Rooney calling for more revenue sharing in NFL
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PHOENIX -- The NFL as the model professional sports league could dissolve into a free-for-all pitting big markets against small and ruin its competitive balance if a more equitable revenue sharing system is not worked out soon.
That's the opinion of Steelers president Art Rooney, who no longer sees the spirit of cooperation from owners that 40 years ago helped launch the NFL's popularity.
"There's no question we have a problem in the league that I'm very concerned about on a going-forth basis," Rooney said during the annual NFL spring meetings. "I think the biggest problem with it really is the attitude of some of the high-revenue teams. I think the only way to say it is that they have a different attitude than some of the big-market people from the old days."
The high-water mark for those old days occurred in the early 1960s when New York Giants owner Wellington Mara agreed to give up his lucrative local TV contract to share national television rights with his fellow NFL owners equally. It was that revenue sharing that put virtually all of the league's teams on equal footing to compete financially and competitively. It continued, for the most part, into this century.
But a new dynamic has emerged in the past decade that threatens to not only destroy the economic balance among the teams but could cause them to lose money. Local revenue, generated primarily by the building of new stadiums, and the ability of larger-market teams to produce more of it has caused great imbalance in the league.
And, because the players' salary cap for each team is the same despite the inequity in revenue, the NFL is fast becoming a league that will look more like Major League Baseball from 10 years ago than the one that has been held as the model for every pro sports league.
"My fear is that we start to approach things more like some of the other leagues than the way the NFL has approached it," Rooney said. "To me, why change the business model that has been pretty successful? But some of these guys have a different approach to it and that worries me."
Yesterday, NFL owners voted 30-2 to approve so-called "qualifiers" that allowed some of the lower-revenue clubs to receive money from the top-revenue teams. But the low-revenue teams claim it won't be nearly enough to offset the immense disparity between them and the top-producing clubs such as Washington, Dallas, New England and Philadelphia.
The vast local income those teams produce is used to help determine the salary cap -- and the salary floor each team must pay its players. Players receive 65 percent of the average team's revenue. But while the Redskins may have, say, $300 million in revenue and the Jacksonville Jaguars only $150 million, each team must abide by the same salary cap/floor. Sooner or later, that floor will rise high enough -- because the high-revenue teams produce so much -- that the Jaguars' income won't be enough to cover their losses.
The salary cap for each team this year has been set at $109 million but that does not include player benefits, which boost player costs closer to $130 million per team. No longer does each team's income from television cover its player costs, as it has since the salary cap first went into effect in 1993.
And it's not just Jacksonville. Rooney said if owners do not agree to fix the system, ultimately the Steelers will get dragged down with it.
"We're in a market that's not growing," Rooney said. "When you look at spendable income statistics in our market, the last time I looked we rank somewhere in the 50s in terms of household spending.
"We're in a market where we have to be concerned about things like this. We look at it as a very serious situation, both in terms of the standpoint of looking at it from a Pittsburgh situation but also a league-wide standpoint."
Rooney estimated that 20 NFL teams, including the Steelers, "are in markets where we're really challenged to continue on an ongoing basis to generate that kind of revenue" to stay competitive.
"Then you have another 10-12 teams -- some of them are doing fine, some are doing big money. That's where the revenue-sharing situation has to kick in to equalize things out."
Rooney sees stadium funding in the future as a major factor as well. For example, since Heinz Field was built with public and private money, the NFL devised a so-called "G3" which helps fund stadium construction for its teams. But the costs have become enormous: The new Giants/Jets proposed stadium in New Jersey is estimated to cost $1.6 billion.
Teams at the bottom of the rung do not want to help fund a stadium such as that, knowing their money would go toward further enriching a top-level team and make matters worse for them.
"It is a challenging project," NFL commissioner Roger Goodell said yesterday of the stadium situation in greater New York. "That does concern us."
What concerns league presidents and owners such as Rooney even more is the greater revenue disparity he foresees washing over the NFL that will change the competitive balance the league has had for so many years.
"We think the NFL built a very successful model that is now being threatened by a handful of teams and is starting to grow into maybe a third of the league and has taken an attitude about it," Rooney said. "That's cause for concern."
First Published March 27, 2007 12:00 am