Analysts Estimate That Media Giants' Annual NFL Profit Ranges From $12 Million to $146 Million

Evercore Partners' Alan Gould and Bryan Kraft believe that CBS makes the highest annual profit from its NFL contract.

NEW YORK - TV network owners are earning between $12 million and $146 million a year on their current NFL contracts, Evercore Partners analysts Alan Gould and Bryan Kraft estimated in a report Monday.

Some are likely reporting losses at the network level, but improve their result when including owned-and-operated TV stations, they said.

Using company data and Evercore research, the analysts suggested that CBS is currently making a $146 million profit on its NFL contract, Fox $107 million, ESPN $83 million, and NBC $12 million.

The calculation for the 2010 season includes estimated advertising revenue - plus, in the case of ESPN, an estimated 15 percent of the network's affiliate fee payments from its distributors - minus the estimated production costs and NFL broadcast right license fees. The calculation also assumed that Fox, CBS and NBC each got a third of the Super Bowl benefit - simply to make a comparison of the networks easier given that the Super Bowl rotates.

"We are not anticipating a lockout," Gould and Kraft said about a potential player labor issue. "We have no special knowledge here, but find it hard to believe that either the league or the players association would want to risk any interruption to the incredible momentum the NFL has had this past season."

The analysts also estimated the financial impact of expected new NFL contract deals starting with 2014, assuming all networks will retain rights, NFL fee costs will rise, while broadcast networks are also able to book higher retransmission consent fees from distributors and get possible reverse compensation from their affiliate stations - essentially, payments in return for their valuable network content. They specifically estimated that 25 percent of future retrans and reverse compensation fees are allocated to NFL costs.

The analysts expect the NFL will strike its next set of TV agreements for the period beginning in 2014 after it signs a new collective bargaining agreement with the players association in early March. Gould and Kraft suggested that in 2014, CBS could make a $293 million profit on the NFL, Fox $232 million and NBC $87 million, while ESPN could lose $49 million.

They estimated that new long-term NFL rights agreements with ESPN, CBS, Fox and NBC could add $46 billion in additional sports commitments for the TV industry.

SportsBusiness Daily recently reported that ESPN would pay $1.8 billion-1.9 billion annually, up from $1.1 billion, for a new contract. Assuming two additional regular season games, this works out to a 50 percent increase per game, or a 36 percent increase if ESPN gets the rights to a wildcard playoff game, the analysts said. Given these are long-term deals,
the compound annual growth rate is "a less eye-popping 6 percent," they commented.

Gould and Kraft assume "at least similar sized increases for the broadcast networks." After all, previously, the NFL was able to get $65 million per game from ESPN, which has dual revenue streams, compared with only $20 million-$30 million per game from the broadcast networks, they argued.