Fans Love New NFL Blackout Rule -- But What's At Stake For Shareholders?

By Jason Notte

With football season upon us and the NFL's money machine again cranking at full speed, a slight tweak in the league's television blackout rule is about to make a lot of fans last-second-touchdown happy. But there's one group the new rule is making happier.

In an attempt to keep its games on local television and ease pressure on markets hit hardest by the economic downturn, the NFL redefined the term “sold out” and lowered to 85% the mandatory stadium attendance necessary to keep a game on the air. It's not a universal change and it's not mandatory, but it's one some NFL teams are embracing.

But happy fans and franchises aside, there are corporations looking to benefit from the new rule.

Before the 2012 season, any home game that wasn't sold out 72 hours before kickoff was blacked out not only in its home market, but on any station with a signal that reached within a 75-mile radius of the home team's stadium. Teams could exploit a loophole in the deal that allowed sponsors to buy up remaining tickets at a third of the cost and give them away to charity, but even that strategy didn't prevent 16 home-market blackouts in 2011 or 26 the year before.

This year, the Tampa Bay Buccaneers, Oakland Raiders and Miami Dolphins all adopted the 85% “sellout” threshold, while the Minnesota Vikings lowered their capacity to 90%. Each of these teams has struggled to avoid blackouts in recent seasons.

This rule change is good news for the teams' couch-riding Sunday faithful, but they aren't the only winners. It's a financial boon for corporations and media.

The NFL expects to take in $9.5 billion this year, and its franchises have reached an average value of $1.04 billion apiece, according to Plunkett Research. All that could rise if the NFL keeps more games on the air. And more than the franchises benefit. Here are just some of the companies whose stocks and coffers could gain from broader television access:

WINNERS

The Major Networks

The NFL's broadcast partners -- CBS (NYSE: CBS), NBC (Nasdaq: CMCSA), ABC/ESPN (NYSE: DIS) and Fox (Nasdaq: NWS) -- have the most to lose when a local game is swapped out for some out-of-market offering. Blacked-out local games cost ratings, and lost ratings cost money. The last thing the networks want to worry about is dwindling ad revenue after extending their deal with the NFL late last year. The new terms locked networks in through 2022 and increased the NFL's take from $1.9 billion per year to $3.1 billion. The move could also boost overall NFL revenue by as much as 60% over the life of the deal.

Perhaps none of the networks or their parent companies feel the pain as much as Disney, which signed an eight-year extension with the league early last year to keep "Monday Night Football" on ESPN through 2021 and to bump up the league's fee to $1.9 billion a year from $1.1 billion. The stakes also got higher for NBC, which used the deal to take over the NFL Network's prime-time Thanksgiving game and pregame show for its new NBC Sports Network.

The NFL loves the deal, which allows more schedule flexibility to dump late-season non-market matchups between losing teams for better games and cuts conference ties to networks to allow American Football Conference to be shown on Fox and National Football Conference games on CBS. The networks also had little room to complain while NFL broadcasts averaged 17.5 million viewers last year, accounted for 23 of the 25 most-watched network shows and doubled the average ratings of network prime-time shows.

Overstock.com (Nasdaq: OSTK)

When you buy the naming rights to a stadium occupied by a team that's had 83 home games blacked out since it moved in less than two decades ago, it pays to buy in low.

Overstock.com signed a six-year, $1.2 million-a-year deal last season for the naming rights to the Oakland Raiders' home at the Oakland Coliseum. That's a steal compared to the $7.6 million a year FedEx pays to slap its name on the Washington Redskins' building, but it's even more of a bargain considering the Raiders are on the upswing and just accomplished the rare task of selling out all their home games last season.

LOSER

Raymond James Financial (NYSE: RJF)

You know that little intro before televised home games that sounds something like “Welcome to sunny $3.2 Million-A-Year Naming Rights Stadium, I'm your host Ex-Football Player"? You don't get that when games are blacked out, which pretty much defeats the purpose of spending millions on naming rights.

Raymond James Financial did just that when it shelled out in 1998 for a $32.5 million, 13-year stint on the Tampa Bay Buccaneers' stadium. The firm renewed that deal in 2006 and is on the hook for $3.2 million a year through 2026. That didn't seem like a bad deal when the Bucs were selling out every home game between 1998 and 2009, but the recession took its toll on Tampa in 2010 and beyond. Poor attendance forced the league to black out every Bucs home game in 2010 and five more last season.

The Buccaneers have since lowered both their blackout threshold and ticket prices in an effort to bolster attendance. Raymond James is paying the Buccaneers for increased name recognition, but if attendance doesn't improve, the financial firm will pay full price to reach half its potential audience.

TOSS-UPS

DirecTV (Nasdaq: DTV)

Back in 2009, DirecTV paid $4 billion to extend its exclusive contract for its NFL Sunday Ticket package until 2014. Since 1994, DirecTV has had uncontested access to the full slate of out-of-market NFL games, stats channels, multi-game channels and mobile apps that let subscribers watch from their phones and tablets. Of DirecTV's 19.9 million subscribers, more than 1.8 million (10.6%) subscribe to NFL Sunday Ticket.

Unfortunately for DirecTV, that deal came with an onerous stipulation demanding an online-only version of Sunday Ticket for non-subscribers and making the NFL RedZone channel non-exclusive to DirecTV. Though DirecTV's stock has risen nearly 57% since it extended its deal with the NFL, it didn't benefit DirecTV to lose any portion of its NFL business to potential blackouts.

Sun Life Financial (NYSE: SLF)

After the Dolphins' CBS affiliate and sponsors stepped in to keep games on television last year, the Dolphins felt it would be wise to make the sellout bar a little easier to clear.

Not even the fans are happier to hear about the blackout move than Sun Life Financial, which in 2010 signed a five-year, $37.5 million deal to put its name on the Dolphins' stadium. As it was, the stadium's naming rights were seemingly jinxed in 1996 after then-owner Wayne Huizenga stripped original owner Joe Robbie's name off the building and replaced it with apparel company Pro Player.

That would've been a savvy move if Pro Player didn't go bankrupt three years later and liquidate its assets in 2001. The nonexistent company's name stayed on the building until 2005, when the name was changed to Dolphins Stadium and, later, Dolphin Stadium. Jimmy Buffet paid to have his Land Shark beer sponsor the stadium in 2009, but Sun Life has been the stadium's first relatively stable namesake in more than a decade, although Sun Life's share price has dropped nearly 26% since it announced the naming rights deal.

The Investing Answer: Look to see how corporations tied to NFL franchises fare this season. Sun Life Financial's shares in particular are to be watched. If you own stock in Raymond James Financial, watch the attendance at Buccaneers games.