Academic journal article International Journal of Sport Finance

The Betting Market as a Forecast of Television Ratings for Primetime NFL Football

Academic journal article International Journal of Sport Finance

The Betting Market as a Forecast of Television Ratings for Primetime NFL Football

Article excerpt

Introduction

Sports broadcasts offer one of the only remaining items consumers of televised programs demand to view live. In a media world increasingly dominated by programs recorded to DVRs and subscription services such as Netflix, sports offers television advertisers an audience that demands to watch a program as it unfolds in real time. Other forms of entertainment, such as television shows and movies, are not as timedependent as technology allows for consumers to watch these events at a time that is convenient for them. Sports remains different as the real-time experience is important to fans who follow their favorite teams, participate in fantasy leagues, and wager on the outcome of games.

With this in mind, sports offers a captive audience to advertisers as fans will not be able to fast-forward through commercials as they watch the game as it actually happens. Television contracts for popular sports have skyrocketed in recent years and advertisers are willing to pay high prices to expose their product to consumers who watch live sports. In the United States, the top sport for viewers and fans alike is the National Football League (NFL), whose season runs through the fall and winter months. Even with its popularity, however, not all NFL games are created equal. Televised games featuring different teams and game conditions are likely to attract dissimilar levels of fan demand for viewing the game.

Understanding the factors that lead to higher ratings for NFL games is important on a variety of fronts. First, the league has primetime contracts with NBC and ESPN (Disney/ABC) for Sunday and Monday night games where only a single NFL game is shown at that time slot. This is quite different from the normal Sunday afternoon games, where multiple games are being played simultaneously. The networks would like to choose the highest-quality games for primetime broadcasts to maximize viewership and revenues from advertisers.

A second factor that is quite important for NFL broadcasts is that advertisers are typically guaranteed a certain Nielsen rating or they will receive future advertising as compensation. This agreement is called a "make good" and is discussed in the advertising literature in research such as Rust et al. (1992). If the game does not meet its ratings goal, the network loses out on future revenues. Understanding the factors that drive television ratings is pivotal to choosing games to broadcast, deciding how much advance advertising to allot to the game, and as a result capture the highest revenues from advertisers.

Third, understanding the game attributes that lead to higher television ratings is useful to the league as a whole when they sell future television packages to the networks. If factors such as game uncertainty and scoring play pivotal roles in driving television audiences, structure of the sport itself could potentially be adjusted, such as rules aimed at increasing scoring, to maximize the value of future television deals.

This paper addresses these issues by studying the factors that affect Nielsen ratings for primetime NFL games on Sunday and Monday nights. Regression models are developed and tested that use expected game attributes formed in the betting market for National Football League games as independent variables. The point spread, a measure of uncertainty of outcome, and the total, a measure of expected scoring, and other factors are used to explain three different measures of television viewership available publicly in Variety magazine: the overall Nielsen rating for the game, the Nielsen rating of the 18-49 year-old viewership bracket, and the share of the rating of the 18-49 year-old group.

The overall Nielsen rating is important to networks and advertisers and its determinants are the main focus of this study. The 18-49 year-old group, however, is an interesting and timely subset because attracting and retaining viewers of this age group has recently been revealed as a problem for the NFL. …

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