The Sports Professor Rick Horrow, in conjunction with promotional partner Northern Trust, reviews the business of the NFL as summer training camps open – and the business of gambling as it relates to Hall of Fames in baseball (this week’s induction ceremony) and football (next week’s induction ceremony).
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Less than three months ago, the NFL held its most viewed draft in the 27-year history of broadcasting the event – a 4.7 rating in 4.2 million households.
For most of us, the Pittsburgh Steelers 21-10 victory over the Seattle Seahawks in Super Bowl XL at Ford Field seems like only yesterday. During this spring, the new Collective Bargaining Agreement with the players was solidified; the search to choose Commissioner Tagliabue’s replacement intensified; and the league continued as a major marketing juggernaut.
This spring, the 32 teams had more money to spend on free agency than ever before -- $530 million. The result is a newfound optimism in almost all of the 32 markets. While parity has been the NFL watchword for a number of years, 25 percent fewer teams reached the conference championship games from 2001 to 2005 as compared to the previous five-year period. Nevertheless, franchise values remain the highest in professional sports -- $819 million on average according to Forbes magazine. As all teams report to training camp by this weekend, three major business issues should be reviewed.
“Summer Camp” Musical Chairs
Less than five years ago, the business trend for NFL executives in the summer was to create a new fan base by relocating their training camp facilities to remote college locations (or to publicly-funded facilities in other parts of the country). The Kansas City Chiefs celebrated that trend with a deal at the University of Wisconsin-River Falls. The Cincinnati Bengals followed suit, doing a deal at Georgetown College in Kentucky. The Chicago Bears moved to Olivet Nazarene University; the Seahawks train at Eastern Washington University in Cheney; and the New Orleans Saints recently did a deal with Millsaps College in Jackson, Mississippi. Recently, more teams are convening training camps at their permanent practice sites. In fact, 13 NFL franchises have committed to return to their local facilities for summer training – many with corporate sponsors underwriting the venture. The Denver Broncos, San Diego Chargers, St. Louis Rams, and Washington Redskins are examples of this trend. Interestingly, Major League Baseball has gone the other direction, generating significant public money for spring training complexes in Florida and Arizona. The new NFL search for public summer training facilities is not completely over, however. South Dakota business and political leaders visited the Minnesota Vikings last week to propose a public/private partnership for Sioux Falls, believing the tourism and economic development revenues are worth the investment risk.
NFL, Gambling, and Fantasy
An estimated $5 billion is bet on football games every weekend -- $40 million in legal football betting in Nevada alone. In fact, pro and college football generated $969 million last year in Nevada, 46.5 percent of that state’s gambling revenues. The football betting obsession culminates with up to $7 billion legal and illegal bets placed around Super Bowl Sunday each year.
The baseball Hall of Fame induction ceremony in Cooperstown – followed by the NFL Hall of Fame induction ceremony in Canton – intensifies the annual discussion on superstar gambling and the taint that goes along with it. Commissioner Pete Rozelle took great care in his justification for suspending Green Bay Packer superstar Paul Hornung decades ago. In the NBA, Michael Jordan’s involvement in the planned Aqua Blue Luxury Condominium Hotel Resort and Spa in Las Vegas has raised eyebrows – especially in light of his new role with the NBA Charlotte Bobcats. While the NBA may not have been concerned about his previous casino ties before his new Bobcat ownership role, it certainly may be now. And the Jordan gambling concerns might cause problems with his $25 million annual endorsements with Nike and Gatorade. As we head into the Cooperstown celebration, the annual Pete Rose issue surfaces again – should he be admitted to the Hall of Fame because of his on-field performance, or should his “lifetime ban,” in fact, be permanent? Time will tell.
The NFL itself faces some interesting ethical choices. Two years ago, Pennsylvania Governor Ed Rendell signed a bill allowing 61,000 slot machines at 14 locations across the state – anticipated to bring $3 billion annually in gross revenues. The NHL has embraced the Pittsburgh Penguins’ plan to build an arena in conjunction with casino revenues. At the same time, the Pittsburgh Steelers have been “trying to block a proposal” for a $410 million Majestic Star slot machine casino near Heinz Field. Steelers President Art Rooney II said “we feel there needs to be some distance between facilities like this and sports facilities.”
Two years ago, controversy intensified over the NFL refusing to run an ad by Las Vegas as part of a $17 million ad campaign for the city. Mayor Oscar Goodman asked his legal staff to look into the equities of suing the NFL. A year later, the NFL asked ABC to remove an ad for Universal Studios gambling-themed movie “Two for the Money.” Though the ad ran on NFL games during last year’s opening weekend, the networks pulled the ad before the second week.
Interestingly, in Canada, the Canadian Football League inked a sponsorship deal last year with online gambling firm Bowmans, paying the CFL close to $500,000 annually for the relationship. While the Arizona Cardinals celebrate the opening of their new stadium this September 10 in Glendale, one of the major funding options, ultimately rejected, was a funding partnership with the Gila Indians of Arizona.
The “bright line distinctions” between acceptable and unacceptable gambling relationships will continue to dominate NFL headlines. At the same time, fantasy football leagues are more prevalent than ever before. An estimated nine million Americans will play fantasy football this season according to the Fantasy Sports Trade Association, generating $3-$4 billion of economic impact.
