EDITOR'S NOTE:Texans fan Alan J. Burge will continue to write a "Voice of the Fan" column throughout the 2005 season. His latest installment is below. Alan's views do not necessarily reflect the views of the organization.
Memo to owners: Don't forget about the fans
For those who don't follow or don't care about the business aspects of the NFL, consider yourselves lucky and ignorance bliss. For those who do follow such dealings, there should be at least mild interest in the newest hot-button issue that is dividing NFL owners.
No, the issue is not the extension of the collective bargaining agreement with the NFL Players Association. The extension is a highly important issue in itself but even that has been put on the back burner, a bit precariously it seems, as owners haggle over how to divide or not divide billions of dollars of revenue among themselves.
Revenue sharing - dividing league revenue equally among teams – has been the NFL's hallmark of equality for decades. It is arguably the single most important reason the NFL is what it is today. But alas, things change over time and the concept no longer seems valid in its original form because of growing inequality in "unshared" revenue.
Back in the good old days, things like television contract revenue and ticket sales constituted the vast majority of league revenue. That revenue was and still is equally divided among owners.
It's the growing amount of unshared revenue, the revenue from things like luxury suites, club seats, and stadium naming rights that's currently at the center of debate among owners.
According to a recent article by ESPN's Len Pasquarelli, shared revenue currently constitutes about 60 percent of the total league revenue. The rest falls into a pot that is unshared, meaning the owner that generates the revenue gets to keep the revenue to potentially reinvest it in the team. Fair? You be the judge.
There's a growing pot of wealth out there that is not community property per se under the current league rules. In a league that was built on the mantra of one-for-all and all-for-one, that 40 percent nugget is a lot of unshared change, especially when you're talking about $5.5 billion (yes, billion) in total league revenue.
And to think I once complained about an $18 playoff ticket.
Without getting into the gory details, teams in larger markets, especially those with new or renovated stadiums, have the ability to generate millions more in unshared revenue than teams in smaller markets and/or playing in older stadiums. This unshared revenue can be used to pay the multimillion dollar signing bonuses it now takes to lure top players in free agency.
NFL team spending is not totally controlled by the salary cap. Team payroll and salary cap accounting are two different animals. While every team has to be under a fixed salary cap accounting limit, there can still be a large disparity in the actual team payroll for a given year due to the allowable methods of prorating bonuses.
Smaller market teams argue that they are unable to spend like their large market brethren, creating a competitive imbalance. However, the small market owners can take solace in the fact that exorbitant spending doesn't always guarantee success (see Washington) and not spending exorbitantly doesn't always preclude success (see New England).
The growing disparity in unshared revenue among teams has the smaller market owners very concerned. Beyond the owners still asking for new or improved stadiums are those who are asking for more of the unshared revenue to be shared. It's an ugly monster that gets hungrier and hungrier with every new luxury suite and PSL that is sold.
In a league built on fairness and equality in revenue sharing, is it fair that Dan Snyder can fetch a cool $250,000 for a luxury suite while Lamar Hunt can't think of asking more than $75,000 just because of what the local market can bear?
Given the disparity, it doesn't seem right that the higher revenue producing teams should be penalized just because they are able to generate more revenue. Some of the newer ownership groups, including our own, argue that the disparity is not as great as it seems because the newer owners carry far more debt than many of the owners who bought into the league decades ago.
Owners are currently stalemated on the issue and NFL Commissioner Paul Tagliabue has scheduled monthly meetings through October in an attempt to reach a solution. The extension to the collective bargaining agreement can't be addressed until this issue is resolved.
So what's a bunch of mega-millionaire owners to do?
How about compromise?
Even though small market teams will continue to be more revenue-challenged than the larger market teams, complete and total revenue sharing isn't the answer. If all revenues were shared, or if a hefty "tax" was placed on high revenue teams, there would be less incentive for the owners to improve their product and the whole league would suffer.
On the other hand, by continuing on the path the league is currently on, we could see the NFL evolve into a league of have's and have not's – even more so than it is today. The question is what's the right balance?
It would seem that the compromise would include some form of incentive based system beyond the guaranteed share that would encourage teams to meet and beat certain performance levels. The performance levels could be normalized against local market expectations and could consider other things such as outstanding debt service in the formula. There are a lot of smart business people out there and certainly someone will come up with a model that will be agreeable to the owners. Right?
Hopefully this is all resolved quickly so fans can get back to worrying about draft picks and whether the offensive line will do its job. Most importantly, while the owners argue over these billions of dollars, let's hope they don't forget who buys the tickets, concessions, parking and merchandise. * *
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