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sportscurmudgeon · 03-08-2006, 10:20 AM

Before we get too enthralled with the cries of capitalism versus socialsim here, let me offer something to think about.

The NFL (just like MLB and the NBA) is slightly different from your ordinary business. Consider this:

If there is a market out there to sell 1000 widgets in a year and there are three companies making widgets, it behooves Company A to try to put either Company B or Company C out of business. If they do that then they only have one other competitor for those 1000 widgets that will be sold in a year. Assuming that Company C is out of the picture, Companies A and B are in a position to do better than they did before Company C had to fold.

That is NOT the case with the NFL. If the 8 or 9 "big market teams" actually put the 8 or 9 "small market teams" out of business, that would hurt the big market teams because they would not have a league with a national footprint and total league revenue would go down. With fewer teams, interest MIGHT not continue to increase and the league could be in trouble.

And more importantly to the 8 or 9 "big market teams" the values of their franchises would drop. After all, one lure of owning an NFL franchise is that none of them actually lose money; if some start to drop like flies, that makes owning one a dicier proposition and franchise values will go down.

Just imagine if the NFL actually had only 8-12 teams again. If 20 franchises had to fold, the league would have difficulty selling expansion ever again AND teams would be playing each other too many times to keep it interesting. Also, how would there be fantasy leagues with so few players.

Danny Boy has a huge cash-cow here with the Skins. But the fact is that he also has a franchise he paid over $800M for and the estimated value now is about $1.1 - 1.2B. He would be a fool - and in business matters he is anything but a fool - to do ANYTHING that would jeopardize the continued increase in value for his franchise. In fact, if the value ever dropped to sy $600M, his creditors would probably call his loan that he took to buy the team.

As Jim Rome might say, that would suck!

03-08-2006, 10:20 AM	#36
sportscurmudgeon Playmaker Join Date: Feb 2004 Posts: 3,159	Re: Revenue Sharring Before we get too enthralled with the cries of capitalism versus socialsim here, let me offer something to think about. The NFL (just like MLB and the NBA) is slightly different from your ordinary business. Consider this: If there is a market out there to sell 1000 widgets in a year and there are three companies making widgets, it behooves Company A to try to put either Company B or Company C out of business. If they do that then they only have one other competitor for those 1000 widgets that will be sold in a year. Assuming that Company C is out of the picture, Companies A and B are in a position to do better than they did before Company C had to fold. That is NOT the case with the NFL. If the 8 or 9 "big market teams" actually put the 8 or 9 "small market teams" out of business, that would hurt the big market teams because they would not have a league with a national footprint and total league revenue would go down. With fewer teams, interest MIGHT not continue to increase and the league could be in trouble. And more importantly to the 8 or 9 "big market teams" the values of their franchises would drop. After all, one lure of owning an NFL franchise is that none of them actually lose money; if some start to drop like flies, that makes owning one a dicier proposition and franchise values will go down. Just imagine if the NFL actually had only 8-12 teams again. If 20 franchises had to fold, the league would have difficulty selling expansion ever again AND teams would be playing each other too many times to keep it interesting. Also, how would there be fantasy leagues with so few players. Danny Boy has a huge cash-cow here with the Skins. But the fact is that he also has a franchise he paid over $800M for and the estimated value now is about $1.1 - 1.2B. He would be a fool - and in business matters he is anything but a fool - to do ANYTHING that would jeopardize the continued increase in value for his franchise. In fact, if the value ever dropped to sy $600M, his creditors would probably call his loan that he took to buy the team. As Jim Rome might say, that would suck! __________________ The Sports Curmudgeon www.sportscurmudgeon.com But don't get me wrong, I love sports...