” Sports Business Journal, 2010.
15 “Sports Business Resource Guide & Fact Book: Digital Media Rights” Sports Business Journal, 2010.
16 “Sports Business Resource Guide & Fact Book: Digital Media Rights” Sports Business Journal, 2010.
17 “Sports Business Resource Guide & Fact Book: Digital Media Rights” Sports Business Journal, 2010.
18 Wayne Friedman, “Disney, TWC Strike Carriage Deal, Includes Disney Jr., ESPN3,” MediaPost, September
2, 2010.
19 DirecTV.com, “English Packages,” http://www.directv.com/DTVAPP/new_customer/base_packages.
jsp?, accessed on August 2, 2010.
20
Liana Baker, “DirecTV quietly kicks off new NFL online package,” Reuters.com, September 1, 2010,
http://in.reuters.com/article/idINIndia-51198420100831, accessed on September 14, 2010.
21 “NFL Network lands eight-game Thursday/Saturday package for 2006,” USA Today, January 28, 2006.
22
Steve Donohue, “NFL to Simulcast Patriots-Giants Game on CBS, NBC, Move Eases Battle Between
Comcast, Time Warner and NFL,” Multichannel News, December 26, 2007.

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The NFL’s Digital Media Strategy 511-055

23 Michael McCann, “Seven Years In, NFL Still Battling Cable Companies,” Sports Illustrated, May 27, 2010.
24 Andy Bernstein, “Who Will Net the NFL” Sports Business Journal, November 7, 2005.
25 See for instance, Jarett Bell, “High-Tech Ideas Drive NFL’s New Plan,” USA Today, March 28, 2006.
26 Lauren Rich Fine, “Online Fantasy Sports Growth Outlook Intact for this Broad-Based Niche,”
ContentNext, October 29, 2008.
27 CTIA—Wireless, “U.S. Wireless Quick Facts,” http://www.ctia.org/media/industry_info/index.cfm/
AID/10323, accessed September 12, 2010.
28 Mintel, “Mobile Communications Services—U.S,” August 2009.
29 Mintel, “Mobile Communications Services—U.S,” August 2009.
30 Yukari Iwatani Kane, Ting-I Tsai, and Niraj Sheth, “New iPhone Could End AT&T’s U.S. Monopoly,” The
Wall Street Journal, March 30, 2010.
31 Matt Richtel, “Analyst: Wireless Industry Price Wars Loom” The New York Times Online, March 5, 2009,
http://bits.blogs.nytimes.com/2009/03/05/analyst-wireless-industry-seriously-hobbled/, accessed September
10, 2009.
32 Matt Richtel, “Can the Cellphone Industry Keep Growing?” The New York Times, February 4, 2009.
33
Yukari Iwatani Kane, Ting-I Tsai, and Niraj Sheth, “New iPhone Could End AT&T’s U.S. Monopoly,” The
Wall Street Journal, March 30, 2010.
34 Matthew Futterman, “NFL Games Go Wireless” The Wall Street Journal, November 6, 2008.
35Mark Walsh “Sprint Scores Exclusive Mobile Deal With NFL.” Mediapost.com, August 19, 2008,
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=88732. Sprint, “Sprint and NFL
Bring Fans New ‘NFL Mobile Live’ Application Free of Charge,” Sprint Press Release, August 18, 2008,
http://newsroom.sprint.com/article_display.cfm?article_id=719.
36 Sprint, “NFL Mobile Live Only From Sprint Gives Fans Unequaled Live Mobile Access to the NFL,” Sprint
Press Release, September 4, 2009, http://newsroom.sprint.com/article_display.cfm?article_id=1213.
37 Daniel Kaplan, “Goodell sets revenue goal of $25B by 2027 for NFL,” Sports Business Journal, April 5, 2010.

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