SBJ/August 16 - 22, 2004/Finance

Panel’s focus grows to NFL-wide biz analysis

The NFL owners group studying revenue disparity in the league has dramatically expanded the scope of its focus to include the league’s entire economic structure. The move marks the first time in the 82-year history of the NFL that a committee will comprehensively examine every business element of the league. It comes as the NFL is wrestling not just with the issue of revenue disparity, but also with negotiations over a new labor pact and TV deals.

McNair
“We will be making an analysis of the performance of all the teams and try to see what impact a number of factors have,” said Bob McNair, the Houston Texans’ owner, who chairs the league economics committee. “The size of the market, an old or new stadium, a good or bad lease, look at win-loss records, competitive factors — we will be looking at all of these things.”

That goes well beyond the initial charge that the committee received in March to examine whether a growing revenue gap among some of the league’s 32 teams threatened competitive balance on the field. NFL clubs on the low side have about $100 million of revenue, while clubs on the high side are in the $250 million neighborhood.

Critics, particularly those at high-revenue teams, worried in March that if the newly appointed committee looked only at revenue and not at the costs to generate that money, clubs would be punished for success. The expansion of the committee’s mandate would appear to take those concerns into consideration, said Marc Ganis, a sports consultant who has worked with NFL clubs.

Low-revenue teams that were hoping for a quick increase in supplemental revenue sharing may be disappointed because the process will now take longer, he said.

McNair said no conclusions had been reached, but he agreed that the committee decided it could not look at revenue sharing in a vacuum.

“You see revenue sharing is sort of dealing with the effect; what we are trying to do is look at the causes,” McNair said earlier this month during an interview at the NFL’s New York City headquarters. (The interview was in the Pete Rozelle conference room, named after the commissioner who made competitive parity a league mission.)

Special Committee
on League Economics
Owner Team
Bob McNair Houston Texans
Robert Kraft New England Patriots
Arthur Blank Atlanta Falcons
Wellington Mara New York Giants
Al Davis Oakland Raiders
Jerry Richardson Carolina Panthers
Bill Ford Detroit Lions
Dan Rooney Pittsburgh Steelers
Wayne Huizenga Miami Dolphins
John Underwood* Green Bay Packers
Jerry Jones Dallas Cowboys
Wayne Weaver Jacksonville Jaguars
* Underwood is the Packers’ treasurer.
Source: NFL
“Why is it that a team needs some sort of financial assistance?” McNair said. “We need a comprehensive review and not focus on $40 million that is being currently distributed” from high-revenue clubs to small-revenue clubs as part of the league’s supplemental revenue sharing program.

McNair placed no deadline on the committee producing recommendations. This week, information gathered with the assistance of the league will be sent to the 12-member committee. They will hold a conference call soon after, and meet in person as a group for the first time on Sept. 14 in Washington, D.C.

NFL owners will meet next in late October in Detroit, but McNair did not pledge anything would be ready by that time.

A source who is working with the committee said that the earliest recommendations could be ready would be the annual meeting in late March in Hawaii.

That sets up an interesting sequence, this source said, because what happens with the collective-bargaining agreement and the TV deals also affects the economic committee’s work. Which one falls into place first will influence the outcome of the others, the source said.

The committee is working directly with Eric Grubman at the league. A former Goldman Sachs investment banker, Grubman was hired in May as executive vice president of finance and strategic transactions. McNair said the data gathering and analysis are being handled by Grubman and the committee, though he did not rule out hiring an outside consulting firm in the future.

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