The NFL has molded itself into a yearlong entertainment property, demanding constant attention, despite only having games from September to early February. The media frenzy surrounding everything they do ensures the NFL can generate revenues year-round, even in the offseason.
Once the Super Bowl is over, we get straight into the Scouting Combine for the upcoming draft (5m viewers over its 4-days), then Free Agency (ratings gold for any outlet reporting on the multitude of player signings and trades), to the NFL Draft, Training Camp, Pre-Season all the way to the start of the new season.
Today we dive into the fascination that is the NFL Draft. Over 300,000 people are expected to attend the 3-day event in Detroit, starting tomorrow April 25-27. They will be joined by an additional 11 million people that are expected to tune in to the first-round broadcast. Furthermore, Detroit hopes to achieve close to $200 million in economic impact from the event.
Greatness from small beginnings
Before we begin, a quick brief for all non-Americans readers, who are not familiar with the concept of a draft. Essentially, it is a mechanism to maintain competitive balance by allowing weaker teams to improve by selecting the best college football players available. The worse a team performed the prior season, the higher a pick they get, increasing their chances to catch up again by drafting the best available college prospects. Nowadays, the draft consists of 7 rounds, with each team drafting once per round (unless they traded away their picks).
The annual NFL Draft was not always this much of a media spectacle. It had very humble beginnings when it was proposed by Philadelphia Eagles owner Bert Bell and held its first installment at the Philadelphia Ritz-Carlton Hotel in 1936. It stayed a relatively modest affair, until 1980, when an upstart sports-focused cable network by the name of ESPN approached the NFL and asked if they could televise the draft. Despite initial hesitation, Commissioner Pete Rozelle and the owners agreed and were happy with how the broadcast turned out. Ever since then, ESPN has broadcast each NFL Draft, with this year’s being the 45th in a row.
The NFL Draft really took off in 2006 when it moved to Radio City Music Hall in New York City, and especially when they moved to a primetime Thursday night slot from 2010 onwards. The production by ESPN surrounding the event, with extensive pre- and post-analysis for any pick has become increasingly expansive and professional. Fans began tuning in more and more, eager to see who their favorite team decided to put their faith in and select. The right pick can set your franchise up for the next decade plus, or set them back a few years. Any fan would want to experience that anguish live, cheering and venting for the (perceived) right and wrong picks. The NFL has been able to leverage these emotions and build the NFL Draft into a tentpole media event every year, tapping into these fan desires and feelings.
Since 2015, the Draft has been going on the road, moving to a new city every year, which has brought the fans even closer to the event and took the spectacle to the next level, both from an entertainment and commercial perspective. Cities can nowadays expect 300,000 fans to show up to the 3-day Draft, as was the case in Las Vegas and Kansas City in 2022 and 2023 respectively.
As a funny aside, the draft is technically an illegal practice in relation to antitrust statutes in the U.S., due to individuals not having a choice with whom to negotiate for their services. It was ruled as such in 1978 by the DC Circuit court:
“The draft inescapably forces each seller of football services to deal with one, and only one buyer, robbing the seller, as in any monopsonistic market, of any real bargaining power.”
How do we still have drafts in all major American sports then? Unions. These are exempt from U.S. antitrust laws. The National Football League Players Association, or NFLPA, is the labor organization representing the professional American football players in the NFL and negotiates compensation and terms of the collective bargaining agreement (CBA) with the league. In essence, abusive business practices that would normally be antitrust violations suddenly become legal if they are performed as part of a collective bargaining agreement with a union…seems reasonable.
The first round of the 2023 NFL Draft last year averaged 11.3 million viewers, with a total of 54.4 million individuals (unduplicated viewers) tuning in over the course of the 3-day event. As you can glean below, the NFL Draft first round viewership has never dipped below 10 million since 2018, peaking at 15.3 million in 2020, though that was during the pandemic, when there was no actual live sport on TV and fans were eager for anything. Given the hotly anticipated QB class of this year, expect the past year’s viewership figures to get topped.
Just for perspective as to how staggeringly high these viewership figures are, here are some comparisons of U.S. average viewership for major events:
NBA finals 2023 (Heat vs Nuggets): 11.64 million
MLB World Series 2023: 9.11 million
Masters Sunday 2023:12.06 million (all other majors well below)
NHL Stanley Cup Finals 2023:2.6 million
Wimbledon final 2023 (Alcaraz vs Djokovic): 3.2 million
F1 Race in Miami 2023:1.96 million
I also want to remind you, we are talking about a draft, not an actual live sporting competition. This just goes to show again how dominant the NFL is in the U.S. compared to any other sport.
Economic impact of hosting the NFL Draft
Kansas City generated a total of $164.3m in economic value from last year’s draft, $108.8m of which came in direct spending, with an additional $55.5m in induced/indirect impact. This year’s draft in Detroit is expected to produce multi-hundred-million-dollar economic impact as well, aiming closer to the $200m mark in total value…quite respectable for a 3-day event.
With a deeper understanding of the economic spark that hosting the NFL Draft can be for a city, the Draft has become increasingly popular to host. The prestige and economic impact that come with it for a city are undeniable. Unsurprisingly, a growing number of cities are now lining up to bid for the honor of hosting the event, not unlike what happens for the Super Bowl.
I would not be shocked if the NFL sees this as an opportunity to open up another revenue stream, leveraging the interest for the event to auction the draft between interested host cities, or to use the hosting right as a bargaining chip with a city.
The NFL has time and again shown that it has a keen understanding how to monetize fan engagement and other sports properties should take note. There are opportunities to increase revenues and attention without constantly adding more games to a calendar. The NFL with its notoriously short calendar has managed to become a full year-long event for its fans, giving them something to anticipate and talk about at every point in the year.
What about the actual players in the draft? It is already a forgone conclusion that the Chicago Bears will select quarterback (QB) Caleb Williams with the number 1 pick. A further three QBs are expected to follow with the next picks in Jayden Daniels, Drake Maye and J.J. McCarthy.
Generally, top-tier QB-prospects are always chosen with the earliest picks, as they are by far the most important position in the sport, touching the ball on every offensive snap. Additionally, there is nothing more valuable in football than having a QB on a rookie scale contract compared to top-tier QBs that count upwards of $50 million against the salary cap (the CBS controls the rookie scale contracts clearly for the first 4-years based on draft position). In fact, it is a competitive advantage to take any rookie player in positions that command a premium salary in a salary cap league like the NFL is, that includes QB, wide receivers and edge rushers in particular. Expect these positions to dominate the early picks, due to their outsized positional and cap values.
For how important the selection of the right QB is and the time invested by teams into it, it is somewhat shocking that the hit rate on first round QB picks is only around 50% over the last 20 years. Despite all the resources invested and all the expertise around, it does appear that there is no exact science to evaluating the exact predictors of QB success. All of this just adds to the appeal and anxiety of fans in the draft. The excitement of tantalizing prospects of the future are only dampened by the understanding that there is a pretty big chance that this pick may be off the team in three years’ time.
The NFL has definitely perfected its overall shoulder programming, and the draft is the highlight of the offseason for many fans. For a few brief days, every fanbase has a glimmer of hope and belief that their future might hold success, and the NFL knows exactly how to captivate that, better than anyone else out there.
One random fact
Before the introduction of the rookie scale contracts in 2011, incoming players were able to negotiate very lucrative rookie contracts with their teams that exceeded veteran deals, resulting in former #1 picks like Matt Stafford signing deals in excess of $70 million; the 2011 #1 pick Cam Newton was the first impacted by the new CBA and signed for $50 million less than Stafford
Thanks for reading
I hope you enjoyed this breakdown and gained a new-found appreciation for the entertainment the NFL has turned the draft into, particularly how they manage to generate continuous attention and revenues, even in the offseason. If you have, please consider sharing it with your friends and subscribing, much appreciated!
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