Posted by John Vrooman on Thursday, September 8, 2016 in National Football League.

Interview with CBS.

How important has revenue-sharing been to the league’s success?   Was the NFL the first of the pro sports leagues to share revenue amongst its teams?

The seismic shift in the economics of the nfl was the sports broadcasting act of 1961 where congress exempted the NFL, rival AFL and other major pro sports from the cartelization of TV rights negotiations.

The survivalist concept of “league think” in the  collective negotiation of TV rights precipitated explosion in equally shared TV revenue and the coevolution of the nfl and network television.

The key players were Wellington Mara and Pete Rozelle in the NFL  and indirectly Lamar Hunt of the AFL. By 1967 the NFL had agreed to merge with the AFL and surpassed MLB as America’s favorite pastime. The NFL has virtually  become the perfect portfolio with shared revenues fully diversified through time and space.

Media revenue is about 60% of league revenue and shared equally win or lose. Gate revenue is about 20% and shared 66/34 and venue revenue is 20% and not shared. This creates an asymmetry in what the new breed of nfl owners consider a revenue sharing tax.

Art Modell once quipped that nfl membership was a bunch of fat cat republicans who vote socialist on football.

This has been true since the AFL-NFL war but league-think is currently being challenged by maverick cowboy capitalism of individualistic owners like Jerry Jones and their monolithic venue cash cow stadiums are threatening the founding survivalist principles of league think in the more capitalistic NFL stadium revolution.

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60% national media shared equally

20% gate (tickets) shared 66/34 home/visitor

20% venue revenue unshared: luxury suites, club seat fees, sponsorships, pouring rights, naming rights, concessions, and parking.

Under the new luxury stadium economics, shared gate revenues have been sacrificed for unshared (untaxed) venue revenues.  The old school media/gate solidarity socialism is being replaced by venue revenue from new school cowboy capitalism. The game changer in the nfl was the solidarity and balance gained from the coevolution of the nfl and network TV.

The league is a perfectly diversified portfolio because teams were sharing revenue with their opponents whose fortunes were perfectly negatively correlated.

Under cowboy capitalism the most powerful sports league in the world is now polarizing into luxury venue revenue haves and have nots where the revenues of teams at the top now triple revenues of teams at the bottom.

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Just to be clear, that’s the breakdown of the league’s $13 billion in revenue, right?

Yep…these are approx splits of total revenue. Total revenue shared is about two-thirds. 60% equal shared media plus 34% visitor share of 20% gate (6.8%) = 67% of nfl total is shared national revenue.