ITAM.

 GLOBAL  STRATEGY.  AUTUMN  2015.  CASE  EXAMPLE  WRITE-­‐UP   1  

 
CASE WRITE-UP EXAMPLE: “The Globalization of the NFL”
Prepared by: Maria Novales-Flamarique, August 2015

INTRODUCTION
Whilst the NFL has been the most successful professional sports league in the US, it has been
unsuccessful at globalizing. In the US, the average football team value is twice that of baseball
teams, three times that of basketball teams, and five times that of hockey. Its operating income
is the highest of all sports; they charge more per ticket and have the largest average
attendance. However, the NFL lags all of the other sports in terms of a following outside the US
and revenues coming from overseas.

PROBLEM STATEMENT
The NFL has not been able to achieve the same or better globalization impact as other sports
leagues and needs to decide whether to continue pursuing its current globalization path or
change directions.

ANALYSIS
1) Why was the NFL unsuccessful in its globalization attempts?

The NFL was unsuccessful in its globalization attempts for the following reasons:
• The NFL launched into globalization from a very strong position as the most successful
sports league in the US. Its local competitive advantage was not enough – and at times
hindered – its globalization efforts
• The NFL’s allocation of the value chain globally did not consider that the principal input
required (players) could not be outsourced globally in the same way as it is in the US, where
it’s an institutional arrangement, through the presence of a robust set of organizations that
produce players whilst also creating a fan base (paradigm of consistency)
• Finally, it is possible that the NFL did not answer the key questions for globalization prior to
launching its efforts, which resulted in a flawed strategy
The NFL’s local competitive advantage

Several sources of competitive advantage explain how the NFL has become the most
successful sports league in the US:
• Concept of “all for one”: All teams are peers and decisions are made as a group (equal
distribution of revenues across owners guarantees that most teams have enough resources
to hire talent) and all teams have a fair shot at becoming champions. In other sports,
unequal distribution of revenues leads to few teams accumulating stars and the perennial
absence of certain teams in finals and semi-finals). Also, the unity of all franchises gives
NFL teams a stronger position to negotiate TV rights as a block
• One of the best marketing machines in the sports arena: early introduction of mid-game
shows, cheerleaders, festive environment, attracts customers that were not necessarily
interested in the sport, but in its entertainment value
• NFL controls a few activities of the value chain (mainly merchandising and production
the game event) which are where value is created
• Timing advantage from a shorter season, which results in more tickets per game and
higher prices per ticket. In addition, the NFL has been good at linking games to specific
holidays, so these become part of the holiday (i.e., Thanksgiving). The season also has

SOURCE: The Globalization of the NFL – Teaching Note; Juan Alcácer; Harvard Business School;
February 2014
2   ITAM.  GLOBAL  STRATEGY.  AUTUMN  2015.  CASE  EXAMPLE  WRITE-­‐UP  
 
minimal overlap with other sports and the NFL has negotiated exclusivity of rights per night
(i.e., Sunday Night Football, Monday Night Football, etc.) by media channel
• One final game (vs. longer playoffs), making it a highly desirable event

However, these sources rely on an environment that only exists in the US: the presence of a
robust set of organizations that produce both inputs (players) and customers. US high schools,
universities and minor leagues cultivate the talent needed for professional teams and also
create a fan base. The NFL performs some of the activities of its value chain (primarily scouting,
marketing and production of games, whilst the source of the main input – players – is mainly
outsourced. American football fully outsources the creation of new players to high schools and
colleges. Most of the scouting is done through the league (although there are some
independent scouts). Marketing and production are solely in the hands of the NFL (with some
minor activities outsourced in marketing).

 
Analysis of sources of failure of NFL’s global strategy

Unfortunately, the NFL doesn’t have the parts of the value chain that create players. It tried to
follow the same strategy as other leagues, but needed to create upstream institutions to boost
demand. In other words, it needed to create both demand for the game and the supply of
players. The other leagues had an easier job – they only needed to create demand, while
taking advantage of existing conditions, with a ready supply of players in their target countries.

Essentially, the NFL was unsuccessful in its globalization attempts because its strategy was
flawed, and it seems that it had not necessarily answered these questions before embarking on
global expansion:

• No real motivation for globalization: The NFL still had room to grow revenue in the US
without major investments, and there was no desire for lower costs, which allows us to
assume that the NFL owners were trying to copy what other franchises did (many owners
are also owners of other sports franchises)
• Less attractive location choices: Europe as a first choice may not have been the best, as
(a) soccer has had a major presence for years; (b) soccer is also an all-season competitor;
(c) football is very much identified as American, which may not have been as attractive for
Europeans as perhaps with markets such as Latin America or even Asia
• Sub-optimal activity allocation: The NFL tried to do all activities in the value chain in
Europe. It would have been better to perform only a few of them, for example, just selling
merchandise

SOURCE: The Globalization of the NFL – Teaching Note; Juan Alcácer; Harvard Business School;
February 2014
 
 ITAM.  GLOBAL  STRATEGY.  AUTUMN  2015.  CASE  EXAMPLE  WRITE-­‐UP   3  
 
• Unfortunate timing: The NFL seems to have tried to accomplish too much in a short period
of time, and a globalization strategy of the magnitude and scope the NFL attempted requires
patience
2) How can a professional sport generate value globally?

Other sports have migrated from one country to another country and become very popular. For
example, other leagues brought foreign players that drove demand for the sport back in their
countries of origin, translating into higher TV-rights revenue (followed by merchandise revenue):
MLB followed this strategy with Latam and Japanese players and the NBA with Chinese and
European players. However, these sports already had institutions overseas that produced
players (inputs) who could be used to create demand overseas.

ALTERNATIVE STRATEGIES

Alternative strategies that the NFL could contemplate include the following:
1. Abandon the globalization process: the NFL should focus on the US market and treat any
foreign stream of revenues as an extra perk. The advantages of this option include (a) no
need for major investments, and (b) strengthening the NFL’s US initiatives will solidify its
position relative to other sports. Disadvantages include (a) the longer the NFL waits, the
harder expansion becomes due to saturation in most markets and (b) the NFL may miss a
great opportunity. As a corollary, if the MLB and the NBA consolidate their presences
overseas, they may accumulate resources that can be used back home to attach the NFL’s
position
2. Follow the same strategy used until 2009, with better execution: the strategy used until
2009 consisted in generating foreign demand by generating foreign players through direct
investment in teams. Specific changes to the execution of the strategy could include
targeting Canada and Mexico instead of Europe; invest at the grass roots level rather than
creating teams and a league. Under this strategy, an infrastructure would be created but the
NFL’s participation (and investment) would be scaled back and it would probably take longer
to achieve its goals

RECOMMENDATIONS
3) What strategy would you advise?

The NFL should create demand without creating people that play the game. This strategy is
based on the belief that sports are attractive to people that do not play them because watching
sports is a form of entertainment. This is the strategy the NFL has followed since 2008. It
consists of having pre- and post-seasons games abroad, using digital media to educate and
attract consumers, and providing limited financing for grass-root local players.

This strategy departs from the traditional approach and not only recognizes that the NFL faces a
different global landscape from the MLB and NHL, but also mimics a more traditional
globalization strategy: exporting your product. Other sports have done something similar.
On the positive side, the strategy implies (a) lower investment; (b) product of the same quality;
and (c) capturing more playing time from existing players. On the negative, (a) it may take
longer; (b) it may negatively affect demand for the sport in the US and (c) a longer season could
stress the US talent pool by increasing the number of injuries.
***

SOURCE: The Globalization of the NFL – Teaching Note; Juan Alcácer; Harvard Business School;
February 2014