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Old 05-29-2005, 01:42 PM   #14
Schneed10
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Join Date: Feb 2005
Location: Newtown Square, PA
Age: 46
Posts: 12,458
Re: Revenue Sharing.

Quote:
Originally Posted by Defensewins
I agree with your concern with this system, there is no incentive for the poor teams to be more lucrative and perform on the field.

The NFL's complicated economics works like this:

The NFL is making about $5.2 billion in revenue per year. Every owner starts out with nearly $100 million a year each from national television and radio contracts and national sponsorships. In addition they get one-third of ticket revenue from each game played, which is pooled and redistributed equally among all teams. The clubs also receive equal portions from a 12 percent royalty on every NFL-branded piece of merchandise. In all, about $3 billion of the $5.2 billion pot is shared equally.
Under the current collective bargaining agreement, which expires at the end of the 2007 season, an annual ceiling is placed on player payrolls of about 65 percent of defined league revenues. So even if Snyder makes more money, he cannot spend it on players salaries. After the $100 million distribution from the league, teams are largely on their own.
Because Snyder is a smart at generating additional revenue, the Redskins' annual revenue has increased from more than $100 million a year when Snyder took over the team in 1999 to around $245 million. So this proves there is no correlation between high-revenue teams and winning percentage. And no correlation between salaries paid and winning percentage.

My major problem with this system is seeing cheap teams like the Cardinals perform so poorly on the field and the owner is a cheap lazy SOB. But yet he is pocketing millions and under spending by $10m on players salaries. Then he complains when his stadium is empty. He is creating the problem. He has not incentive to improve, because the leagus is subsidizing his team. Hard working owners like Snyder are paying his salary and bills.
Great analysis, you're dead-on.

Dan Snyder and Jerry Jones (the highest revenue generators) contend that less revenue should be shared because of owners like that of the Cards. They contend that there isn't enough incentive for them to market themselves because they can grab a big chunk of shared revenues to make up for their laziness. I agree, to a point. The worst thing that could happen to the league is moving back to the un-capped era. The point was made earlier, Rozelle's theory, that league parity is what leads to compelling drama and interest across the entire country. Without a salary cap, big market teams like our Redskins will outspend the smaller market teams and gain a big advantage in player acquisition. This leads to the PERCEPTION amongst the public that the smaller market teams don't have a chance to compete, and hence interest drops. (It doesn't matter whether wins and losses are actually tied to payroll size or not, what matters is that people PERCEIVE that is the case, and consequently the non-die-hard fans lose interest once they realize their team can't afford to sign the household name players) And when some fans begin losing interest, demand for tickets decreases, as well as the number of people who will watch the games on TV. That leads to declining TV ratings, and that means fewer TV revenues for the NFL. That's the key, those TV revenues are the biggest chunk of the shared pot, if TV revenues start declining, ALL NFL teams will be worse off, including Dan Snyder and Jerry Jones.

Not to mention the quality of the league declines as the big market teams (like the Yanks and the Red Sox) just spend their way into the postseason.

I'm OK with wanting to adjust the amount of shared revenues, but not if it destroys the salary cap system.
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