The NFL is being devoured by its own economic model.
 

The whole story is good, but I bolded the indispensible parts of the story.

https://www.sbnation.com/2017/9/19/1...s-owners-money

The NFL is being devoured by its own economic model
by Spencer Hall @edsbs
Sep 19, 2017, 8:00am EDT

This is a very boring, simple explanation as to why the NFL’s ratings are declining. It is not an opportunity for you to shoehorn in your feelings about Colin Kaepernick protesting the game. No one really cares about your feelings about Colin Kaepernick’s protest, because if you are the kind of person who gets really offended by Colin Kaepernick’s protest, then your feelings in 2017 are the most boring and predictable thing about you, and telling on you in a deeply unflattering light.

The simpler and also boring systemic problem with the NFL that might actually explain something is its success, and how that success made the ownership class in the NFL fat, lazy, and locked into a business model they have no real reason or incentive to change, even with falling TV ratings.

The absence of real risk of failure is a start. Stakeholders in the NFL cannot lose—at least not under the league’s current structure. Owners split money from the league’s massive TV deals and other media revenue streams. That stream is so dependable, so huge, and so guaranteed that it’s done what large, intractable pools of cash have done since the invention of markets. It has altered and distorted the very thing that created it, and broken the basic exchange between consumer and seller that made the NFL successful in the first place.

It’s a form of laziness, and a special kind different from the standard laziness in the NFL. Laziness bred from prosperity isn’t a new problem for NFL ownership and management. For every old-school Rooney or Mara or Hunt family intent on making at least an honest show of competing, producing a good product, and paying at least paltry attention to the demands of the consumer, there has been a Culverhouse or a Smith, owners who ran their franchises with the least possible effort and expenditure. The slumlords of the NFL took their rent, often without providing anything close to a finished building.

Note: This may be literally true of the 1970s and 1980s Buccaneers, whose stadium sort of looked like concrete that never set exactly right, so they just went with it and said, “yeah, it’s supposed to be shaped like a melted frisbee.” What you call a mistake, the 1970s called architecture.

That approach towards maximizing your dollar with the bare minimum of effort became more sophisticated over time. As the league’s revenues boomed, they became something less like points of civic pride run as passion projects by the locally wealthy, and something more like attractive investment properties with a promising rate of return for billionaires — particularly those billionaires who entered the NFL as strangers to the league, but as intimate familiars of a corporate culture dependent on squeezing every profitable dollar, and trimming every wasteful one from the budget.

For instance: The legend of Dan Snyder tells a story of someone who was “passionate” about the Washington franchise on a personal level. It sometimes leaves out his ruthless economizing of the franchise, a focus on the bottom line interrupted periodically by splashing free agent signings to keep fans semi-interested in the team. That he keeps them in the worst stadium in the league, charges for everything short of oxygen, and rolls out a consistently mediocre product doesn’t matter: His great gift as an NFL owner, after nearly 20 years, has turned out to be a deep understanding of knowing exactly how little actual quality he could slip into the product without breaking the customer’s dependence completely.*

*Side note: Dan Snyder would be an amazing MDMA dealer.

That level of sophisticated coasting in the name of profitability became a laudable thing for owners. Jerry Jones, in particular, emphasized profitability and value for the league, leaning hard on new television contracts, stadium deals, corporate tie-ins, and whatever else he could grab in order to boost the value of the Cowboys to its limit. The momentum for moving the Raiders — one of the league’s oldest recognizable brands, with one of its most insanely loyal fanbases — from Oakland to Las Vegas came largely from Jones, and mostly for the holy grail of profitability. Jones is the crowning example of the NFL’s gargantuan gains in the financial weight room: Since buying the Cowboys for $140 million in 1989, Jones has grown the value of the franchise to $4.2 billion. The team makes a publicly declared $227 million a year.

The NFL was able to do this because, at a certain point, wealth outstrips the power of the assets that created it. In 2017, the league split over $7.8 billion between teams. The money and the success the league enjoyed became so huge that they attained their own gravity, and became separate from the main product that built the league in the first place: professional football.

That separation of the product from the wealth it creates should be familiar to any American consumer. A large company takes control of an entire economy, becomes so large it cannot fail, and thus has no real incentive to do anything but seek rent on that endless, belching pipeline of cash. The product produced generally does not improve, and often without the pressure of competition doesn’t have to improve at all. It might even get worse, or at least watch things like customer service and satisfaction take nosedives.

It’s not exactly a monopoly, but it’s also not-not exactly a monopoly, either.

The value in that kind of behavior doesn’t come from the product. That flatlined in terms of utility a long, long time ago. (The Patriots remain unusual for not only trying, but trying intelligently to produce a good product.) An NFL owner no longer needs that to continue to boost the value of the franchise using anything that happens on the field. Value comes from getting a new stadium someone else paid for, moving the franchise to a more valuable piece of real estate and doubling the value of the franchise overnight. Value comes from leveraging and re-leveraging your existing assets, not by creating anything new.

If you see an NFL franchise as just another asset to be maximized and squeezed for every dime, being good at football — i.e. producing a good product — doesn’t matter. It’s not even rational to put effort towards anything but “value creation,” i.e. shuffling around pieces of the franchise until they sit in the most profitable positions. The Rams doubled their value overnight by leaving St. Louis and moving to L.A. They are a miserable football team run by a despised owner playing in an empty stadium, but the Rams could care less. The fourth most valuable team in the NFL sucks by design, and shines bright enough on the balance sheet to eliminate any real concerns about how bad the product is on the field.

The Rams, the 49ers, and the Washington team are all in the top 10 most valuable NFL franchises. There are other reasons for that besides their efficient disinterest in making a good on-field product — the real estate and cost of doing business in expensive places like L.A., the Bay Area, and D.C. being a huge one — but the lesson for anyone acquiring an NFL team as an asset is pretty clear. Strip the place to the frame, gorge on TV money, and only do the bare minimum to keep people interested.

That distancing of the product — and its overall quality as an experience — from revenue makes for a dysfunctional exchange between the consumer and the producer.

What does that mean, exactly? It means that because the Rams don’t have to worry about quality, they can slog into the Coliseum, wait for a new stadium to be built, and bill themselves as a content company while playing in front of hundreds of bored fans. It means that being good, for a lot of teams, is an accident, or a periodic spasm to regain fan interest spaced between long troughs of minimal effort.

*The NFL is you at work! Congrats, you too could be America’s most successful sports enterprise.

This explains why the NFL now functions less like an open market business, and more like a cartel. (Not a cartel exactly, economics pedants, but cartel-ish.)

A cartel really doesn’t care what you want. It knows what you need, and has it. All behaviors from that point forward only protect the cartel and its control of supply and delivery. There will be no innovation, no new ideas not in service of that maintenance of revenue streams, and no serious competition between cartel members. In fact, they’ll all cut the quality of the product wherever possible to take home the most possible cash.

The NFL isn’t alone in this in sports, and not even in football, either. The disease of guaranteed revenue has bitten college football, too. Texas, the most profitable athletic program in the nation, is a prime example of the strange incentives huge profits can create within a sports franchise. The more money the program makes, the less consistent or important the quality of the product has been to the priorities of those at the top running the cash machine.

But as the most popular sport in America — and one that pools profits — it is the most visible, and most visibly prone to this leveling by the demands of the spreadsheet. Even a distancing by slight degrees, like turning your basic exchange from one of fans opting into an experience into one of a television product given to captive subscribers, is enough to change how ownership behaves.

There is a structural reason live audiences aren’t even necessary anymore: Ticket sales make up such a shrinking percentage of team revenue that the Rams and 49ers might as well play on sound stages, if you think they don’t already. The distance between the sport and the mammoth business it built will only grow, and in that space will be those who loved the NFL, but now watch the condensed version of the NFL on RedZone, and those who make it begrudgingly while looking to the next successful investment opportunity.

That next something might be something like eSports, which the owner of the Patriots just dropped $20 million on via investment in an Overwatch league. When will we know eSports made it? When there are commercial breaks after load screens, fights over gaming arenas being paid for with public money, and a class of owner looking for nothing more than the next grandiose and guaranteed font of cash. eSports is lucky, for the moment: Kraft seems to enjoy making a quality product. It’s when the Haslams and Stan Kroenke* show up that gamers should panic.

*Okay, go ahead and panic, gamers. Stan Kroenke is already there.

Would have been easier to just say Mark Cuban was right.

Well then you'd have to reiterate what Mark Cuban said.

"Pigs get fat, hogs get slaughtered. And they're getting hoggy."

"Just watch. Pigs get fat, hogs get slaughtered. When you try to take it too far, people turn the other way. I'm just telling you, when you've got a good thing and you get greedy, it always, always, always, always, always turns on you. That's rule No. 1 of business."

Cuban should focus on making his league be as interesting on the court as it is off. The only enjoyment I've got from the NBA is memes about Draymond Green kicking people in the dick, memes about Draymond Green accidentally sending dick pics on snapchat, memes about Kyrie Irving being a flat earther and jokes about the 76ers tanking.

Interesting article.

Clark Hunt pretty much followed this exact blueprint.

Gouge city for stadium improvements and tax breaks.
Raise prices on everything.
Alienate your fans with high prices and a shitty product.
When season ticket sales plummet and fans fly banners- clear chess board and put new pieces in place.
Raise prices again as fans come back.

I honestly don't see where Hunt followed this model at all. He has constantly pumped $ into the product and franchise he just has hit wrong on some of it like Pioli.


As expensive as it is the Chiefs still rank towards the bottom on ticket cost etc...and the fan experience at Arrowhead is still great.

I think Hunt has made mistakes, but it's hard to criticize him at this point. He has poured into the team since he took over, and clearly he's gotten better at his job.

I really like that he considers KC the owners of the team and he's just the Chairman. That's cool.

A few years from now I think we'll see we actually have one of the best owners in the NFL.

That article used a shit ton of words to say that the NFL is making so much $ they aren't motivated to innovate and improve the product and have saturated the market with it to the point of diminishing returns.

There is always a point something is going to peak and there isn't much more they can do at this point to innovate the product in my opinion.

They may want to drop the TNF games to drop the saturation but what else could they do?

When Clark took over it seemed that he was ALL about money and building the worth of the Franchise for his family. We had had a lot of bad years since Lamar's death- and while we were losing games in embarrassing ways- Clark was raising the prices on Everything.

But...

And this is just my opinion- something changed in his attitude. Was it the parking lot suicide and the banners, the complete fan revolt?

After that, he decided to get serious about winning and even personally stalked Andy at the airport before he could visit other teams.

And that excellent move has changed everything- Andy knows how to build a team and win.

Best move Clark could have made. I am sure he is tired of hearing about never winning the trophy with his Pops name on it- I would think this would be a big motivator. Clark knows he will never be considered a great owner until he wins a SB or two. I love the new direction of this team and think they are finally on the right track.

Al Davis when he was alive went ALL IN every season and he had a true love for the game. He had his flaws but the NFL needs another maverick like him that will buck the system.

Add a second bye week to either allow for a "better" TNF product or just for the sole purpose of giving more teams exposure on nationally televised games?

That's a lot to chew on and one could go any one of at least a dozen different ways in responding. If you have a product in demand, there's nothing wrong with charging what the market will bear for it. If price was the only reason consumers bought anything, like a car for example, we'd all be driving Yugos. This goes along with the notion that any moron can cut prices to the bone and go broke

Running a business, any business such as a NFL franchise, is not a game of pricing or volume. It's a game of margins. If an owner feels too much heat on his/her margins, they come to full alert status but I'm not seeing that posture among most of the NFL ownership as yet with the LAC franchise perhaps being an exception as was discussed in another thread.

I get what you are saying, but I have to disagree a little. Yes, Pioli turned out to be a giant ****ing mistake....but at that time of the hire, it was generally accepted that Clark made the best move available--he spent big bucks and went and got what was the #1 target on the board for many NFL teams.

When Pioli turned out to be a **** stick---Clark again went out and got what was considered an excellent hire--someone who was coveted by many teams to be GM. Dorsey was considered another great hire.

Clark has spent big bucks to hire some pretty big names to run the franchise. In retrospect, some of the moves have not been good. But to say Clark has not tried or was just doing it for the money is not right. If he was just doing it for the money, why shell out big bucks to Pioli and Dorsey? He could have just hired someone much cheaper.

Hindsight makes everything look 20/20.

Not a bad idea, I had forgotten about the proposal to have all teams play their TNF games after a bye week. I wouldn't be apposed to a 2nd bye week if it improves the product on the field and stop all the complaining.

Part of the issue with TNF is the need to put every team on a Thursday during the season, its just going to make for some shit match ups.

They're gonna have to go back to more practice in the next CBA to improve the product on the field, or what they should do, get away from the good old boys league of coaches and look at guys like McVay and Shannahan who are young and innovative.

In all honesty, they need to let a little air out of the bubble before it bursts.

Maybe they see the end of football coming as we know it, so they're just trying to max out before it happens.

Lol, the opening paragraph shows how clueless they are. RIP NFL.

Drop Thursday night football. Instead just keep the MNF doubleheader all year long.

Considering how worthless the 4th preseason game is, there's really no reason to axe it at the very least and add a second bye week.

I really don't see how the gate for a 4th game is that much of a moneymaker once you exclude season ticket holders who've already proven they'll pay for something they aren't even attending.

Post is good and true. Can't believe I agree with a Direckshun thread.

why gamble when every NFL franchise is worth $2 BILLION now?

they will eliminate the 4th pre-season game. Add in an 17th game. Give the players 2 bye weeks and everyone is happy. TV gets another week of real games. NFL likes the increased revenue and they expand the rosters. More player jobs. Win/Win.

**** an odd number of games just for tiebreaking purposes alone.

although I agree with your opinion, this is the NFL we are talking about here. More money for them. More money and jobs for players. What do you think their decision will be?

Get as much money regardless of dilution to their product.

Quit having Thursday night football until​ Thanksgiving.

Keep making fans wanting more but don't over feed them.

That's a good summary of the article... the bubble is slowly bursting, has been for at least a few years, if not a decade. It's not necessarily lazy as the article says, I'm sure the owners are all in on getting while the getting is good.

And if you must have games overseas, they can be these Thursday games. Allows more travel time on both sides of the game.

Agree with second bye, but Fox and CBS should both be allowed to airdouble headers every week.

Thursday afternoon games? Time zones hurtthat game in states

I think the NFL's real problem is structural. The median age of its audience is graying big time. Young people, some call them "Millennial's", just aren't watching.

I'm interested to see how this develops. Millennials get blamed for killing everything, but it's often overblown. I'd like to see what millennials are actually watching. It's pretty obvious soccer has gained in popularity. And a lot of MLB and NBA teams are now selling "pass" style tickets, where you pay less than a season ticket but get guaranteed tickets to every game, delivered to your phone on gameday. I saw the Dolphins were offering a cheaper standing room only ticket this year to try and pull some of that audience in.

If people younger than 35 aren't playing fantasy football at a rate close to the age bracket older, that would be a warning sign.

Have you looked at Disney stock lately? DIS ticker.

ESPN is in free fall. They talk of cord cutters, but my daughter and son are, if I can borrow a cheesy line from a cheesy Disney sports movie that was shamelessly pimping their new hockey team, they are "NEVER WAS". As in, they never had a cord to cut. They are over the top consumers of content, all day, every day. No cords to cut, cause they never subscribed to ESPN in the first place.

Anecdotal to be sure, but there are sure to be more like them.

Absolutely. Yes!


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Yeah, and I don't feel like that's happening, but maybe it is. I get the feeling a lot of people enjoy fantasy football more than the actual games. For some people the NFL only exists to create statistics for fantasy teams.

I ****ing hate those people

Anyone remember the movie, "The last boyscout". The opening music was "Friday nights a good night for football", with the opening scene having a half back making sure he scored a touchdown by pulling out a gun and opening a few holes.

One of my favorite football scenes in movies. lol.

There's little doubt of that. There's a whole other conversation you could have here about young people and their ability to find well paying jobs, student loan debt, etc. And whatever you make of that, it's something that exists. You're eventually going to have to get people who spend 8 bucks a month on TV to drop hundreds on Sunday Ticket.

Plus, there are a lot of people who just genuinely don't give a crap about live TV, even with an antenna. Netflix has created a system where you don't need live TV to be entertained, and there are so many shows being created by TV networks that you can never watch them all. Plus you can watch them whenever you want, without commercials. You aren't bound by a noon kickoff time, and you don't have to sit through 6 minutes of commercials sandwiched around a kickoff that sails through the endzone for a touchback.

Last night was kind of a bell ringer on commercials: the shitty thing about them isn't the length of time they take up as a portion of the broadcast.

It's the ****ING FACT IT'S THE SAME 4-5 COMMERCIALS THAT ARE ANNOYING AS ALL MOTHER OF ****.

ESPECIALLY THAT BUTT****ING AMAZON COMMERCIAL WITH THE TWO BIT SARAH MCGLAUGHLIN VOCALIST AND THE ****ING GOLDEN RETRIEVER BEING TORTURED WITH A FAKE ASS LION'S MANE.

Precisely, so what we have here, is a marketplace that is in flux looking for a new equilibrium, which, due to the long term nature of TV contracts and player salaries will take some time to come into balance.

I honestly cannot see spoiled on air talent protesting against over half their paying audience and NOT having the market react, this in addition tot he other structural long term issues that this market is dealing with. There is an oversupply, as you stated, of substitute product in the entertainment industry.

Yeah, it's pretty infuriating. But all these channels have Fantasy Football experts and are running player stats across the bottom of the screen all day. It's obvious where the $$ is.

Plus all these sports channels have fantasy football leagues on their website. So they can make money off of it too.

Which is why I only watch Free Chiefs games about an hour behind live. zap all the commercials and half time political commentary.

No, you're probably one of a few people that remember that scene!

If I grew up in the real-time internet generation...I wouldn't give a flying **** about sports. They had their place in the 80's-early 90's. There was nothing else to do. It's not Hatfields vs. McCoys anymore.. the geographic rivalries arent important to them. They are playing video games with people from Taiwan, China and Australia...live.

They think sports are stupid...and for the geriatric crowd.

Endless commercials, TNF. Amateur football. Any thing possible conceivable notion to make a buck. Spiraling down the drain.

Having spent 18 years in the Chicago market, I witnessed first hand the point this article is making. It is about marketing, it's a business. Maximum return on investment.

I watched them restore enthusiasm each off season to the local fans with high profile QB/RB draft/free agents. The fans kept eating it up though, they finally had the right guy this time!

Of course, a lot of those fans are also Cubs fans, so the Bears do have that going for them. You couldn't talk to any of them about football without the "85 Bears" becoming the focus of the conversation.

Hammer meet nail. The rules changes have changed the product significantly.

The NFL doesn't need innovation. They need to get back to the basics and un**** all the things Goodell ****ed up.

It's a pretty simple model. Do what's right for real fans. At every single turn, the NFL has plowed fans over:
-Games are more accessible to corporations than screaming fans
-The DirecTV contract is moronic in a world of streaming/on-demand
-Stop giving a shit about European fans if you're bleeding American fans
-Change bullshit deals so fans can actually afford NFL merchandise
-Let players have personalities instead of the "protect the shield" bullshit
-Stop appeasing fantasy owners/gambling. We're all tired of the same QBs dominating the league
-Stop watering this down. TNF is a stupid ass idea. Draft coverage is exhausting.

Pretty simple concept. In the million ways Goodell has put $ over fans, do the opposite and un**** this league.

I agree with this. I'd also add that the inconsistency in the way penalties are called is maddening. I love the Chiefs, but there have been times when I've seriously considered giving up watching completely because the penalties are so aggravating.

I have no idea what holding is or isn't, because it appears to happen on just about every play, but it's called at random. It also seems like it happens more often and is called less often when teams are protecting elite QBs.

Defensive pass interference is called excessively, while offensive pass interference is almost never called, even in cases where it appears much more egregious than the DPI that is being called.

Yup. At least get rid of all the bullshit subjective penalties. At least holding is a penalty that gives the team an unfair advantage. Who really gives a shit about taunting and excessive celebration? I can't believe how many games were literally impacted by late taunting calls.

Totally agree on OPI vs. DPI. Let's face it, Goodell made the NFL passing game friendly for ratings and fantasy football geeks.

Flags are so disruptive. I don't know why the NFL thinks flag happy games are watchable.

Another penalty that drives me crazy is "12 men on the field" when a player is sprinting off the field while his replacement comes in, and the offense does a quick snap for some free yardage. So stupid.

What we are seeing right now is the inevitable downturn after the bubble hit its peak.

Personally, I blame it on the product. The NFL is sterile. College football is vastly more entertaining. More offensive formation, multiple ways to win, etc.

I've watched college football off and on for the last 12 hours today. I've been generally entertained and feel like I've enjoyed the product I've been watching despite not having a real rooting interest in almost any of these games.

I know that won't hold true tomorrow.

Same. I watched my Army Black Knights lose a heartbreaker and then I watched some amazing games.

Tomorrow night, I won't be invested until Sunday night rolls around. My interest in non-Raiders games has greatly declined. The product simply lacks.

The games are bad. They are just ****ing bad and not interesting or good football. Sometimes the Chiefs are fun to watch because they are my hometown team and I am invested I also think they do some interesting unique things on offense....I can possibly interested enough to see a Raiders or Broncos game as rivals but it is rare I will watch that.

The games are bad. And most the teams a very bad. It just turned into this short pass 7 on 7 barely drop back style that is awful. And the commercials. So many ****ing commercials. Its insane there is barely football getting played.

Meanwhile it is so expensive to go out to the stadium and when you do go there is barely anyone in the whole building that can carry their own booze or handle themselves. Something that used to be a huge joy is just bad. Nothing political about it...it was already rotting.

Alot of these are really good. Fantasy football is total bullshit.

Directshun thread

You gave up on the NFL a decade ago.

No one cares what you think.

Go play in the street with your soccer ball.

What prompted this response? *shrug*

I mean do you disagree? Proof seems to be in the pudding right?

LMAO

No, not at all.

After the election, ratings returned to pre-2016 levels.

The Thursday night game this week, Rams v. 49ers, was up 20% over last year.

Those of you wishing the death of the NFL can just keep wishing.

Not wishing death on anything. If you think things are fine in the NFL then....well that is a fun opinion.

I mean an MLS team sold out a new 71k seat NFL stadium & an NFL team couldn't sell out a 27k seat MLS stadium in the same weekend

Zachy soccer

Just stop

Which league has the $9 billion dollar TV deal?

I have never MLS is more valuable or makes more money.

I don't think the NFL is going broke I just think its a bad product and a lot of people agree with that. You see it across the stadiums and you see it with dogshit football and bad football teams.

But if you think everything is great that is cool...not sure a lot of people agree.

The AIDS have broken landfall.

The T-Shirts are already out there.

Penalties are killing the game.

Only call the egregious ones & let the ticky tack ones go. It hurts the flow of the game.

Perhaps, they're trying to emulate the nasty heathens who sailed over on the mayflower and other ships, who slaughtered the indigenous folks, or who enslaved or who have started world wars or who have overthrown governments or who have assassinated world leaders or who have destroyed economies, or who have stolen trillions in real estate and stock market scams, or who have massacred church fulls of people or who have shot up movie theaters, or who have shot up school fulls of children, or colleges or...well you get the picture right? And it's also high time that police start shooting white criminals whom are deemed armed and dangerous, instead of buying them happy meals..You savages are effing delusional,and it's time that you start asking yourself why that is.

Thread title should be "here's a desperate attempt to say left wing politicization is not ruining the NFL"

Penalties and replay. I remember when they didn't have replay and I was a proponent of it. Probably because the Chiefs got jobbed once. But now they come out with the reviews after every stupid play. It's slowing the game down to a complete stop.

Sucks.