Tuesday, September 22, 2009

NFL Blackout Rules

The phrase “let them eat cake” was attributed, perhaps erroneously, to Marie Antoinette, the wife of Louis XVI. But Marie had nothing on the NFL. The league trumped that cry when it announced that fans of local teams whose games are blacked out this season will be able to watch replays online for free, but only after midnight on game day.

NFL blackout rules prevent a game from being aired on live TV in a team’s home market if the game isn’t sold out 72 hours in advance of kickoff. Prior to this season, blackouts were mostly an infrequent occurrence. Only nine NFL games were blacked out last year, amounting to less than 4% of the league schedule.
But in the worst economy in decades, ticket sales around the league have been sluggish. Unsold seats are no longer the exception and as many as a dozen teams are in danger of experiencing blackouts at some point this year. The total may quadruple last year’s figure, a sobering thought for a league that has seen demand for its product rise on an upward trajectory for almost two generations.

The NFL acknowledged the economic downturn last December by slashing 14% of its workforce and freezing salaries through 2009. But in stark contrast to those economic realities, general admission ticket prices increased this year by 3.9% to an average of $74.99, based on figures compiled by Team Marketing Report. The average “premium seat” now costs $229.17, a bump of 15% over last year.

Throw in the cost of parking, food, beverage and souvenirs, and the incentive to give up the comforts of home for the privilege of spending an afternoon in the rain, snow and cold surrounded by 65,000 screaming fanatics who are blocking your sight lines and clogging up the restrooms, quickly disappears.

Don’t shed any tears for NFL owners. With billions of dollars in guaranteed TV contracts, Forbes estimates league revenues in 2009 will exceed $7 billion. Ticket sales represent approximately one-fifth of that figure. But a full stadium is the engine that drives demand for the product, whether on TV, in advertisers’ boardrooms, or at retail shops selling NFL merchandise. If last year’s decline in attendance – paid attendance was down 290,000 or 1.7 % last year over 2007 figures – is a trend, league honchos have more to be concerned about than the impending labor negotiations with the players.

The NFL blackout policy has been controversial from its inception. Prior to 1973, all games played in the home market were blacked out, regardless of whether they were sold out or not. But as part of the NFL, AFL merger in 1970, which required congressional approval to avoid antitrust violations, Congress wanted all games broadcast in the home market. The league agreed to a compromise, and the 72-hour rule was instituted in 1973.

In addition to the economy and the high cost of attending a game, there may be a third reason for declining attendance. Fans can sit in the comfort of their living rooms in the company of friends and family, eat and drink what they want, when they want it, and see more of the game than they ever could in person. Flat screen TV’s, high def, multiple replays, and in-game bells and whistles give viewers the feel of “being there” without all the negatives associated with attending a game - and at much less cost.

As a concession to its less well-heeled fans, who have suffered disproportionately in the recession, the NFL could have allowed the broadcast of non-sold out games this year as a one-time exception to the blackout rule. But if fans continue to avoid the stadium when the economy rebounds, and the league reverts to the blackout policy, the public relations fallout could be disastrous. Better to draw a hard line this year and take the heat than to create a situation that would be difficult, if not impossible, to reverse.

By adhering to the blackout rules, the NFL runs the risk of alienating much of its fan base, which, thanks to NFL marketing tactics, has come to view their right to watch professional football as inviolate. But the alternative presents risks the league is unwilling to assume. It may take years to determine whether the NFL made the right call.

Jordan Kobritz is a former attorney, CPA, and Former owner of The Maine Guides. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at jkobritz@mindspring.com.



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