Jun 04, 2013 at 06:29 PM
written by Adam Grossman

Verizon Vies For Direct Value in NFL Deal

The Sports Business Journal is reporting that Verizon is close to announcing a four-year, $1 billion extension of its partnership with the NFL, a deal that will allow the company to “to stream every NFL regular season and playoff game to mobile phones.” The agreement is significant for two reasons.

First, it shows the NFL’s power to command a premium price for league-wide sponsorship/media rights deals. The average $250 million per year is more than leagues like the NHL or MLS make annually from their entire media rights deals – let alone just the mobile component.

Second, this sponsorship/media rights deal shows the increasing importance for sponsors to look for direct ways to monetize their corporate partnership agreements. In the SBJ article, the authors assert that the Verizon-NFL agreement “should forever obliterate the distinction between sponsor and media-rights deals.” There is some validity to that claim as the catalyst to this deal is Verizon’s ability to have exclusive rights for mobile streaming of all NFL content, although the deal is limited to mobile phones and does not include tablets. It is important to remember that Verizon has no ability to broadcast games on television. Those rights are specifically reserved to the NFL broadcast partners: CBS, Fox, ESPN, DIRECTV and the NFL Network. In addition, the Verizon deal still likely will include the advertising spend that is part of more traditional sponsorships.

Rather than focusing on the blurring boundaries between sponsorship and media rights deals, sports managers and decision makers must keep in mind how much companies are willing to pay for sponsorships that directly translate to new revenue. Having the ability to stream all NFL games to mobile phones is a significant differentiator between Verizon and competitors such as AT&T, Sprint, and T-Mobile. DIRECTV, starting in 1994, has used a similar model with the NFL Sunday Ticket to attract customers to its satellite television platform. This is both a tangible benefit to Verizon with its sponsorship and something that easy to explain to the company’s key stakeholders – customers, management, employees -- and the media.

This is the type of deal that sports properties/rights holders (teams, leagues, events and individuals) should be pursuing with sponsors. Not only does it translate into direct revenue for the sponsor, but the deal also provides a high-value service offering for the sponsor to provide its consumers. More importantly, this deal does not solely focus on the number of impressions that Verizon receives for its sponsorship but rather the quality of those impressions. Verizon now has unique content that can directly attract new and retain current customers who are looking to make a purchasing decision about a new mobile carrier with a differentiated service offering. Verizon can offer unique content that specifically targeted to a certain demographic in a channel that is important to the customer.