Revenue Sharing

Great post SC..great post.

Before we get too enthralled with the cries of capitalism versus socialsim here, let me offer something to think about.

The NFL (just like MLB and the NBA) is slightly different from your ordinary business. Consider this:

If there is a market out there to sell 1000 widgets in a year and there are three companies making widgets, it behooves Company A to try to put either Company B or Company C out of business. If they do that then they only have one other competitor for those 1000 widgets that will be sold in a year. Assuming that Company C is out of the picture, Companies A and B are in a position to do better than they did before Company C had to fold.

That is NOT the case with the NFL. If the 8 or 9 "big market teams" actually put the 8 or 9 "small market teams" out of business, that would hurt the big market teams because they would not have a league with a national footprint and total league revenue would go down. With fewer teams, interest MIGHT not continue to increase and the league could be in trouble.

And more importantly to the 8 or 9 "big market teams" the values of their franchises would drop. After all, one lure of owning an NFL franchise is that none of them actually lose money; if some start to drop like flies, that makes owning one a dicier proposition and franchise values will go down.

Just imagine if the NFL actually had only 8-12 teams again. If 20 franchises had to fold, the league would have difficulty selling expansion ever again AND teams would be playing each other too many times to keep it interesting. Also, how would there be fantasy leagues with so few players.

Danny Boy has a huge cash-cow here with the Skins. But the fact is that he also has a franchise he paid over $800M for and the estimated value now is about $1.1 - 1.2B. He would be a fool - and in business matters he is anything but a fool - to do ANYTHING that would jeopardize the continued increase in value for his franchise. In fact, if the value ever dropped to sy $600M, his creditors would probably call his loan that he took to buy the team.

As Jim Rome might say, that would suck!

Essentially that's the crux of the argument I suppose. Should the owners consider themselves owners of their own companies competing against each other? Or should they consider themselves business partners working together for the NFL to compete with outside competitors. By working together they've created tremendous value for each of their teams. According to Forbes, the Vikings are the least valuable team in the NFL (at least they were last year) yet they're more valuable than the Knicks (the most valuable NBA team). The Detroit Pistons and Detroit Red Wings (for all their history and NBA titles and Stanley Cups) together are nowhere near as valuable as the Detroit Lions (with nothing). By the same token, I can understand the argument someone like Dan Snyder would make when he says if you want to reap my reward, help me with my debt as well.

sigh...I'm just glad the deal is done

Saden1-

I must agre with you on your quote of;

"Remember folks, the league is only as strong as it's weakest link."

However, the weakest link must really attempt to maximze revenues as much as all other teams. It is clear that they can reach the numbers of big market teams, but they need to attempt. I agree to some type of analysis.....I can't believe the skins were making this type of revenue when the Cooke's owned the team. If there was ever to be totall revenue sharing, what would be the incentive for a team to work harder....why not sit pat, if anything your competitior makes he has to share with you. If I am the owner of Cinci....I sit back-do nothing and get a piece of Snyders action....doesn't seem to promote action.

I know we don't know the total analysis of the new deal, but I hope there is some sanity to it.