Questions for CPA's and Lawyers on this forum

[006]

How will the NFL handle the television contracts that are coming up?

How will the NFL owners handle the next CBA?

Thanks

I'll hang up and listen.

 

[Hank Kingsley]

Poorly.

Poorly.

You're welcome.

 

[redseat]

 

[jerseyhawksfan79]

 

[Wolverine830872]

 

[True Lakers Fan]

How will the NFL handle the television contracts that are coming up?

How will the NFL owners handle the next CBA?

Thanks

I'll hang up and listen.

The owners will argue any additional income will be needed to pay off lawsuits for past concussions and injuries.

The players will say that is bullshit and want more

The players will get screwed

 

[ducky]

Tv contract:

Going to be a monster deal. It will be damn interesting to see if any networks bow out afraid of what TV will look like 5 years from now. But seems unlikely. NFL football is too big a slice of the overall revenue pie for all of these networks right now to back out.

Next CBA?!?
They just signed a 10 year deal.
17 games starting next year. Although maybe this COVID season might have them delay one more season. But that is also unlikely because of the above mentioned revenue.

 

[Sharkonabicycle]

CPA will mostly be concerned with how the revenue and accounting is going to be recognized for this and accounted for, also in the sense of reported sales for investors. How the contract provisions are written legally have a LARGE impact on how financials are recognized and projected. Since basically all the broadcasters are public (even if a subsidiary) this is key item.

Legal (lawyers) will handle the exact agreement in terms of what the language is while CPAs are going to be the ones explaining to the networks what it means in terms of profitability, forecasting, ad sales, and potential cash earnings. CPAs that AUDIT will also be VERY much reviewing those contracts to ensure there's no 'fooling' the #s to report inaccurate projections based on what's written.

There's a number of ways this can go, but I'm assuming networks are going to sign up for a low minimum fixed amount (if any) with an expectation of an NFL season. That said, networks will also likely ask for termination protection in the event an NFL season cancels or is largely postponed. That said, the structure that was before likely fixed pricing (i.e the PS5 is $500 period, not $20 for every year it works) based on the NFL having the power to sell based on historical numbers may very well shift to a variable costing approach based on viewership/potential lost games/postponement, etc. This really doesn't impact the NFL (outside of the owners, contracts given, projections) because it's a private org, but this heavily impacts broadcasters who rely on advertisement revenue which is based on earning projections and expected revenue/broadcasting agreements.

The NFL is POTENTIALLY shifting from a guaranteed/routine service (projections from broadcasters can be based on historical findings, which is allowed in GAAP and can be translated to ad agencies) to something that is based on a deliverable (delivering the game) and certain factors of when the game could be made up, change of byes, postponement of the season, shifting games to mid-week, multiple Monday nights, etc. The ad revenue is contingent based on the deliverable and finding out what that acceptable level of risk, is something that must be worked out by the SEC/Audit staff as most of those broadcast Companies are public.

CPAs are going to be warning networks what this means for costing consideration as well. If you're on the network side, where you'd typically accrue cost, the cost accrual may be fractional with heavy FS disclosures and ad revenue accruals/forecasting is going to be significantly impacted as well since their contract while it is a cost will generate revenue in the form of ads they broadcast. The forecast projection for their earnings is heavily impacted as ad agencies will no doubt build termination protection in which MAY result in a earning projection issue which will unsettle shareholders.

The NFL is naturally going to want the usual amount, fully fixed or 'guaranteed' contracts while networks are going to argue for full termination provisions with minimal/no penalties or variable pricing, so the tug of war between the two is going to be interesting. That said, the networks hold the majority of the power here (since ad revenue is what it's all about), and the NFL owners are simply going to some degree have to bend over and take it. The 60K fans (assuming they fill the stadium) they grab each game is peanuts in comparison as well as a lot of the merch if you don't have a season. There's a reason the NBA, MLB, NFL, etc. was SO desperate and spent a LOT of money to get SOMETHING going.

Course, it could be a move for some major networks... they may lowball (similar to oil) a fixed bid and exclusive rights, but I don't think that's in the NFLs interest... that would be the extreme (FOX buys out the NFL lol). That said, it's not even been a year. I don't think we'll see that kind of knee jerk reaction that quick.


As for the CBA - lol. Players have less power than the NFL. They'll get some 'simple negotiations' they want and take the rest on the chin. The CBA 'thing' is a pawn on the chess board at this point.

 

[ducky]

That said, the networks hold the majority of the power here (since ad revenue is what it's all about), and the NFL owners are simply going to some degree have to bend over and take it.

That is so not true.

The NFL has all the power here because they have the power to leverage the networks against each other. Let's say NBC decides to underbid for Sunday Night Football. Fox can scoop in and steal it away and have most of Thursday night games and all of the Sunday night games. That is a HUGE revenue hit on NBC and a huge boost to FOX revenue. Huge. And even if the CEO of NBC has better profit in 2021 because he didnt overbid for the NFL, he will be showing a huge loss in overall revenue without the ad money from the Sunday night games. In today's world, revenue trumps profits. Profits come eventually if you continue to expand your revenue (in theory). Which means that CEO will be given the boot if he doesn't win the NFL bid and sees his revenue decrease. And all the main heads of Fox, ESPN, NBC and CBS all know this.

Long and short is that the NFL is the one bankable item that all these stations have with ad revenue from your typical TV show plummeting over the years. These stations can't afford to not win the NFL bid and risk losing their share of the NFL ad revenue from their overall revenue pie. It's too big and it's too consistent.

 

[Sharkonabicycle]

That is so not true.

The NFL has all the power here because they have the power to leverage the networks against each other. Let's say NBC decides to underbid for Sunday Night Football. Fox can scoop in and steal it away and have most of Thursday night games and all of the Sunday night games. That is a HUGE revenue hit on NBC and a huge boost to FOX revenue. Huge. And even if the CEO of NBC has better profit in 2021 because he didnt overbid for the NFL, he will be showing a huge loss in overall revenue without the ad money from the Sunday night games. In today's world, revenue trumps profits. Profits come eventually if you continue to expand your revenue (in theory). Which means that CEO will be given the boot if he doesn't win the NFL bid and sees his revenue decrease. And all the main heads of Fox, ESPN, NBC and CBS all know this.

Long and short is that the NFL is the one bankable item that all these stations have with ad revenue from your typical TV show plummeting over the years. These stations can't afford to not win the NFL bid and risk losing their share of the NFL ad revenue from their overall revenue pie. It's too big and it's too consistent.

I mention that further down. One network could swoop in and basically steal all games, but I doubt Networks are going to start paying HUGE amounts or the same amount they've been paying given the uncertainty. The NFL has the choice to sell it (it's their product) and point is, they HAVE to. Yes a Network could go insane and just monopolize the market, but I'd be SURPRISED if that happens THIS soon. Again see my point above shortly after your quote.

My point with networks hold all the power, is the NFL HAS to sell because that's the majority of their income. What is negotiated and who pays what or is willing to OVERPAY is entirely based on the networks and if they want to 'bet'. If the NFL says, "We don't like any of your offers. We sell to nobody." Then RIP NFL. And I don't think the networks will overpay or sign contracts they've done in the past because ad agencies are the 3rd party that matters to them. That said, if the NFL plays a full season and there's statistics based on what it was like with COVID that could be enough basis for those Companies to make that decision.

 

[sonnyblack65]

If any lawyers on here, I want to sue the OP because I was looking forward to watching Kapernick on Sunday and slay the Dolphins.I was sold a bill of goods and booked it!!

 

[ducky]

I mention that further down. One network could swoop in and basically steal all games, but I doubt Networks are going to start paying HUGE amounts or the same amount they've been paying given the uncertainty. The NFL has the choice to sell it (it's their product) and point is, they HAVE to. Yes a Network could go insane and just monopolize the market, but I'd be SURPRISED if that happens THIS soon. Again see my point above shortly after your quote.

My point with networks hold all the power, is the NFL HAS to sell because that's the majority of their income. What is negotiated and who pays what or is willing to OVERPAY is entirely based on the networks and if they want to 'bet'. If the NFL says, "We don't like any of your offers. We sell to nobody." Then RIP NFL. And I don't think the networks will overpay or sign contracts they've done in the past because ad agencies are the 3rd party that matters to them. That said, if the NFL plays a full season and there's statistics based on what it was like with COVID that could be enough basis for those Companies to make that decision.

A place like Apple TV, Youtube TV, Hulu, Disney plus.....them capturing a series of NFL games would be absolutely huge for their platforms and future revenue via ads and future subscribers who are only signing up to watch their team play football could be a game changer from them.

And the NFL actually could decide not sell too. 10 years ago I would agree with you. But today I don't.

Them launching their own platform where they get revenue from subscribers along with ad revenue and cut out the middle man of the network isn't completely out of the question. Obviously the start up cost of such an ambition venture would be really high.....but the NFL has the cash to back that up easily. I doubt that happens on this TV contract.....but I could see that happening on the next TV deal. The NFL Network failed because of the failure of cable. A streaming service on the other hand isn't that hard to pull off these days.

 

[Southieinnc]

How will the NFL handle the television contracts that are coming up?

How will the NFL owners handle the next CBA?

Thanks

I'll hang up and listen.

they're billionaires.
they will do the best they can and continue to cash checks.
Some more of that cognac pleas......