Monday, November 27, 2006

Roger (Goodell) Rocks America

NFL Commissioner Roger Goodell’s tour of NFL cities is nearing its end. Making full use of the NFL corporate jet “NFL ONE”, Goodell visited Kansas City Thursday night holding an impromptu press conference. The first few months of Goodell’s term as commissioner have been good times for the league. Before Sunday’s blackout in Buffalo, the NFL had sold out the first 11 weeks of their schedule, every game in every market. If the Bills had managed to sell their remaining 7,000 tickets before the NFL’s 72-hour blackout rule kicked in, the NFL would have turned the corner in putting together one of the more interesting streaks in recent sports business history – selling out an entire season.

“It’s been a great three months primarily because of how great the season has gone. When you see the game being as exciting and competitive as it is, it’s easy for us to keep a focus on that. From our standpoint, as long as fans are focused on the football field, that’s a big plus for any commissioner or anybody involved with the league. It’s been a great start and there have been no surprises. I’ve been in the league for 25 years so I think I understand what I was getting into.” Goodell offered the media in Kansas City.

While selling tickets hasn’t been an issue for the NFL this year, the league fell well below their stated goal for the debut of the NFL Network’s first live NFL game Thursday in Kansas City. In late July NFL Network officials hoped to be in 65 million homes by Thanksgiving. The NFL was very proactive in getting their message out to consumers, investing more than $100 million in a multi-media campaign. When the campaign started the NFL Network was in 41 million homes. When the Kansas City Chiefs and the Denver Broncos kicked off Thursday night the NFL Network was in 41 million homes.

Goodell didn’t have much to say Thursday night regarding the NFL Network’s distribution issues (as a good leader Goodell; it makes more sense to let Steve Bornstein the head of the NFL Network deal with delivery issues), Goodell however didn’t back away when questioned about whether the eight games on the NFL Network and the move to put Monday Night Football on ESPN signals a move on the NFL’s part from over-the-air to pay-per-view (in this case) cable TV?

“There’s a difference between Pay-Per-View and cable. In fact, I can tell you that of all the satellite and cable operators that have taken the NFL Network to date, they have not had to have a price increase because of the NFL Network. Our fans are going to demand it. Our fans are going to want to see it. I think the cable operators will understand that as we get further into the season and as we deliver higher, better quality programming. I’m confident that our fans’ voices will be heard and cable operators will have to make a choice and say that they have to deliver this.” Goodell offered.

As the CEO (leader) of any business, Goodell is responsible for ‘delivering’ the company line, spinning the story in ways that best suit the National Football League. Much of the leverage the NFL Network had with Time Warner, Charter Communications and Cablevision (the three major cable providers not offering the NFL Network) and Comcast’s decision to place the NFL Network on their digital analogue pay-per-view distribution band ended Thursday with the first broadcast. It isn’t going to become any easier now that the NFL Network’s first game has come and gone. The outrage the NFL Network expected from consumers hasn’t materialized and shows no sign of ever taking place.

That’s not to suggest the NFL Network doesn’t offer solid value, just not the investment the NFL is demanding from cable providers. The NFL Network wants to charge cable providers 70 cents each month for what amounts to eight NFL games. ESPN charges cable providers $3 each month for 17 NFL games and collectively thousands of Major League Baseball, National Basketball Association and NCAA football and men’s basketball games (all great sports television properties). When you take the time to compare what the NFL Network is offering, compared to what ESPN provides, and do a cost/benefit analysis for both consumers and cable providers, there is no question the NFL has vastly overestimated the value of their cable network.

Nonetheless, when asked where he believed the NFL Network would be in ten years, Goodell offered this view, “We are thrilled with the NFL Network to date. It’s been an absolutely great way for us to deliver more football to our fans. We think it is high quality. The production has been outstanding. I think this game you’ll see tonight on the NFL Network will be extremely well done. We’re proud of what has been accomplished so far.”

“Looking down the line 10 years from now, we see greater distribution. We think it will give an opportunity for more fans to experience football. It will give them an inside look at what NFL football is all about. The thing that is really exciting to me about it is giving fans football 365 days a year. Our fans want more and more football and we find that out everyday.” Goodell said

Goodell has played a key role in the evolution of the National Football League as a business, working side-by-side with now retired commissioner Paul Tagliabue for more than 25-years. There are those (SBN included) who believe in the not-too distant future (ten years) the NFL will be playing Thursday and Saturday games on the NFL Network on a regular basis (only with more games will the NFL have the leverage they need to convince cable providers of their worth,) but at least in the short-term Goodell made it clear he’s happy with where the NFL is with games on, the number of games, and where they are on the NFL Network.

“We are very proud of the fact that we have stayed on broadcast television and we’re one of the few leagues that has been able to do that. I think it’s the key to our success. We’re in the first year of six-year TV agreements, so we don’t have to face that for quite some time. But I will tell you that we’re going to make every effort to stay on the broadest possible platforms. We are mixing that in with some of the newer platforms, like the NFL Network, but doing it on a very limited basis and very strategically.” Goodell said.

Goodell is correct in saying that the NFL remains the only sports league with most of its games on over-the-air television, but he also failed to recognize the networks collectively invest $3.75 billion annually in the NFL. True ESPN pays the NFL $1.1 billion annually for Monday Night Football rights (games on cable TV) but its important to note that the NFL included a clause in ESPN’s contract assuring games are offered on over-the-air channels in the home markets on teams’ appearing on either Monday Night Football or the NFL Network package (as long as the games meet the NFL’s 72-hour blackout rule. The NFL enjoys strong friendships with local, state and national politicians. If the NFL ever seriously considered moving their games to cable or pay-per-view the political fallout may negate any financial benefits.

There has been a great deal of interest from NFL franchises in regard to the first European regular season games, expected to be held in either London and/or Berlin in 2007. One of the teams that have been very proactive in making sure Goodell is aware of their interest has been the Kansas City Chiefs.

“We’ve had a lot of teams express interest in playing an international regular-season game. The Chiefs have been at the forefront of that. They’ve been in a number of our overseas preseason games to date. I know that’s it’s an interest of Lamar’s and the Chiefs organization. We’ll probably be making a decision on the first game by the Super Bowl.” Goodell said.

One of the biggest challenges Goodell and the NFL are going to face in the coming months is the future of the San Francisco 49’ers. Two weeks ago 49’ers owner John York announced the team would abandon their plans to build a new state-of-the art facility in San Francisco for a stadium in Santa Clara, where the 49’ers have both their offices and their practice facility. Days later, York resumed discussions with San Francisco officials. Coming at the same time the Oakland A’s have announced their moving 30 miles south to Freemont, and the uncertain future for the Sacramento Kings, the past few weeks haven’t been the best of times for sports fans in Northern California.

While sports fans in that region may be experiencing a ‘perfect storm’; Goodell’s focus as it should be is only on what’s best for the 49’ers.

“It’s not so much a preference of where. You have to find out what’s reasonable and practical in the community. You need to determine what works for the community and the NFL. I’ve seen the plans for what’s proposed at Candlestick Point, I was out there last month, and I understand what they’re trying to do. But I’m not sure it’s a good solution for our fans getting in and out of Candlestick Point.”

“I don’t get involved in local decisions other than it has to work for the community and it has to work for the team. I think they’re trying to balance how to stay in San Francisco, I know that’s their priority, but I also know that Santa Clara has developed a pretty good alternative. I’ve been in touch with the mayor and other officials out there and I know there’s an effort to try and figure out if they can address some of the issues that are facing them in San Francisco.” Goodell said.

As Goodell and the NFL turn the corner in the home stretch for the 2006 season the business of the NFL remains strong and focused. The challenges ahead include the future of the 49’ers, the Chargers interest in a new stadium (and the lack of political interest in San Diego for any public – taxpayer support), the long-term business success for the New Orleans Saints, the NFL’s interest in placing a team or teams in Los Angeles, but those issues are for another day. As the NFL heads into the last third of their 2006, these are the best of times for the National Football League.

For Sports Business News, this is Howard Bloom. Special thanks to the NFL communications department for the transcript from Commissioner Goodell’s Kansas City unplanned presser.

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