NFL ticket prices rise for London games. Is a Europe team possible?
NFL tickets in London will be more expensive than ever this year, and several NFL figures, including Commissioner Roger Goodell, have voiced support for an NFL franchise in the city. NFL tickets for whole seasons and not just a few games a year can be sold in London, and perhaps in Germany, experts say, but the league has several obstacles to consider.
"I think if we can continue to have that success and continue to build on what we've had already, I think it's realistic to think that a franchise could be here," Mr. Goodell said in an interview with London-based Sky Sports last week.
Starting a London franchise sounds far-fetched, but the NFL has certainly been testing the waters in recent years. Several NFL games have been played in London since 2007, and three games will be played Wembley Stadium, just outside the city, in 2014. Although there are some logistical obstacles to overcome, experts say there is a potential for huge revenues in Europe. However, they are are divided on whether or not the NFL should make a move in the European market.
Interest, too, has been rising steadily. Fueled by demand on the secondary, ticket prices for the three NFL games to be played in London will be more expensive than ever, according to Forbes.
“The NFL has maxed out its North America market,” Mark Rosentraub, a sport management professor at the University of Michigan, says in a phone interview. Although putting a team in Los Angeles has been tossed around, it would mean only marginal revenue gains, he says.
In terms of TV viewership, games in London have done "very well" with fans in both the United Kingdom and the rest of Europe, Mr. Rosentraub explains, so putting a franchise in London "raises the intriguing possibility of expanding the revenue pool."
There would be some stress on the London franchise, Rosentraub admits. The team would finish a Sunday game at midnight, then jump on a plane to North America for seven to eight games, he says. To ease the stress on the potential London team, a second team could be placed in Europe.
“Germany would be a valuable location,” Rosentraub says.
However, the NFL games played at Wembley are not representative of the demand for an entire franchise, says Brian Mills, an assistant professor of sport management at the University of Florida. There is a "novelty effect" with these games, he suggests. But a London franchise would increase total revenue coming to the league from television contracts.
“Adding another huge market to your broadcasting would likely mean much larger broadcasting contracts [people in those cities] are watching the games,” he writes via e-mail. “We've seen this consideration become more and more important for leagues over the past 20 years.”
Mills predicts the NFL will try and get a franchise to Los Angeles before venturing into Germany. Although a German team would alleviate some of the travel load on a theoretical London team, he says the NFL may find it too risky to do it too soon.
"While there is something to be said about creating a rivalry to increase interest, I just don't see the league putting two teams in the European market at once, as that is a very risky proposition (and we saw what happened with NFL Europe,)" Mills says. "It would depend on whether that German team continued to increase the size of the television broadcast pie slices. But I'm not sure how much it would do so beyond just the London team.
The logistics and financial concerns are not as problematic, Rosentraub says. A London team wouldn't have to build a new stadium. for example – it could just use Wembley Stadium. Games played at Wembley could be at 6 p.m. local time on weekends, so people on the East Coast would see them at 1 p.m., he adds.
Although Wembley is primarily used as a soccer stadium, it could work as a football stadium for the NFL. England's national soccer team has three home games at Wembley scheduled in 2014 – one in September, one in October, and one in November. A potential NFL franchise using the stadium could also have games without causing a lot of interruption to the English soccer team’s schedule.
But if Wembley cannot be used, then another stadium would need to be constructed. Building a stadium is one of the biggest costs for starting a football franchise, Mr. Mills adds.
“We know that stadiums are often financed by the public sector – or at least partially so –but it's not clear how this would work in London,” he explains. “The cost to the team could be as little as $100-$200 million, or as much as $2 billion depending on the size and luxury of the stadium, what costs might be covered by the public sector, whether it is a downtown stadium or placed in existing open land, and so on.”
The stadium construction and the other fees make starting a new franchise ‘pretty significant,’ Mills says. It is tricky to calculate the exact amount because it varies on several factors, he adds.
One factor – and significant cost – is the expansion fee that the owner would need to pay for starting a new team. For example, the Texans organization paid $700 million to the NFL to bring an expansion team to Houston in 1999. Mills believes the fee has increased by a lot since then.
“League bylaws generally leave these clauses pretty vague to ensure they can charge what they think is best for the league,” Mills says. “One thing is for certain: the expansion fee will have to be large enough that the existing owners are compensated for any additional split of broadcast revenues. Otherwise, they likely won't vote for the expansion.”
But without any surveys, no one has a real understanding of interest in football in the London, Mills says.
“In demand models in sports economics, we tend to use income and population numbers when thinking about a market for a professional sports team,” he explains. “The more people and the more money there, the more likely they can survive. But extrapolating those assumptions to a place where the sport is not really played is new ground.”