Why Are NFL Viewers Vanishing?

NFL execs have a crisis on their hands. Fewer people are watching the product in 2016. There are probably a myriad of reasons for that but a TV partner may have bigger problems than just declining viewers tuning into Monday Night Football. The Walt Disney Company’s ESPN division allegedly lost 621,000 subscribers in October and has steadily lost customers over the past three years. That might account for some of the NFL’s ESPN TV problems. ESPN has been living off of the 1984 Cable TV Act and was thought to have a clear path to perpetual money making but cord cutters have stopped that and may kill the golden goose, cable TV revenues if they continue to leave, ratings drop and ad rates drop. That is a major NFL worry.

The reason why the NFL and the other leagues get huge money can be traced to one piece of legislation and one revision during the Ronald Reagan presidency. In 1984, President Reagan signed into law the Cable TV Act of 1984. What that did was socialize cable TV for those who wanted almost everything offered on a basic expanded tier. Consumers brought everything offered on the tier or nothing at all. There was no choice. The legislation saved ESPN, CNN and others from financial ruin and sports operators started getting major money from cable TV.

The other Reagan years work that helped owners was the 1986 tax code revision. Simply, in the right set of circumstances, a sports owner could extract as much as 92 cents out of every dollar generated in a publicly funded venue leaving just eight cents to pay down the debt for the local municipality. That increased owners’ revenue. NBA and other major league athletes got more than 50 percent of the much higher revenues generated after the leagues negotiated player deals. The TV legislation and the new enhanced revenue gadgets in super sports venues stuffed sports with money. There was also a shift from fans to well-heeled customers. Major League Sports became less accessible to a person with a limited income or limited access to money. Those with limited incomes in 2016 are cutting the cord.

NFL worries are not just limited to a TV ratings drop. ESPN is losing subscribers and that might eventually impact how much money the cable network can pay the NFL for TV rights.