Official Partners Everywhere: The NFL's Business of Sponsorships

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Mark Conrad
Hello and welcome to the Sports Business Podcast with Prof C, the podcast that explores the world of professional, collegiate, amateur, and Olympic sports. I’m Mark Conrad, or Prof. C from Fordham University’s Gabelli School of Business, where I serve as Professor of Law and Ethics and the Director of the Sports Business Initiative. It has almost become a cliché to say that the NFL has become the gold standard in the business of professional sports. 

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Mark Conrad
From its modest beginnings as a small-market, limited-interest adjunct to the far more popular college game, in the last 70 years, the league has utilized the power of television, unified ownership, and clairvoyant commissioners whose business acumen matched their mastery of marketing the sport, resulting in the domination the media landscape. Today, the NFL encompasses more than a team sport:

00;01;11;01 - 00;01;49;23
Mark Conrad
it is a highly successful entertainment and media company. In addition to dominating television with 83 of the top 100 rated broadcasts last year, the NFL unleashes its power to garner lucrative sponsorships. The league’s brain trust knows how to auction endorsement and sponsorship deals. Formally known as “partnerships,” these arrangements involve relationships between specified companies and sports organizations to attain “official” status as a way to expose their brand.

00;01;49;25 - 00;02;19;03
Mark Conrad
And these firms pay lots of money for the privilege. This is nothing new, of course. Just about every sports organization, from a local sports group to the International Olympic Committee, seeks out sponsorship partners. But what makes the NFL so successful is its leverage and its ability to craft product categories to maximize the number of sponsors for the most money.

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Mark Conrad
Witness this coup d’etat. For the last 30 years, the NFL had a sponsorship with Visa, which is best known as a credit and debit card company, which also offers cash access. However, when that deal recently expired, the NFL carved up what seemed to be a very broad product category. The league basically chopped up the credit card category into credit/payment cards, retail banking, and peer-to-peer payments. 

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Mark Conrad
American Express, or AmEx for short, is the “Official Payments,” sponsor, U.S. Bank was titled as the league’s “Official Bank and Wealth Management” sponsor, and PayPal took over a category named “Peer-to-Peer (P2P) Payments.” Result: three income sources instead of one. The NFL’s power is such that it can demand that multiple firms attain a limited core of rights. You are seeing this in other products, not just in the financial universe. 

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Mark Conrad
Think of bottled water: there is bottled mineral water, bottled spring water, bottled carbonated water. Think of automobiles: there are sedans, SUVs, light trucks, heavy trucks, recreational vehicles, and EVs. Could the NFL or NBA or other league divvy up rights like this? Or, how about the official personal injury law firm, real estate law firm, litigation law firm? As long as the leverage is there, the carveout possibilities are huge.

00;04;08;25 - 00;04;38;02
Mark Conrad
The one caveat is something that those in the industry coin as “swim lanes.” Each of the sponsors must stay in their lanes and try not to push the envelope with covering products that may conflict with another sponsor. This is based on good faith, but also on the business interests of the parties to maximize their specific territories and not to push the envelope, resulting in potential litigation.

00;04;38;05 - 00;05;06;06
Mark Conrad
As the Sports Business Journal recently reported, this NFL carve-out model is “not simple for anyone involved,” said a marketer who worked on this deal. The marketer added, “There was a lot of needle threading” to avoid conflicts. The NFL’s new endorsements have resulted in related local team deals, which can be negotiated separately. An example is

00;05;06;07 - 00;05;33;02
Mark Conrad
AmEx, which has become a stadium or team sponsor in Atlanta, East Rutherford, N.J., the home of the Giants and the Jets, and Miami, according to the sports business journal. Look for this trend to continue, not only in the NFL, but in other major sports leagues, like the NBA, who may also be going from strength to strength. For the Sports Business Podcast

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Mark Conrad
At Fordham’s Gabelli School of Business, I’m Mark Conrad, or Prof. C. Have a great day!