Wednesday, December 27, 2006

In 2006 -- Titans of Industry -- the National Football League II


Two of the benchmarks of the National Football League have been stability and leadership in the commissioners’ office. Since 1960 three men have been National Football League commissioners. Pete Rozelle arguably the key figure in the growth of the National Football League as a business and as a brand, Paul Tagliabue who replaced Rozelle in 1989 and pushed the league to a stratosphere few believed any sports league could ever achieve as a business, and Roger Goodell who replaced the now retired Tagliabue on September 1, 2006. Goodell’s goal is simple, keeps the NFL moving forward, never backwards. Take a business that under the leadership of Paul Tagliabue annually generated $6 billion a year and do your best to make sure you don’t slip.

Forbes Magazine released their 2006 NFL team financial valuations in early September – the numbers weren’t just staggering, the numbers showed how powerful a business the National Football League had evolved into: this year Forbes believes the average NFL team is worth $898 million, 212% more than when Forbes began calculating team values eight years ago. Look at it this way: Football team values have increased 11 times more than the S&P 500 since 1998. Profitability? In 2005, the average NFL team posted $30.8 million in operating income (earnings before interest, taxes, depreciation and amortization), versus $5.3 million in 1997.

Tagliabue replaced Rozelle on October 26, 1989. Tagliabue’s hiring is an often told tale. It took 11 ballots, three ownership meetings in three different cities, and a New York based executive-search firm before the NFL made the best decision the league ever made. Tagliabue was elected on the eleventh and final ballot. The NFL’s old guard were steadfast in supporting Jim Finks, then the vice president and general manager of the New Orleans Saints. The new guard believed Tagliabue was the man to lead the NFL into the 21st century.

''I've had the luxury and benefit of working with Pete Rozelle for 20 years,'' Tagliabue said at a news conference after arriving that fateful afternoon from Washington. ''He's the goal standard for all founders and leaders to come. I hope to have Jim Finks working with me. He called and told me he would be supporting me 100 percent. I told him I wouldn't let him off so easily.''

Fourteen months into his term as commissioner Tagliabue, as he would be forced to deal with in the terrible aftermath of September 11, 2001, had to consider how the NFL would react to ‘events beyond the scope of football'; Operation Desert Storm. Days after the first President Bush sent Americans into battle, the NFC and AFC championship games where scheduled for Candlestick Park in San Francisco and Rich Stadium in Orchard Park, N.Y. The following Sunday, January 28, 1991, Super Bowl XXXV, was scheduled to be played before 75,000 fans in Tampa Stadium.

As he told The New York Times’ Ira Berkow, there was no doubt whatsoever in his thought process as to what the NFL would do.

"We can't be paralyzed as a nation," Tagliabue said, "and can't act out of fear. We have to maintain appropriate respect for the situation, and keep appropriate proportion. So we've decided to play the games, but we're going to follow events right up until the kickoffs. There could be a change at any moment."

A month after Super Bowl XXXV, Tagliabue started setting the table for the dramatic moves forward the league has made in increasing their television rights fees. The NFL was in the final year of the league's four-year, $3.6 billion contract with five networks: the Big 3 of ABC, CBS and NBC, and the cable networks ESPN and TNT. The vision Tagliabue had was to develop the NFL as a sports property capable of moving beyond the barriers of offering their games on over-the-air carriers in each NFL market.

"We're thinking of something like a season's-ticket concept," said Tagliabue. "Maybe take an attractive game at the end of September, October, November, and December, a four-game package. You get the fans' attention by putting it on a regular basis, just like you do with 'Monday Night Football.' "

Tagliabue’s idea would be the birth of DirecTV’s NFL Sunday Ticket. Major League Baseball, the National Hockey League, the NCAA for both men’s football and basketball each now offer and generate tremendous sources of revenue from a concept first thought of by Paul Tagliabue. The league would wait a few years before moving forward with a ‘season-ticket package’ but it was the NFL who created the opportunity.

The next landmark date during Paul Tagliabue’s tenure took place on January 6, 1993. It took nearly two years, but Tagliabue led the NFL to the finish line with a new collective bargaining agreement with the NFL Players Association. Tagliabue had been beside Rozelle when NFL players went on strike early in the 1987 season leading the owners to use replacement players. Years of litigation followed. Tagliabue was determined to find a solution that didn’t include litigation, a strike, or replacement players.

The key to the NFL’s 1993 CBA, changing the rules of free agency, allowing each team to designate only one player as their franchise player. Every other player could become a free agent once their contract had been completed. The essence of the 1993 CBA remains a key component to the CBA that the NFLPA and the league agreed to in March.

Labor peace allowed Tagliabue’s vision of a bigger National Football League to move forward. The league expanded to Charlotte and Jacksonville in 1995 ($140 million for each franchise). The NFL also expanded into Houston ($700 million in 2002) and Cleveland ($540 million in 1999). The four expansion franchises have generated $1.54 billion in expansion fees for NFL owners.

Six years after being hired as the NFL’s seventh commissioner, the challenges Tagliabue was facing must have seemed like they were everywhere. First the Rams left Los Angeles for St. Louis and then the Raiders returned to Oakland from Los Angeles. Dallas Cowboys owner Jerry Jones was battling the NFL over local sponsorship rights. Jones believed he could circumvent NFL mandated sponsorships if it benefited the Cowboys.

If you really want to appreciate what makes a great leader you need to look no further then look no further then Tagliabue allowing franchises to move. Tagliabue believed that ship had sailed in 1982 when Al Davis successfully sued the NFL for the right to move the Raiders to Los Angeles from Oakland. Bud Adams moved the Oilers to Nashville and Art Modell moved the Browns to Baltimore. In both cases under Tagliabue’s leadership Houston and Cleveland returned to the league with new owners and stadiums.

Jerry Jones filed a $750 million lawsuit against the NFL in 1995 citing his belief that each NFL franchise had the right to negotiate their own sponsorship agreements.

"Jerry's views aggravate the problem and don't help solve the problem because there are two underlying realities about a sports league that you have to recognize to be successful," Tagliabue said. "You have to operate in markets of different sizes. And No. 2, winning and losing is cyclical. And by definition you're always going to have losing teams in a sports league. You have to sustain your stability in individual markets even when you are losing."

"When you say Jerry wants to dismantle Properties, it is a disservice to Jerry," Tagliabue said.

"Jerry wants to build something new, which is what we have been doing here."

The NFL filed a $300 countersuit against the Cowboys. On December 13, 1996, the NFL and Jones agreed to drop their respective lawsuits.

September 11, 2001 a date will remain etched in the consensus of everyone who was alive that terrible day. Two days later, Tagliabue made the only decision he could concerning the NFL games scheduled for Sunday, September 16, 2001, the second Sunday of the regular season – Tagliabue postponed the 15 scheduled games.

''We wanted to be sensitive, certain, and right,'' a tired Tagliabue said in a conference call with the news media, ''and certainly not superficial.''

He added: ''At a certain point playing our games can contribute to the healing process. Just not at this time.''

Five hours after Tagliabue announced he was postponing the NFL’s slate of games; Major League Baseball announced they would follow the NFL’s lead and postpone their games for the entire week. All Division I-A college football conferences -- some of which earlier had said they would play that week -- called off their weekend games. NASCAR called off its Winston Cup race in New Hampshire this weekend. In each and every case, it was leadership by example; the sports industry followed the decision Paul Tagliabue believed was in the best interest of the National Football League.

''This was our commissioner's finest hour,'' said Baltimore Ravens owner Art Modell to the New York Times. ''He did the right thing. I wanted our league to take the initiative, to be the pace-setter by making the correct decision quickly and decisively. Paul did just that.''

When Tagliabue finally retired on September 1, he realized the Saints return to New Orleans following the terrible aftermath of Hurricane Katrina, but he also had to accept Los Angeles, the second biggest market in the United States, would once again not be home to an NFL franchise. A quiet but decisive leader – Tagliabue left those and other challenges to the only man who could possibly succeed him, Roger Goodell.

Sometimes in life the right person is the right person for that job. Roger Goodell was elected as the National Football League’s eighth commissioner Tuesday evening, August 8, 2006 in the fifth and final ballot. Goodell had enough votes after the fourth ballot collecting 23 of the 30 votes (22 was the key), passing Gregg Levy on the decisive ballot. NFL owners made a quick and decisive decision, sending a strong message to the NFL's corporate and media partners -- the NFL's $6 billion business is in great hands with Roger Goodell in charge.

A lifelong football man himself, Goodell's election represented possibly the greatest single example of vision in the history of the sports industry. Roger Goodell’s election sends a clear message to anyone interested in working in the sports industry – live your dream, never lose that dream, and remain clear in the vision and destiny you believe your life holds for you. That is why Roger Goodell today will be entrusted with managing the $6 billion NFL.

In high school, Goodell, remembered sleeping with an NFL “Duke” football when he six years old, decided that his goal was to work for the NFL and perhaps someday become commissioner. Upon graduating from Washington and Jefferson, he began a letter-writing campaign to land a job in the NFL.

He wrote a total of 40 letters, starting with Commissioner Pete Rozelle and including one to every NFL team. In the summer of 1981, Rozelle instructed NFL Executive Director Don Weiss to interview Goodell. After one interview and several more letters from Goodell. He was offered a three-month internship in the NFL office that began in September of 1982 shortly before the start of a nine-week NFL players’ strike.

The following year, Goodell worked for the New York Jets as an intern in public relations and administration. Following that season, he was offered a position on the New York Jets coaching staff, but decided it would be better to return to the NFL office in 1984 as an assistant in the public relations department.

That is the definition of passion, dedication and a never-ending commitment to purpose.

"I spent my life following my passion," said Goodell, who worked his way from an intern in the public relations department to what is the most powerful post in American sports in an ESPN.com report. "The game of football is the most important thing. You can never forget that."
One of the few life lessons most people consider is to follow what they believe is their destiny. Granted most six-year olds don’t dream of growing up one day to become the NFL commissioner, but it is an amazing story that one six-year old had that dream and never let that sway him from what he believed was his and his alone.

"We've had the two greatest sports commissioners in the history of professional sports, Paul Tagliabue and Pete Rozelle, and I was fortunate to work for both of them," Goodell said. "I look forward to the challenge and thank them again for their confidence."

“The league has always tried to find a better way of doing things and be responsive before we need to,” Goodell said. “That has been a hallmark of our leadership under both Commissioner Rozelle and Commissioner Tagliabue.”

He added: “My theme was it wasn’t time for status quo. We need to keep innovating. I don’t think it was a vote for the status quo.”

Four months into what Roger Goodell hopes will be a lengthy tenure managing the biggest brand name in sports, the 2006 season has been largely uneventful for Goodell. Apart from the “Roger Rocks America Tour” Goodell agreed to visit each NFL city during the 2006 football season. The biggest challenge Goodell has faced is the terrible behavior of many NFL players.

To date more than 35 players, including eight members of the Cincinnati Bengals and four San Diego Chargers have been arrested and charged with various crimes. The sense of entitlement among National Football League players is out of control. Chicago Bears Terry "Tank" Johnson, the teams’ starting defensive tackle, had bad week even by NFL standards. Johnson was arrested at his Chicago home and charged with misdemeanor weapons charges. It was the third time Johnson had been arrested in the last 18 months.

Hours after his arrest Bears general manager Jerry Angelo reportedly warned Johnson he was down to his final chance with the Bears. Early on December 15 Johnson’s bodyguard William Posey was murdered in a Chicago nightclub. Johnson was present at the shooting. Johnson did not play in the Bears 34-31 win over the Tampa Bay Buccaneers that Sunday.

What next for the Bears and Johnson? Literally hours after being told he was down to his last chance to remain a Chicago Bear would general manager Jerry Angelo follow through on his threat to cut the teams ties with their starting defensive tackle, a key member of the Bears defense? Would the Bears really consider jeopardizing their chances to win a Super Bowl because a player had behaved badly? Of course not – the Bears suspended Johnson for one game, a meaningless game Christmas Eve. Meanwhile a Chicago Judge placed Johnson under house arrest. Good news for the Bears, he’ll get to play for the Bears during the playoffs.

As the 2006 is coming to an end and we look forward to 2007, the first four months Goodell enjoyed as commissioner will seem like a honeymoon cruise with the challenges Goodell and the National Football League is going to have to deal with in 2007. They include but are far from being limited too:

Create a code of conduct for NFL players

Working with the NFL Players Association to create a code of conduct for NFL players. David Stern may have overreacted in suspending the Denver Nuggets Carmelo Anthony for 15 games for throwing a punch in an NBA game on December 16, but if Stern went too far, imagine what David Stern would have done if he was dishing out the justice if Stern was dealing with the small, but noticeable criminal element playing on Sunday for the National Football League? Or imagine what Stern would have done to Terrell Owens after Owens spat at Falcons cornerback DeAngelo Hall (the NFL fined Owens $35,000). Goodell has to lay down the law and deal with the reprehensible behavior of NFL players who step over the line.

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? The NFL needs to expand by at least two franchises in the next six years (in order to make the NFL Network work) and one of those two teams must be in Los Angeles. It won’t be easy, but Goodell has to know both Tagliabue and Rozelle would have found a way to get this accomplished.

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 good news for Roger, the Chargers who have the right to 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. The good news, the team announced a few weeks ago they won’t consider moving (just yet anyway). You have to know the future of the San Diego Chargers is to be settled in the next six months.

New media, globalization and performance-enhancing drugs

Clearly the five immediate challenges Goodell is facing are labor peace (revenue sharing), the much needed code of conduct for NFL players, what to do with the Los Angeles market, the San Diego market and the long-term future of the New Orleans Saints (that will be dealt with in a separate insider in the next week). 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 rules 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 working to take their sport and league globally is the National Basketball Association. David 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?

Truly Pete Rozelle and Paul Tagliabue are regarded as Titans of Industry. Leaders, men among men. Standard-bearers. Good luck Roger Goodell in living up to the legacy left to you by Rozelle and Tagliabue. The Rozelle era ended in 1989, the Tagliabue tenure in 2006, 2007 and beyond belongs to Roger Goodell.

For Sports Business News this is Howard Bloom

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