super bowl bears 298.88.
(photo credit: AP)
Choose any indicator to measure success and the NFL would probably be the No. 1 professional sport in North America in every major category: ticket sales, television contracts, marketing contracts, etc. But with success came division, a lesson that NFL owners have learned all too well in recent years.
Wealthier NFL teams like the New England Patriots have experienced tremendous growth in local revenue over the past 5-10 years due to luxury box sales, stadium naming rights, and radio contracts, yet the revenue streams of smaller market teams like the Buffalo Bills have remained stagnant.
"People simply cannot afford to pay us what they pay in other cities," said Buffalo Bills owner Ralph Wilson at the NFL owners meetings last week.
The dispute over local revenue nearly led to the end of labor peace in the spring of 2006. High revenue owners, for the most part, argued that they should not be penalized for their innovation. On the other hand, lower revenue teams countered that if local revenue was not shared, they would face a competitive disadvantage that would be tough to overcome.
NFL owners also wanted an agreement that did not reward teams for failing to maximize their revenue. For example, small market teams such as the Green Bay Packers and Kansas City Chiefs are in the top half of NFL revenue while a big market team like the San Diego Chargers is in the bottom-tier.
Ultimately, it was a plan by Patriots president Jonathan Kraft that called for higher revenue owners to contribute money to a pot that was to be allocated to lower revenue teams based on a set of qualifiers that allowed owners to come to an agreement last year. The agreement was, however, ambiguous because it simply said that money would be shared between NFL teams, but was vague about how the money would be shared.
NFL owners finally agreed to a set of qualifiers at last weeks meetings. The plan allows low-revenue teams to receive additional money based on ticket sales, the age of their stadium, and the amount they spend on players. The plan was approved 30-2.
"It is a really fair deal," said Miami Dolphins owner Wayne Huizenga. "It says that if you are in a new stadium, you probably don't deserve any help for a few years because you have new sources of revenue. But it also says that if your ticket sales are well below league average and you are spending what you should on players, then you should get some help."
Kraft was instrumental in both agreements. "His plan really laid the groundwork for last year's Collective Bargaining Agreement and the agreement that we came to in this meeting," said Jonathan's father and Patriots owner Robert Kraft, who visited Israel with former NFL commissioner Paul Tagliabue last month.
Much of the debate centers around a spirit of sharing that dates back to the NFL's inception. Pete Rozelle, the NFL's first commissioner, implemented such novel concepts as TV revenue sharing, allowing small market teams like the Green Bay Packers to receive the same amount of TV money as the New York Giants. The agreement arrived at last week does not affect the $3.2 billion worth of television money that NFL owners split annually.
Even with the agreement, problems remain. NFL teams now spend about 65 percent of their annual costs on players - something that wealthy teams like the Patriots can afford long term. On the other hand, a team like the Bills will have trouble spending that money in addition to affording all its other costs.
"The agreement will keep us going for another couple of years," said Wilson. "But long term, we cannot survive giving upwards of 60% of our net revenue going to players."
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