Tech, gambling and alcohol helped the NFL earn almost $2 billion in sponsorships this season

The National Football League is nearing $2 billion in partnership fees, the most in professional sports.

Agreements from betting firms and technology companies helped the NFL lure a record $1.8 billion in sponsorship revenue, sports partnerships consultancy firm IEG told CNBC. The NFL's figure is a 12% increase year-over-year from $1.62 billion it made in the 2020 season. It pulled $1.47 billion from sponsorships in the 2019 season.

Sports gambling companies, casinos, and lotteries saw the most significant spike in NFL sponsorship agreements. DraftKings, FanDuel, and Caesars became sportsbook partners in 2021 after the companies struck five-year pacts worth just under $1 billion combined. The NFL also landed secondary deals with BetMGM, WynnBet, FoxBet, and PointsBet.

Partnership deals with the NFL usually run from three to seven years and cost a minimum of $10 million per year for smaller companies. More prominent firms could pay more than $200 million per year.

FanDuel appAndrew Harrer | Bloomberg | Getty Images

Verizon has one of the more prominent NFL deals and paid the league over $400 million annually. Last September, the communications company agreed to a new 10-year deal with the NFL and added 5G rights. But the new deal doesn't include live streams of games, making it less valuable. That also means the NFL's mobile rights are also up for grabs.

IEG's estimates come days after the NFL produced one of its most memorable playoff weekends that included the thrilling overtime game between the Kansas City Chiefs and Buffalo Bills. That game attracted over 42 million viewers, the highest divisional postseason game since 2017.

“It's not coming from traditional places,” said Peter Laatz, IEG's global managing director. “It's coming from emerging categories. Not only are we seeing emerging talent on the field; we're seeing emerging categories.”

Although gambling sponsorships saw the biggest increase in the NFL's 2021 season, tech deals ranked first in absolute dollar figures for 2021, led by Microsoft. The tech giant has an on-the-field deal with the league, which uses Microsoft's Surface tablet. That agreement is worth roughly $100 million per year, according to IEG data.

Gambling deals ranked second, and alcoholic beverage deals ranked third.

Last December, the NFL renewed its deal with Anheuser-Busch, which pays the NFL more than $250 million per year for beer and hard seltzer rights. The company lost control of hard alcohol rights, which Diageo took over for a reported $30 million per year.

The NFL put its wine and champagne rights up for auction but has yet to strike a partnership for that category.

“They've cut those categories (tech and alcohol) pretty fine,” said Laatz, calling the NFL's sponsorship money a “runway revenue train.” He then projected the NFL would endure a “finer cutting of categories” in the future to grow deals in the U.S.  

NFL targets global revenue next

Although the NFL's total sponsorship revenue increased significantly, the bulk of that growth went to league-wide sponsorships, which grew 23%. NFL clubs only took in 4% additional revenue in rights fees year-over-year.

To grow revenue streams for clubs, the NFL is taking a page from the National Basketball Association's playbook and allowing teams to leverage international markets. Last month, the NFL permitted 18 teams to market their intellectual property in 26 territories, including Canada, Germany, Mexico and the United Kingdom.

But it could be a while before teams see real traction in that department.

There's no doubt the NFL is dominant domestically, but American football isn't a big draw overseas like the NBA. In addition, Canada and Australia already have established football leagues, so the NFL has serious competition. 

Laatz said he's “skeptical” of the NFL's overseas plan, which the league labeled the “International Home Marketing Areas.” The NFL has tried to grow its product in London with its annual games, and Germany has shown interest in the NFL.

But those sporadic overseas games may not be enough to vault the NFL into international prominence loik the NBA.

“There's a big difference between playing games internationally, which the NFL has clearly done, and having a prominent NFL footprint to grow the sport overseas,” Laatz said.

Still, to get a sense of the value a U.S.-based sports club can earn from international deals: The Golden State Warriors – one of the most popular NBA teams abroad – agreed to a multi-year global rights sponsorship with crypto platform FTX for roughly $10 million total.

Laetz believes NFL teams' deals could be even more lucrative.

A Bitcoin symbol on an advertisement at Mass Transit Railway station in Hong Kong, China, on Oct. 27, 2021.Tyrone Siu | Reuters

Still waiting on crypto deals

Meanwhile, the NFL is taking a wait-and-see approach toward deals in the cryptocurrency space.

Last October, at the NFL's owner meetings in New York, officials told CNBC that crypto-related deals are still being examined. Laatz called it the “sideline model” – as in, the NFL waits to see how other institutions maneuver.

“They're careful about not getting into speculative arrangements that can cause backtracking,” said Laatz.

While the NFL stalls on crypto deals, companies are pouring millions into the NBA.

In addition to the FTX-Warriors deal, crypto platform Coinbase agreed to a $192 million deal over four years with the NBA. On the team level, the Los Angeles Lakers landed a $700 million naming rights deal with Crypto.com. And the Portland Trail Blazers landed the NBA's first crypto jersey patch deal.

Outside basketball, Major League Baseball added a crypto patch agreement for its umpires, and individual NFL players like Tom Brady are also striking crypto deals.

But Laetz says the delay won't really matter, given the NFL's ample revenue growth. “The thing they are leaving on the table right now is risk.”