Business Model of NFL and Why is it successful Following the American Psychological Association’s Guidelines Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Business Model of NFL and Why is it successful Following the American Psychological Association’s Guidelines Case Solution

In order to make it more competitive and entertaining, the NFL has outlined some limitations in terms of spending on the roster. This makes teams compete on the same level. The salary cap in 2017 was 167 million. The soccer in Europe has been the victim of this drawback, where the leagues are mainly one-horse races. The team with more money could buy the best players, although the presence of LFP regulations, it still is not as effective. The competitions are often one-sided, and in order to make the game more entertaining and competitive, there is the need for a level playing field. The NFL has a hard cap, where limit could be extended to a certain limit in some scenario but otherwise exceeding the limit will activate certain penalties or sanctions (Wikipedia, 2018).

NFL draft is different from MLS, MLB, and NBA. The seven different rounds are held during the drafting period. The last team in NFL last year’s gets to pick first, so they are given an opportunity to sign the brightest talent among all. So, this year Cleveland Browns would be given the first pick, while the first team in the league Minnesota Vikings would be the 32^nd team to choose the player. Every team is given one option in each round. Each NFL team has one choice per round (NFL, 2018). So, in this way, the NFL becomes even more competitive as the weakest can pick the best talent. The positions of the draft can also be swapped among the teams. There is no concept of transfer fees but the contract that is offered to the players. The concept of the compensatory pick is to fill in the position of players who have left the team and joined other, and the teams pick from free agents to fill in the void. The NFL drafts take over the time frame of three days, and the team’s representatives are given a table and the team’s representatives are in contact with their higher management to discuss their strategies. Once all picks are done, the teams have the option to trade the picks.

The distinction and uniqueness of NFL from other sports have captured the minds and hearts of millions across the United States. The NFL modifies the rules and regulations to keep the game more safe and entertaining for the fans. The restrictions such as salary cap, and drafting shows that they always strive for competitiveness, there has been some controversies surrounding NFL. The ratings in recent year has been down a little, but that has not affected the business of the NFL and it is ever growing. The long-term growth plans of NFL have some effects on the short-term stability (Vrooman, 2010). As much of the revenues are generated from the television rights, the gate receipts do not make a significant part of the revenue. The teams are allowed to use the same old stadiums because they are less concerned with the ticket revenue.

The overall business model of NFL is successful due to its differentiated policies such as 60-40, and they have been able to modify the game for the popular demands and make them more entertaining. The control on the expenses through hard salary caps and less reliance on the gate receipts rather centralization of revenue generation has made NFL more successful than any other sport in United States (Archieve Boston, 2002). The consolidation of power and distributing its products across the country from a central system makes NFL keep tighter control over the distribution. The NFL sustains the demand by the brand management, as it contracts with fewer media outlets, but allows the local channels of the team to broadcast its games (Fisher, 2010). The other reason for a central system is that the risk is distributed among all 32 teams as the revenue generation is not independent to every team solely. In 2003, the NFL launched its own channel to broadcast the games and generate advertising revenues. The growth rate is estimated to be around 7% which is higher than MLB and NBA. At this growth rate, the revenue of NFL is expected to be $40 billion in 2035.

Conclusion

The NFL has overtaken basketball and baseball as the face of the USA in sports. The business model is centralized where it controls and monitors the distribution of its products. The centralized control keeps NFL to have a track record of its consumers, and their preferences. The NFL is looking to expand abroad, which is risker while looking at the operations which are centrally configured. The NFL also has some stiff competition from the basketball and baseball. Looking at the competition, the NFL has successfully managed to overtake both sports through brand management and sustaining the demands. The NFL has also control over the marketing licensees and vendors of the teams, and the teams come together as one unit to promote National Association of Football rather than the individual team, which makes them different from all NBA and MLB teams.

The teams with success in NFL have been the biggest beneficiaries of this business model. This model is structured to keep competing as well as economic parity amongst the teams. It feels like as if the NFL is some kind of community where everyone puts their efforts to generate revenues and everyone gets the equal share of the pie. The consensus of the owners on the business plan has also played a crucial role in maintaining disciplined success. The New England Patriots were regarded as the best team in NFL, in 2017; however, they lost to Philadelphia Eagles in the final of the super bowl. Overall, from the 2000s, they have turned around an average NFL team into one of the greatest teams in NFL.

The lessons from the business model are that around the world there are thousands of leagues played, everyone in the league tries to get the lion’s share of the pie and the team with more money outplays every other team in the league, making it less entertaining and competitive. The basis of the business model is ticket generation and revenue from television rights. The NFL realized the importance of television much earlier and based their business model solely on the national media rights which have been paying them off. The other leagues need to revise their business structure in order to create more economic and competitive parity among the teams which will attract more viewers and ultimately increase their revenues................

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Business Model of NFL and Why is it successful Following the American Psychological Association’s Guidelines Harvard Case Solution & Analysis