Decision 2006 – Roger Goodell a week later
Returning the National Football League to Los Angeles
Has it really been 11 years since Los Angeles was home to an NFL franchise? Al Davis moved the Raiders back to Oakland and Georgia Frontiere moved the Rams to St. Louis. Both franchises left the nation’s second biggest market after the 1994 season. The challenge the NFL faces hasn’t changed since the second biggest television market was left without a football franchise – a stadium without the amenities an NFL franchise needs on the eve of the 2006 season. The Rose Bowl (the home of the UCLA Bruins) and the Los Angeles Memorial Coliseum (home of the USC Trojans) both seat in excess of 90,000 more then enough for an NFL team back lack any suites and club seats – a key component of every NFL teams revenue streams.
In one of his last “missions” as commissioner, Tagliabue led an NFL delegation to Los Angeles in May in hopes of assuring the NFL would return to Los Angeles. The Rose Bowl had shown interest; the NFL is offering the City of Los Angeles $137.2 million to improve the Coliseum and Anaheim remains interested in trying to figure out how they can fit into the NFL plans. The real question that has yet to be answered – will any of the proposed stadiums offer the NFL what it needs, a stadium capable of being home to an NFL franchise?
There is little if any political support for taxpayer dollars to be used for a stadium.
"It's clear to me that the NFL and their supporters are still looking for the county and the city to use … public tax dollars to help finance this deal," Los Angeles County Supervisor Zev Yaroslavsky told The Los Angeles Times. "Such an arrangement would be fiscally irresponsible and contrary to the promises that have been publicly made by most public officials involved in this project."
"This is not a children's hospital we're building here," he said. "This is not a high school or university. This is a for-profit business. They ought to pay taxes.
"If everybody did this," he said, "we'd have no taxes."
"We can't forget our basic obligations to our constituents," Councilman Ed Reyes said. "We could be forgoing opportunities to keep millions of dollars in the city and in the neighborhood."
What remains even more important to the NFL’s future in Los Angeles – will Southern Californian’s support an NFL franchise? Both the Trojans and the Bruins have strong followings in the market. As big as the population base is, lets remember less then 30,000 people attended the Rams last game in Anaheim.
There are several potential franchises that will try and leverage Los Angeles as a potential relocation city. San Diego (next challenge for Roger), Minnesota and New Orleans are all looking for new stadiums that will be built with taxpayer dollars. There are those who have suggested many occasions Southern Californian’s are less concerned about an NFL franchise and will end the 11 plus seasons of great football choices for residents of Los Angeles. Without an NFL franchise, networks can showcase their best games on a weekly basis, attracting strong television numbers.
A very old stadium down San Diego way
The National Football League has made it clear – San Diego’s Qualcomm Stadium can no longer be home to an NFL franchise.
“I'm surprised that we are here this week,” Tagliabue said two days before Super Bowl XXXVII was played at Qualcomm Stadium in 2003. “If it weren't for Alex (Spanos) ... I don't think that San Diego would have been on the top of the list of most owners who were considering Super Bowl sites.”
As is the case with Los Angeles politicians, you’re committing political suicide in California if you attempt to push through a taxpayer supported plan to build a stadium for a National Football League team. Making it that much more difficult for Roger – the not so satisfying legacy Paul Tagliabue left behind.
“My sense is that Roger's style will be dramatically different than Mr. Tagliabue's,” said George Mitrovich, president of the City Club of San Diego. “Roger Goodell has a clear understanding of the importance of good public relations as it relates to people in cities. I can't imagine him saying what Tagliabue said when he was here.”
“Roger is clearly a smart guy, a realist,” Mitrovich said. “Most people give him credit for the (NFL's) television package. So he has the competence and the skill to get a great many things done, but because he's just a different person (than Tagliabue) – an engaging, likable person – it makes things easier. ...
“People remember how (Tagliabue) dissed our city at a very bad time. Those are the kind of things that if you think them, you shouldn't say them. This is a very insecure place. You say something like that and it goes down a lot worse here than it would in other places. In New York or Chicago or San Francisco, who cares? But here, it shakes us down to our toes.”
The Chargers can pay a $6 million penalty to the City of San Diego after the 2008 NFL season and move the franchise. The organization will be allowed to negotiate with cities interested in giving them the keys to a yet-to-be-built stadium as soon as January 1, 2007. Mark Fabiani hired by the Chargers to negotiate a stadium building agreement on the teams behalf has said all the rights things in the short term – the team wants to stay where they are, as long as they get what they’re looking for, a new stadium.
San Diego Mayor Jerry Sanders made it clear three months ago. San Diego facing a $1.4 billion pension deficit, didn't have the money to help the Chargers replace aging Qualcomm Stadium in Mission Valley. The city has suggested the Chargers focus their stadium search in San Diego County, but not in the city of San Diego. The clock will reach midnight soon enough. No one really believes the Chargers are going to find a stadium solution anywhere in San Diego County.
What will team president Dean Spanos next move be? Likely out of San Diego, with Los Angeles being his first choice for the Chargers relocation. Before anyone gets too far ahead of themselves, Los Angeles still needs a stadium and Spanos has made it clear he isn’t interested in paying for a stadium – making Los Angeles an unlikely destination. And the other 31 NFL owners elected Goodell as their commissioner; they have big expectations Goodell is going to deliver significant new revenues. Spanos may want to move his Chargers to Lotus Land; however wouldn’t it make more sense the league expand to Los Angeles. The last NFL expansion franchise – Bob McNair paid the NFL $700 million for the Houston Texans. Given that Al Lerner paid $540 million for the Cleveland Browns it is not unreasonable to expect the next NFL expansion franchise fee to top $1 billion. Each NFL team stands to gain close to $35 million if the NFL expands to Los Angeles and $0 if Spanos is allowed to move his team – good luck in figuring this out Mr. Goodell.
Small may indeed be big in the National Football League
Goodell was elected unanimously on the fifth and final ballot. In reality he had 23 votes (22 was the magic number) after the fourth ballot. A minority group of owners never supported Goodell, the so-called small market franchises. These owners were upset with the NFL’s new collective bargaining agreement, believing the revenue sharing component worked against smaller market NFL franchises.
Jacksonville Jaguars owner Wayne Weaver suggested after Goodell was elected he supported Goodell but still sent a strong message to the NFL’s new boss.
"There is a consensus that our business model has to change, and the union has to participate in some way in having an agreement that works for the players and all 32 clubs,'' Weaver told the Florida Union Times.
Weaver and other so-called small market owners concerns are focused on the 59.5 percent of total NFL revenues which the players are guaranteed.
"I think, clearly, in the immediate future, we've got to let the union understand there's risk-reward in these new businesses," Weaver said. "If we're going to continue to grow the revenues of the NFL, there's a cost to that, and the union has to share in that cost.''
“There's some defects in our CBA that cause us internal problems, and we have to work very hard to get the players association to understand what the problems are and get them to work with us,” Houston Texans owner Bob McNair says.
The small market franchises believe ownership is taking all the risk, by guaranteeing the players almost 60 percent of league revenues. If the owners had taken the time to consider increasing their television rights fees you would honestly have to question if the owners are just being selfish. In less then ten years, NFL television rights increased to $1.1 billion for the 1997 season. The current agreement that runs through the 2011 seasons guarantees the NFL $3.4 billion a year, more then $100 million per team, per year. NFL team owners can pretty much be guaranteed they’ll be able to pay most of their bills before they sell their first ticket. NFL teams share 83 percent of their revenues. Maybe the message Commissioner Goodell should be delivering to the small market owners – you might be best advised to keep your feelings quiet and not wake-up the big market teams.
Nonetheless, New England Patriots owner Robert Kraft, one of the leagues more respected and influential owners has made it clear in the last week, the NFLPA would be well advised to understand who is buttering their toast.
“[Players Association executive director Gene ] Upshaw did a good job for his members, but he overreached," said Kraft. ``If it's not good for both sides, in the end it won't work. By November 2008, we have to decide."
Goodell for his part seems focused on the status quo when it comes to revenue sharing and the current CBA.
“I think they certainly have differences of opinions on certain things, but they always do what's in the best interests of the game,” Goodell said of the league's 32 owners. “I think they will continue to do that.”
“I think that this process required you to tell the ownership how you saw the future, what you thought the National Football League should be doing to prepare for that future,” Goodell said.
Roger it would appear likes the Big Easy
It’s good that Roger Goodell has made seven trips to the Big Easy since the devastation Hurricane Katrina left behind. The Saints are heading back to New Orleans. There remains no shortage of issues that Goodell is going to have to deal with. The good news – Goodell appears to have a great deal of support from business leaders in the Big Easy starting with Saints owner Tom Benson.
"I have watched him grow in the league, and his work ethic and knowledge of our business has led him to where he is today," Benson said. "With regards to our relationship, he and I have a long-standing and good working relationship with regards to the Saints in New Orleans, and I would expect and think that would continue."
According to Benson, Goodell played the key role in finding $20 million in government grants to help offset the estimated $185 million it will cost to fix the damage left behind for Hurricane Katrina.
"I think the NFL made a great selection," Doug Thornton, regional vice president of SMG, the company that runs the Superdome for the state told The New Orleans Times Picayune. "Roger has a full grasp on what we're doing with the Superdome and has been instrumental in helping us put the Dome back together."
"I am very pleased. We've got a great relationship with him. I don't see that changing. I think he'll continue to be supportive."
"Roger has been sort of my go-to guy on the NFL staff in New York," Thornton said. "He is very intellectual. He seems to have a great feel for the business and is a person who, like Paul Tagliabue, has the ability to grasp issues very quickly."
But Tagliabue and Goodell have their differences, Thornton said.
"I would characterize Paul Tagliabue's style as very presidential, almost like a head of state," Thornton said. "I would characterize Roger's style as being more a business approach. He has a very good understanding of the issues that are important to the league. You have to be sensitive to the political side, you have to be sensitive to the NFL Players Association and you have to be sensitive to the economics, plus you have to keep 32 owners happy. That's always a big challenge.
"Everybody has his own unique style. But I think Roger represents the new face of the NFL."
"I think Roger's selection is a tremendous one both for the NFL and for the city of New Orleans," New Orleans Councilman at-large Arnie Fielkow said. "He's a tremendous leader who is very intelligent, very compassionate and he understands the challenges that New Orleans faced before Katrina and will face in the future. He has always been a great friend of the Saints and of our city.
"Commissioner Tagliabue has been fantastic in every way. His successor brings those same qualities to the table in terms of wanting to be of help to New Orleans in its rebuilding efforts."
Those platitudes aside, Benson and Thornton didn’t address the biggest issue Benson has with the Saints. Before Hurricane Katrina almost wiped New Orleans off the face of the earth, Tom Benson had made it clear in no uncertain terms he no longer believed the Superdome could offer the Saints the revenues they needed to remain competitive. After taxpayer dollars will have paid $185 million to repair the Superdome and with billions needed to bring the Big Easy back from near death its unreasonable to expect any political support to build a new stadium, it just doesn’t make sense. For all the good the NFL is trying to do in returning the Saints to the Big Easy it all indeed may be for nothing. The challenges Goodell faces in New Orleans are daunting.
New media, globalization and performance-enhancing drugs
Clearly the four immediate challenges Goodell is facing are labor peace, what to do with the Los Angeles market, the San Diego Chargers and the long-term future of the New Orleans Saints. As important as those issues are to Goodell, he can’t ignore a trio of additional issues:
New media: The sports industry leaders in working with the Internet remain Major League Baseball. MLB is making money at streaming their games over the Internet. NFL TV contracts are all national, the blackout ruels would make streaming NFL games challenging. But it’s a major opportunity waiting to be taken advantage of and could prove to be a very lucrative new source of revenue for the league.
Globalization: The sports industry leaders in working to take their sport and league globally is the National Basketball Association. Stern has backed away from suggestions he believed a European division was in the NBA’s future. The United States men’s national team preparing for the upcoming World Championships in Japan stopped in China for a series of games. Major League Baseball and the National Hockey League talk about going global but have no real plans in place.
The NFL played a regular season game in Mexico City last year and will in the not too distant future play a regular season game in Toronto. NFL Europe has never proven to be a moneymaker for the league, but sooner rather then later the NFL will play a regular season game in England, but does it really make sense?
For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The New Orleans Times Picayune, The Los Angeles Times, The San Diego Times Union and the Florida Times Union