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Is the NFL’s commissioner really worth $64 million per year?
Roger Goodell, the top man in charge of America’s highest profile professional sport, was paid $64 million in 2021. He leads a 32-team pro football enterprise worth approximately $144 billion.
By comparison, the CEO of ExxonMobil earned about $18 million in total compensation (salary, bonuses, and the like) in 2021. He is in charge of an energy empire worth over $400 billion.
Believe it or not, the National Football League’s commissioner thinks he deserves a raise. Let’s examine this curious case.
At the fall annual meeting of the NFL owners in New York City this week, Dallas Cowboys owner Jerry Jones was all alone as he dared to question this issue. JJ thinks the league has been overpaying for the man in charge of the NFL’s 32 valuable professional football franchises.
Regardless of what you might think about his daily operations of the Dallas Cowboys, Jerry Jones is very smart and clearly understands how to grow his own personal wealth.
His initial investment of $140 million to purchase the Dallas Cowboys in 1988 has grown exponentially to an estimated value of $7 billion today. In a previous post, I showed that Jerry Jones’ original investment has generated a 12.5% annual rate of return since 1988.
Jerry Jones and the other 31 NFL owners must independently cover their annual cost of operating their football teams. However, that hasn’t been a difficult issue in recent years.
Each NFL team must pay for the player salaries (a cash outlay averaging more than $225 million per team in 2022) plus other team expenses.
Before shedding any tears about the cost of operations, each NFL team also shares in the revenues from several lucrative television network contracts granting broadcast rights to the NFL’s weekly games. When you add stadium ticket sales, team merchandising revenue, in-stadium concessions, parking, and other sources of income, an NFL team’s revenue should easily cover current annual operating costs.
As long as every NFL team is able to avoid losing money in a particular year, the value of their initial investment after purchasing the team continues to grow at a rate of return which is the envy of most average investors.
Simply put, the primary job of the NFL commissioner is to continue to increase the value of the investments held by those 32 franchise owners.
This week, a motion was put before the 32 NFL billionaires in the room as to whether to enter into a new (translated – more lucrative) contract for the current Commissioner, Roger Goodell.
Dallas Cowboys’ owner Jerry Jones simply asked the obvious “elephant in the room” question to the other 31 franchise owners.
What does Roger Goodell do to deserve being paid $64 million per year?
Jerry Jones wanted Commissioner Goodell’s pay to be tied to more clear and tangible targets than his current contract apparently called for.
When thinking about Roger Goodell’s job, I consider him as being like a professional financial investment advisor/counselor for 32 tightly knit clients.
Some investors are willing to pay a top financial advisor up to 1% of their total investment value (annually, that is) in order to actively manage the client’s financial assets.
In the process, you must trust that this professional will protect your investments at all times and, generally, beat the market’s average annual rate of return. You also hope for exceptional returns to justify the annual cost of this financial advisor’s healthy commission.
For most NFL fans, Commissioner Roger Goodell has been the man who has routinely irritated us by moving some regular season football games to London and playing football games on Thursday nights. He has inserted himself into controversial issues such as player suspensions.
Commissioner Goodell has done a masterful job of minimizing the public discourse about the increasing levels of brain damage (CTE cases) in football players resulting from repeated helmet-to-helmet contact.
Goodell snuffs out negative press nearly as effectively as The Godfather eliminated any new local competition.
Though the NFL Commissioner may be regarded as the NFL’s designated “bad guy” by football fans, his actions are guided by an overarching goal of generating additional revenues for the league (now or in the future) and increasing the net worth for each of the league’s 32 franchise owners.
That’s Roger Goodell’s real role. He is a highly paid professional caretaker of the billionaires’ NFL franchise values.
That’s why the NFL Commissioner became involved in matters such as how long that the Cleveland Browns must keep quarterback Deshaun Watson benched after his numerous creepy (but apparently not illegal) interactions with massage therapists in Houston. He wants the public to believe that the NFL expects its players to be upstanding citizens.
The NFL “Commish” is charged with protecting the league’s image and reputation with millions of fans and hundreds of business partners.
Roger Goodell’s job (like his predecessors) has been to “Protect the NFL Shield” at all times.
The Commissioner has done an exceptionally good job in generating television revenues for the franchise owners.
Why do you think the NFL has television contracts with CBS (for the AFC), Fox (NFC), NBC (Sunday night game), ESPN (Monday night game), and now Amazon (Thursday night game)? The league has smartly thrown a proverbial bone to as many dogs as possible in hopes that they will return in a few years and be willing to ante-up the going price once again.
For the league’s television partners, the NFL delivers millions of viewers in the most lucrative advertising demographics. Though the majority of NFL viewers are men, the league has continued to entice more women viewers over the past few decades, too. The NFL has been quite successful at building an audience which most advertisers seek to pitch their products.
From 12 Noon until nearly 11PM every Sunday in the fall, televised NFL football games will consistently deliver the largest block of television viewers for the entire broadcast week.
Sunday afternoon’s match-up of the Buffalo Bills at the Kansas City Chiefs on CBS drew over 25 million viewers. On Sunday night, the much-anticipated game featuring the Dallas Cowboys at the Philadelphia Eagles pulled in 21 million sets of eyeballs for NBC.
By comparison, the highest rated non-NFL network TV show last week was CBS’ 60 Minutes. It had nine million viewers.
There was a good reason that 60 Minutes was the #1 non-football show. It immediately follows the final NFL game carried by CBS every Sunday. The next highest rated non-football television show last week drew seven million viewers.
Televised NFL football crushes all other programming.
Even the most popular college football games do not measure-up to the NFL’s ratings. Last Saturday afternoon’s thrilling last-second win by Tennessee over Alabama drew a season high 11 million viewers for CBS.
Sunday’s slate of NFL games doubled that number.
The NFL’s television ratings are the equivalent of Godzilla. It stomps everyone.
So, let’s now take another look at the pay for the NFL Commissioner, Roger Goodell.
It’s time to do a little sports math.
The value of an NFL franchise ranges from a low of $3 billion (Cincinnati Bengals) to the Dallas Cowboys’ $7 billion price tag. The average value is about $4.5 billion per franchise.
If we assume that the average return on the value of an NFL franchise was 12.5% last year, then the average franchise value grew by $562 million last season. Multiply that by 32 franchises and the NFL’s combined net worth (theoretically) increased by nearly $18 billion in just one year!
NFL Commissioner Roger Goodell’s annual salary of $64 million represented just .36% of the collective NFL franchises’ increase in net worth last season.
Next, let’s see how Roger Goodell’s incredible salary compares with similar professional sports leagues.
NBA Commissioner Adam Silver is paid $10 million per year by the 30-team pro basketball league. The New York Knicks remain the most valuable hoops franchise at $6 billion. The New Orleans Pelicans bring up the rear at $1.5 billion. The NBA’s average franchise value is estimated to be a little more than $2 billion each.
Major League Baseball Commissioner Rob Manfred earns $11 million per year from the 32-team professional baseball league. The New York Yankees are valued at $6 billion with the Miami Marlins coming in last at $990 million. Like the NBA, the average pro baseball franchise is currently worth about $2 billion apiece.
Based on those comparisons, the NFL’s average franchises are worth more than double the value of the average NBA or Major League Baseball team. If the basketball and baseball commissioners are paid an average of $10.5 million per year, shouldn’t the NFL commissioner (theoretically) earn about $25 million per season?
Thus, the $64 million question was raised by Dallas Cowboys owner Jerry Jones at this week’s NFL owners meeting.
Is Commissioner Roger Goodell being overpaid for what he does when compared to the other major sports leagues?
The results are in. By a 31-1 vote, the NFL’s ownership group overwhelmingly voted this week to proceed on negotiating a new contract agreement for current commissioner Roger Goodell.
The vast majority of NFL owners are apparently quite pleased with their high-priced investment manager.
It was still a nice try, Jerry!