Revenue Sharing

[saden1]

Originally Posted by LongTimeSkinsFan

The term is price gouging and you are using it out of context. The source of your definition provides a more valid example of price gouging as follows:

Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent. -Wikipedia

Price gouging could not be charged against the NFL teams because (1) the goods or services they provide would not be considered essential and (2) the price increase would not be initiated in anticipation of or during a civil emergency.

As far as the NFLs pricing strategy goes with their products like hats, shirts, etc., they can set price levels as high as they want. The demand on such goods is elastic to begin with since there are enough look-alikes to offer competition in the marketplace. As an example, my wife probably would have had to pay $125 or so for an official Clinton Portis jersey, but the one she picked up at Wal-Mart a couple of years ago for $20 suits me just fine. BTW, you wanna talk REAL anti-competitive practices, do a case study of Wal-Mart!

Excuse my misspelling of the word, thanks for pointing that out. I must also point out that you're are in correct in your assessment. If your read further down the article you'll notices that it states:

The term is not in widespread use in economic theory but is sometimes used to refer to practices of a coercive monopoly which raises prices above the market rate that would otherwise prevail in a competitive environment.

Since the NFL is a monopoly it [can] indeed engaged in price gouging and a determined individual can successfully sue them.

edit: added [can]

[That Guy]

good luck with that. price gouging is like the idiots who charged 20-50$ for a bag of ice after the hurricanes.

the nfl may be price fixing (illegal but very hard to prove, and the settlements bring peanuts), but its not price gouging in any sense. the NFL is not essential, its entertainment.

[saden1]

Originally Posted by That Guy

those according to their abilities to those according to their needs.

It is at its heart a socialist idea; saying that it's not would be incorrect. Whether it's in the better interest of the league (as a whole) is debateable.

And with all the talk of moving teams, I can't believe no one mentioned the Boston Braves. shame on you.

You are using the word socialism very literally. You are talking about billionaires in a capalistic society who formed a monopolistic entity argue amongst themselves about what their cut from revenue generate from society. If it were socialism, the money would end up back in the pockets of fans. Last time I checked, the NFL didn't send me a check.

[saden1]

Originally Posted by That Guy

good luck with that. price gouging is like the idiots who charged 20-50$ for a bag of ice after the hurricanes.

the nfl may be price fixing (illegal but very hard to prove, and the settlements bring peanuts), but its not price gouging in any sense. the NFL is not essential, its entertainment.

The penalties aren't peanuts, if the state attorney or the feds are suing you. You know NY attorney general Eliot Spitzer is not someone the NFL wants snooping in its business practice.

This brings up the question of what happens if the ticket prices are too high and people can't afford to go to the game? Is blacking out games legal?

It's 12:30 am in the left cost, I got to get some zzz's. Peace.

[LongTimeSkinsFan]

Originally Posted by saden1

This brings up the question of what happens if the ticket prices are too high and people can't afford to go to the game? Is blacking out games legal?

What you are proposing would be called in layman's terms 'cutting off one's nose to spite one's face'. Again, I would issue the point that for the most part, the demand for the NFLs products, be they entertainment, clothing, or novelties is an elastic model by economic definitions and while there may be a core of enthusiasts for any given team willing to pay almost any price for such goods, the volume of sales needed to generate profit levels consistent with numbers we're seeing today would require that prices be kept at affordable levels. This would include re-broadcast rights and licensing revenues as well.

For example, I have never been to a game at FedEx field and all the people that I know locally that are Redskin or pro football fans go to games there about once a year. The cost of a ticket for many of us in this area is disproportionate to the value of the experience, especially since we can listen to a game on radio or watch it on TV. In the case of a blackout, radio is not affected, but even if it were, there is the internet and the newspaper the next day. At least to me and many other people, NFL product, regardless of its nature, is paid with disposable income and not essential to daily living.

[sportscurmudgeon]

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!

[That Guy]

saden, the fans feed the system, they aren't part of it though

SC, the teams still share tv revenue and all franchises are profitable. If they need to go clippers, the tv revenue could literally pay all stadium, staffing, coaching, and player salaries and leave the owners with over 40million a year in profit.

[That Guy]

Originally Posted by saden1

The penalties aren't peanuts, if the state attorney or the feds are suing you. You know NY attorney general Eliot Spitzer is not someone the NFL wants snooping in its business practice.

This brings up the question of what happens if the ticket prices are too high and people can't afford to go to the game? Is blacking out games legal?

It's 12:30 am in the left cost, I got to get some zzz's. Peace.

the riaa just settled a massive price fixing lawsuit, and guess what the prosecution got? 2000 crappy CDs that didn't sell at retail donated to charity and $2 checks. Price fixing suits usually aren't big payouts.

blacking out games is legal if its in the terms of the contract, you're not forced or required to watch the games. If the ticket prices are too high, don't pay. its a perfectly viable option and it won't put your physical well being in jeopardy.

[70Chip]

Originally Posted by That Guy

the riaa just settled a massive price fixing lawsuit, and guess what the prosecution got? 2000 crappy CDs that didn't sell at retail donated to charity and $2 checks. Price fixing suits usually aren't big payouts.

blacking out games is legal if its in the terms of the contract, you're not forced or required to watch the games. If the ticket prices are too high, don't pay. its a perfectly viable option and it won't put your physical well being in jeopardy.

I bet the plaintiff's lawyer's are shopping for new Gulfstreams though.

[saden1]

Originally Posted by That Guy

the riaa just settled a massive price fixing lawsuit, and guess what the prosecution got? 2000 crappy CDs that didn't sell at retail donated to charity and $2 checks. Price fixing suits usually aren't big payouts.

blacking out games is legal if its in the terms of the contract, you're not forced or required to watch the games. If the ticket prices are too high, don't pay. its a perfectly viable option and it won't put your physical well being in jeopardy.

The RIAA suite was made into a class action suit by the lawyers for the lawyers. This is the preferred type of suit you want to be involved in if you're money loving law firm. The way these suites gets started typically involves a law firm scrounging up a dozen or so people and then soliciting for more people to join the suit. A price fixing suite brought on by a government entity (state or federal) is damaging monetarily and could cost executives their freedom.

[Sheriff Gonna Getcha]

Great post SC..great post.

[SmootSmack]

Originally Posted by sportscurmudgeon

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!

Essentially that's the crux of the argument I suppose. Should the owners consider themselves owners of their own companies competing against each other? Or should they consider themselves business partners working together for the NFL to compete with outside competitors. By working together they've created tremendous value for each of their teams. According to Forbes, the Vikings are the least valuable team in the NFL (at least they were last year) yet they're more valuable than the Knicks (the most valuable NBA team). The Detroit Pistons and Detroit Red Wings (for all their history and NBA titles and Stanley Cups) together are nowhere near as valuable as the Detroit Lions (with nothing). By the same token, I can understand the argument someone like Dan Snyder would make when he says if you want to reap my reward, help me with my debt as well.

sigh...I'm just glad the deal is done

[lifetimeskin]

Saden1-

I must agre with you on your quote of;

"Remember folks, the league is only as strong as it's weakest link."

However, the weakest link must really attempt to maximze revenues as much as all other teams. It is clear that they can reach the numbers of big market teams, but they need to attempt. I agree to some type of analysis.....I can't believe the skins were making this type of revenue when the Cooke's owned the team. If there was ever to be totall revenue sharing, what would be the incentive for a team to work harder....why not sit pat, if anything your competitior makes he has to share with you. If I am the owner of Cinci....I sit back-do nothing and get a piece of Snyders action....doesn't seem to promote action.

I know we don't know the total analysis of the new deal, but I hope there is some sanity to it.