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Why NFL has an 'interesting opportunity' amid COVID-19: EDO CEO

EDO CEO & President Kevin Krim joins Yahoo Finance’s Zack Guzman to discuss how the coronavirus is impacting live sports and TV ad spending.

Video Transcript

ZACK GUZMAN: For all the sports fans out there-- and I hope you're enjoying the NBA action that has resumed. But if you are a football fan, obviously, a lot looks shaky out there, as we hear more rumors about the power conferences shutting down the season, or at least postponing until the spring. And what might that mean for all the advertising dollars attached to that, the potential impacts for some of these providers out there? And you look at ESPN, the overall impact to Disney? Well, it adds up to quite a bit of money.

And here to discuss that is the CEO and President of EDO, Kevin Krim. And Kevin, good to be chatting with you again. I mean, obviously, we know how bad this impact is going to be for a lot of the schools that make a lot of money from ticket sales in college football.

But when you stack up the costs of what you see in terms of ad dollars coming through the TV-- the TV coverage on these games, I mean, what are their-- what's the dollar figure that you put to it?

KEVIN KRIM: Well, listen-- thanks, Zack, for having me. Football is big business. And college football is very big business, as is the NFL.

ESPN alone, ESPN and ABC, their college football programming-- regular season playoffs and the national championship and the regular bowl games, those, we estimate, add up to $850 million a year alone in advertising sales. So you add on top of that Fox, CBS, and NBC Universal, and you've got billions of dollars at stake here.

ZACK GUZMAN: Yeah, I mean, there were other numbers thrown out there. Sportico had about $800 million in terms of lost advertising revenue for ESPN, your number a little bit higher than that. But when you look at it overall, it's obviously spread across the season. But it seems like the semifinal and the championship just by itself, we're talking millions of dollars.

KEVIN KRIM: Hundreds of millions of dollars, Zack. And it's for good reason. What we at EDO do is we measure the impact of advertising on TV. So we see the moment an ad airs on TV. We see the spike in people searching for that brand or product that's being advertised.

And when we look at the performance on an audience-adjusted basis of the National Semifinals or the National Championship Game for the NCAA football, these are some of the best programs on all of television. They're right up there with the NBA finals, with Monday Night Football, with even the Super Bowl.

ZACK GUZMAN: Yeah. And how does it kind of shift? Obviously, when we're talking about college football, it's a very different discussion. You're dealing with student athletes who aren't getting paid outside of whatever they get for tuition and everything like that. But when you look at the NFL, very different. We've seen some players opt out. But they're getting paid a lot of money that they're earning here.

How might that be different in terms of how the NFL might grapple with trying to change their season and moving their schedule around versus just the outright cancellation we're seeing talked about right now on the college level?

KEVIN KRIM: Well, Zack, it's always good to center ourselves that this is a public health crisis, first and foremost, and people's lives and health are at stake. But the money is huge. The NFL is billions and billions of dollars a year in advertising. It is some of the best performing-- by EDO data, some of the best performing TV the whole year round, certainly the best among live sports.

And what we see there is that the NFL has an interesting opportunity. First of all, it's a simpler problem to solve than college football in terms of keeping the players healthy. There's fewer of them. And the concentration of the games can be handled more carefully.

If, for some reason, college football doesn't happen this season, then the NFL has a very interesting opportunity to reorient some of its games toward Saturday primetime television. The reality of the NFL's franchises, their various franchises, whether it's Sunday Night Football, Monday Night Football, Thursday Night Football, or the Sunday day games-- it's the Sunday day games that have the most challenging sort of requirements, because they're doing regional matchups. So you're scattering the audience into different pockets around the country.

What the NFL has always prided itself on is that it's a national TV franchise. That's why it's the nation's game. It's not that football has some advantages over basketball or baseball. It's simply that it's a nationally televised league that has had that history for its entire existence.

So the Sunday day games, if you can move some of those to Saturday primetime, you would get the benefits of the NFL's premium performance in terms of advertising, and you'd get less of a fragmentation of your audience. You could have a win-win for the NFL and the broadcasters. Obviously, the colleges will lose out on some major economic benefits. But the broadcasters in question here, they may actually benefit if the NFL juggles that schedule correctly.

ZACK GUZMAN: And that's the interesting piece of this, too, because as we've covered, I mean, leagues vary differently in terms of how much revenue comes in through ticket sales versus TV rights. The NFL obviously skews a little bit heavier, because we're talking about millions and millions of viewers, towards those TV rights. Not necessarily true for the MLB. Certainly not true for the MLS.

But when we think about college football, too, I guess that's somewhere in the middle there, when we think about schools making so much money from those ticket sales. But on the MLB front, you think about what's already happened there. We saw teams shut down when they had cases come out. How might that also shift some of these players? Fox has invested quite a bit in terms of their own baseball coverage.

KEVIN KRIM: Right, so baseball is-- among the major leagues, the big-- the big live sports leagues, MLB is not necessarily as valuable as the NFL and the NBA and college football. But it is right up there. The playoffs, the World Series for MLB are in the top 10 based on our rankings of formats for advertising performance.

So MLB is a valuable franchise. They definitely have a challenge in the number of games. And they're not playing it in a bubble format.

So I think that's a good kind of proxy for the challenges that college football would have. It's not being-- they wouldn't play in a bubble if they're going to play at all. And you see how challenging it's been for MLB.

ZACK GUZMAN: That if they play at all pains me to hear, because, I mean, we're talking about the actual percentage that this actually happens, and it's not looking good. But as you said, I mean, it's a health pandemic first and foremost. The safety of the players important in weighing all of this.

But clearly, the dollars stack up. $850 million, as you say, across ESPN there when we're just talking college football there as well. But Kevin Krim, EDO CEO and President, appreciate you bringing us on that data. Good insights there on that front. Of course, it means much more in terms of the joy out there to Americans to watch this, so fingers crossed.