Sunday, February 21, 2010

A question about the NFL model

Thanks Clayton
The reference is 'In a league of its own: America's National Football League offers a business lesson to other sports' The Economist 27 April 2006. Among other things the article compares the financial performance of gridiron clubs to EPL clubs.
It found that:
"The teams' owners share roughly 70% of their revenues with each other; and they stick to a strict salary cap that limits the amount each team can spend on players' salaries... ... all 32 owners a chance to field teams that are both financially viable and athletically competitive, even though some are in much richer local markets than others. The contrast with English football's Premier League—the richest soccer league in the world—is striking. The lack of a salary cap and the fact there is little revenue sharing means that the league is dominated by the same teams, year after year, while the poorer and less successful teams lose support and flirt with bankruptcy... ... its teams are far more evenly matched competitively than those in other leagues. Several teams rise and fall in the league tables from one year to the next, and every season provides many fresh examples of how any team can win on “any given Sunday”. That keeps supporters coming back, and ensures that the bulk of the games remain interesting, even in the final weeks of the season. ... one team's losing season and sagging revenues are offset by another team's banner year..."

And the punch line to get all teams working hard to fill stadiums: "... the league likes to leave one prominent city without a football franchise, “like an empty seat in musical chairs”, so that teams in other cities can threaten to move if they do not get their way. "


Anonymous said...

when i read about the NFL, two things caught my eye.

It rewards good travelling teams. Play boring football away from home that no-one wants to see? It`ll affect your profits. Got a star that everyone wants to see? It`ll affect your profits.

The often forgotten side of the salary cap is the minimum spend. In the NFL it is 80%. Is the A-league`s minimum spend too low?

The A-league is very centralised, so I wouldn`t be surprised if they haven`t looked at, thought about what the NFL has done.


john said...

Thanks Clayton
The A-League is half way there. I prefer the US MSL model in which the central body determines all contracts - ensuring that the teams are even.

The trouble with the A-League is that many of the foundation clubs are now way under capitalised. Brisbane had its chance in season one to be a Melbourne Victory but went conservative on player spend. Lost too many games at home and lost its chance. A lot of the people that came along in those first 2 years won't come back.