Wednesday, October 26, 2005

Mr. Mara and the value of perception

Brother, can you spare $2 billion, split 32 ways?

New York Giants owner Wellington Mara, the patriarch of the NFL, died Tuesday. Much has been and will continue to be written about Mara's role in the growth of professional football. He was a true pioneer and the league's last living link to the days of two-way players and leather helmets, barnstorming clubs and the wing-T, the Providence Steam Roller and the Frankford Yellow Jackets. For all he accomplished, however, all the history he was a part of, Mara's most remarkable legacy may be the NFL's financial structure.

Mara was a staunch defender of the league's revenue-sharing system. He believed that the fortunes of his franchise were inextricable from those of the NFL's other members. He believed that a strong league in which all teams could compete would generate far more fan support, far more wealth, than a league with a handful of winners and a slew of patsies.

The question is whether revenue sharing is the best way to accomplish that.

Whenever NFL revenue sharing is discussed, the conversation splits into two camps. One says shared revenue is the foundation of the NFL's dominance astride the American sports landscape. The other sees revenue sharing as anti-capitalistic, anti-competitive, anti-labor, anti-American, probably even antihistamine.

The pro-revenue-sharing camp's argument: By pooling all significant revenue, most notably television and licensing dollars -- and by setting a limit on player salaries pegged to the size of that revenue pool -- the league guarantees that each franchise has the same amount to spend on players. That ensures that the league will have what supporters call competitive balance and detractors call parity. For evidence, this camp points to Major League Baseball, where the New York Yankees dominate every year. In the NFL, they say, every team has a shot, every year.

The anti-revenue-sharing camp's argument: Because of pooled revenue, the successful franchises are forced to subsidize the failures. Franchises that maximize their revenue are prevented from putting together the best team they can because a significant chunk of their income is diverted and because the salary cap limits how much of their remaining income they can spend. But the worst part, they say, is that revenue sharing isn't even necessary. Shrewd management and talent evaluation are what give teams an edge. For evidence, this camp points to Major League Baseball, which this year will crown its sixth different champion in as many years. In the NFL, they say, the same team has won the Super Bowl three of the last four years.

Who's right? Would you believe they're ... both right? Well, probably not, because they aren't both right. They're both wrong.

Revenue sharing does in fact help NFL teams in smaller markets. Take the Green Bay Packers. They're down now, but the Packers have been among the league's elite for the better part of the past decade. As a professional sports franchise, the Green Bay Packers do everything right. They're well-managed and well-marketed and have a fiercely loyal fan base that covers the state of Wisconsin. But as great as Wisconsin is -- and it is great -- the entire state has 2.5 million fewer people than New York City alone. The state's population is about one-quarter that of the New York metropolitan area (and the New York-New Jersey-Connecticut region is considerably richer than the Milwaukee-Kenosha-Racine corridor). Simply put, the Packers don't have access to the kind of revenue the New York Giants do. Revenue sharing helps the Packers even the playing field.

The Green Bay Packers are one thing, and the Arizona Cardinals are quite another. Arizona has about the same population as Wisconsin but is growing much faster -- and Phoenix is the sixth-largest city in the country. The Cardinals get the same cut of the TV money that the Packers get. Yet the Cards, winner of the coveted Down and Distance Most Forlorn Franchise award, haven't been a factor in the NFL for 30 years. They're poorly managed, poorly marketed. They're lucky if they can get 40,000 people into their 73,000-seat stadium.

Slide over to baseball for a moment, and we see that, yes, the Yankees spend their way into contention every year. But the New York Mets, with pockets nearly as deep, assemble some of the cruddiest teams in baseball. The Chicago Cubs squeeze enormous amounts of money out their credulous fans yet are a study in mediocrity. The teeny-tiny Minnesota Twins and Oakland A's have been competitive for the past five years. This is the case, luxury tax or no luxury tax.

So revenue sharing and limited spending can -- but not necessarily will -- help teams compete. And unshared revenue and unlimited spending can -- but not necessarily will -- help teams compete. One club may take the money, use it to improve the team, increase the level of competition and fan excitement, and thus raise the value of all franchises. Another club may take the money and run. Both sides are partially right ... which means both sides are wrong.

What I see as the most critical aspect of revenue sharing in the NFL is also one of the least recognized. Revenue sharing may help level the playing field, but more important -- most important -- it creates the perception of a level playing field. When fans don't believe that their team has a legitimate shot at a championship, this year or in the future, they stop being fans. They quit coming to the game. But when they believe that "this could be the year," they buy tickets. They buy gear. They make their team rich.

In sports, as in every other aspect of life, perception is reality. Why does Rodney Harrison invest so much psychic energy in looking for disrespect where none exists? Because he plays better when he's playing with a grudge. Even if everybody gives the Patriots their due props, he'll still feel disrespected, and he'll play as if that disrespect exists. Perception is reality. (Oh, and does Harrison really play better with a grudge? Well, he thinks he does, and that's all that matters. Perception is reality.)

Back to revenue sharing. I spent the first 18 years of my life in Minnesota, and, after a 10-year Iowa interregnum, I've now lived in the Washington area for eight years. If there's one thing that Vikings fans and Redskins fans have in common, it's that both always think that this is going to be the year. The Redskins are the NFL's most valuable franchise, the Vikings are the least valuable. The Redskins own their stadium and use it like an ATM; the Vikings pay rent on a comparative hellhole. Yet the fans see the teams as equals, and year after year both teams sell out all their home games. Perception is reality.

One can argue that the real reason the Vikings have been able to compete with the Redskins is that they've made better decisions. But consider: Minnesotans know that the Twins have had more recent success than the high-revenue Baltimore Orioles because of smarter management. But that doesn't stop a Twins fan from hearing that free-agency clock ticking and wondering when the Yankees or Red Sox or Dodgers will sweep in and pick off whatever talent they want. (They ought to know by now that there are few things in baseball more disappointing than an ex-Twin.) That's not a fear for a Vikings fan. An NFL team, of course, can get itself in cap trouble and have to dump salary, but no NFL team is in danger of losing a player because the Giants play in a bigger market, have a larger cable-TV contract and thus can pay any price. The Giants can't do that because Mr. Mara didn't want it that way.

Mr. Mara knew perception is reality.


Rich Lanthier said...

Hey Paul,

Very interesting! I see your point. Why the hell can't the Cardinals get their act together? They operate within the same structure and many sorry NFL teams have risen (and fallen again, of course). But the cardinals? An enigma. I guess the ownership just doesn't care about winning, and if they are only drawing 40K per game, the "fans" don't either! shortsighted... But then again, they could sell the team and move them to San Antonio and SPlit the Alamodome with the ain'ts...


PCS said...

The Cardinals won't get it together until the Bidwells follow the Brown family in Cincinnati: swallow hard and start spending money. On coaches, on player development. Otherwise, even if they want to win (a big if), they won't get anywhere.