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NFL owners to fight over revenue sharing
By Jerry DiPaola
TRIBUNE-REVIEW
Sunday, March 28, 2004
If you asked Steelers chairman Dan Rooney to list the most precious things in his life, there is no question that his family, his team, his Irish heritage and NFL revenue sharing would top the list.
He has few concerns about two of the first three, but he senses an attack on the league's unique economic system, and he is attending the owners' meetings this week in Palm Beach, Fla., to try to protect it.
One of the most important items on the agenda is serious discussion and a possible vote on the NFL Trust, a master business agreement among the 32 teams in which national advertising revenue is shared equally, and the league acts as licensing agent for team trademarks and logos. Discussions have been ongoing for two years, but a resolution must be reached soon because the 23-year-old trust agreement expires Wednesday.
Rooney and many owners believe revenue sharing is how the league has maintained competitive balance. That, in turn, has led to the NFL's colossal popularity that outdistances other professional sports league.
"I think we have to do what's right," Rooney said. "We have to keep the uniqueness of football."
The dispute that has surfaced involves some richer owners, such as Jerry Jones of the Dallas Cowboys, Daniel Snyder of the Washington Redskins and Al Davis of the Oakland Raiders, who want additional financial autonomy over their local markets.
Jones, for example, wants free of the trust to control Cowboys licensing, stadium sponsorships and local merchandise distribution. Snyder has the most valuable franchise in sports and wants to be even more aggressive in marketing the team logo to ease some of his debt load.
It's unlikely that even the most maverick of the owners want the NFL to mirror the financial chaos that besets Major League Baseball and the NHL, but some industry insiders say change is coming.
"What is being asked is a fundamental question," Marc Ganis, a Chicago-based sports industry consultant who works with the NFL, told The Washington Times. "Are the owners going to still work together as partners or, in effect, become 32 free agents?"
Said Rooney: "We're not sure where it's going to go."
Revenue sharing has survived in the NFL, even though there is a great income disparity among teams from top to bottom. NFL Properties businesses last year generated about $4 million per team, according to league vice president of public relations Greg Aiello. But Rooney said some of the richer teams can net well more than $50 million on their own.
To mediate such wide-ranging parties, Rooney suggested, only half-kiddingly, that the NFL will have to "bring Solomon in."
The players' union also has an important stake in negotiations that will take place this week. Gene Upshaw, executive director of the National Football League Players Association, told The Washington Times that his group will fight change to the trust "tooth and nail."
"I have always liked to use the analogy that all of our players can't go play for the New York Yankees," he said. "Someone has to go to some of the other teams. We are only interested in (receiving) a fair share among all the teams, and if any owner thinks he is going to go off on his own, that could be a real problem."
Compromise might be the only way to solve the problem. For example, owners are now permitted to strike their own deals with other credit card companies, even though the NFL has a national contract with Visa.
In any case, Rooney believes preserving revenue sharing and the NFL Trust is just as important to the league as the salary cap.
"You saw it this year with Washington (in free agency)," he said. "If there is no cap, I don't know what Washington would do."
http://www.pittsburghpostgazette.co...4088/292461.stm
Difference between winning, losing money is NFL Trust
Sunday, March 28, 2004
By Ed Bouchette, Pittsburgh Post-Gazette
For years, the NFL served as the model pro sports league with its extensive revenue sharing, salary cap, labor peace and profitable franchises.
All that could change if a handful of owners can block the renewal of the NFL Trust, which is set to expire Wednesday.
The Trust, in place virtually since the 1960s in one form or another, governs the league's equal distribution of its vast merchandise and marketing profits from the sale of products and licensing. Owners such as Jerry Jones of Dallas and Daniel Snyder of Washington want more individual control so they can market on their own and keep the profits.
In a worst-case scenario, such a non-revenue sharing system would make teams such as the Cowboys and Redskins much more profitable while turning others such as the Packers, Jaguars, Colts and Saints into losing franchises.
The Steelers' Dan Rooney fears that if the NFL Trust is not renewed in some form, the league could take on certain inequities that are seen in Major League Baseball and the NHL, where more teams claim losses than profits and are split between the haves and have-nots.
"It's a big item for us, this Trust," Rooney said. "We're not sure where it's going to go as far as the Trust is concerned."
Rooney called it the most important business the owners will tackle during their annual meeting, which opens today in Palm Beach, Fla. Trouble is, they've been discussing the issue for the past two years and have not reached an agreement with only four days left before it expires.
If that happens, teams theoretically would have free use of their logo and their ability to market it how they see fit. As it is now, each team must get permission from the league when it wants to use its own logo for marketing purposes in its own territory. For example, the Steelers hang a backdrop on their wall during news conferences that features their logo and PNC Bank, one of its main sponsors. The NFL had to approve of it first. Under that agreement, the Steelers keep the proceeds.
Either way, the television and ticket revenue sharing would not be affected.
Teams now have the leeway to market certain products and sell certain rights in their own region. Using the Steelers as an example, the NFL -- under its revenue-sharing Trust -- has a national licensing agreement with Coors beer and Pepsi Cola; the Steelers have regional sponsorships with Rolling Rock beer and Coca-Cola, and do not have to share that revenue.
Snyder, Jones et. al. want to broaden that arrangement so they can stick their logos on anything they want and cut deals nationally on their own without sharing any of the proceeds. They believe they can do a better job of it than the NFL and will reap the benefits.
Without the Trust in existence, the Cowboys -- long-dubbed "America's Team" -- could approve a national line of clothing, beer, candy or video games if they want and keep the proceeds.
Teams in bigger markets and with a large national following would benefit greatly. Rooney, who says his team's revenues would fall somewhere in the middle of the NFL pack, foresees some of the more powerful teams bandying together to cut deals that benefitted only them.
"It creates problems for everybody," Rooney said. "Teams, instead of staying in their territory, they'll start moving out. You'll start getting the teams at the top making their own deals as a group. If you have San Francisco, New York, Washington, Dallas, Chicago -- I'm just covering the country -- you'd have a pretty big situation.
"You'll have all this kind of stuff happening if you don't have this agreement. You really need some agreement."
NFL spokesman Greg Aiello downplayed the proceeds of the Trust as only about $4 million per team, but Rooney said certain teams, unleashed from the Trust, would command well over $50 million each while others would earn a relative pittance, akin to the revenue produced by the New York Yankees vs. the Pirates.
If that happens, the parity that has existed in the NFL for years would vanish. Not only would it put more money in the pockets of some owners, it would allow them to pay out signing bonuses much bigger than seen today. It also could affect the competitive balance on the field and turn profitable teams into losers even under the salary cap.
Rooney said there are several options for the owners before the agreement expires -- pass a new Trust agreement with changes to placate owners such as Jones and Snyder, install an agreement for one year, or do nothing and see what happens.
If they do nothing, Rooney predicted a "free for all."
NFL owners to fight over revenue sharing
By Jerry DiPaola
TRIBUNE-REVIEW
Sunday, March 28, 2004
If you asked Steelers chairman Dan Rooney to list the most precious things in his life, there is no question that his family, his team, his Irish heritage and NFL revenue sharing would top the list.
He has few concerns about two of the first three, but he senses an attack on the league's unique economic system, and he is attending the owners' meetings this week in Palm Beach, Fla., to try to protect it.
One of the most important items on the agenda is serious discussion and a possible vote on the NFL Trust, a master business agreement among the 32 teams in which national advertising revenue is shared equally, and the league acts as licensing agent for team trademarks and logos. Discussions have been ongoing for two years, but a resolution must be reached soon because the 23-year-old trust agreement expires Wednesday.
Rooney and many owners believe revenue sharing is how the league has maintained competitive balance. That, in turn, has led to the NFL's colossal popularity that outdistances other professional sports league.
"I think we have to do what's right," Rooney said. "We have to keep the uniqueness of football."
The dispute that has surfaced involves some richer owners, such as Jerry Jones of the Dallas Cowboys, Daniel Snyder of the Washington Redskins and Al Davis of the Oakland Raiders, who want additional financial autonomy over their local markets.
Jones, for example, wants free of the trust to control Cowboys licensing, stadium sponsorships and local merchandise distribution. Snyder has the most valuable franchise in sports and wants to be even more aggressive in marketing the team logo to ease some of his debt load.
It's unlikely that even the most maverick of the owners want the NFL to mirror the financial chaos that besets Major League Baseball and the NHL, but some industry insiders say change is coming.
"What is being asked is a fundamental question," Marc Ganis, a Chicago-based sports industry consultant who works with the NFL, told The Washington Times. "Are the owners going to still work together as partners or, in effect, become 32 free agents?"
Said Rooney: "We're not sure where it's going to go."
Revenue sharing has survived in the NFL, even though there is a great income disparity among teams from top to bottom. NFL Properties businesses last year generated about $4 million per team, according to league vice president of public relations Greg Aiello. But Rooney said some of the richer teams can net well more than $50 million on their own.
To mediate such wide-ranging parties, Rooney suggested, only half-kiddingly, that the NFL will have to "bring Solomon in."
The players' union also has an important stake in negotiations that will take place this week. Gene Upshaw, executive director of the National Football League Players Association, told The Washington Times that his group will fight change to the trust "tooth and nail."
"I have always liked to use the analogy that all of our players can't go play for the New York Yankees," he said. "Someone has to go to some of the other teams. We are only interested in (receiving) a fair share among all the teams, and if any owner thinks he is going to go off on his own, that could be a real problem."
Compromise might be the only way to solve the problem. For example, owners are now permitted to strike their own deals with other credit card companies, even though the NFL has a national contract with Visa.
In any case, Rooney believes preserving revenue sharing and the NFL Trust is just as important to the league as the salary cap.
"You saw it this year with Washington (in free agency)," he said. "If there is no cap, I don't know what Washington would do."
http://www.pittsburghpostgazette.co...4088/292461.stm
Difference between winning, losing money is NFL Trust
Sunday, March 28, 2004
By Ed Bouchette, Pittsburgh Post-Gazette
For years, the NFL served as the model pro sports league with its extensive revenue sharing, salary cap, labor peace and profitable franchises.
All that could change if a handful of owners can block the renewal of the NFL Trust, which is set to expire Wednesday.
The Trust, in place virtually since the 1960s in one form or another, governs the league's equal distribution of its vast merchandise and marketing profits from the sale of products and licensing. Owners such as Jerry Jones of Dallas and Daniel Snyder of Washington want more individual control so they can market on their own and keep the profits.
In a worst-case scenario, such a non-revenue sharing system would make teams such as the Cowboys and Redskins much more profitable while turning others such as the Packers, Jaguars, Colts and Saints into losing franchises.
The Steelers' Dan Rooney fears that if the NFL Trust is not renewed in some form, the league could take on certain inequities that are seen in Major League Baseball and the NHL, where more teams claim losses than profits and are split between the haves and have-nots.
"It's a big item for us, this Trust," Rooney said. "We're not sure where it's going to go as far as the Trust is concerned."
Rooney called it the most important business the owners will tackle during their annual meeting, which opens today in Palm Beach, Fla. Trouble is, they've been discussing the issue for the past two years and have not reached an agreement with only four days left before it expires.
If that happens, teams theoretically would have free use of their logo and their ability to market it how they see fit. As it is now, each team must get permission from the league when it wants to use its own logo for marketing purposes in its own territory. For example, the Steelers hang a backdrop on their wall during news conferences that features their logo and PNC Bank, one of its main sponsors. The NFL had to approve of it first. Under that agreement, the Steelers keep the proceeds.
Either way, the television and ticket revenue sharing would not be affected.
Teams now have the leeway to market certain products and sell certain rights in their own region. Using the Steelers as an example, the NFL -- under its revenue-sharing Trust -- has a national licensing agreement with Coors beer and Pepsi Cola; the Steelers have regional sponsorships with Rolling Rock beer and Coca-Cola, and do not have to share that revenue.
Snyder, Jones et. al. want to broaden that arrangement so they can stick their logos on anything they want and cut deals nationally on their own without sharing any of the proceeds. They believe they can do a better job of it than the NFL and will reap the benefits.
Without the Trust in existence, the Cowboys -- long-dubbed "America's Team" -- could approve a national line of clothing, beer, candy or video games if they want and keep the proceeds.
Teams in bigger markets and with a large national following would benefit greatly. Rooney, who says his team's revenues would fall somewhere in the middle of the NFL pack, foresees some of the more powerful teams bandying together to cut deals that benefitted only them.
"It creates problems for everybody," Rooney said. "Teams, instead of staying in their territory, they'll start moving out. You'll start getting the teams at the top making their own deals as a group. If you have San Francisco, New York, Washington, Dallas, Chicago -- I'm just covering the country -- you'd have a pretty big situation.
"You'll have all this kind of stuff happening if you don't have this agreement. You really need some agreement."
NFL spokesman Greg Aiello downplayed the proceeds of the Trust as only about $4 million per team, but Rooney said certain teams, unleashed from the Trust, would command well over $50 million each while others would earn a relative pittance, akin to the revenue produced by the New York Yankees vs. the Pirates.
If that happens, the parity that has existed in the NFL for years would vanish. Not only would it put more money in the pockets of some owners, it would allow them to pay out signing bonuses much bigger than seen today. It also could affect the competitive balance on the field and turn profitable teams into losers even under the salary cap.
Rooney said there are several options for the owners before the agreement expires -- pass a new Trust agreement with changes to placate owners such as Jones and Snyder, install an agreement for one year, or do nothing and see what happens.
If they do nothing, Rooney predicted a "free for all."
