U.S. Markets open in 22 mins

One place where the NFL is a huge underdog

Rick Newman
Senior Columnist

NFL teams can use more than 500 footballs on any given Sunday during the season, with more than 700,000 official Wilson balls sold each year. So the sale of a few dozen should barely attract notice.

Yet shoppers in China got the league’s attention two years ago when they bought 72 footballs from the NFL’s shop on Tmall, the huge Chinese e-commerce site owned by Alibaba (BABA). The NFL was trying to ramp up promotion of the sport in a few big Chinese cities, and had run into a problem. “Nobody could get a football,” says Frank Lavin, global CEO of Export Now, a consulting firm that helped the NFL contract with Tmall. “People would travel to the United States and bring back three in their suitcase.”

The NFL had no idea what the demand for footballs was in China, so it started with the smallest possible shipment—one pallet, or six dozen footballs. They sold out in less than a day. So the league shipped four more pallets, and those sold out quickly too. The NFL now sells several hundred footballs a month to Chinese fans through Tmall — less than a day’s worth of sales in the United States but an important toehold in the world’s most populous country.

Many American businesses are clamoring for access to China, which will soon boast the world’s largest consumer class, with trillions of dollars’ worth of spending power. The NFL is no different from General Motors or IBM. “China has the potential to generate fans for generations,” says Richard Young, the NFL’s managing director for China. “It’s not a get-rich-quick scheme.”

The NFL is enjoying peak popularity in the United States, with controversies involving off-field abuse by players and concussion-related brain damage among veterans barely denting the sport’s image. The league rakes in about $10 billion in annual revenue; Commissioner Roger Goodell is aiming to hit an ambitious $25 billion by the year 2027.

The next frontier of American football

That’s where China comes in. “The NFL has maximized its revenue potential in the U.S. market,” says Stefan Szymanski, professor of sports management at the University of Michigan. “If they want to expand further, they need to expand outside United States.” Media analysts think the NFL can squeeze more revenue out of TV deals, mobile Internet and maybe even labor concessions, but like many other successful U.S. enterprises, the NFL faces incremental gains in a home market that’s close to saturated.

Expanding overseas is standard strategy for boosting revenue, but it’s not clear how exportable American-style football is—especially to China. “The NFL sells very well in certain markets where people have a susceptibility to American culture,” Szymanski says. The Detroit Lions and Atlanta Falcons recently played before a sellout crowd at London’s Wembley Stadium, for instance, and the NFL hopes to field an expansion team in London by 2022.

China, for all its allure as a massive source of consumer spending potential, could present much stiffer resistance. The five most popular sports in China are badminton, table tennis, basketball, soccer and swimming, according to research firm KantarSport. American-style football ranks 29th, behind powerhouse sports such as snooker, rowing and sailing. Young points out that football is more popular in urban areas, which is where the NFL is promoting the sport most aggressively.

Many of the sports that are popular in China benefit from exposure at the Olympics, especially if the Chinese government sponsors the sport as a means to build national prestige. Soccer is a huge hit because of its unique global presence. Basketball came to China decades ago and took off when the 7-foot, 6-inch Yao Ming — who played on the Chinese national team — became a star with the NBA’s Houston Rockets in the early 2000s.

Long-term strategy

The NFL has ambitious plans to change that, in line with Goodell’s goal of nearly tripling overall revenue by 2027. Young says the NFL is aiming to become a top 10 sport in 19 of China’s largest cities by 2020, with revenue to come from merchandise, media rights and sponsorships with familiar partners such as Nike (NKE), Budweiser (BUD) and Visa (V).

Analysts see an opportunity. “If you take a long-term view, there’s no reason why the NFL couldn’t be more popular than NBA,” says Z. John Zhang, director of the Penn-Wharton China Center in Beijing. “It’s a fast-paced game with lots of body hits and combat strategies. On top of that, Chinese soccer teams suck and they’re not expected to do better for another decade or so. There’s an audience ready to switch.”

To generate interest, the NFL shows games on more than two dozen over-the-air and online streaming platforms, including the popular online video service PPTV. Viewership is light, since the NFL has only about 14 million serious fans in China — 1% of the population. Still, the fan base is up from a scant 1 million just a few years ago, says Young. 

The NFL also opreates a flag-football league with teams at 36 Chinese universities in Beijing, Shanghai and Guangzho, including the annual “University Bowl” championship game. For nine weeks each year the NFL rents a field in each of those cities to hold a training-camp style “combine” where fans can kick field goals, learn how to throw a spiral and test their running and jumping ability. The league’s Tmall site helps sell Tom Brady and Peyton Manning jerseys, along with footballs and other gear, throughout the rest of China.

Yet the NFL remains a heavy underdog in China. The sport lacks Olympic-level visibility and with hardly any Chinese kids learning to play, there seems to be little chance that a Yao Ming of football will emerge to play any time soon in an NFL game, or even try out for a team. The NFL shows no willingness so far to reschedule game times in the U.S. so viewers in China, 12 to 15 hours ahead, can watch at convenient times — a move credited with boosting the popularity in China of soccer clubs such as the U.K.’s Manchester United.

There’s even new competition muscling in on the NFL: arena football, which its promoters tout as faster and livelier than NFL-style play. Six to eight arena teams are due to start playing next summer, with Chinese players included on the roster. Maybe they should stop by one of the NFL combines for some tips before the season starts.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.