In 2010 NFL Commissioner Roger Goodell set a goal of achieving $25 billion in total revenues by 2027. At the time the league was generating $8.5 billion in annual revenue so I thought that was a pretty audacious. It equated to $1 billion increase per year in revenues until 2027.
But as I thought about it further, its really not THAT audacious. It comes out to 6.5% annual growth and if you assume future inflation will be at least 2.5% and the NFL will continue to raise prices with inflation (both very conservative bets, in my opinion) then it equates to 4% real growth per year. Seven years in Roger Goodell’s NFL revenue is at $13.5 billion equating to $750 million in annual growth per year.
To me, what’s more interesting than whether or not they reach the goal is, Why make this goal and publicize it in the first place? As I thought more about it, there are likely some very good reasons for setting a big, long term financial goal. Some such reasons could include:
- Puts employees and partners on alert– Developing and communicating a goal like this tells employees and stakeholders (players, owners, tv partners, non-tv media, etc), “we may be the most successful US professional sports franchise but we are focused on driving significantly more growth.” As new contracts for television come up or expansion opportunities I wouldn’t be surprised if NFL executives use the goal as leverage on new contracts to justify further revenue share increases or expansion of terms.
- Makes executives think about big growth opportunities– You would think Roger Goodell would not make this public prediction, if he didn’t have a strategy for achieving it. Other writers have said the plan is feasible based on rebuilding stadiums, renegotiating television rights, and other ancillary revenues like forcing internet providers to pay for rights and better monetization of fantasy football. The major point is the bigger goal likely forces executives to think bigger than next year’s revenue forecast to find opportunities (like international expansion) that can make this bigger goal a reality.
- Gives a “Financial Vision” to a complex organization– Stating the NFL’s goal of $25 billion in revenue by 2027 sounds a lot more grandiose than saying “we want to average 6.5% annualized growth over the next 17 years.” More importantly, simple goals are far easier to communicate – especially in a complex organization. In my work, I have known of other large multinational companies (public and private) make similar simple revenue growth goals. For example, one company multi-national company I worked with had a five-year revenue and EBITDA goal of $2 billion and 20% respectively. This goal is simple, easy to understand and communicates the key objectives for years to come. In addition, having a simple goal implies the company has a plan to achieve it and working on that plan provides a good frame of reference for making decisions and increases motivation.
So when thinking about your business, don’t be afraid to look further out than 3 or 5 years and identify a simple financial goal based on a target for revenue, EBITDA, enterprise value or all of the above. Like the NFL, It may give your organization an empowering financial vision to help focus and drive growth for years to come.
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