| Run for your media-proof bunkers. Super Bowl hype is ramping up for its final frenzy. Your life will be invaded by previews and commentaries on the big game, the advertising during the game, the half-time show and even the hype itself.
Half of the U.S. population and millions of Canadians will be sucked into watching the annual crowning of the National Football League’s champion as America’s most successful socialist experiment. The big-game hype will be full of jingoistic salutes to the American way, the American dream, the American military and the tough job it has bringing the dream to the unenlightened masses of the world. Yet the league itself and how it has risen from the periphery to the pinnacle of U.S. sports is a testament to socialist values.
Salary caps, revenue sharing and micromanaging of the on-field product have made the NFL the most popular and wealthy professional sports league in America.
The public was given a rare glimpse at the NFL’s remarkable finances during a lawsuit against the league by Al Davis, the owner who has fought the socialist tendencies of the NFL while profiting from them. In 1999, NFL teams averaged $11.6 million (U.S.) in operating profit, but the real money in professional sports is in the investment. The market value of an NFL team in 1984 was $80 million. By 2002, it was $500 to $700 million.
All this profit and investment growth comes from sharing and limiting competition on both sides of the balance sheet. What the NFL and most of its owners understand is that the market-value of a franchise equals the value of any given franchise. They are all in this together, competing only on the field. Revenue sharing and the ability to move to a more lucrative market make the quality of the team and the potential of its present market unimportant in determining its value.
Over 70 per cent of an NFL team’s revenue comes from shared revenue. National and local television and radio fees, paid attendance and merchandise are all put in the league pot and divided equally. This shared revenue was about $65 million (U.S.) per team in 1999, up 66 per cent in just five years.
On the expenditure side, the salary cap ensures that no team can spend more on its players than any other team. The NFL cap limits teams to spending 63 per cent of their gross revenues on player salaries, a payroll of $67 million in 2001. The average National Hockey League team spends 73 per cent of its revenues on player salaries according to the NHL – the highest among North American professional leagues.
NFL teams can lose games but not money as long as the management is at worst mediocre.
As for the actual product, hype and marketing are more important than quality in today’s overcrowded sports market. Whatever the professional league, the expanding number of teams and games has turned the typical contest into a humdrum affair at best. The most professional or talented athletes find it tough to produce awe-inspiring performances every week in the grind of modern sports. In the age of just-don’t-lose-baby, the NFL has found the secret to making most games close in score and giving championship potential to all its franchises. The Carolina Panthers went from a 1-15 record to the Super Bowl in two years. The New England team finished last in their division before winning the Super Bowl in 2001.
The only budget line that separates NFL teams is what they can squeeze out of the local burghers for the promise of staying in town. The squeeze play revolves around the stadium.
Under the NFL’s revenue sharing rules, all money generated by a stadium, except for ticket sales, is kept by the home team – this includes parking, concessions, luxury box rent and club seat fees. The most profitable teams are the ones with the best stadium deals.
As recently as the ’80s, municipalities built stadiums and used the rent from teams and profits from parking, concessions and luxury boxes to pay for the building. NFL owners recently figured out that a potent mix of civic insecurity, economic ignorance and media hype gave them a big stick when negotiating new stadium deals. A stadium building boom ensued. This time the municipalities and states built the stadiums, paid the teams to play there and gave them all the parking, concession and luxury box money. Now local taxpayers fork out tens of millions of dollars each year for an economic return equal to a couple of Wal-Mart stores.
In the end, the NFL model proves that, like their capitalist counterparts, even the most socialist of enterprises cannot avoid the temptation to use and abuse politicians to squeeze a little more profit out of the taxpayer with a subsidy or two.
Web resources
· Thirty seconds of Super Bowl advertising for $2.2 million –
www.nielsenmedia.com/newsreleases/2003/pre-superbowl_2003.htm.
· One city’s fight with its NFL team –
www.indystar.com/library/factfiles/sports/football/indpls_colts/stadium/stories/2002_1020.html.
· Wikipedia the free encyclopedia on the NFL –
en.wikipedia.org/wiki/National_Football_League#Salary,_and_the_salary_cap.
· The financial arrangements of the NFL, NHL, NBA and MLB –
www.bls.gov/opub/cwc/archive/spring1998art1.pdf. |
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