December 18, 2009 | Fox Business
Matt Egan
FOXBusiness
Despite being the U.S. sports world’s biggest success story, and drawing viewers from more than 200 countries, the National Football League doesn’t have a franchise outside its borders due to a confluence of complications that such a move could cause.
But within the next decade it’s very possible the NFL will join its peers in having a team in Canada or Mexico — or maybe even overseas in Europe.
It’s clear the NFL is testing the waters for international expansion through a series of exhibition and regular season games in foreign lands. If those steps pan out, it seems likely Toronto, Mexico City or even London will have its very own franchise in the next 10 to 15 years.
“There is too much money for it not to be viable. The NFL, like every business, is looking to expand and find new markets,” said Brian Billick, former head coach of the Baltimore Ravens and author of More Than a Game: The Uncertain Future of the NFL. Billick is also an analyst for FOX Sports, which like FOX Business is owned by News Corp. (NWSA).
The NFL hasn’t hid its desire to expand overseas. During a press conference before this October’s regular season game in London, NFL Commissioner Roger Goodell said, “I think it’s very practical if the interest continues to grow that we could have an NFL franchise in London someday.”
According to the league, Canada and the U.K. rank second and third respectively in NFL Shop merchandise by country, behind the U.S.
But just because it’s obvious doesn’t mean it’s going to be easy. The league needs to consider a number of issues, including how international expansion would impact revenue sharing, cultural obstacles, safety, travel time and the sport’s foreign viability.
“Whenever you talk about international expansion it raises a plethora of business and economic issues that are very real and not simple to resolve. If they were simple then maybe there’d be teams there,” said Marshall Glickman, CEO of G2 Strategic and former president of the Portland Trailblazers.
International Baby Steps
In the meantime, the NFL has already had several global forays, including a game earlier this month between the New York Jets and Buffalo Bills in Toronto. The Bills, who play in the second-smallest market in the NFL, received permission to play one home game a season north of the border over a five-year span.
It’s been a boon to the Bills, which Forbes estimates received $78 million Canadian — more than its total operating income in 2006 — for the Toronto Series. The team sold out the 56,000-seat Rogers Centre in the first two years of the event, charging C$183 per seat, compared to its NFL-low $51 seats in Buffalo.
Despite some potential economic benefits, the Bills appear determined to stay in Buffalo — for now.
The Bills Toronto series is “directed at keeping the team viable in Western New York,” Russ Brandon, the chief operating officer and general manager of the Bills said in an email. “We are encouraged that we have seen a significant increase in both season and individual game ticket sales from Southern Ontario” at the team’s home games in Buffalo.
Aside from the two games thus far in Toronto, the NFL has played four other regular season games outside the U.S., mostly in London. A 2007 game held in London’s Wembley stadium brought in 80,000 fans and sold 45,000 seats in just 90 minutes. And half-a-million fans have already applied for tickets for a scheduled 2010 game. The league has expressed interest in playing two games a season in the U.K. in the future, possibly in Manchester or Scotland.
“At this point growing methodically and organically through special events, outreach, and new media to penetrate foreign markets will allow the league to build its notoriety and maximize revenue once it does place a franchise on the ground on foreign soil,” David Carter, a sports business professor at USC, said in an email.
Expansion Obstacles
As would be expected, money will play a key role in deciding whether or not to expand internationally; adding another team will dilute the cut each NFL owner takes from the annual $6 billion revenue pie. Some owners may bet they are better off keeping their slice than risking it in a foreign experiment.
International expansion also faces cultural barriers, especially in Mexico and the U.K. where the sport is still being introduced to fans. Unlike basketball, soccer and baseball, football is an expensive sport for kids to play and that has weighed on the sport’s global popularity.
“It’s a much harder sell to people when they don’t grow up watching the sport,” said Robert Tuchman, founder of sports marketing firm PCE Sports and Entertainment.
Expansion in Canada faces another obstacle: competition. Aside from the extremely popular National Hockey League, football in Toronto would go head-to-head with the Canadian Football League.
“It’s a very long-established football league that in several markets is integrated into the soul of the communities,” said Glickman.
Some have suggested merging the CFL’s Toronto Argonauts with an NFL expansion team, but that risks taking down the entire CFL. Still, Glickman said he sees Toronto, Vancouver and Montreal as “viable markets” in Canada.
The NFL dipped its toe into Mexico when Mexico City hosted a game in 2005 in front of 103,467 fans — the biggest regular-season crowd in league history. But in addition to cultural issues, expansion into Mexico could face security issues as the country reels from violence related to drug cartels.
Of course, the NFL could face opposition if it expands overseas before it does domestically.
“There is one other foreign country that doesn’t have one: LA,” quipped Ralph Cindrich, a sports agent who represents Troy Smith, quarterback for the Baltimore Ravens.
Despite being the second-biggest media market in the U.S., the NFL doesn’t have a franchise in Los Angeles, which some say should be the league’s top expansion priority.
“No, I don’t look at it that way. I look at it as seizing opportunities when you can,” Goodell said at the press conference in London. “The opportunity to be in either one of those markets would be a positive thing for us, but I don’t look at one as a higher priority.”
While there are some potential travel obstacles for West Coast teams, London appears to be a viable market for expansion.
“I think it’s entirely feasible,” said Glickman. “It would open up an entire country to the sport. The market is so large that even though a much smaller fraction of the population would watch and follow, presumably, that small slice is a still a helluva lot of people.”