SBJ/September 1 - 7, 2003/Special Report
Tagliabue keeps his focus on the future
Published September 1, 2003
Tagliabue says the NFL’s business is healthy but faces challenges.
Sitting in his office on Park Avenue in New York City, NFL Commissioner Paul Tagliabue has a quiet confidence and easy demeanor while discussing the issues facing the league, which kicks off its 84th season Thursday evening in Washington, D.C. He openly acknowledges the league's continued success, but is quick to point to the changing economic and entertainment landscape and constant challenges that the league faces as it enters its 14th full season under his leadership. While Tagliabue works to keep the attention of today's consumers, he also balances a full agenda that includes the launch of the NFL Network, the future of NFL Europe, the prospects for a cold-weather Super Bowl and the expiration of the NFL Trust — too many issues to give the 62-year-old much time to look back.
Tagliabue recently sat down with SportsBusiness Journal Executive Editor Abraham Madkour and NFL writer Daniel Kaplan at the league's headquarters in New York.
SBJ: You are going into your 14th full season as commissioner. What is the state of the NFL's
Tagliabue: Well, the fans seem to think it's healthy because they continue to have tremendous interest in our game and in our teams and in the postseason and the Super Bowl. So we would like to think it's healthy, but we also like to be realistic to know that everything that is healthy also has challenges. I think that is where we are.
SBJ: What do you think those challenges are?
Tagliabue: Well, I think the challenge starts with keeping the game as great as it's been, and that involves youth football, high school football, college football, NFL football. Part of that is keeping the collective-bargaining agreement in place with the mechanisms that are in there in terms of distributing talent in an equitable way. One of the challenges is to keep the public tuning in to NFL telecasts in a big way in a television universe where there are more and more channels, more and more alternatives for the viewer.
SBJ: You mentioned TV. You were one of the few sports to brunt the cyclical trend of declining
ratings in the past season. What do you have to do in the coming season to keep up the countercyclical effort?
Tagliabue: Well, I think it starts with the game and the quality of the game and the intensity of the competition as we move into the late part of our season, the regular season as well as the postseason. I think it means being smart about how our season is structured. The combination of the preseason, the regular season and the postseason, the number of teams in the postseason, all of those things have an impact on fan interest. It also means being wise about when we play our games. Right now our games are focused on Sunday. It gives us an advantage in terms of the aggregation of all the games being a magnet for football fans, the one sport where you can set aside a day and see everything that is happening in terms of the competition with the exception of the Monday night game. We are focused on the weekend, and I think that is important. Moving some of the postseason games later in the day on Saturday in particular when there are more people at home and they are watching the games has been important. So looking to the future, we need to consider whether the balance we have between early games on Sunday, late games on Sunday, late games in prime time on Sunday and Monday, whether that's the right balance or whether there is a better balance.
SBJ: What about the Monday night game? Viewership continues to go up as more people are watching
TV, but the average Nielsen rating is consistently going down. Are you concerned about that and is there a way you can strengthen this important piece
Tagliabue: Well, in absolute numbers, the ratings for everything is going down because you've gone from three channels to 400 channels in a lot of households. So if you divide the audience over 400 channels you're going to have a smaller audience than you did when you had one-third of the country watching one of three networks, the way television was in the '70s. "Monday Night Football" keeps coming up in the ratings in terms of where it ranks among prime-time programming. It's holding very well compared to the audiences for the other mega-shows that are out there for advertisers, so that gives us encouragement about the future. At the same token, we will look at whether there should be more than one game in both the Sunday night and the Monday night prime-time windows, because the quality of the game can be a factor in viewership. But we also have to recognize that in this multichannel universe, it's not going to be possible to get 50 percent of the audience, except maybe for the Super Bowl.
SBJ: Could the NFL Network be a possible avenue for more games on Sunday night or Monday night?
In addition, how have your media partners reacted to the creation of your own channel?
Tagliabue: We don't see the NFL Network carrying live games. We think keeping the product strong for our network partners is the critical starting point. Right now the AFC package is very strong; CBS has done a great job in handling the AFC package. The NFC package has always had an historic edge because the NFC teams in the aggregate are in larger metropolitan markets and Fox has done a great job with that. The two Disney companies, ABC and ESPN, are doing an outstanding job with prime time. That's our goal is to keep the product there and not to dilute the product, and I think we are all convinced that the thing not to do is to slice your product ever thinner, because ultimately you end up marginalizing it.
SBJ: Is there any concerns that your media partners have conveyed to you about the competition
for ad dollars, for creative content, for viewership, to the creation of the NFL Network?
Tagliabue: No, right now all of the networks have been very positive about the power of the NFL and about the strength of the advertising marketplace generally and also specifically to the NFL. Obviously if you look back at the economy, I think the data now shows that there was some softness in the economy before 9/11. There was obviously a big impact on television, television advertising spending after 9/11, but as we look at the 2003 season, the networks advise us about the strength of the market. It seems like it is very, very positive, which is a good omen as we are going forward.
SBJ: How often are you talking to Steve Bornstein [NFL Network president] and are you still
on schedule for the Nov. 4 launch?
Tagliabue: Yes, Steve and I talk, if not every day, almost every day, and we are on schedule for Nov. 4. I see it [the NFL Network] as clearly complementary, and we have an opportunity to be complementary to our network partners. At least for two reasons. No. 1 is the size of our audience. More than 100 million watch our games on the weekends, but then, with the exception of ESPN, our other three network partners do not have heavy NFL programming in the ensuing weekdays, so I think there is a real opportunity there Monday through Saturday for the NFL Network. ... So, it will give our fans, both casual and avid, an opportunity to see the teams up close, to see what they do to get ready to play, but also to see who they are. We have 1,800 players in the league and most of them are tremendous leaders on the field and in the community and the network will give us a chance to let the fans have an insight on all that.
SBJ: Commissioner, we don't know when you are going to retire, but say it was today. What would
you say your legacy to the NFL would be?
Tagliabue: Well, I think probably the most significant thing has been labor peace for hopefully two decades or more. More broadly, understanding the traditions and the structure of the league that have been established over decades that are critical and keeping those in place and strengthening those [in areas] which includes smart revenue sharing and then being willing to make change. Probably the biggest change that the league has made in my time as commissioner has been from the old player system to the current player system. It seems to be working; it has produced tremendous competition on the field, which has always been the first concern.
SBJ: Some owners are grumbling about possible revenue disparity caused by new stadiums. What
are your thoughts about this issue and would the league change its revenue-sharing formula to help those teams without new stadiums that are falling behind
in this race?
Tagliabue: I don't think revenue disparity comes from new stadiums. I think the revenue disparity comes from a lot of things. Stadiums, market size, disposable income in the community, other competition from other entertainment, including major league sports. You can have a great new stadium, and a lot of debt, because it was privately financed, and when you net out your revenue from your debt service, are you ... going to be one of the mega-revenue teams? On the other hand, you could have a publicly financed stadium in a small town and you could be at a revenue disadvantage because you don't have the major corporate presence, or you have an economy where people are being laid off. So, it's not stadiums alone. There are a lot of reasons for revenue disparity. We've adjusted some of our policies in recent years, and adopted new policies, and I'm sure we will continue to do that, to try to guarantee that there is an incentive at the team level to promote NFL football and promote your team. But at the same time the ability of all teams to compete for player talent within the framework of the collective-bargaining agreement, that's the critical fact.
SBJ: Does that mean you would be willing to tweak the revenue-sharing formulas?
Tagliabue: Absolutely. We've tweaked them many times in the last dozen years, and I'm sure we will continue doing that.
SBJ: The L.A. market seems to be an issue where there is a difference of opinion of whether
the NFL needs to be there. Why do you think it's so important that the NFL return to L.A.?
Tagliabue: There are a lot of people in the Pacific Coast time zone and there are a lot of people in California, so that's one thing. Another thing is that football has a great tradition in Southern California. We were all reminded of that recently at the Hall of Fame when Marcus Allen was inducted. Here's a great player who played youth football, high school football, college football and NFL football in Southern California. That's part of the tradition. It includes people like Anthony Munoz. Anthony is important because Southern California and the Los Angeles area has a great Hispanic population that is interested in our game. So I think that we should be there with teams where we have fans, where our game is well supported, and where the diversity of America is clear, and Los Angeles is one such market.
SBJ: So the television ratings impact, is that important to you? Or would you rather be there
for the live in-game element and experience?
Tagliabue: You can't separate the two. But you can't make decisions on the basis of television ratings alone. We are in a sport which is attractive to people both as a spectator sport and as a sport in which people want to participate, so we need to be in those areas where there are people who will participate and cheer for teams, and Los Angeles is such an area. But it's the whole Pacific Coast, it's not just Los Angeles, it's not just San Francisco. America is a big place and one-sixth of it, roughly one-sixth of it, happens to be in the Pacific time zone, I think, and so it's one part of a much broader fabric of American society, and the interest of the American public in sports.
SBJ: Speaking many time zones away, what is the status of NFL Europe and do you see that continuing
next season in its current form?
Tagliabue: Well, I think it should continue because I think it's serving an important purpose. ... We are in a world that is ever smaller because of technology and specifically telecommunications. We are in a world that hopefully growing standards of living will enable more and more people to participate in a diverse way in different sports, and I think NFL Europe is one vehicle for exposing our game to people outside the United States. I think our relationship with the Canadian Football League, and with football in Mexico, is equally as important. I can see a day down the road when there could be competition among the league in Canada, the Canadian league, a Mexican football league and a European football league. That's the vision of where our sport could evolve, but you're never going to get there if you don't start with some baby steps in promoting the game in Europe. So when I think about Europe, I have to think in two levels. First, is the strategic vision for our game, and then tactical steps to move toward that strategic vision, and in that context, I think it's important.
SBJ: What about the financial losses?
Tagliabue: I think the financial losses have to be looked at and compared with the revenue and other costs. Every dollar you spend on one subject could theoretically be spent on another subject. But the cost of running Europe is modest compared to many of the other costs that we incur, and I think the payback from Europe is greater than some of the cost that our teams are incurring in a variety of areas. It's ... less than 1 percent of revenues, and it's less than 1 percent of player costs, so you have to judge every investment you make, in total, in terms of usage of those resources. When you do that, I think Europe is an exceptional investment. It's less than half a million per club.
SBJ: There has been a public dispute in the papers here in New York between the New Jersey
Sports and Exposition Authority and the owner of the New York Giants. How does that affect the ability of the Giants to get the 2008 Super Bowl, and if
it impacts it negatively, does that doom the chances of a cold-weather Super Bowl that year?
Tagliabue: I don't think it dooms the chance of a cold weather Super Bowl in 2008 because I think Washington is a strong candidate with an outstanding stadium, and having the game in the nation's capital could be very attractive, I would think. Those are the two cities we are considering, Washington and New York. It's certainly not good for New York's prospects because from day one everyone has understood that the quality of the stadium for the open-air Super Bowl in Northern cities would be a key factor, so we're still hopeful that dialogue can be resumed between the Giants and the sports and governmental authorities in New Jersey so that their Super Bowl bid can remain viable. If not, we will have to [revisit the issue in a few years].
SBJ: Are you taking any role in that?
Tagliabue: I'm having conversations with representatives of the state, and I'll try to continue to do so, as long as people think my participation might be constructive.
SBJ: Are the two sides still talking, because you had mentioned resume talking.
Tagliabue: Yes, I think they are still talking. They don't seem to be making too much progress, but sometimes progress comes when you least expect it.
SBJ: At the Super Bowl this year in San Diego, there was a great amount of discussion on the
next three Super Bowls being played in Houston, Jacksonville and Detroit, markets that may lack some of the appeal of New Orleans, San Diego and Miami.
What's ahead for future sites for the game and in terms of the markets where this marquee game should be? Do you see it rotating as often to so many different
Tagliabue: I think so. I think Houston, for one, will be a great venue for the game. I think the stadium is one-of-a-kind, a unique, open-air, retractable-dome stadium. All of the feedback I have had from a wide range of groups that have an interest in attending the Super Bowl game are very positive about Houston, and so I don't have any concerns about any of the upcoming sites. And we will continue to bring the game back to places like Miami and New Orleans, others, and hopefully at some point we can get to Los Angeles, New York and Washington. So I think that as America has grown, there are a lot of places that can host the Super Bowl very well.
SBJ: The NFL Trust expires in March 2004. Can you talk about the changing sponsorship model
of the league and where you see teams having more inventory they control and certain categories controlled by the league?
Tagliabue: Mostly it has to do with how the marketplace has evolved, and maybe most of all, the popularity of the NFL and the interest of sponsors in using NFL football as a vehicle for making a statement about their product and their brand. Stadiums are part of this. In the old days, teams were tenants and there were not opportunities to have sponsorship arrangements associated with stadiums, naming-rights arrangements, gate naming rights and so forth. So those opportunities now exist. Opportunities exist with radio and with preseason television and with other media. So, I think what we have done in the last two years provides a template in some areas to carry into other categories for the future. But I am certain that there are ideas that we have not even thought of yet that are also part of the future. We are going to be addressing a master agreement on all of these commercial opportunities, particularly in the retailing, sponsorship and related advertising areas at our league meetings in September and again in October, and again next March, so I think we can get a consensus moving forward.
SBJ: There's another deadline in March of 2004, and that's the NFL's option to buy part of
Reebok's On-Field. Do you perceive the NFL taking that option?
Tagliabue: We have been having constant dialogue with Reebok, and it's turned out to be a really strong relationship of joint planning and joint creativity. But at this point it's really too early to know.
SBJ: Can you update us on Malcolm Glazer's efforts to buy the Los Angeles Dodgers?
Tagliabue: I haven't heard anything for quite a while from the Glazers. You know, we've told them that if they were going to structure some form of ownership within the family, it has to be independent of Malcolm Glazer and his resources, since he is the controlling owner of the Buccaneers. I really don't have any recent information that I could share with you.