NFL closes disastrous 2017 season with refunds to advertisers
The 2017 NFL season is one the league would probably like to forget.
Not only did the on-field narrative get hamstrung with injuries to superstar players like Aaron Rodgers, J.J. Watt and Odell Beckham Jr., the off-field narrative was dominated by disenchanted fans.
Many NFL fans were upset that such a prevalent number of players were protesting the national anthem. They found that act disrespectful.
Others believed the NFL was “blackballing” the originator of the anthem protests, Colin Kaepernick. They accused the league of being racist for keeping Kaepernick unemployed.
All told, the NFL saw an overall ratings decrease of nearly 10 percent in 2017. The league went from averaging 16.5 million viewers in 2016, to just 14.9 million viewers in 2017.
Unfortunately for Roger Goodell and his posse, those declining ratings are finally hitting the league where it hurts most.
The ratings were already on the decline from 2015 to 2016, but the decline from 2016 to 2017 has officially affected the league’s bottom line, per data from Standard Media Index via Ad Week.
In-game NFL advertising revenue dropped 1.2 percent in 2017.
While that figure may not seem large, when dealing with billions of dollars, it’s not a negligible amount.
The NFL saw its ad revenue decline by $30 million, from $2.45 billion in 2016 to $2.42 billion in 2017.
That’s especially concerning for the NFL considering that the average cost of a 30-second ad spot increased in 2017 to $505,000 compared to the $499,000 it cost in 2016.
So if the NFL filled out just as much advertising time in 2017 as they did in 2016, and charged more for it, it stands to reason that they would make more money, not $30 million less.
Why don’t the numbers add up? Because the NFL had to return a hefty chunk of money to the advertisers through what is known as “makegoods” in the advertising business.
Makegoods are essentially partial refunds provided to the advertisers because viewership didn’t reach the numbers that would’ve justified the premium price of ad spots. Sometimes makegoods are cash refunds, other times they’re additional ads the broadcaster will run in other programming at no additional cost.
In 2017, the makegoods rose to beat the rate increases, triggering the first ad revenue decrease in several years.
As much as Goodell would like to bury his head in the sand about the sagging ratings, this will be impossible for him to ignore.
Even in 2016, with ratings first beginning to decline as Kaepernick’s anthem protests first began proliferating around the league, the NFL’s ad revenue growth remained steady.
In 2014, the NFL drew $2.17 billion in ad revenue. In 2015, that number grew to $2.38 billion, a 9.6 percent increase. In 2016, the numbers grew again despite the anthem protests to $2.45 billion.
It’ll be fascinating to see how the league responds after consecutive years of declining ratings have finally affected the NFL’s bottom line.
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