Thursday, November 30, 2006

National Football League expansion in the next six years – here’s the plan

Wednesday was a great day for those interested in bringing an NFL franchise to Toronto. The inevitable destiny of Toronto becoming home to either a relocated National Football League team or an expansion franchise took a giant step forward Wednesday after comments NFL commissioner Roger Goodell made to Reuters, making it clear as a bright, cool, crisp Canadian day – faith will be rewarded, within the next six years the NFL is heading to Toronto.

“We can envision that,'' Goodell said of expansion outside the United States, in response to a question. “I don't know if it will become a reality, but it's certainly a possibility.

“The closer to the border, probably the more likely from a geographic standpoint; but I don't think in today's world that's a hurdle to overcome,” he added in the Reuters report.

As a matter of record, Toronto is 44 miles from the American border (Toronto to Niagara Falls, New York) and Mexico City 1,445 miles (Mexico City to San Diego).

Goodell going on the record and suggesting in no uncertain terms the NFL is looking at international expansion is in stark contrast from the long standing position of his predecessor Paul Tagliabue.

“What I said about possible expansion to L.A. is that to me that the only possibility in the foreseeable future for an expansion team would be Los Angeles. I could not see, at least now, a decision that would involve a two team expansion. So if there is expansion I would think it would leave us with an odd number of teams for some period of time, which we have had in the past, most recently when we had Cleveland back in the League, but not Houston. We had 31 teams and that's been a pattern that has been in the NFL in the past. So I don't see expansion in Canada as being related to what we might do in Los Angeles” Tagliabue commented at his Super Bowl XL conference.

It’s really important to understand when speaking at the Super Bowl, or any public event, Tagliabue always said what was considered politically correct. It served no purpose for Tagliabue to suggest the NFL is interested in expanding into Toronto. It wouldn’t be considered politically correct. Why then the dramatic reversal by Goodell?

The NFL wants to expand to Los Angeles. Paul Tagliabue made it his mission to place an NFL franchise back in Los Angeles before he left as commissioner on August 31. What began in 1996, a year after both the Rams and Raiders left Los Angeles without an NFL franchise for the first time in 29 years, Tagliabue committed himself to ensuring the NFL’s return to Los Angeles.

His last and failed final effort took place at the NFL meetings on March 28, and ended with a visit to Los Angeles in May. Everyone from Arnold Schwarzenegger to Cowboys owner Jerry Jones said the right things, but no one said what needed to be said, we’ll find a way to make this work. Despite where the NFL is today in their seemingly futile efforts to find a sucker willing to invest $2 billion in building a stadium and paying a $1 billion expansion fee for the rights to Los Angeles, in the next ten years the NFL will find a way to expand to Los Angeles. Most NFL owners are billionaires and they became very rich by understanding how to make big deals work. Maybe not today and not tomorrow, but NFL owners need Los Angeles and Los Angeles might need the NFL.

Once the NFL finds its way to expand into Los Angeles, here’s where Toronto becomes the obvious choice for a 34th franchise. Despite comments Paul Tagliabue made at Super Bowl XL, the NFL has always expanded by two. It makes no sense whatsoever to add only one franchise, the scheduling headaches are enormous. The NFL’s bye weekends allow every franchise to open and close their seasons at the same time. History dictates the NFL will continue to follow that thought process.

By moving into Canada the effect on the American television market would be nil, properly positioned a Toronto based NFL franchise could be marketed as a ‘national’ franchise. Canadians do not react well to Torontonians believing they are the center of Canada’s universe. The team could play a pre-season game in Montreal, Toronto or Edmonton and hold their training camp in the Ottawa area. In other words, build the teams’ brand as Canadian, and be sensitive towards Canadians. A Toronto based franchise will be great for the business of the NFL, and the franchise can be positioned as a national franchise. That would give the NFL access to more then 35 million people.

The issues the NFL is having with selling the NFL Network are going to force the NFL to expand by at least two teams in the next six years. The NFL who rarely fail at anything have to be ‘concerned’ about the distribution issues the three year old cable network is facing. The NFL Network was in 41 million homes when the NFL training camps began in late July, and four months later with the NFL Network’s second game set for tonight, there isn’t much of a chance the NFL Network will be in more homes by seasons end. Time Warner, Charter Communications and Cablevision need more incentive before they’re going to consider adding the NFL Network.

In five years (this year is the first of a series of six year agreements) the NFL will add season long Thursday and Saturday night games. There will be a number of issues with weekly Thursday and Saturday nights games, one of which will be preserving the integrity of as many Sunday NFL games as possible. The NFL owns Sunday’s, but having a weekly money making taste of Thursday and Saturday night games is just what the NFL Network needs. However to make that work, the NFL needs more teams to be able to schedule more games, thus the need to expand by at least two franchises before the next TV contract is negotiated.

There are those who believe American markets exist that could be home to an NFL expansion franchise other than Los Angeles. San Antonio’s Alamodome seats just over 58,000 for football, and the good citizens of San Antonio won’t build a new football stadium. Orlando, don’t kid yourself. The Citrus Bowl isn’t big enough, and Orlando is a tourist driven economy, and a transient population traditionally has never been a good formula for supporting a football franchise. Hartford, that plan died on the vine when Robert Kraft used the interest the Connecticut city had in building a new stadium for the Patriots to leverage Hartford’s interest in keeping the team in Massachusetts. Las Vegas has long been interested in an NFL franchise – as long as Vegas sports books allow betting on football (more then $40 million a year), that will never happen.

There has also been some discussion about two expansion franchises being added to the Los Angeles market. That doesn’t make any sense. There are enough concerns regarding the viability of the NFL in the Los Angeles market. Many believe the market is well served by the USC Trojans and the UCLA Bruins. Putting two franchises into a market doesn’t make any sense. That said, the NFL needs to put one franchise into the Los Angeles market, and it needs to do that sooner rather then later. It will be challenging enough to make one franchise work in the Los Angeles market, two expansion teams is nonsensical.

There have been talks about placing an expansion franchise in Mexico City. The Hispanic market is very important to the NFL but the security concerns a team in Latin America would represent to the players and their families it’s never going to take place. With all due respect, the NFL Players Association will never allow the league to expand to Mexico City without the league and/or the team assuming astronomical personal security for athlete and their each family member. Imagine Denzel Washington’s 2004 film “Man on Fire” in a real life situation with an NFL player or a member of his family. Even better when Toronto presents their expansion bid, here’s how Toronto can highlight how terrible a choice Mexico City will be. As Toronto finishes their bid presentation, has a 60 inch plasma TV and a DVD player set up. Denzel walks in the room, removes “Man of Fire” from its case, pops in the movie (having never uttered a word), turns on the DVD player, the movie starts and two hours later Mexico City will be a distant NFL expansion memory.

Larry Tanenbaum has consistently shown a strong interest in playing with the ‘big boys’. He should have been awarded the NBA’s Toronto expansion franchise in 1994. He took care of the NBA’s mistake a few short years later and now runs Canada’s largest sports company – Maple Leaf Sports and Entertainment. You have to believe Larry Tanenbaum has waited a long time to be king of the castle. When Larry Tanenbaum wants something he has the drive and determination to find a way to get it done. For Larry Tanenbaum this is the opportunity he has worked a lifetime to achieve.

Despite comments from Ted Rogers that suggested he wasn’t interested in taking a leadership role in financing an NFL franchise, Rogers is too smart a business man to not want to play an important role in bringing the NFL to Toronto. Rogers understands content is king. An NFL franchise would represent untold content for his all-sports radio stations, cable sports network and other media platforms. When Rogers (the company) purchased the Blue Jays, Ted Rogers (the CEO) made it clear he believed a tremendous synergy could be created between the Blue Jays and every facet of the Rogers media empire.

Paul Godfrey president of the Toronto Blue Jays has proven on numerous occasions he has the ability to bring people and money together to create what he believes are world-class opportunities for Toronto. First as Mayor of Toronto he played a key role in bringing the Blue Jays to Toronto and then as head of Toronto City Council Godfrey again played a key role in the building of the Rogers Center. His biggest dream has always been an NFL franchise – he’s consumed by that goal, and with a proven track record he’ll find a way to get the deal done. He’s a dealmaker who gets deals done.

The Rogers Centre can be retrofitted to meet NFL standards, increasing the seating capacity to around 70,000. There are logistics in getting this done, but none of them are insurmountable.

The NFL can make whatever politically correct statements they believe they need to make about the future of the CFL and expanding into Canada, but at the end of the day Roger Goodell as the NFL’s eighth commissioner is responsible for creating new revenue sources for his 32 bosses, the 32 men who hired him. During Paul Tagliabue’s 17 years, the NFL added four teams who collectively paid expansion fees totaling $1.54 billion. Two franchises each paying a $1 billion expansion fee will make Roger Goodell look like God to his 32 bosses. Goodell has every incentive to make it work.

The bottom line, the NFL needs at least two more franchises in the next six years if the NFL Network is ever going to work. Goodell also revised the NFL Network’s subscriber goals telling Reuters the NFL Network’s short-term goals are to be in 50 million homes and in 60 million homes long-term. Clearly the NFL has dramatically downsized their expectations relating to where they want the NFL Network to be, but be very clear, the NFL knows they need more games on Thursdays and Saturdays if they are ever going to make the NFL Network work, and that is only going to take place with more NFL teams. Toronto – are you ready for some NFL football. Only Los Angeles and Toronto can make this work for both the NFL and their respective cities.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: Reuters.

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