The NFL is looking to Facebook to help fuel international growth

Key Points
  • The NFL and Facebook agreed to a content agreement in 2017, which was renewed last year and runs through 2020.
  • The NFL is hoping the relationship will continue to assist in its efforts to expand its brand internationally.
  • Facebook, meanwhile, is hoping to increase monetization and renegotiate away from paying an up-front fee.
San Francisco 49ers' quarterback Jimmy Garoppolo (10) celebrates a touchdown by teammate Raheem Mostert (31) in the second quarter of their NFC Championship game at Levi's Stadium in Santa Clara, Calif., on Sunday, Jan. 19, 2020.
Jose Carlos Fajardo | MediaNews Group | The Mercury News via Getty Images

After years of resisting the incorporation of its game footage outside of linear television, the National Football League's relationship with social media giant Facebook is proving to be beneficial for a sport looking to grow outside of its home base.

Facebook is entering the second year of a two-year partnership with the NFL, under which it pays the league an undisclosed amount for game recaps that it places on its three-year-old Facebook Watch video-on-demand platform. After Facebook recoups the fee it paid the league for game recaps via revenue from video ads, the agreement shifts to the NFL taking 55% of the video ad revenue, while Facebook keeps the remaining share.

"It allows them to have relationships with audiences that they otherwise would struggle to reach," said Rob Shaw, Facebook's head of Global Sports Media and League Partnerships.

But while both the league and Facebook are focusing on growth in 2020, their targets are a bit different.

The NFL wants to expand its brand internationally. In contrast, Facebook, though cheering for the league's growth, hopes to earn more money from the deal.

International interest: 'Like feeding red meat to a lion'

Facebook has spent the last five years building its video platforms, which include Facebook Live and Facebook Watch — the video-on-demand service that emulates YouTube.

Facebook knows what sports fans are consuming and what's trending, and it used this info to sell the NFL on a content agreement in 2017. The two parties renewed the deal last year, and it runs through 2020. Halfway into the current deal, the NFL has had its most successful year utilizing the Facebook partnership.

Facebook says roughly 19 million people have watched at least one minute of NFL game recaps over the course of the past two seasons, with 25% of viewers being outside the U.S. The company receives the recaps roughly an hour after each NFL game, and will immediately post a recap after Sunday's Super Bowl LIV, too.

Facebook Groups has served the NFL well, as it allows fans from around the world to gather in one section to engage with NFL content via comments, likes and reactions. The league now runs two popular groups, the NFL UK group and the NFL-Fans in Deutschland group.

According to Facebook, the Deutschland group is particularly successful. It averages roughly 2,000 interactions per day and has grown by 59.5% in the last year.

"The NFL is blowing up in Germany," said Shaw, who spoke to CNBC while in Miami for the Super Bowl. "You can see it through the data of content consumption. That is a value add that Facebook offers these leagues. Otherwise, they'd have to guess what market they should try to solicit a rights deal."

"It's like feeding red meat to a lion," Shaw added. "There is just such a passion from these people, just getting them into a room together is more than enough."

Stewart Love, a member of the NFL UK group, which has grown by 7.5% since last year, said the group is "home to a community where fans from all ages, race, and gender can come together and talk all things American football in the UK."

With the league's reach growing outside of the U.S., Ian Trombetta, the NFL senior vice president of social and influencer marketing, said the relationship with Facebook is "critical."

"The collaboration is getting better and better," Trombetta told CNBC. "Growing the game, getting NFL content in front of more fans on a global scale, it's going to continue to grow."

The NFL is also taking advantage of the Facebook-owned Instagram. According to CrowdTangle, a company that monitors social media platforms, the NFL's Instagram account grew by 20% in 2019, and the league's four main IG handles — @NFL, @NFLNetwork, @TheCheckdown, and @NFLThrowback — drove nearly 1.9 billion video views, up 44% compared with last season.

"They're consuming the content which can be monetized, and the NFL is prospering off that," Shaw said. "From an audience development perspective, you can't put a number on it, but they've been served very well by it."

From Facebook's standpoint, the company is happy with video growth on NFL content and now will look to increase monetization ahead of the next round of negotiations. The company hopes to place more ads in-stream and move away from guaranteeing the league a certain amount of revenue up front.

Both parties declined to comment on exactly how much Facebook guarantees the NFL. Still, Shaw described the partnership with the NFL as "maturing," adding Facebook will continue to invest in the relationship, which also allowed the company to build similar connections with other leagues, including the National Basketball Association and Major League Baseball.

"If you go back a couple of years ago, I don't think the NFL paid as much attention to what our platform could do for them," Shaw said. "This is a relationship that is growing in importance to them and growing in importance to us."

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