Revenue Sharing Tops Owners' Agenda

[buffalobillsfootball]

BY EVAN WEINER

March 22, 2007

 

The Business of Sport

 

When National Football League owners arrive in Phoenix this weekend for their four-day annual meeting, they'll be looking to solve some of the league's persistent problems, including revenue sharing, building new stadiums for the San Francisco 49ers and the Minnesota Vikings, and perhaps addressing a rash of off-field arrests of NFL players, before hitting the links. Unlike previous years, there will be few discussions of "sexy" issues such as an eagerly awaited announcements of designated sites for upcoming Super Bowl contests. Although making instant replay permanent has surfaced as a topic. Still, the league has a number of economic issues to iron out and those should fill up the owners' agenda.

 

A major issue is revenue sharing and how to rectify what smallmarket owners perceive as inequities in the current system. The topic will likely surface during the meeting but it appears NFL commissioner Roger Goodell is in no hurry to tackle the problem. Goodell and the league's 32 owners have yet to draft an agreement that would satisfy both ends of the spectrum — from big-market owners like Dallas's Jerry Jones, and Houston's Robert McNair to Buffalo's Ralph Wilson on the poorer side of the revenue tracks.

 

Instead, Goodell and NFL owners are looking for someone to mediate the problem. Goodell initially sought the assistance of former commissioner Paul Tagliabue, but Tagliabue declined — and with good reason: He had addressed the issue and failed to reach a resolution during his last year in office.

 

Since Goodell took the helm in September, Senator Schumer, a Democrat of New York, has weighed in. Schumer has used his office and considerable influence in backing Wilson, who contends that the proposed Collective Bargaining Agreement (it has not been ratified) could kill off smallmarket franchises like his Bills.

 

Meanwhile, a select committee of owners has explored the revenue-sharing dilemma and concluded that the revenue playing field lacks balance, but beyond that, nothing has come to pass.

 

Another item on the agenda — stadiums — could make for an interesting session because of a confluence of factors. For one, the league's stadium-building subsidy program, the G-3, is broke. There is no money left for the Yorks, owners of the 49ers; the Spanos family, owners of the San Diego Chargers, or Vikings owner Zygi Wilf, all of whom have new stadium projects on the table. (The Yorks have proposed a new facility in Santa Clara, Calif., while Alex Spanos has his eye on San Diego's suburbs, whether Oceanside, Chula Vista, or National City. Wilf intends to keep his interests close to home, with plans for a new facility near Minneapolis's Metrodome.)

 

Replenishing funds in the G-3 program may have to be tied into a revenue-sharing formula, a move that may give rise to another contentious issue for NFL owners. Ironically, Jones is in the middle of this debate. Despite being an owner of a high-revenue franchise, Jones wants league money to help pay off his share of the Cowboys–Arlington, Texas, deal for a new Cowboys facility that will be erected in the Dallas-Fort Worth area. But funds in the subsidy program were depleted when the Giants and Jets received $300 million in loans toward the teams' New Jersey stadium project, and another $42.5 million went to the Kansas City Chiefs for upgrades at Arrowhead Stadium.

 

NFL clubs typically repay G-3 loans with revenue garnered from the sale of club seats to visiting teams, once the new stadium or stadium renovation is complete.

 

Additionally, the city of San Antonio has been relegated to the sidelines, having abandoned its search for an NFL (or Major League Baseball) franchise, which further limits the threat of relocation by the Yorks, Spanos, Wilf, or Saints owner Tom Benson. San Antonio and Bexar County, Texas, officials thought they were players in the stadium game until last week, when they were led to forfeit after neither NFL nor MLB officials expressed interest in the city.

 

Perhaps San Antonio officials shouldn't have been surprised. The city's Alamodome was a stateof-the-art football facility when it opened in 1993 — but that was 14 years ago. Today, the multipurpose facility requires hundreds of millions of dollars in renovations.

 

The San Antonio–Austin, Texas area is also a weak television market with a limited corporate base. The region's corporate community and rank-and-file ticket buyers already show their support for the NBA's Spurs. (San Antonio also has a baseball team in the Double A Texas League and an American Hockey League club.) A second major league franchise in San Antonio could result in a financial calamity for both the Spurs and the new team. There is just not enough of a market to sustain both.

 

Even after Benson took his Saints from the Katrina-ravaged Superdome to play three games at the Alamodome, NFL officials remained convinced that San Antonio was simply not much of a market for pro football. Part of that reasoning may be attributable to Jerry Jones, whose Cowboys trained in San Antonio in 2002 and 2003 and will return this summer for training camp. Jones has signed a five-year deal with city officials, which grants him rent-free use of the Alamodome. San Antonio is part of the Dallas market and the league may be wary of cutting into McNair's Houston Texans revenue stream.

 

Now that San Antonio officials have earmarked stadium upgrade monies for other local projects, it figures to cause some problems because the league does not have any other legitimate, uninhabited markets seeking teams — available markets that owners could have otherwise used as leverage in dealmaking.

 

This weekend, the 32 owners will once again be brought up to speed on plans for Los Angeles, but there is nothing going on in the country's second-biggest market. L.A. will not even be among the cities discussed by the owners' Super Bowl selection committee. Dallas and Indianapolis want the Big Game, and the usual suspects will make bids — South Florida, Tampa, Houston, and Phoenix — but there will be no talk of Los Angeles since it remains a city without a state-of-the-art stadium.

 

This will continue to weaken NFL owners' leverage in the stadium game. When other cities are thrown into the mix, deals can get done quickly, as demonstrated recently by the NHL's Pittsburgh Penguins owners, Mario Lemieux and Ron Burkle. Lemieux and Burkle used an offer from Kansas City and a visit with Las Vegas's Mayor Goodman as negotiating chips in talks with Pittsburgh, Allegheny County, and Pennsylvania officials, and finally landed a new arena. NFL owners are losing their leverage.

 

The owners likely to address the increasing number of player arrests, but it's unclear what they could do without the support of the National Football League Players Association. The owners and the players union will need to work out a disciplinary agreement that allows management to deal with players' behavior.

 

The balance of the sessions figure to deal with international growth — looking beyond 2007, including a pre-season game in Beijing and a regular season matchup in London— and with a look at how the NFL's day-to-day business fared in 2006. Once that's out of the way, securing the best tee time might be the most important decision an NFL owner makes next week in Phoenix.