Why The NFL Actually Wants to Lose the Supreme Court Betting CaseBy Brett Smiley | Published: November 1, 2017 at 3:00 pm
On December 4, the NFL, NCAA and major professional sports leagues will argue in the Supreme Court of the United States that the law banning states outside Nevada from legalizing sports betting is both necessary and constitutional. And they will make the case with a straight face — over New Jersey’s protests.
Theoretically, the leagues are fighting for the law known as PASPA (Professional and Amateur Sports Protection Act) for the “integrity of the game.” You’ve heard NFL commissioner Roger Goodell use that phrase before. But really the leagues are fighting because the law allows them to block sports betting in the courts, and for a reason you often hear around the office: because they’ve always done it that way. Also it would be an almost impossible case to settle, and it won’t.
5 Reasons The NFL Actually Wants to Lose the Supreme Court Betting Case: It Boils Down to Money, As Always
Now, I don’t have any inside knowledge of the league’s thinking about its desire to win or lose this case. Rather, I have my observations, some common sense, plus facts and figures. Here are the reasons the NFL actually wants to lose the case, which would pave the way for New Jersey and other states to license and regulate sports betting:
1. To Keep Ratings High and Continue to Collect Billions From Broadcast Partners
Over the past two NFL seasons I’ve read scores of articles across all kinds of websites foretelling the demise of football, based on temporary blips in ratings. But any way you slice up the numbers, NFL remains the gold standard for drawing eyeballs to televisions, equating to big advertising revenue for broadcast partners. Some weeks ratings are up and in some windows they’re down. Overall, it does appear that ratings are down a few points over the past couple seasons.
The goal here is not to go down a black hole of TV rating dissection and deduction but highlight some key points:
A. TV ratings are down for all four major networks 8% in prime time (all programming, not just football) through the first month of the new TV season.
B. The way people consume television (not just sports) and media is changing at warp speed as people are ditching traditional TV/cable packages.
C. One factor explaining the downtick may be that sports fans are spending less time watching sports.
The upshot here is that the NFL would be foolish to count on the usual increase in the amount of money it fetches for its television packages — about $7 billion annually under existing contracts with CBS, NBC, FOX, ESPN/ABC and DirecTV (Sunday Ticket). (The NFL also has smaller streaming contracts with Amazon and Yahoo!/Verizon for Thursday and London games.)
Currently ESPN pays $2 billion per year for the Monday Night Football package and a Wild Card game aired on ABC and ESPN. As you know, ESPN has made a large number of layoffs over the past year that included the departures of high-profile talent like Ed Werder, John Clayton and Jayson Stark. Unfortunately, more layoffs may be coming.
The guy who wrote the book on ESPN (literally), James Andrew Miller, believes that ESPN may actually get out of the NFL broadcasting business at the end of its eight-year contract in 2021. That may seem absurd, but it may simply make more financial sense for ESPN to walk away and allocate the $2 billion to different sports properties, shows, events or endeavors.
ESPN’s model is heavily dependent on subscriber fees and less so on advertising like FOX and CBS, a subject explored in greater detail by Outkick the Coverage’s Clay Travis. It’s possible that one of the other networks or even digital giants like Amazon, Twitter or Facebook would go for big (or small) pieces of the pie, but enough to replace $2 billion? And with ratings decreases across the board (due in part to segmentation and cord-cutting), can the other major networks afford to commit a billion-plus per year or more over nearly a decade, with more TV consumption uncertainty on the horizon? There is certainly one way to increase/preserve engagement and eyeballs: Legal, regulated sports betting.
Americans already bet roughly $150 billion illegally on sports; those people will continue to watch, engage and wager but legal sportsbooks in U.S. states will open up a market for millions of new customers outside Nevada who are currently on the sidelines.
2. Public Opinion in the U.S. Has Shifted in Favor of Sports Betting
A Washington Post poll in September showed that for the first time, a majority of Americans approve of betting on professional sports becoming legal: 55% of respondents approved against just 33% who disapproved. That’s major change from 25 years ago when Congress enacted PASPA.
At that time, then-NFL commissioner Paul Tagliabue testified at hearings that “The spread of legalized sports gambling would change forever—and for the worse—what our games stand for and the way they are perceived.”
“Gambling on games, betting on games, is part of the DNA of football [soccer] around the world. Go to a game in Chelsea or in Stamford Bridge, somebody’s coming to your seat or in your box with a tout sheet, and you can place a bet,” Garber said. “I am a big proponent that it’s going to happen, we might as well be in front of it. I think there are great values to our tax revenues to be able to do that, I don’t think we can stop it, so maybe we’d even lead the charge.”
Tagliabue’s warnings represented fears from a less technological era. Despite his and Congress’ intentions, PASPA has not stopped sports betting. It has only pushed illegal sports wagering into the shadows, offshore, and outside the purview of technology used in Las Vegas and Europe that would help monitor any betting irregularities, thus enhancing the integrity of the game.
The “No Fun League” certainly does not go out of its way to win public approval, as evidenced by its longstanding prohibition against any modicum of a touchdown celebration — a stance the league has finally, mercifully lightened up on. But here I think the NFL sees the direction things are moving: The Oakland Raiders are moving to Las Vegas!!
The main point here is: the NFL doesn’t even have to play the part of the “bad guy” by pushing in favor of legal, regulated sports betting (outside Nevada). The public wants it. Twenty states have backed New Jersey in the high court, including those that don’t want sports betting (like Utah), rejecting PASPA on constitutional grounds. Garber and Silver and their respective leagues are willing to lead the charge, deflecting any criticism that may come from anti-gambling groups. The NFL can merely go along and like the NBA and MLS, jolt interest and engagement in their games.
3. The Shield Has Suffered a Lot of Damage In Recent Years, Much of It Self-Inflicted
This goes hand-in-hand with the first point above regarding ratings and keeping broadcast rights revenue flowing. It’s difficult if not impossible to isolate the main reason(s) why ratings have slipped and may continue in that direction. But there’s been no shortage of NFL public relations disasters: a product of arrogance, greed, miscalculations and in some cases, forces outside its control that have alienated hardcore fans, pushed casuals away, or made some question their enthusiasm for the sport. To name several:
- The Ray Rice and Greg Hardy domestic violence tragedies and the league’s gross mishandling of those matters
- The 2012 referee labor dispute/replacement referee debacle
- Deflategate and Roger Goodell’s protracted federal court war against Tom Brady — only the most marketable and recognizable NFL player (other than Peyton Manning)
- The controversy over the Washington team’s mascot
- The major motion picture “Concussion”
- Michael Vick’s disgraceful dog fighting ring, conviction and prison sentence
- The 2011 player lockout
- The Miami Dolphins’ bullying scandal
- Yo-yoing of the Ezekiel Elliott suspension in ’17 in connection with an alleged 2016 domestic violence incident
- The national anthem controversy, which President Donald Trump has helped fuel, which most recently resulted in (1) Houston Texans owner Bob McNair likening players to prisoners; and (2) NFL Network and FOX sideline reporter Peter Schrager getting kicked out of a cab.
Now a few words from the President, which resonate strongly with his supporters:
Ratings for NFL football are way down except before game starts, when people tune in to see whether or not our country will be disrespected!
— Donald J. Trump (@realDonaldTrump) September 26, 2017
The NFL has all sorts of rules and regulations. The only way out for them is to set a rule that you can't kneel during our National Anthem!
— Donald J. Trump (@realDonaldTrump) September 26, 2017
…NFL attendance and ratings are WAY DOWN. Boring games yes, but many stay away because they love our country. League should back U.S.
— Donald J. Trump (@realDonaldTrump) September 24, 2017
The NFL has decided that it will not force players to stand for the playing of our National Anthem. Total disrespect for our great country!
— Donald J. Trump (@realDonaldTrump) October 18, 2017
Despite what Trump has said, in-stadium attendance has remained pretty constant over the past decade-plus. You can look at the numbers yourself. But as you can see, the NFL is very high on controversy and pretty low on goodwill. That’s not good for business.
The NFL continues to thrive despite itself. It cannot take public and fan interest for granted. Or it can, at its own peril. You know one way to jolt interest and engagement in the games?!
4. Brain Injuries and Youth/Young Player Participation Threaten the Future
The lifeblood of the sport is today’s youth and high schoolers, whose parents shepherd them into sports and activities. In recent years, football participation has decreased for a variety of reasons, chief among them safety, depending on the region. One study shows that athletes who take up football at age 12 or earlier experience more behavioral and cognitive problems later in life than those who don’t. Maybe flag football becomes more prominent or there’s some breakthrough in impact-limiting helmet technology. NFL players are retiring before or during their primes due to concerns over head injuries. This will diminish the supply of athletes and talent and potentially diminish the quality of on-field play.
I’m a guy who played football in middle school, high school and college, and who wouldn’t trade the experiences or values I learned for anything. Even still, I’m sincerely not sure if I want a (future) child of mine to play football. I suffered one concussion that a trainer identified and I can count at least three more. The worst occurred during a one-on-one drill in 10th grade when I collided helmet-on-helmet with a teammate, my ears rung and my body vibrated, and my head hurt for a couple days. It’s unpleasant but it’s part of the game as presently constituted.
What the heck does this have to do with the Supreme Court and the league’s desire to lose the case? If the NFL can engage more adults now, the league will have more people considering the benefits of football and the potential for the game to become safer, and perhaps more parents will decide to let their kids play. You know a way to increase viewership and get more people to watch advertisements about how the NFL is helping to make football safer at the youth and high school level? Yes.
5. There’s Simply Too Much Money To Be Made
You know what the NFL and its owners love most? Money. Because if player safety were numero uno, there sure as heck wouldn’t be football games on Thursday nights or any Thursday Night Football television package. Six days is not enough time to recover from bruises and nagging injuries sustained in the most recent battle,while three-and-a-half days is comically insufficient.
A longer way of saying: Cash is King, not safety or any charitable endeavor, certainly not giving players a platform to take a stance on police brutality or any social issue. Because that hurts the bottom line.
Season-long fantasy football and to a lesser extent daily fantasy football has helped spike interest in the NFL. The NFL itself has embraced fantasy with shows devoted to it on the NFL Network, same for ESPN and all the websites for broadcast partners. Fantasy gets previously disinterested people to tune in and keeps interested people closer. You know one way to jolt interest and engagement in the games even more!? Legal, regulated sports betting!!!!
One of the last, major hurdles for the NFL and other pro sports leagues is monetization of legal sports betting. (No, it’s not “integrity of the game.”) Beyond the ancillary benefit of increased viewership, how do they get their cut of dollars wagered and an expanded market? Well, that’s the money question and SportsHandle will offer some answer there next week. Sponsorship will likely be one piece of the puzzle but not the only one. But the door would open to many more streams of revenue that could only be slowed by a lack of imagination.