NFL Football: A History of America's New National Pastime

7 The Cartel

7 The Cartel When a joint business enterprise, or a cartel in the case of the National Football League, has great success in terms of massive revenues and considerable profit, one might envision a world of happiness and contentment. One might expect that as the pie grew, and as each piece of the pie got larger, those who fed off the pie would be grateful for their good fortune. In the NFL, where the term “revenue sharing” developed a sacred aura over the years, where dedicated owners had pulled together for decades to produce this successful sports enterprise, surely the achievement of prosperity that enriched one and all would be hailed as a stellar accomplishment. So it was, to a point. A sports cartel was defined by James Quirk and Rodney Fort in a paraphrase of Ambrose Bierce’s definition of a Christian as: “a benevolent association that is organized to further the interests of sports fans, insofar as this is not inconsistent with extracting the maximum amount of money from them.”1 One small problem with cartels is that individual members, seeing the profits, have a tendency to look at their piece of the pie and imagine that it could be even bigger. They often believe they grow the pie more than others and deserve a larger piece. The magic word in this process is “more,” and the word never heard is “enough.” The initial success of the NFL accelerated the search for more sources of revenue, ways to elaborate the product, and ways to spin off new ones. Although these activities often led to the expansion of the pie, at other times they could lead to conflict with “revenue sharing” and conflict within the cartel. In 1973 the average per team gross revenue was $6.2 million. The average operating profit was $900,000 a year and only two teams lost money. This was not a huge business enterprise but it did represent considerable growth over Crepeau_text.indd 112 7/1/14 11:29 AM 113 T h e Car t e l the previous decades of the NFL.2 Over the next two decades sports franchise values rose at the heady rate of about 22 percent per year. In the 1990s the rate per year decreased, but it remained in double digits. NFL franchise values followed the pattern at least until the late 1980s, when rising salaries and flat television revenues briefly slowed the trend. By the late 1990s the NFL average franchise value reached $205 million, and seven of the ten highest valued teams in professional sport were in the NFL.3 The Stadium Game Increased television revenues, along with franchise movement and stadium construction, pushed team values upward. In addition average franchise values spiked when two expansion franchises were priced well beyond the preexisting market values.4 If a team owned their stadium, the total value of the franchise increased. If the team didn’t own the stadium, team revenues could be supercharged by generous contract arrangements with the governmental entities that built the structure. New revenues came through increased ticket prices and sales, heightened concession sales, and such innovations as luxury boxes, premium seating, and seat licenses, all of which sent revenue streams overflowing their banks. The building of new stadiums by local and state governments was encouraged by a desire to acquire or keep an NFL franchise and thereby capture or retain the title, “Major League City.” This is one of those ephemeral titles that developed currency in the second half of the twentieth century. Part of its power stemmed from urban boosterism and part from growing enchantment with spectator sports. Starting with the AFL in the 1960s the opportunities to acquire these markers of civic greatness became easier for two reasons: expansion, and the willingness to move a franchise for a price. For sports leagues a delicate balance needed to be maintained between supply and demand , so that becoming “major league” was possible but not too easy. As an added benefit, limiting franchises gave NFL owners the leverage they needed to extort their communities by threatening to leave for greener pastures. That there is very little evidence that being “major league” has any real or measurable value seems to matter not one bit. One study of metro areas between 1958 and 1987 found no significant difference in per capita personal income between those cities that had or did not have a major league team. There is no evidence that a major league...