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"NFL tug-of-war over revenue"

2004 July 6
by Skip Sauer

USA Today has a story with useful observations on economics in the NFL. It appears that some of the owners want even greater revenue sharing.

[T]he NFL’s 32 teams — with a combined value exceeding $20 billion — split most of the revenue. Including the eight-year, $17.6 billion television package that expires after the 2005 season, the NFL and its franchises generate about $5 billion in annual revenue and share roughly two-thirds of that amount equally.

It’s the unshared revenue at issue.

With changing economics driven largely by stadium deals (and luxury boxes), the difference in annual revenue for the richest teams, such as the Redskins, and lower-revenue teams, such as the Colts, is more than $100 million, according to some NFL executives.

That could explain why Washington, lured to the Redskins in March with a six-year, $24 million contract, is one of the linebackers Polian wishes he could have kept. The other, Mike Peterson, went to the Jacksonville Jaguars last year with a $20 million deal.

“We can’t keep as many people as some teams can,” Polian says, grumbling. “The issue is cash. If you have cash that your stadium is generating every year, you can commit that to bonuses to retain or get players in the free agent market. That’s the name of the game.”

In a league that prides itself on competitive balance, just the perception of a wide revenue gap strikes at the heart of a philosophy that has long been a pillar for success.

“There’s concern that the disparity between the first quartile and the fourth quartile is getting too great,” New England Patriots owner Robert Kraft says. “How do we equalize it? The main issue is allowing everybody to compete.”

Well, the Panthers are surely in the bottom quartile, and by giving Kraft’s Patriots a good run in the Super Bowl, they proved yet again that everyone can compete. Isn’t Kraft’s complaint odd, given his team has won two Super Bowls in three years? Perhaps he has a soft spot in his heart for the Cincinnati Bengals…

In my opinion (and its only that), existing NFL rules mandate too much competitive balance. Dynasties can be good too, as long as they are not permanent. I’ll bet Jerry Jones and Dan Snyder are doing their homework, because their fellow “partners” may have their sights on the Cowboys’ and Redskins’ local revenue streams. Last time I checked, the Cowboys and Redskins, for all of their unshared revenues, had not been doing very well on the field. This spat is about money, not competition on the field.

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