- The Jaguars have played an annual fixture in London since 2013, with the city now accounting for 11 per cent of their “local” revenues.
- Opportunity has created major new platform for the team’s commercial partners, with four UK-based brands signing up in the past year.
- Interest in buying Wembley Stadium dropped, with potential repercussions for long-term strategy.
Until a time when it is evident there is an unmistakable directive from the FA to explore and close a sale, I am respectfully withdrawing my offer to purchase Wembley Stadium.
With this statement, Shahid Khan – the owner of the NFL’s Jacksonville Jaguars and English Premier League side Fulham FC – appeared to draw a definitive line under the saga which had rumbled on for much of 2018.
The collapse of the £900m (€1bn/$1.2bn) sale – due, Khan has claimed, to its divisive nature and lack of support from across the FA – will have a major impact on the Jaguars. Having played a game at Wembley every year since 2013, the franchise has staked a lot on London, and the move would have shored up its interests in the city.
“We’ve never tried to hide from anyone the importance of playing here to our long-term stability,” says Hussain Naqi, senior vice-president of international development at the Jaguars. And although he describes the Wembley bid as “a discrete business decision, separate from either the Jaguars or Fulham”, one only needs to look at the story of the Jaguars in London so far to appreciate the part the city plays in their long-term ambitions.
In 2011, four years after it first played an annual regular-season fixture in the city, the NFL began seeking one of its members to become its designated London team. The chosen franchise would play one home game per season in the city and – crucially – receive home marketing rights for the entire United Kingdom. The thinking was that having a club return year after year would help to engender a sense of fan community, making the annual NFL fixtures more than a novel day out for UK sports fans.
“The first stage really is just getting people in, and that’s what happened very successfully in the first few years,” says Naqi. “But there was a worry that it wasn’t sustainable, that people might come once for the experience and then not bother coming back for a second year.
“You want to educate people about the sport, so that they’re coming back because they actually enjoy the game and are emotionally invested in the game. Having a team play here every year that the fans could get behind was a significant step in that direction.”
In 2013, the Jaguars became the NFL’s official London team, signing a three-year deal to play one game annually at Wembley Stadium. That deal was renewed in 2015 for an additional four years, taking them through to 2020. Internationalisation, particularly with a focus on London, was a priority for Khan – who, at the time, was also in the process of purchasing Fulham FC – but Naqi acknowledges that there were elements of good luck involved in the team’s ability to secure the deal.
Naqi says the Jaguars were in a “fortunate position” as one of the only teams who were able to make the commitment over a multi-year period. “Other teams have lease obligations to play a certain number of games in their rented stadium, or there are local considerations,” he says.
In other cases, particularly for the traditionally bigger NFL teams, it is simply that regular-season home games – of which there are only eight annually – are just too lucrative to sacrifice. That this was of minor concern to the Jaguars offers some indication of why London was such an appealing prospect for the franchise – and why it remains of such importance to their future.
Maximising local revenues
When Khan confirmed his purchase of the Jaguars in 2011, their local revenues were the second lowest in the entire NFL, having faltered against declining local interest and what Naqi describes as a “saturated” regional sponsorship market. Jacksonville itself was regarded as a poor choice of location when it first joined the NFL in 1995, thanks to a significantly smaller suburban area and television market than any of the other teams in the league, issues which have remained obstacles to the franchise’s growth.
The Jacksonville media market holds about 700,000 television households – 42ndin the United States. Average attendances at TIAA Bank Field have hovered around 60,000 for the past few years, rarely filling the 67,000-seater venue; 25 teams had a higher average attendance than the Jaguars during the 2017 season. Furthermore, as a business and financial centre, the city is dwarfed within Florida by Miami, limiting the number of local companies able to partner with the team.
All of this has meant that, where the average split between national and local revenues for an NFL team is roughly 70/30, closer to 80 per cent of the Jaguars’ total revenue was being made up by national income in 2011. As the team’s president Mark Lamping put it last year: “The reason we’re interested in London is maximising our local revenue. Just maximising Jacksonville is not going to get where we want to be.”
The majority of an NFL team’s national revenues come from the league’s media-rights deals, which are shared equally by the league’s 32 teams. In the 2017 season, this amounted to $255m per team. Local revenues are so crucial to NFL teams because it is where the difference is made, with all profits made from ‘local’ sponsorship and media rights deals being retained by the franchise.
“Our team president and our owner have been very transparent that as a club, in order for us to be stable, we need to increase local revenue,” Naqi adds, noting that the transparency of the club’s hierarchy has been crucial in the fans’ acceptance of losing a home game every season. “In Jacksonville, because of the size of the market, because of the complexity of the corporate community, because of the size of the corporate community, in terms of the transients and the turnover that you see, there are a lot of fundamental elements that are endemic to Jacksonville that make it a very challenging NFL market.”
While there were challenges in moving a game away from Jacksonville – persuading the mayor, the local council and, most importantly, the supporters – Naqi says that most of the relevant stakeholders quickly bought into and backed the concept once it became clear how dramatically the deal would grow the Jaguars’ potential ‘home working area’ and offer a stable growth platform for the franchise.
In the US, the ‘home working area’ – the territory in which a team is allowed to directly activate and market to fans and from within which revenues are classified as ‘local’ – is limited to a 75-mile radius around a team’s stadium.
According to NFL UK numbers, there are three million “avid” American football fans in Great Britain, and as many as nine million people who consider themselves casual fans – against a total of 1.2 million people living in the Jacksonville area. The agreement suddenly opened up a significant marketplace, for the Jaguars to market to and monetise directly but, as significantly, a hugely valuable demographic for commercial partners to target.
“When you look at the data we have on the demographics that follow American football in the UK and attend our games, they tend to over-index on affluence, they over-index in terms of being younger than other audiences, and they tend to be a little bit more educated than a lot of audiences, so they’re a marketer’s dream in many respects,” says Naqi. “That gives us an incredible audience and opportunity to work with our partners, a great demographic for them to communicate with through the Jaguars.”
UK market driving income
Since last year, the Jaguars have signed four new UK-based sponsors: telecoms provider Lyca Mobile; financial services firm LGT Vestra US; packaged meats company Fire & Smoke; and travel agency Ocean Holidays.
“These are either UK-based companies trying to speak to expats over here or, in the case of Lyca Mobile, trying to get their name out into the US market,” explains Naqi. None of the deals would have happened without the team’s presence in London and their ability to activate exclusively in the UK marketplace.
It is not just new sponsors coming in to take advantage of the UK marketplace. Existing sponsors have been persuaded to extend and expand deals due to the rise in interest in the Jaguars and their increased marketing reach.
Naqi gives the example of insurance provider US Assure, which has sponsored the hospitality suites at TIAA Bank Field for the past three seasons and has now expanded its arrangement to bring employees and clients across to London once a year. Tourism board Visit Florida, a long-term partner of the Jaguars, even took advantage of the Fulham connection, becoming a primary sponsor of both teams in its efforts to communicate with the London audience.
According to Forbes, overall sponsorship revenues for the team increased by 70 per cent in the three years from 2013 – the year they first played in London – to 2016, dramatically outstripping the average NFL sponsorship revenue growth in that timeframe of close to 20 per cent.
Furthermore, the proportion of the Jaguars’ $140m local revenue represented by the UK reached a high of 15 per cent in 2016. The fall to 11 per cent in 2018 was attributed largely to an unfavourable foreign exchange rate due to a drop in the pound’s value against the dollar rather than any change in the UK’s NFL environment. That 11 per cent is expected to rise again when the 2018 numbers are released, and it is a figure Khan and the Jaguars are desperate to protect.
As Wembley is a designated “home” fixture for the Jaguars when they play there, they retain the majority of the gate receipts, generating one-and-a-half to twice the revenue on a per-game basis than an average match in Jacksonville. Higher ticket prices and a considerably-increased capacity (Wembley holds 90,000 specatators) mean the Jaguars can make as much as $5m from a single game at Wembley. Average per-match takings for the 2017 season at TIAA Bank Field were in the region of $2.8m, not including seats in corporate hospitality.
While NFL observers widely expect the Jaguars to renew their deal to play at Wembley beyond 2020, it is by no means a certainty. Owning the venue would have given them much greater leverage in negotiations. Five years in, though, Khan’s London strategy is paying off – increasing local revenues and offering a growth platform for the future.