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With Equality Comes Dominance
Alexander Schultz April 1st 2008 Professor Messier, History 200
Baseball may be best known as our national pastime; however, football has established itself as our national obsession. While the National Football League (NFL) has steadily grown in both popularity and success throughout its existence, it was catapulted into the forefront of our nation’s top sports leagues after the signing of the 1993 Collective Bargaining Agreement (CBA), which installed for the first time in league history both a free agency system and a salary cap. The end goal of the CBA was to improve all aspects of the NFL; competitive balance, fan interest, league growth, franchise growth, and player’s salaries. The keystone, however, to the CBA was to increase fan interest in the league, which in turn would increase fan investment allowing all the other pieces of the puzzle to fall into place. It was determined by both the owners and the players that fan interest was predicated on an increase of league parity, or competitive balance; after all, how much interest could the NFL garner if the results of a given season could be easily predicted before the season even began? This paper intends to analyze how the 1993 CBA did just that: improve league parity with the hopes that fan interest would be augmented. Parity, which is the keystone to a successful league, has multiple factors. I will argue that the CBA, and specifically the installation of free agency and a “hard” salary cap, has reinforced a high level of intraseason parity (competitive balance in any given season) and dramatically improved interseason parity (parity from season-to-season). The measurement of parity can be seen in many different ways; however, in order to efficiently argue my point I will only look at a few, which include the comparison of the ideal standard deviation of winning percentages versus the actual standard deviation of winning percentages for the periods before and after 1993, the number of new Super Bowl1 winners from year-to-year both prior to 1993 and
The Super Bowl is the NFL’s championship game played at the end of each season.
The benefits of the CBA for individual teams and its players can be looked at by analyzing change in team value. and the average greatest swing in wins and losses for individual teams. and fan attendance. and the change in players’ contracts throughout the league’s history. Furthermore. which would raise the amount of investment by both fans and corporations thus bringing more money into the league and for teams through the NFL’s aggressive revenue sharing policy. The CBA has been an enormous factor in successfully distancing the NFL from the rest of America’s major sports leagues in these aspects as will be evident through a brief. increased revenue through league advertisement and television contracts. The ultimate goal of the owners. change in playoff teams from year-to-year. and the players as well. but effective comparison of the NFL and its two biggest competitors. the teams. the price of expansion teams. and league was to increase total revenue with the above effects of the CBA in mind. the price of a single Super Bowl commercial. 4 . has benefited the fans. Parity was to increase the popularity of the league. as fan interest rises so too does the total revenue of the NFL and its teams. An increase in popularity can be seen in a number of different ways including an increase in television contracts. Its end goal of increasing league revenue. which is then shared equally amongst the teams. television ratings. If parity throughout the league has improved than surely the amount of fan interest will tangibly be affected and ideally improved as well. a competitive league is the foundation to fan interest. players. It is my goal to prove to the reader that the CBA of 1993 has had immense consequences on all aspects of the NFL. As I stated above.after 1993. the National Basketball Association (NBA) and Major League Baseball (MLB).
was usually of much greater 2 In the Supreme Court case. players were not paid their true value of labor. Prior to 1957.” which essentially gave the owners complete power over their players. the NFL had what was called the “reserve clause. however. In the “Rozelle Rule. the players and the National Football League Player’s Association (NFLPA) fought a long and hard battle to establish a free agency system regulated by a salary cap in the NFL.In order to best understand the consequences and the magnitude of the 1993 CBA it is important to take a brief look into the structure of the NFL pre-1993. The Supreme Court ruled in Radovich’s favor. Following the end of the “reserve clause. it was first introduced in baseball over 125 years ago. 5 . stating that the NFL was not the MLB and would not be granted the same antitrust exemption that was granted to baseball following the Sherman Antitrust Act of 1890. Consequently. and was established with the goals of stabilizing player movement and reducing salaries in its respective leagues. claiming that without the “reserve clause” larger market teams would easily outbid smaller market teams for players’ services (Baschnagel 2005). on the contrary.” which was found to be illegal by the Supreme Court in 19572. In players’ contracts a reserve clause gave each owner the exclusive rights to negotiate with that player. from the team that signed the free agent. All-Pro Guard George Radovich challenged the NFL’s “reserve clause” after being blacklisted by NFL teams following his return to the NFL after a brief stint with another league. instead. The concept of a “reserve clause” was not a new one. the “Rozelle Rule” (named after then commissioner Pete Rozelle) was instituted. they were merely paid more than they would have been making outside of the NFL at that time. Free agency was by no means a guaranteed institution in the NFL. effectively keeping salaries low by avoiding bidding wars amongst teams.” teams that lost free agents to another team were compensated by being given one or two players. teams believed that the ability to keep players was crucial to maintaining competitive balance. at the commissioner’s discretion. At the time. The compensation.
was to dissolve the NFLPA. the season had to be cut from 16 regular season games to only 9 and the playoffs. the “modified version” of the “Rozelle Rule” was initially agreed upon in the 1977 CBA and again in the 1982 CBA. only three players ever changed teams (Fort 1997). the courts suggested. such as healthcare and retirement packages. in the “modified version. their attempt at bringing about free agency ultimately failed resulting in a 57 day strike at the start of the 1982 season4. Many players simply returned to their original organizations without their true labor value being recognized. The free agency that exists today has grown from “Plan B Free Agency. was almost equally as restraining for the players as the original. The only solution. The players and the NFLPA once again turned to the courts in an attempt to change the status quo. however. The “modified version. The NFLPA agreed. claiming that the “modified version” was a violation of antitrust laws. In 1988. Throughout the “modified version’s” 12 year reign an average of 125 players a year filed for free agency. 1982. 4 The strike began on September 21. thus becoming a deterrent for teams to sign free agents (Fort 1997). frustration by players and the NFLPA began to boil over as they demanded a change to the system in place.” however. the NFLPA did just that and disbanded in an attempt to have their previous suits succeed. the players negotiated for greater player benefits. 1982 and ended on November 16. During this time no football was played in the NFL. In return. failed as the courts ruled that because the “modified version” had been negotiated and agree upon in the 1977 CBA.” 3 Among other things.” that a set formula would replace the commissioner’s discretion when dealing with the compensation of lost free agents. The “Rozelle Rule” once again was transformed into the modified version of the “Rozelle Rule” beginning in 1977 and lasting until 19883. the league’s antitrust laws did not apply. This too. 6 . however. however. When the players returned to the field. In 1982.value than the free agent himself.
Today. teams must choose their pieces wisely. Free agency today has drastically changed how teams conduct business. making the NFL the last major sports league with free agency. In the end. which would thus bring the league more revenue that brought the two sides together. gave the players the legal precedence they had been both longing and needing. The CBA was intended to create more competitive balance throughout the league and ultimately improve the financial strength of both the organizations and the players. “Plan B” gave teams limited rights to no more than 37 player per season. After a long road the 1993 CBA marked the culmination of the years of effort to wrestle player control away from the owners and to create a more balanced relationship between the employees and their employers. The NFL experienced only one year of unregulated free agency in 1993. On May 6th. it was the agreement between the players and the owners that parity was strongly correlated with fan interest. 1993. as a player on the team one year could very likely be gone the next. 7 .which was put into place in February 1989. leaving everyone else unprotected. Organizations once built teams for the “long haul” with the knowledge that players would remain on their rosters for years to come. the favorable decision of McNeil v. In 1992. The rest of the paper intends to look at how parity has changed since the 1993 CBA and how the players and owners were correct in their analysis of the effects of parity on fan interest and ultimately league revenue. ProFootball Inc. 5 6 The 1993 CBA was renewed for 6 years in 1998 and again in 2006 through the 2011 season. the NFLPA and the owners negotiated a salary cap to control free agency. officially ushering in the modern era of the NFL5. however. The salary cap was a vital part to “Plan A Free Agency” (the name given to the free agency system agreed upon in 1993) as without it competitive balance would decrease as richer teams could spend more on players6.
Many factors affect the competitive balance throughout the NFL. the NBA and MLB. Without competitive balance. they are useful in comparing the NFL with the NBA and 8 . What fun is it to root for a team that has no chance of beating the top teams in the league? Why would a fan pour out his heart and soul (and money) into a team that has no shot of making it to the Super Bowl let alone the playoffs even before the season began? Fans enjoy knowing that on any given Sunday their team can pull off the upset against a better team or that despite their team’s losing record in the season before. last place or first place. The second. a change in league champion. and the fact that every team has an equal chance of making the playoffs. However. a new season represents a fresh start and the very real possibility of watching a playoff bound club. for example. the ability for last place teams to improve from season-to-season or vice versa. First. Furthermore. reverse-order draft. is the idea that there is equality from season-to-season.League parity is the key to the NFL’s ultimate goal of increasing fan interest and thus increasing total revenue. including its extensive revenue sharing. The idea that any team. intra-season parity. free agency and the salary cap. have had the largest impact on improving NFL parity. fans would lose interest in a seemingly predictable game. inter-season parity. Parity in the NFL can be looked at from two different angles. Both aspects of parity are important to look at in order to analyze how they were affected following the installation of free agency and the salary cap. the league argued. perhaps. and compensatory scheduling. is a measurement of how competitively balanced teams are in a single season. Since the 1993 CBA. the NFL has been unmatched in team equality by both their history and by their main competitors. can beat any other team on any given day is an example of intra-season parity.
The NFL’s aggressive revenue sharing. Revenue sharing in the NFL has done an outstanding job of bringing more stability to the smaller market teams. National television contracts. and the like. which have not. injuries. as without it it would be difficult for them to compete with large market teams that potentially have more fans and marketing opportunities. which leagues have excelled at creating a competitively balanced league and. NFL teams also split their total gate revenues as the home team receives 60% of the gate and the visiting team receives 40%. national licensing. which will be written about in more depth later in the paper.5 divided by the square root of the 9 . effectively compares the ideal standard deviation of a team’s winning percentage with the actual standard deviation for both the periods before and after the installation of free agency in the NFL. radio contracts. or . The ideal standard deviation for an NFL team’s winning percentage would be . plays a large factor in evening the playing field for large market and small market teams. which is much better compared to the other major leagues. Tangibly analyzing intra-season parity is a difficult thing to do as many factors can affect a single game’s outcome. weather. including national television contracts. In a perfect world a team would have a 50-50 chance of winning every single game. ejections. bring in over half of each team’s total revenue per year (Baschnagel 2005).125. and various internet fees are evenly distributed amongst its teams.” however. The total revenue the league brings in every year. penalties. which splits their gate about 90%-10% in the National League and about 80%20% in the American League.MLB from the standpoint of. Charles Baschnagel in his 2005 paper “An Analysis of the 1993 NFL Salary Cap on Competitive Balance and League Revenue. This is quite even compared to MLB.
9 The ratio of actual versus ideal standard deviation for winning percentages in 1993 was 1.5/√82. the NFL boasted a high level on intra-season parity.5/√16 The new scheduling was instilled to increase competitive balance as better teams were faced with a harder schedule and worse teams were given relatively easier schedules.054.4872 with a variance of .757 with a variance of . Even before the 1993 CBA.511 with a variance of .0206 (Baschnagel 2005). from 1985-1997 the average ratio was 2. The two periods of comparison are 1977-1992 and 1994-2004. The 1993 season’s data was not taken into account in this analysis as it was the only year the NFL went through an unregulated period of free agency.number of games played.05510.054 7 8 The equation of ideal standard deviation of an NFL team’s winning percentage is . and finally from 1998-2004 the average ratio was 2. slightly better was the period of 1994-2004 with an average ratio of 1. 10 .946 with a variance of .0213.5006 with a variance of . Although intra-season parity in the NFL with free agency proved to be similar to that of the pre-free agency period. 10 The equation for this is . which was only minimally improved following free agency and the salary cap.284. From 1971-1984 the average ratio of actual versus ideal standard deviation for NBA winning percentages was 2. From 1977-1992 the average ratio of actual versus ideal standard deviation was 1. The year 1977 was chosen because that was the year that the NFL first instituted a new scheduling formula based on how teams did in the previous year8.329. thus allowing teams to spend as much money as they wanted on free agents9. The results of the comparison show that free agency and the salary cap had little impact on the already high level of intra-season parity as the two standard deviations were virtually identical. A comparison of the ideal standard deviation with the actual standard deviation for the periods before and after free agency clearly displays how the 1993 CBA has affected intra-season parity. 167. The ideal standard deviation for winning percentage in the NBA is . it compared very favorably to the NBA and MLB.
like intra-season parity.772 and a variance of .268(??). From 1902-1972 (the year before baseball instituted free agency) the average ratio of actual versus ideal standard deviation for winning percentage was 3. is a vital factor in influencing fan interest. In a model season the standard deviation for MLB winning percentages would be . Following baseball’s installation of free agency in 1973. These results show that the soft salary cap in the NBA in fact decreased the level on intra-season parity. the common phrase that “there is always next year. a high level of inter-season parity keeps fans saying. more importantly. 1985-1997 represents the installation of a soft salary cap in the NBA (a salary cap that allowed teams to exceed the salary cap to match the offer of another team for a “reserved” player). Any given season may end poorly for a team.03912. MLB also lags behind the NFL in terms of intra-season parity. Furthermore. inter-season parity has drastically increased since 1993. 11 . inter-season parity. however. was still not enough to pass the NFL in competitive equality. which would be redistributed to those teams that remained under the salary cap) as well as kept the soft salary cap in place. however. turnover of playoff teams. 11 The period 1971-1984 represents the period in the NBA directly following its merger with the American Basketball Association (ABA). Inter-season parity is equally as important as intra-season parity when analyzing how the NFL’s competitive balance was affected by the CBA. This improvement. 12 The equation for this is .156 with a variance of . and believing. Parity from season-to-season can be illustrated in the turnover of Super Bowl champions.(Baschnagel 2005)11.” While intra-season parity has been maintained at a high level since 1993. and from 1998-2004 the NBA instituted a luxury tax (a tax on teams that exceeded the salary cap.137. it also shows that compared to the NBA the NFL boasts a more competitively balanced league. however. and average greatest swings in both wins and losses. intra-season parity drastically improved with an average ratio of 1.5/√162.
It is widely acknowledge that free agency marked the end of dynasties. The turnover of champion from season-to-season is an important aspect of inter-season parity. This statistic is very telling of the turnover rate following the CBA in 1993. who won the Super Bowl in 2001. 26 years. For fans a successful season might not face such a steep barometer. In the period of 1967-1992. and the Dallas Cowboys of the early 1990’s. however this is outside the scope of this paper.and post-salary cap eras clearly shows the increase of Super Bowl winner turnover after 1993. an argument can be made that the New England Patriots. according to the fan theory. there were 12 different Super Bowl Champions. Green Bay won 35-10. with the different winners in bold. a championship. witnessed 11 different Super Bowl Champions. they say. are a “modern day” dynasty. Tables 1 and 213 show the Super Bowl winners from 1967199214 and 1994-2008.Fans can often hear players talk about a season not being successful unless it ends with a Super Bowl championship. the San Francisco 49ers of the 1980’s. in the end a Super Bowl victory is what fans hope and cheer for every season. ten different American League Conference (AFC) champions. 12 . attracts more fan interest. The pre-salary cap era is known for producing memorable football dynasties. which. and ten different National League Conference (NFC) champions15. 15 The Super Bowl is played by the AFC champions and the NFC champions. Following the 1993 CBA. however. the period of 1994-2008. Super Bowl I was first played in 1967 pitting the Green Bay Packers against the Kansas City Chiefs. the Pittsburgh Steelers of the 1970’s. A higher turnover represents more uncertainty in the league. only 15 years. 2003. Comparing the pre. is the only true measure of success. however. and 11 NFC champions. While the overall number of different champions from 1994-2008 is actually one less than 13 14 Tables 1 and 2 can be found on pages 25 and 26. nine different AFC champions. The data clearly shows that since 1993 the turnover rate for Super Bowl champions is higher than for before 1993. and 2004.
While the ultimate goal of a team and its fans is a Super Bowl victory. If a team. the first nine seasons of free agency. While this increase makes it more difficult for any one team to win the Super Bowl it also gives more teams a chance to win the Super Bowl and to get into the playoffs. 13 . from 1977-1992. Clearly. the turnover percentage increased as the average percentage of teams in the playoffs that were not there the season before was . the average percentage of teams that made the playoffs one season. The second measurement of inter-season parity is the turnover of teams that make the playoffs from one season to the next. In the seasons following the 1993 CBA. Before free agency. It is also important to note that the Cleveland Browns. A higher turnover of playoff teams leads to higher fan interest as the league becomes more unpredictable. furthermore.397 with a variance of . making the playoffs for the first time in the free agency era in 2002.that of the pre-free agency period the sample size for the two periods is drastically different.0098 (Baschnagel 2005)16. the NFL has seen an increase in Super Bowl champions compared to the pre-free agency period. success of a season can also be judged by whether the team made the playoffs or not. however.439 with a variance of . 1994-2002. the playoff implications of any given game positively affects its attendance (Leeds 2002). the NFL restructured its playoff system to allow 12 teams in up from the previous 10. became an expansion team in 1999. A high swing in wins or losses from season-toseason represents greater league volatility. since the 1993 CBA. who moved to Baltimore in 1996 becoming the Ravens. the predictability of the league will decrease and thus 16 In 1990.0094 (Baschnagel 2005). who according to Sports Illustrated is the worst team in the NFL since free agency with an average of five wins per season. The final measurement of inter-season parity I looked at was the average greatest swing in both wins and losses in a season. saw all but the Cincinnati Bengals and the Cleveland Browns make the playoffs17. after not being in the playoffs the previous season. 17 The Bengals. for example. was . made the playoffs for the first time in the free agency period in 2005. can go from two wins in one season to ten wins the next. In addition.
-5. 1983.9 losses per season in the AFC. In the 10 seasons from 1979-1992 (excluding 1982. In that same period the average greatest seasonal swing in losses in the NFL was -5.05 per season (+6. which was the only unregulated free agency period in NFL history.91 losses per season in both the AFC and the NFC). The turnover of both Super Bowl champions and playoff teams increased after the installation of free agency and the salary cap.5 losses per season in the NFC). The league’s unpredictability increased following the CBA in terms of the average greatest swing in both wins and losses. and 1988)18 the average greatest seasonal jumps in wins in the NFL was +5. The average greatest swing in losses also increased from 1995-2005 in the NFL as it was -5. Using pre-1993 and post-1993 as two comparative periods in the NFL’s history one can see how the volatility of the league has changed since 1993.increase fan interest. While the jump in average wins and losses is not huge (just under a one game increase for both) the results are noteworthy. 19 1994 has been excluded because its win/loss swing is predicated on the 1993 season. +5.8 wins per season in the AFC. While other factors may offer insights for the jump. 1987. which affected the seasons’ outcome. The CBA did a good job maintaining an already high level of intra-season parity and did an outstanding job increasing inter-season parity. was augmented as is seen by the increased turnover and swing in greatest average wins and losses from seasonto-season. a principal factor in the fan theory.09 wins per season in the AFC.7 wins per season in the NFC). From 1995-2005 (excluding 1994)19 the average greatest seasonal jumps in wins in the NFL was +6. 14 . unpredictability. an increase in league volatility clearly coincided with the signing of the 1993 CBA. Furthermore. It was the owners and players agreement that this increase in parity would bring 18 The NFL experienced two work stoppages in both 1982 and 1987. Since the data is predicated on the previous year’s results both 1983 and 1988 had to also be excluded.91 losses per season (-5.25 per season (+4. +6 wins per season in the NFC).2 per season (-4.
The current television contract for the NFL both immensely increase league revenue and display an increase in fan interest. inking record contracts with the NFL in 1997 that brings in an average of $2. and can be found on numerous channels being analyzed and talked about seven days a week. which translates into over $73 million per team (Schaaf 2004) (Zimbalist 2006). which would raise league total revenue that ultimately led to the 1993 CBA. the price for a single Super Bowl commercial. is now watched up to four days a week. Over half of Americans claim to follow football and the television networks know this.2 billion per year for the league (that’s more than double the four year contract the NFL signed in 1993). Before 1993. 1993. television contracts are the NFL’s main revenue source and it seems that networks will continue to invest more and more into the proven product that is football. The NFL certainly has come a long way from its first broadcasted game in 1951 by the DuMont Network. ratings are available for the popular Monday Night Football21 (MNF) program. and 1997) infer that television networks find their investments to be worth it. The enormous television contracts that the NFL continues to negotiate (1990. While Nielsen Ratings20 are not released to the public. I will be looking at the league’s media contracts. Fan interest can be measured in many tangible ways. and the available attendance records for the league. The popularity and rankings for MNF steadily rose leading up to 1993 from its 1970 inception. 21 Monday Night Football kicked off in 1970 as an experimental program of ABC and has become an important face of the league. 15 . which was once only played on Sundays and broadcasted on two networks. Today. MNF boasted an 20 The Nielsen Ratings were developed by Nielsen Media Research to analyze the audience size and composition for certain television programs. a cable station. Television has been proven to be the best medium to bring football to the masses and the masses clearly have been watching. however. broadcasted on three major networks.about higher fan interest. Football.
the price for the same 30 second commercial grew over 2400% ($2. perhaps nothing is more significant 22 Table 3 can be found on page 27. so too has the price for a 30 second Super Bowl commercial spot. Although MNF has become a constant in the NFL. companies believe that even a short commercial is worth such a large price tag as it will be viewed by over 88 million people and will ideally be talked about by even more. while viewership since 1972 only grew 55% (88. however. Table 322 shows how the value of a 30 second commercial spot has increased from 1996-2001. and sometimes for the commercials. sometimes for the Super Bowl parties and the food. sometimes for the game itself. The rise in value of a single Super Bowl commercial represents an increase in NFL viewership. the largest single game is by far is the Super Bowl.2 million) (Schaaf 2004).000 that would reach 57 million people (Schaaf 2004). and the cost of a Super Bowl commercial are all telling factors in the increase of fan interest. Clearly. catchiest commercial that will have everybody talking about it the next morning. As the popularity of the NFL has grown. In 2001. After all. if the Super Bowl ratings were poor it would not be worth it for a company to invest over two million dollars into a 30 second advertisement. Year after year people gather together to watch the game. whether it is solely for the game itself or merely for the commercials. MNF ratings. It can be argued that the CBA maintained MNF’s popularity.5 million people). the popularity and ratings following the CBA remained at a high level (Baschnagel 2005). 16 . Television contracts. furthermore. Companies spend millions of dollars trying to create the funniest. especially because the increased league parity made it more difficult for the league and network to predict quality match-ups. In 1972.average rating of 16. more people are watching the Super Bowl and companies are keying into this. a company could purchase a 30 second spot for $86.
did nothing to slow this growth as the NFL broke yet again its own attendance record for the fifth straight year in a row in 2006 with an average of 67. Many factors increase any given game’s attendance: rivalries. throughout the NFL’s history its attendance records have consistently risen. or the expectation of a close game (Welki 1999). Even before the 1993 CBA the NFL was continuously breaking its own attendance records as fan attendance kept on rising.787 fans per game.520 fans per game. While television might be the medium through which most NFL fans follow their teams. playoff significance. The CBA.than attendance records. which has been equally redistributed to the teams and its players. Five years later in 1980. Fenn. & Crooker 2004). 17 . however. in 1991 the NFL set an attendance record for the third straight year with an average of 61. the NFL boasted an average of 54. Again. it should be noted that NFL stadiums have continued to grow in capacity. Clearly. The rise in fan interest has consequently raised media and fan investment in the NFL. which has undoubtedly helped increase overall attendance records throughout the years. In 1975. The CBA has maintained the NFL’s continuously rising attendance records. the NFL set an attendance record for the third year in row with an average of 59.738 fans per game. higher winning percentage for either the home or visiting team. attendance records are still a significant factor in both analyzing how fan interest and team revenue have changed. which has helped lead to more fan interest. The CBA has successfully raised league parity. however.792 fans per year (NY Times 1992). however. Figure 1 shows the average NFL attendance from 1932-200223. Ticket revenue represents one-third of teams’ total revenue (Spenner. 23 Figure 1 can be found on page 28. the CBA was negotiated to ultimately benefit both the league’s total revenue and the players.
The NBA and the MLB have not experienced the same financial growth as the NFL. the NFL was quickly growing. expansion values. 26 Figure 3 can be found on page 29. $90 million was the total revenue from all sources for an average NBA team (Zimbalist 2006). however. Revenue growth in the NFL really took off after the television contracts were signed in 1997. While 1994 may be looked at as slow growth compared to the years following it. however. the MLB from 1994-1995. it should be noted that both leagues have experienced work stoppages since 1993 (the NBA from 1998-1999. In 2005. one possible explanation is the fact that free agency and the salary cap were unproven to the NFL buyers. team profits. passing the NBA and MLB was inevitable. Although the NBA was the fastest growing 24 25 Figure 2 can be found on page 29. During their respective strikes.By looking at league growth. however. which lasted 232 days). the NFL has been financially outperforming both the NBA and MLB25. however. it was after the 1993 season that the NFL’s revenue growth really took off. 18 . Even before 1997. the league surpassed the NBA as the fastest growing league in America. both leagues lost millions in revenue. whereas. Figure 326 uses 1993 as a base year to compare the NFL’s revenue growth compared to the NBA’s and MLB’s. this should not take away from the impressive growth the NFL has shown since 1993. The NFL. and comparisons to the NBA and MLB one can see how since 1993 the NFL has been unmatched in its financial escalation. however. NFL teams received $90 million from all national media revenue. This jump reflects an increase in fan interest after free agency had established the NFL as a proven product. which lasted 191 days. Since 1993. both fans and network executives saw the NFL as worth investing in. Following the NFL’s signing of television contracts in 1997. individual team growth. was not put on pace to be the fastest growing league in America until after inter-season parity improved. Figure 224 shows the NFL revenue growth since 1990 (Bashnagel 2005). The NFL revenue growth had been steadily rising before the CBA. for example.
Nineteen years later.) All of the leagues’ revenues are up since 1990 (the NFL and MLB brought in about $1.932 billion and the MLB’s $3.league from 1993-1996. A team’s value before 1993 was substantially lower than its free agency era counterpart. The price of an expansion team was still on the rise. the average value for an NFL franchise was $733 million. however. the Arizona Cardinals ($-4. In 2005. the owner of the Dallas Cowboys.6 million with a high of $69. A faster growing league means more money for the teams and thus greater team value. the NFL surpassed it and never looked back. 19 . however. the average profits for an NFL team were $27. Expansion team price tags are a telling statistic in seeing just how much the worth of owning an NFL team has risen over the years. In 1976. today the Cowboys are estimated to be worth about an unprecedented $1. In 2003. it cost only $16 million to buy the Seattle Seahawks and the Tampa Bay Buccaneers. Jerry Jones.6 million (the Washington Redskins) (Zimbalist 2004). In 2004. It is easy to understand why someone with the means might see the NFL as a worthwhile business venture.837 billion (Baschnagel 2005. Figure 427 shows the average increase of NFL franchise value from 1991-2004. the price tag for the Carolina Panthers and the Jacksonville Jaguars jumped to $140 million a piece. as it cost $530 million for the Cleveland Browns in 1998. made a profit in 2003. the NBA about $840 million).3 billion. and a whopping $700 million in 2002 for the Houston Texans (Weismann).5 billion. bought the team in1989 for $199 million.9 million).3 billion in total revenue compared to the NBA’s $2. the NFL has firmly established itself as the leading league since (Baschnagel 2005). Michael Ozanian of Forbes Magazine estimated that all but one of the NFL’s 32 teams. in 1995. just under a 470% increase from the 1993 average value 27 Figure 4 can be found on page 30. the NFL brought in over $5.
As the prices for the NFL’s services have risen.” which has only led to more growth of the league. the two pertinent shifts in team value coincide with the 1994 and 1997 television contracts. however. Players’ contracts are now higher then ever. which has never been as clear as it is today. The NFL and its teams have been financially rising for much of its history. benefited the players more than any other aspect of football. and consequently. it is easy to understand just how beneficial the CBA has been for today’s NFL players. advertisement revenues are up. demand for the NFL. Free agency has allowed each player to find his true market value as players can shop their skills around from team to team. the rise in guaranteed money. Today they play in a league where they can auction off their skills to the highest bidder. as 20 . Television networks are inking record contracts. The 1993 CBA has. While free agency itself may not have directly put more money in the league’s pockets it has had a hand in making the league more entertaining for fans to watch and follow. The league growth has also directly benefited players as they are getting a larger piece of a faster growing league than their 1993 counterparts. Players once played in a league where the owners only needed to pay them just more than what they would have made outside the NFL. perhaps. By looking at the increase in the average player’s salary. never as much as since the 1993 CBA. investors have been more than happy to try and buy a piece of “NFL pie.of $129 million (Baschnagel 2005). and player movement. and fans are attending games more and more every year. Like the change in league growth. The increased entertainment has led to an increase in quality.
to $109 million in 200729. coaches’. concessions.5 million in 2005. the average number of players making at least $1 million was only 40. While many teams spend the maximum amount of money possible to sign free agents. While the continual rise in average players’ contracts is beneficial for the players. The installation of free agency has made a player’s skill and performance a much bigger factor in his salary compared to before free agency when players received more money based more on their position (Leeds & Kowalewski 2001). meaning a player can be cut from a team at any time and his salary would disappear.usatoday. The average jumped yet again in the period from 2002-2006 to 634 players making at least $1 million per season30. 30 http://www. from 1990-2007 the average player salaries have had an increase of 394%. From 1987-1992. assistants’. Table 431 shows the increase of average player salaries beginning with 1980 and ending in 2007. and trainers’ salaries do not fall under salary cap restrictions. are very risky for owners because they must still pay the player for the contract length regardless of 28 Defined gross revenue (DGR) includes stadium signage. the CBA instilled a minimum percentage of total revenue (59% of a team’s DGR) that teams must spend as well. Guaranteed contracts. greater sources of revenue. 21 .com/sports/football/nfl/2007-10-06-sw-labor-anniversary_N. and fan and corporate investment. The 1993 CBA did not guarantee player contracts. to $85. 29 Although the salary cap ensures financial parity amongst all the teams. parking. which can potentially give them a competitive on edge on the field. Player salaries were on the rise even before 1993.2 million in 1994. From 1993-1998 that number jumped to 341. The increase in average player salaries over the years can be attributed to the increase in legal mobility (free agency).htm 31 Table 4 can be found on page 27. even more so. and increased revenue from media coverage. club seats. is the dramatic increase in guaranteed money players now earn. and naming rights. like in the NBA.the salary cap (64% of the team’s defined gross revenue28) was raised from $62. rise in sports agents. luxury box seats. Teams can invest more money here. however.
it has also had benefits that go beyond money. or 92%. players were all but stuck on one team for most of their careers whether they liked it or not. Since the early 1980’s. where he went on to have a record breaking season causing no trouble as the Patriots went undefeated and the Raiders rid 22 .934 after 1992 (INSERT CITATION).728 before 1992 and $679. Of a player’s guaranteed money. Randy Moss. it has given them more freedom. As free agency has given players the ability to move from team to team. teams can get rid of players that turn out to not fit their style of play or disrupt team chemistry. signing bonuses make up almost half. is a good example of how player mobility can help all the parties involved.2 billion. the number has more than doubled and significantly increased in value since the CBA. Before 1993.2 billion. up from an average of $125. over $8.factors such as a career ending injury. The average value of player bonuses has risen over 440%. While guaranteed contracts benefit the owners. players can find teams that provide the best fit for themselves and for their families as well. On the other side of the same coin. furthermore. Moss. diminishing talent. when the NFLPA first began to receive player contract information. teams offer guaranteed money in order to lure better free agents. a once-in-a-generation talent. since 1993 (INSERT CITATION). Today. or detrimental club house attitudes. Moss was traded to the Patriots from the Raiders in 2007. the players negotiate over half of their contracts with guaranteed money in order to secure their financial stability. While free agency has certainly provided the players with substantially more financial benefits. was disrupting the last place Oakland Raiders with both his explicit discontent with the team and with his large contract. While bonuses existed before 1993. the now New England Patriot’s wide receiver. the total value of all signing bonuses is $9.
player’s gain more assurance with increased signing bonuses that they will remain on the team for longer.” is a vicious business that sees young players coming in and out of the league every season. The league has been enormously successful in creating a product that fans want to invest in. since 1993 there have been almost 470 bonuses worth $2 million and up (INSERT CITATION). A $2 million signing bonus gives players a higher probability that they will remain on the team for longer (95% of players who received a $2 million or more bonus stayed on their team for one or more seasons) (INSERT CITATION). The 1993 CBA was passed with the fans. which helped overall competitive balance. The NFL. league. Prior to 1993 only 40 signing bonuses were worth more than $2 million. While in this instance Moss was traded and not acquired in free agency. whereas. Fan interest led to increased total revenue. returning to the issue of guaranteed money. which in turn added to fan interest. The entertainment value of the NFL has been dramatically improved following the installation of free agency and the salary cap. league. 23 . which was redistributed to the teams and players. this example displays how the freedom players acquired in 1993 can benefit both players and teams both financially and personally. sometimes called the “Not For Long League. The overall goal was to improve these three main aspects of football in America and bring the NFL to the top of major American sports leagues. and the players all contributed to a cycle of success. and players in mind.themselves of a player who was tearing apart their team and taking up millions of dollars of salary cap. Lastly. with much of the credit due to the NFL’s successful economic model. The CBA was predicated on the fact that the fans.
even regressing as fans decreased. perhaps. the NFL continued to grow. remains how long can the NFL stay ahead of other major professional sports leagues? Financially it looks as though the NFL will be able to stay ahead of the NBA and MLB for sometime to come. As the two leagues remained stagnant. The owners and players have embraced a league first mentality that has paid off enormously for not only themselves. this is no guarantee for the future. however. Michael Vick’s dog fighting arrest). Despite the NFL’s so-called “image” problem following some notable players’ highly publicized legal problems (for example. Despite being our national pastime. baseball will most likely remain behind football for many more years as the steroids issue has become a black cloud over the game. The current CBA expires after the 2011 season and a lockout looms in the air. the young charismatic stars like LeBron James and Greg Oden can take the place of Michael Jordan and carry the NBA to the next level. is too steep. but for their fans as well. the league seems to still be the most popular professional sports league in America. The NFL has been lucky to enjoy such a long period of labor peace. Tensions between the owners and the players have been on the rise as owners believe that the current salary cap. it also benefited from the work stoppages of both the NBA and MLB. however. The league faces the potential of a lockout that could jeopardize the 24 .The unmatched revenue sharing and protracted labor peace coupled with effective marketing has truly increased football’s popularity in America. while it is still a popular sport does not seem to have enough to overtake the NFL anytime soon. The question. Finally. Although the NFL can credit its economic structure and the CBA for its rise to the top. basketball. which is expected to rise to $129 million in 2009.
If the NFL can maintain its labor peace there is no telling how much more the NFL can grow. and players’ sake I hope it is the former or all the NFL’s hard work will have been for naught. teams can get that key free agent to put them over the top. as is evident following the NBA and the MLB strikes. There have been talks about a team outside of the United States and the goal to increase the number of international players in the league. A recent NFL regular season game was played in London at famed Wimbley Field during the 2007 season with mixed results. very likely. which led to the 1993 CBA. league. For any NFL fan. which seems. The National Hockey League (NHL). Perennial losers now have a shot at winning it all. the CBA marked a positive turn for the league. who experienced a lockout that killed the 2005-2006 season. For the fans. it was an example of the NFL’s attempt to keep on growing and broadening its horizons. 25 . Labor unrest is detrimental to both financial growth and the sports popularity.2011 season if the owners decide not to renew the current CBA. and we are able to enjoy more exciting competitive games every season. which direction the NFL will take: unprecedented growth or a step backwards. at the moment. much like baseball. It will only take a couple seasons to see. however. is still struggling to regain the popularity it had before the lockout. If a lockout occurs the NFL and its players could face a similar battle as the one they fought in 1987. The CBA did exactly what it intended to do and then some.
com/superbowl/history 26 .Tables & Figures Table 132 Super Bowl Winners: 1994-2008 Year 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 Super Bowl Winner New York Giants Indianapolis Pittsburgh New England New England Tampa Bay New England Baltimore St. Louis Denver Denver Green Bay Dallas San Francisco Dallas 32 http://www.nfl.
but eventually returned to Oakland in 1994. The team moved from Oakland to LA in 1982. 27 .com/superbowl/history The LA Raiders are the same team as the Oakland Raiders.nfl.Table 233 Super Bowl Winners: 1967-1992 Year 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 Super Bowl Winner Washington New York Giants San Francisco San Francisco Washington New York Giants Chicago San Francisco Los Angeles Raiders34 Washington San Francisco Oakland Raiders Pittsburgh Pittsburgh Dallas Oakland Raiders Pittsburgh Pittsburgh Miami Miami Dallas Baltimore Kansas City New York Jets Green Bay Green Bay 33 34 http://www.
000 $1. http://www.000 $1.com/sports/football/nfl/2007-10-06-sw-labor-anniversary_N.100.000 $1.260.000 $354.000 $569.000 $2.000 $501.000 Median Salary $50.000 $525.000 $160.200.000 $1.200.000 $1.000 $772.000 $1.400.000 $301.000 $986.000 $217.000 $1.000 $787.Table 335 Super Bowl XXX XXXI XXXII XXXIII XXXIV XXXV Year 1996 1997 1998 1999 2000 2001 Network NBC Fox NBC Fox ABC CBS Cost of a 30s Commercial $1. page 140.000 $1.000 $275.085.htm 28 .usatoday.600.180.000 $441.000 35 36 Schaaf 2004.000 $584.000 $2.291.000 $537.750.000 Table 436 Year 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 Average Player Salary $79.330.000 $534.000 $722.700.100 $1.
Fenn.Figure 137 37 Spenner. pg 1. Crooker 2004. Their information was gathered from “NFL Record and Fact Book” 29 .
page 81. page 82. the breaks in the graph represent the NBA and MLB’s respective strikes. Baschnagel 2005.Figure 238 Figure 2 Figure 3 Figure 339 38 39 Baschnagel 2005. 30 .
page 82.Figure 440 40 Baschnagel 2005. 31 .
62% 129.67% 86.05% n/a 200% 24.89% 87.78% 113.71% 126.74% 145.54% 123.93% 95.62% 118.89% 88.96% 93.44% 75.Louis Rams Kansas City Chiefs New Orleans Saints Oakland Raiders New York Giants Jacksonville Jaguars San Francisco 49ers New York Jets Buffalo Bills Cincinnati Bengals San Diego Chargers Indianapolis Colts Minnesota Vikings Atlanta Falcons Arizona Cardinals 1998 Value $403million $413million n/a $252million $557million (2000) $320million $346million $329million $365million $340million $312million $237million $322million $112million $324million $244million $300million $322million $123million $243million $235million $288million $294million $254million $259million $252million $311million $248million $227million $233million $233million $231million 2003 Value $952million $851million $791million $756million $695million $683million $671million $649million $642million $638million $635million $621million $620million $617million $610million $609million $608million $602million $601million $585million $576million $573million $569million $568million $567million $564million $562million $561million $547million $542million $534million $505million % Increase 137.forbes.53% 162.18% 118.01% 92.11% 98.44% 93.96% 388.92% 123.shtml?index=1 Bold in all three columns denotes the highest value.62% 140.59% 102.21% 140.23% 106.65% 103. 32 .Table of Individual Franchise Growth from 1998-200441 Team Washington Redskins Dallas Cowboys Houston Texans New England Patriots Cleveland Browns Denver Broncos Tampa Bay Buccaneers Baltimore Ravens Carolina Panthers Miami Dolphins Detroit Lions Chicago Bears Tennessee Titans Philadelphia Eagles Seattle Seahawks Green Bay Packers Pittsburgh Steelers St.55% 450.81% 80.61% **42 41 42 http://www.97% 132.com/static_html/football/2003/valuationsFLA.27% 149.
2002. David Neft. Judy. Lester.com/history>. Attendance At Record Level.com/gst/fullpage. Vanderbilt Library. 1999. ""Winner Take All in the NFL: the Effect of the Salary Cap & Free Agency on the Compensation of Skill Position Players"" Journal of Sports Economics (2001).go. and John Thorn.com/static_html/football/2003/valuationsFLA."" New York Times 20 Mar.sportsline. 6) Horrow. "Buying Some D in D. "Total Football II: the Official Encyclopedia of the NFL" Harper Collins. 13) NFL Players Association. "an Analysis of the Effects of the 1993 Salary Cap on Competitive Balance and League Revenue: Has Anticompetitive Behavior Led to Better Competition?" Williams College. 2) Battista. 1998."" Sports Illustrated 26 Aug. 1992. <http://www. 10) Munson." NFL.F..php?id=36>. 3) Carroll." Sports Illustrated 9 Mar. Peter. 12) "NFL History. 8) King. Part I.espn.espn. Team Have Learned That It's a Hit-or-Miss Affair--and That You Don't Have to Spend Big to Win. 5) "Forbes Team Valuations: 1998-2003" Forbes.org>. Nashville Public Library." ESPN.html? res=9E0CE5DC1131F931A25750C0A964958260>. <www.nfl. <http://query.L.Bibliography 1) Baschnagel.forbes.com/general/story/7003559> 7) King. ""Shop Right: in the First Decade of NFL Free Agency.C. 4) ESPN. ProQuest. 11) "N.com>. Peter.nytimes. <http://library. and Sandra Kowalewski. National Football League.williams. Bob. Charles N. Michael A. <http://www. Rick. <www.” <http://cbs.Com." New York Times 12 Mar. ""Free-Agent Salaries are Soaring in the N. <http://sports. 9) Leeds. "Storm Clouds Gather and Lockout Looms Large in NFL Labor Strife. 2007. 33 . 2008. 2005. Late ed.shtml?index=1>.F. “The NFL Juggernaut at Post Season. Michael Gershman.nflpa.L.com/nfl/columns/story? id=3288568&lpos=spotlight&lid=tab3pos3>. eds. Nashville Public Library. 12 Mar.edu/theses/pdf.
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