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Forbes.com: Fumble? (NFL large markets vs small markets)


tenken627

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You have to register to view the article, but it's not that long so I pasted the whole article. If the mods want to edit, please feel free to do so.

I never realized that the Redskins, Cowboys, and Patriots make up 20% of the league's local revenue just the 3 of them together.

http://www.forbes.com/business/forbes/2006/0213/058a.html

Fumble?

Monte Burke, 02.13.06

The NFL is unquestionably America's healthiest and most popular pro sports league. But a fight over money could change that.

These are glory days for the National Football League. On Feb. 5 a projected 145 million viewers will watch the Pittsburgh Steelers and the Seattle Seahawks square off in the fortieth Super Bowl. The league is in robust financial health: The franchises are flush, with an average annual operating income of $32 million per team. And last year the NFL signed television deals with Fox, CBS, NBC, ESPN and DirecTV that amount to $3.7 billion annually, a 53% increase over the last national broadcast deal.

Ah, but how quickly games can turn. After Super Bowl XL, NFL owners and players will meet to try to hammer out details of the next collective bargaining agreement. It looks like the typical owners-players scrum. But what's complicating these negotiations is that the owners are fighting among themselves. On one side are small-market, lower-revenue teams like the Jacksonville Jaguars and the Buffalo Bills; on the other, big-market, big-revenue teams like the New England Patriots and the Dallas Cowboys.

The battle is over what the NFL calls "local revenues," that is, money made by individual teams on things like concessions, suites, parking and stadium-naming rights. This is no small amount. We estimate that combined local revenues for all 32 teams in 2004 were $1.6 billion, 26% of the total football revenues of $6 billion. Local revenues have grown 20% annually in the last five years, thanks mainly to the entrepreneurial efforts of owners like the Cowboys' Jerry Jones, the Washington Redskins' Daniel Snyder and the Patriots' Robert Kraft, whose teams, combined, account for 20% of the league's local revenue.

Individual owners have been allowed to keep their local revenues. Revenues from sources like ticket receipts, licensing and national TV money are shared among the teams. Now owners of some smaller teams, like Wayne Weaver of the Jacksonville Jaguars, want the local revenues to be shared among all teams. Of course, they say, it's not the money they're after. They just want to keep the league competitive.

No surprise that owners like Kraft, who transformed a moneylosing Patriots franchise into a $1 billion asset, are balking. "Those of us who have taken financial risk did so with an understanding of certain rules that were in place and did our financing on that basis," he says. The goal of revenue sharing, he says, is to allow all 32 teams to field competitive teams but not necessarily to guarantee all 32 owners profits. "Every team should have an incentive to be entrepreneurial," Kraft says.

The players, too, want a piece of those local revenues. They currently get 65% of the revenue shared among the owners. But they now want that 65% to also include the local revenues.

There hasn't been a work stoppage since 1987, and both sides have at least one important incentive to reach an agreement after next season. Without a contract, the league's salary cap, which works to keep the teams competitive, would expire in 2007. And the players would then be eligible for free agency after six years rather than four. Still, squabbling over those local revenues could take this into overtime.

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So Dan Snyder, Jerry Jones and Bob Kraft do a great job at marketing their team in their local markets and the losers in Jacksonville and Buffalo can't and we should feel sorry for them?

Pardon me while I don't shed a tear for owners who act like they're entitled to piece of everything and don't lift a finger to earn it.

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If the other teams want the money that the big teams make, then go out and make that money. Stop asking the Redskins to be penalized for earning more than the other teams. Jacksonville is a large enough city to make a lot of money. DC is about 500,000 - 700,000 pop. with Carolina and Baltimore taking fans away from the area, and we still make a ton of money. If we can do it in this area with the two teams squeezing us, any team can make money. Stop asking us!!!!

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I really do think it is unfair to ask other teams to share their local revenues if they do than guess what owners like Bob Craft and Jerry Jones will just stop makin as much money and will start actin like Jacksonville and Buffallo. It is no point in trying so hard to get Local Revenues and then the other owners don't do anything in there markets and don't want to spend money on players or coaches they just want to keep all there money for themselves. Dan Snyder takes the money and uses as much as he can to make his team better just because he does thatdon't mean you should cut from how much he is making.

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I just think the New England Patriots are a perfect example.

They used to be losers in both the NFL and in revenue for decades.

Bob Craft came in, decided to treat the Patriots like a REAL business, and made some risks and spent money on his franchise. And how did it turn out? He's an owner of one of 3 franchises worth over a billion dollars.

These other owners need to stop being parasites and actually run their business like a business.

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So Dan Snyder, Jerry Jones and Bob Kraft do a great job at marketing their team in their local markets and the losers in Jacksonville and Buffalo can't and we should feel sorry for them?

Pardon me while I don't shed a tear for owners who act like they're entitled to piece of everything and don't lift a finger to earn it.

'

Buffalo is just a poor city. Market all you want, the people dont have the money. I used to live up near Buffalo in Niagara Falls, and seriously, it isnt marketing, its demographic. The people dont have money, and dont buy team merchandise. Also, with Buffalo, the fans backs were broken, dreams dashed and hope shattered after being the bridesmaid 4 years in a row and never being the bride, all their fans either jumped ship or commited suicide. If the team cant make money in the area then the team should be moved to a deserving location like San Antonio. Fans need to support their team. San Antonio is clammoring for a home team in Football. I think it would have been the best thing for the Saints to have moved there. Im far far from rich, but I still spend money on my team and thats what these weak, poor teams need is a loyal, money spending fan base, and if you arent gonna get that in Arizona or Buffalo or Jacksonville, then find a market that would appreciate the team, test the market, and move the team there. I understand it cant possably be that easy, but it cant verywell be impossable. I buy a jersey every season, and spend money on tickets to the majority of the home games. When I go to the games, I like to spend money. After all, I am at an "outing" and im there to have fun. Its funny, I usually second guess my spending and feel guilty when I spend too much on something.... I dont get that feeling at Redskins games, they are ALL worth it. :rant: :soapbox:

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'

Buffalo is just a poor city. Market all you want, the people dont have the money. I used to live up near Buffalo in Niagara Falls, and seriously, it isnt marketing, its demographic. The people dont have money, and dont buy team merchandise. Also, with Buffalo, the fans backs were broken, dreams dashed and hope shattered after being the bridesmaid 4 years in a row and never being the bride, all their fans either jumped ship or commited suicide. If the team cant make money in the area then the team should be moved to a deserving location like San Antonio. Fans need to support their team. San Antonio is clammoring for a home team in Football. I think it would have been the best thing for the Saints to have moved there. Im far far from rich, but I still spend money on my team and thats what these weak, poor teams need is a loyal, money spending fan base, and if you arent gonna get that in Arizona or Buffalo or Jacksonville, then find a market that would appreciate the team, test the market, and move the team there. I understand it cant possably be that easy, but it cant verywell be impossable. I buy a jersey every season, and spend money on tickets to the majority of the home games. When I go to the games, I like to spend money. After all, I am at an "outing" and im there to have fun. Its funny, I usually second guess my spending and feel guilty when I spend too much on something.... I dont get that feeling at Redskins games, they are ALL worth it. :rant: :soapbox:

I was agreeing with the person I quoted.... Im just long winded. :D

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It sounds like our American tax system. You Democrats and Pro-Union guys should love the likes of Weaver and Co. Let's take from the hard working owners who took risks for their teams and hand it to the lazy, poor owners who didn't make one sacrifice. Sound familiar?

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This is a catch-22 situation for Daniel Snyder and us fans. If he shares his local revenues then more money will be available to the players, which means the cap will increase. But then the skins' would have less revenues to spend on players, and might not be able to afford alot of those upfront bonuses. In 04 we spent something like 50m in signing bonuses. I think they will have to meet in the middle and include a portion of local revenues up to a certain number. That way if a team like the redskins are over the max they must contribute it will still lend itself to being entrepreneurial and looking for ways to increase local revenues. If they take all of it then why would teams do everything they can to generate local revenues, when it all goes to the league and they keep 1/32nd of it.

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I agree with Stew. - If Jacksonville is such a low money earning city for a team, then why did the NFL approve a team to be there in the first place? At the time Baltimore and LA were pushing for teams and LA still doesn't have one.

I would also think Utah could be a good possiblity for an NFL team and maybe another team in Texas.

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Arizona has a large metropolitan area, and is no way a poor market at all.

Arizona's problem is Bill Bidwill.

Buffalo and Pittsburgh both have small markets and the inhabitants aren't well off. But they have some of the arguably most devoted fans in the country. It would be a shame if those franchises move out on them for a better location.

But they both know that without a salary cap, it will mean the beginning of the end for them. Without revenue sharing, fans of those teams will know that the ticket prices would shoot up. Which means fewer fans would be able to afford them which reduces revenue. And while that is happening, top tier players would leave their teams to play for richer teams. So basically, the typical Pittsburgh Steeler fan would be paying large ticket prices to watch substandard football. And owners start to wonder about if tradition and loyalty to a city is worth the loss in money.

They NEED a salary cap of any sort to ensure some type of revenue sharing to survive not only in the NFL, but in the business as well.

Or maybe go the Green Bay Packers route and have the city itself have ownership of the team.

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They should share the parking fees and luxury seats. I mean it's still ticket sales isn't it? The naming rights, concessions, stadium ads etc should stay with owners, these are "local" revenues. Why shouldn't the players slice include these things as well? Include them in and cut the percentage a bit. Just for god sakes don't have a stoppage.

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If, for instance, Billings, Montana, wants an expansion team, all 73 people that live in town better make it to every home game. And they better bring an additional 70+ thousand folks with them. Small markets are just that: small markets. Want big market money? Move to a big market.

On an aside, how many of these small markets sold out every home game last year? If you're not pulling your weight, don't ask for help from the big boys.

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It sounds like our American tax system. You Democrats and Pro-Union guys should love the likes of Weaver and Co. Let's take from the hard working owners who took risks for their teams and hand it to the lazy, poor owners who didn't make one sacrifice. Sound familiar?

:doh:

I guess it's too much to ask to keep the "Tailgate" junk in the "Tailgate" huh?

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Bob Craft doesn't have the NFL-business saavy that he gets credit for. He just mugged Mass. a few years back by using a move to CT as a bargaining chip for a better stadium. The worth of that franchise comes from winning Super Bowls, which he doesn't have much to do with. Snyder's job is far more impressive, in my opinion.

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It sounds like our American tax system. You Democrats and Pro-Union guys should love the likes of Weaver and Co. Let's take from the hard working owners who took risks for their teams and hand it to the lazy, poor owners who didn't make one sacrifice. Sound familiar?

Actually it sounds like the tax system of the entire industrialiazed world. Why are you picking on America?

But hey, if you're going to act like an ignoramous and accuse union workers (like cops and firefighters) of being lazy, please spew that crap in the Tailgate.

You've been around here too long not to know better.

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If a team can afford to pay for player salaries up to the cap limit, then please explain WHY any more revenue should be shared? If you cant afford to pay the salaries, why do you have an NFL team?

"Hi I have no money, and am too lazy to do the work to make my franchise succesful, so hand it over".

Ridiculous.

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Local revenue belongs with the team.....period. Otherwise, Snyder, Jones, Kraft and company will stop marketing their teams. Why spend their money so the other socialized owners can profit from their hardwork.

We all complain about how Snyder markets our team. We hate the Fedex colors, the constant commercials, the high cost of parking and food. etc. Well, all this local revenue helps Snyder buy better coaches and players so we can get a championship.

Let the other teams do the same. Otherwise, Snyder will just cut the cost of everything to make ends meet and live off the League revenue.

The other owners are either too lazy to make more local revenue or they don't want to risk any of their OWN money. These are all filthy rich millionaires. Why the hell are taxpayers paying for THEIR stadiums. And why should Snyder et.al. give all their hard earned profits to them?

If the league wants to share a bigger piece of the League revenue pie with the lazy/risk averse/bad businessmen who pretend to be owners....fine. But to "TAX" Danny and company for getting the most out of their investment is flat out wrong.

I'm all for the salary cap...but if Green Bay can make money then ANY small town franchise can make money. Jacksonville is hardly much smaller than the DC metro area. Tell that Jacksonville owner to market his team or get out of the business. Snyder, Jones and Kraft should not be asked to subsidize his hobby.

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I agree with Stew. - If Jacksonville is such a low money earning city for a team, then why did the NFL approve a team to be there in the first place? At the time Baltimore and LA were pushing for teams and LA still doesn't have one.

I would also think Utah could be a good possiblity for an NFL team and maybe another team in Texas.

Uh- at the time- La had both the Raiders and Rams. The NFL added Jacksonville in 1993. Heck, Jacksonville dropped out for a time and Tags convinced them to come back.

The final 5 were: St. Louis, Charlotte, Memphis, Jacksonville and Baltimore.

St. Louis was the favorite but the ownership group collasped- so charlotte got a team first and then they waited another month and gave Jacksonville a franchise. Memphis was only offering the Liberity Bowl- not a new stadium- so they were never in it. Baltimore was opposed by Jack Kent Cooke- so that's why they never got an expansion team.

Buffalo Bills will probably move after Ralph Wilson dies. Jacksonville isn't really supporting the Jags- remember they close off part of the stadium now- so it looks like they sell out. Jacksonville will also move in a few years.

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It sounds like our American tax system. You Democrats and Pro-Union guys should love the likes of Weaver and Co. Let's take from the hard working owners who took risks for their teams and hand it to the lazy, poor owners who didn't make one sacrifice. Sound familiar?

No that doesnt sound familiar please explain

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Uh- at the time- La had both the Raiders and Rams. The NFL added Jacksonville in 1993. Heck, Jacksonville dropped out for a time and Tags convinced them to come back.

The final 5 were: St. Louis, Charlotte, Memphis, Jacksonville and Baltimore.

St. Louis was the favorite but the ownership group collasped- so charlotte got a team first and then they waited another month and gave Jacksonville a franchise. Memphis was only offering the Liberity Bowl- not a new stadium- so they were never in it. Baltimore was opposed by Jack Kent Cooke- so that's why they never got an expansion team.

Buffalo Bills will probably move after Ralph Wilson dies. Jacksonville isn't really supporting the Jags- remember they close off part of the stadium now- so it looks like they sell out. Jacksonville will also move in a few years.

you're right. I forgot the Rams were still there in 93/94, but as you even said about Jacksonville, if it was such a low money or population town, why did the NFL put a team there?

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