The NFL, a league of international dominance

          Over the past century, the NFL has had a hammerlock on the market due to sturdy branding image, a passionate fan base, and a strong-minded leadership;  However, due to rising player criminalist incidences, and other sports leagues growing popularity, the NFL will need to make internal changes in order to retain and increase its dramatic market share. Unequivocally, the NFL has risen into popularity that no other domestic sports league has been able to achieve, and to understand where the NFL is going, it is essential to understand its roots.

In the early 1870's, football was created as a hybrid of soccer and rugby, with the first rules being written in 1876. By the early 1900's, teams began paying their players per game, but there were many problems with their organizations. These problems ranged from players jumping from team to team, teams employing college players, and scheduling problems. As a result, on August 20, 1920, a gathering of men from several local football associations met and formed the American Professional Football Conference. A year later, in 1921 the league's name would change to American Professional Football League. Starting in 1922, the name again changed to the National Football League, which has remained ever since:

The National Football League (NFL) serves as a trade association for 30 U.S.-based franchised teams… The owners of the franchised teams operated their teams much like stand-alone businesses, but shared approximately 75 percent of their revenue with other franchises. The NFL negotiated television and radio broadcast rights for the teams and maintained the right to market team names and logos through licensing agreements. (answers.com, par. 1)  

            In April of 1921, the APFL's second year of operation, the owners decided to elect a new president to take over for Jim Thorpe, and after much deliberation and debating, elected Joe Carr, the owner of the Columbus Panhandles. Joe Carr would run the show for the next 18 years, and become the NFL's first patriarch, setting up the statue of limitations that the teams would abide by, and ensured that the league retained control of the teams. He left an indelible mark on the league, and wasted no time in doing so, drafting a league constitution in his first year as president.       

"Carr also developed bylaws, assigned teams territorial rights, restricted player movements, and developed membership criteria for team franchises." (answers.com, par. 4)

            He was responsible for instituting the first roster limit (16) in 1925, and in 1927, he solved one of the league's biggest problems by consolidating the teams that were financially weak into the teams that had owners with bigger bank rolls, thus providing the spectators with teams that were more talented across the board. "Organizationally, the league was divided into two divisions in 1933, the Western and Eastern divisions, with the winners of each scheduled to meet in an annual championship game. " (fundinguniverse.com, par.  5)  After Carr's death in 1939, the NFL saw its first televised game between the Brooklyn Dodgers and the Philadelphia Eagles. This would be the spark that ignited the flame that is currently the multi-billion dollar industry that we know today.

            One of the other most influential events in the history of the NFL was the merger with the rival league, the AFL, which had implemented a playing style that was more pass-oriented, thus pleasing the fans more, as well as being much more inclusive of African American players.  The two leagues officially merged in 1970, and formed into two conferences, the AFC and the NFC, and the new NFL would implement some of the things that had made the AFL so successful, such as player's names on the back of the jersey, and a tendency to be more pass oriented:

Overseeing the merger between the AFL and the NFL was Pete Rozelle, who held the title of NFL commissioner. Rozelle was selected as commissioner in 1960 and held the same title after the merger. Rozelle's tenure, which stretched until 1989, was as influential on the development of the NFL as Carr's effect on the league.  (www.fundinguniverse.com, par. 7) 

Rozelle realized that the greatest strength of his league was that their programming, and he persuaded the owners to relinquish control of their network deals and share the revenue earned by broadcasting and give the NFL control over negotiating broadcasting rights. As a result of this and the NFL's legal ownership of any and all films or accounts of a game, the NFL has been able to achieve product exclusivity.

Due to the NFL controlling 100% of the supply of product, they are currently the most popular spectator sport in America, commanding the attention of an average of 40+ million viewers weekly on network television. (Neilson Media Research)

One of the main reasons that the NFL enjoys such a high viewing rating is their comparatively short season, (16 games plus playoffs as compared to the Major League Baseball association, which has 162 games/year plus the world series, or the National Basketball Association, which showcases 82 games/season in addition to playoffs), creates a greater fan frenzy on game day due to the fact that the fans know that they will be miserable for the seven months of the year that they won't be able to receive any football news. As a result of this fan frenzy, the NFL has the highest game day attendance ratings in the world, averaging more than 67,000 fans per game, totaling 17,341,012 paid attendees at all regular season games in 2007. (www.nfl.com, par, 2) Shockingly, this is not even close to the main reason that the NFL is such a lucrative business; "The NFL breaks even through stadium, sponsors, and broadcasting deals rather than actual gate receipts for the athletic event." (http://www.sportsbusinesssims.com, par. 2)  Furthermore:  

In 2007, NFL games were the top-rated program in local NFL TV markets a record 86 percent of the time (the previous record was 80 percent in 2006). TV blackouts were lifted due to sold-out games (72 hours in advance) in 96 percent of games this season (only 10 local TV blackouts in 256 games). (www.nfl.com, par, 5)

            Another strength of the NFL was its ability to see the market for hosting its own version of a fantasy football league online, thus driving fan interest even higher by making them go to the NFL.com website to log on to their fantasy football teams. By bringing hundreds of thousands of additional fans to their website, they are providing the consumer with additional exposure to merchandising ads, as well as developing more devotion from said fans. Yet again, the forward thinking of their commissioners has paid huge dividends for the league.

            One of the most important implementations of a commissioner in recent history was that of the second most former commissioner, Paul Tagliabue, who took over for Pete Rozelle in 1989. Tagliabue realized quickly after taking up the reigns of the most important position in American sports that dynasties like the Dallas Cowboys, however entertaining for the home team, were not in the best fiscal interest of the league. This was due to the fact that they did not promote continental support of the league, but rather an intensely loyal local fan base. Consequently, he set up the first salary cap, which limited how much each team could spend on their roster each year, while also setting up a minimum that they had to spend, all in effort to establish true parity.

True parity creates a much more marketable product across the board, because it gives any team in the league more of an equal chance of winning each game each week, as opposed to MLB, whereas the top spending teams are in the World Series significantly more than teams such as the Florida Marlins, who rarely have a chance to compete. To put that into perspective, the  NY Yankees spent $209,081,579 in payroll this year, whereas the Marlins only spent $21,836,500. (www.sportsline.com)

            The other primary reason for parity is in the NFL Draft, which is the system from which teams acquire new talent from the college ranks to stimulate equality within the league. The usage of this system has provided the avidly passionate fan bases of all 32 teams with the best product possible year in and year out. This consistently nets the league higher profits by keeping each and every game competitive, thus ensuing in a higher week-to-week attendance rating. As a result of the parity created by the draft, even a team that is for example 0-8 has the potential of beating a team that is 8-0, which creates more product marketability that keeps even the casual fans watching intently, because their team can still play the dreaded "spoiler" role.

This is entirely unlike the NFL's main football competition, the college ranks, because in the NCAA, if a team has a bad record, and they play a nationally ranked team, there is almost no chance whatsoever that they can pull off a victory. All of this results in more marketable merchandise because on average, NFL fans do not take years off when their team isn't in playoff contention.

            While parity is one of the ultimate strengths of the business model of the NFL, they also face a significant internal weakness that is more so unique to their sport then most businesses. Unfortunately, due to the violent nature of the game, and the fact that their product is entertainment, sometimes the more marketable players can get injured and miss a season. This represents a significant amount of loss of possible profit and a definite weakness.  The NFL has an increased company risk factor over most businesses in terms of profits and single team sustainability. For example, the three-time Super Bowl winning quarterback Tom Brady had his ACL and MCL shredded in week one, which caused him to miss this entire season. The result is that his team, the New England Patriots, who were a preseason Super Bowl favorite, has struggled mightily this year and has not enjoyed anywhere near the success they had in previous years. As a result, this has lead to lower TV ratings for their games, which, of course, is obviously not what New England owner Bob Craft, or the NFL wants for their team, or their shareholders.

            One of the biggest issues that the NFL deals with is the ever increasing number of players who end up in the tabloids and newspaper's front page for their legal indiscretions. This has become a huge problem for the league as of late, ranging from notorious players such as first round draft pick Adam "Pacman" Jones' involvement with several shootings, assault cases on women, and drug possession cases, (www.uslaw.com) to the Cincinnati Bengals' Chris Henry's 13 encounters with the police between 2005 and 2008, ranging from serving alcohol to three females who were under the age of 18, to his being arrested in Orlando FL for multiple gun charges including concealment to aggravated assault while wearing his 15 jersey. (www.wlwt.com, par. 13) This steadily growing statistic is alarming to the brass in the NFL, because one thing that all commissioners have had in common is their desire to make the professional athletes employed by them live by the law and be positive role models. Another  of the NFL's main concerns is negative brand imaging, which would imply that if their players are out of control with the law, that parents will start boycotting it in their children's programming lineup, thus losing out on a significant amount of future viewers/customers.

In addition, they have to deal with the moral majority of Americans who would rather not be spending their time and money to watch a team like the Bengals who employ over 15 players who have rap sheets. In an attempt to dissuade players from perpetuating negative brand image, the current commissioner Rodger Goodell, with his strong leadership regarding issues on player misconduct, revised the suspension rules. In addition, he has begun dealing out more severe suspensions to repeat violators, such as the aforementioned "Pacman" Jones and Chris Henry. Goodell dealt a full year suspension to Mr. Jones, (2007), and an eight game suspension to Mr. Henry, as well as another two game suspension in the same year. These suspensions are far austere and longer than any other commissioner in league history has ever dealt out, and have gone a long way in resurrecting the positive brand image that the NFL has enjoyed for the vast majority of its existence. Goodell is truly a leader that is not afraid to be assertive when he needs to in order to protect the integrity of the image he is charged with protecting. (sports.espn.go.com)

In a further effort to crack down on the "thuggish" image that is being projected by players, the NFL has formed a committee of experts to analyze game film of players to see if any of them are making gang signs, and according to the NFL V.P. of Officiating Mike Pereira said that each case 'will be dealt with harshly.' "In 2001, the NFL put a similar ban on bandanas and do-rags because they were deemed to be "too-closely related to gang symbols." (theredzonereport.com, par. 6)

All of these efforts that the new commissioner Goodell has made have already started to make a positive effect on the image of the NFL. Provided that he continues to meet each and every case with the same amount of sternness, then it is this writer's opinion that within a matter of time, probably no more than a decade, he will have effectively solved this issue.

             Continuing on with Goodell's leadership, he is engaging in strategic planning that promotes expansion to other markets, Europe has shown itself to be an outstanding outlet for NFL games, so much so that in 2006 Goodell committed to showcase at least one game a year on foreign soil. In the 2007 game between the Miami Dolphins and the New York Giants, a game was played in Britain, and the speed at which the tickets sold out was staggering:  

The first 40,000 tickets, priced between $90-$180, were gone in 90 minutes, and the game became a sellout of 86,000. Tickets available on websites or via brokers this week range mostly from $90 to $300, though asking prices for club seats were about $500 and the highest price of any ticket approaches $1,500. (www.usatoday.com, par. 6)

            Another recent opportunity that the league faces is to increase revenue in one of the smallest markets in the league, the Buffalo area. In an attempt to solve the seating issues caused by the Buffalo Bills' small market size, the NFL has moved one of their eight home games a year to Canada for the next eight years. This plan has been met with much excitement by the new consumer market in Canada. It is another great step in expanding the market reach, and will yield the NFL great profits, due to the fact that tickets will average $250 per seat, as opposed to the $46 per seat price that fans pay at Ralph Wilson stadium in Buffalo. Also, to ensure that they protect their stake in the Canadian market, purchasers of seats in Canada will have to buy tickets to each of the eight games to be played there. (www.thestar.com, par. 6)  This shows that, as according to the BCG Growth-Share Matrix, not only is the NFL the undisputed cash cow of the entertainment industry, but they are not content in keeping things the way they are, and hoping that their current business model sustains itself. They are also going through great lengths to become stars in new markets as well, and they are using their strong brand image to take advantage of the fact that the only comparable product available in the near vicinity is the vastly inferior Canadian Football League. Due to a lack of legitimate competition in the Canadian market, the NFL is acting as an extortionist by charging approximately five times the cost of an average seat for a Buffalo game, and getting away with it as a result of the market starving for the presence of a sports league of the NFL's caliber. Because of the contract clause that dictates that the purchaser of these tickets also purchase tickets to the games following in the next seven years, they are in effect using strategic planning to acquiring surplus revenue in the short term for reinvestment into the company to further their market share on international soil. As a result, they are all but assuring that they become stars in the new market, while paving the way to becoming cash cows sooner than later.

            Another external opportunity that the NFL has is to uniformly engage itself in non for profit outreach activities. Whereas there are players in the NFL that are regularly involved in charity work for their respective cities, the NFL has a significant opportunity to combat their waning positive public image by mandating that each and every player dedicate a set number of hours per week to various charities or nonprofit institutions geared towards helping those less fortunate. The effects of a program like this would be twofold in the NFL's benefit; : first, it would help resurrect the positive public image that the league has worked so hard to attain for the duration of its existence, furthermore, as of some of the more troubled players having to spend 20 hours a week doing community service projects, their available time to participate in illegal activities is diminished, thus keeping players out of the news for bad reasons and keeping them in the news for good reasons. Also, with the local news sources reporting more good deeds by the players, this serves as a free advertisement for their already dominating market presence. This would most likely result in a higher volume in ticket sales, new cooperative branding agreements, merchandising sales, and the ability to increase the prices due to increased demand for product.

            While the NFL has plenty of room for expansion, there are also some external threats that the league has to acknowledge and compensate for. Currently, the chief threat to the NFL is the recession that our economy is in. With the economy plunging, and jobs becoming scarcer, people simply aren't budgeting as much money as they once were for entertainment.

"We're not just competing for people's entertainment dollars anymore," said Brett Yormark, chief executive of the National Basketball Association's New Jersey Nets. "We're going up against milk and orange juice." These quotes are symbolic of the entertainment industry as a whole. What is important to realize is that these problems have not gone unnoticed by Goodell, who had this to say while speaking at the University of the Incarnate Word.   "We're all feeling the pinch right now, some more than others, and it's something we want to remain sensitive to."

            Recently, the NFL has seen decreased sponsorship revenues through TV advertisement, as Goodell admitted at a conference held on the globalization of sports in London, the day before the second game that the NFL has played in Wimbley, England. While he wouldn't give any specific figures to represent the drop in advertising funds, "Goodell said he was confident that ad sales for the games would stabilize even in the short term, adding that holding onto sponsors would be a bigger long-term problem for the league." (www.sportsline.com, par. 6)  "That's something we are evaluating, whether there will be a long-term change in the way companies invest in sponsorships, and how they do that," he said. "And that could impact us well beyond 2009." What is crucial to take out of this is that once again, the NFL's forward-thinking commissioner has taken a proactive strategy in handling this threat, because otherwise, it could end up signaling the end of an era of dominance of the worldwide sports entertainment market.

Make no mistake about it, should Goodell's plans not work, and should one of the NFL's chief source of revenue, advertisement rights, wither up, then the networks won't be paying them the hundreds of millions of dollars that they are currently for broadcasting rights. This would result in fewer games being aired on TV, and that combined with the tarnishing of brand image caused by high profile player incidents off the field, would result in catastrophic loss of market share. This could quite possibly leave the NFL as we know it a figment of the past.

The NFL's rise to prominence in the entertainment industry has been strongly influenced by their strong history of visionary executives, their sturdy branding image, their intensely loyal fan base, and their ability to recognize new markets and exploit them. They have had internal issues throughout their history, but whenever a new one rises up their executive has acted quickly and sharply, and solved the problem effectively. In the 21^st century they are facing many expansion opportunities, and have already began taking advantage of them by expanding markets, repositioning their image, and changing their overall approach to handling players and player conduct. However, with the global economy collapsing, they have to create and sustain new revenue streams to their business or else they will be swallowed up by whatever new giant makes its way in the entertainment industry.