Professor Subrata Sen on the NFL Blackout Rule
In week 10 of the NFL season, the Tampa Bay Buccaneers played on their home field against the Houston Texans. Bucs fans who weren't in the stadium to witness it were out of luck, as they have been four other times this season. The game didn't air on local television because of the National Football League's blackout rule that bars the local broadcast of games which aren't sold out at least 72 hours prior to game time.
The NFL blackout rule has been in effect since 1973. It is intended to get fans to attend games and generate revenue from ticket sales, as well as concessions and parking. But the policy rankles fans in tough economic times, when high ticket prices put games out of reach for some. Critics call it anti-consumer, and within the last month, legislation has been proposed and a petition filed with the Federal Communications Commission seeking to reverse the rule.
"It's an antiquated rule," says Subrata Sen, the Joseph F. Cullman 3rd Professor of Organization, Management, and Marketing at Yale SOM, who has studied the economic implications of NFL blackouts. "When it was imposed in the 1970s, its rationale was supported by the fact that non-television revenue contributed more than two-thirds of each team's revenue. Today, television dwarfs all other sources of team revenue."
In their paper "Should NFL Blackouts Be Banned?" published in Applied Economics, Sen and co-author William Putsis (University of North Carolina) estimate the rule's effect on individual team revenues by analyzing data from games in an NFL season. They calculate that blackouts increase a team's game day revenues by about $400,000, on average. However, by estimating the cost per television viewer and the value that viewers place on being able to watch games on television, the authors find that the value to fans watching games on television is much higher than the revenue gain from imposing blackouts.
"It's time for the NFL blackout to go because the loss in viewers' rights far exceeds the gain in team revenue due to the blackout," says Sen.