I was on an airplane watching television, which is not a statement that would have made sense even ten years ago, but there you go. Thank you, America. Among the suite of channels was the NFL Network, which I predict will soon be the world’s most popular cable channel and will spawn a second and third channel, if it hasn’t already. I wasn’t supposed to be watching football, but they were showing the NFL Combine, where the league gathers top college prospects to put them through their paces. I couldn’t resist.
The drill I happened to see was for defensive backs. They had to backpedal then whirl around and catch a ball fired at them at about 200 mph. Afterward, a gentleman named Peter Giunta, the secondary coach for the New York Giants, called the prospects together to give them an inspirational speech. Giunta was bald and intense. His rhetorical style fell somewhere between General Patton and Tony Soprano. “It is a privilege to play in the National Football League,” he began. “It is not your right … You have to do the right things, not only on the field but off the field. They’ve done security checks on you, background checks. I don’t wanna read about you in the papers. We live in a great country. We all have the power of choice.”
He continued on this theme for several minutes. Then he called upon Bradley Roby, a projected first-rounder from Ohio State, to lead a final cheer. The players huddled up. “We all know why we’re here,” Roby barked. “ ‘Get money!’ on three.”
One, two, three. Get Money!
It is always refreshing when people are honest in this way. And it is particularly refreshing when it comes from the NFL, because there is so much horseshit swirling around regarding the economic forces that drive the game.
The most persistent myth about the NFL is that, because of its revenue sharing system, it is somehow socialist. To quote the writer Chuck Klosterman: “The reason the NFL is so dominant is because the NFL is basically Marxist.”
Klosterman has written a lot of intelligent analysis of the NFL over the years. This is not a prime example.
As noted, NFL owners in large cities agreed to divide TV proceeds equally back in 1962, in part to create competitive balance on the field. That is not Marxism. It is, at best, a canny form of market manipulation. But the history is far more problematic. In fact, Pete Rozelle had signed a TV contract in 1960 on behalf of the entire league—a deal struck down by a federal court as a violation of antitrust law. Rozelle went to Washington, and lawmakers obediently passed the Sports Broadcasting Act of 1961, which allowed the NFL and other leagues to circumvent those pesky antitrust rules and to sell TV rights, collectively, to the highest bidder. The law essentially made the NFL a legal monopoly.
But just as a thought experiment, let’s pretend the NFL really were Marxist. Here’s what that would mean. First, there would be no private ownership, and therefore no team owners. The teams, though they would represent different cities, would belong to the State. Employees would be paid according to the Marxist edict: From each according to his ability, to each according to his need. A top quarterback such as Peyton Manning would not be paid $18 million every season. He would be paid based on his needs, let’s say $100,000 per year. The worker who laundered his jock strap, or the custodian who mopped the floors of his locker room might be paid just as much as Peyton Manning—perhaps more if they had greater needs, say, a lot of children or sick parents. Star athletes could still ostensibly earn huge sums in endorsement deals from private industry, though the league would have to decide whether these payments violated its Marxist tenets. Commissioner Goodell would not receive a compensation package of $42.2 million, as he did in 2012, nor would his deputies earn millions.
In fact, one of the most fascinating questions that arises from a truly Marxist NFL would be the question of what to do with the staggering profits, which would no longer be divvied up by a cabal of geriatric magnates or funneled to a pack of vainglorious athletes. We can safely assume that its operating costs would be a fraction of the nearly $10 billion the NFL is projected to earn this season. The balance—$9.5 billion?—would be available for redistribution to societal needs such as early education, medical and renewable energy research, intervention for at-risk populations. Fans would be in the strange position of justifying their support of pro football by pointing to all these good works.
A Marxist NFL, in which salaries were no longer grossly inflated by our blessed free market, might spur other felicitous outcomes as well. Players could choose to join clubs in the cities or states where they actually grew up. With obscene economic incentives removed, players and fans might experience the sport as a purer form of meritocracy. As with the NCAA basketball tournament, competition would hinge on team and regional pride rather than individual earning power. There would be no more parasitic entourages or predatory agents. And almost certainly, athletes would make more sensible decisions regarding their own health.
Do I realize this will never ever happen? That lawyers would descend from their penthouse aeries to sue the bejesus out of all parties? That the players themselves would flee the NFL in droves to join for-profit leagues, or form their own? That Rush Limbaugh’s head would explode as he tried to process the concept of a “socially-conscious blood sport.”
Yes. Which is my point.
The NFL is the opposite of Marxist. It is the epitome of crony capitalism, a corporate oligarchy that has absorbed or crushed all potential competitors, that routinely extorts municipal and state governments, and openly flouts its tax obligations while remaining, in the words of The Atlantic’s Gregg Easterbrook, “walled off behind a moat of antitrust exemptions.”
The league’s players are among the most specialized employees on earth. Every aspect of their job performance is filmed, analyzed, measured, and submitted to public scrutiny. Minute differences in efficiency translate into mindboggling pay discrepancies. It is this ruthless workplace that compels so many players to play through pain, shoot up steroids, etc.
Much is made of the communal virtues imparted by football: sportsmanship, teamwork, self-sacrifice. But a genuine Marxist would note that these qualities are placed in the service of contests whose outcomes are irrelevant to the fate of the worker. Football is the ultimate bourgeois indulgence. Its civic function is to distract the proletariat from the aims of the revolution and to serve as a means of indoctrination into thought systems that are individualistic and materialist.
Think about it, folks. Last season, the Minnesota Vikings paid a man named Jared Allen more than a million dollars per game to maul opposing quarterbacks. The “market”—meaning us, the fans—has determined that Allen’s value is roughly $18.5 million per year. The State of Minnesota pays an elementary school teacher an average of $38,000 per year. Paramedics make $42,000; cops, $28,000. That makes one quarterback mauler worth 474 elementary school teachers. Or 440 paramedics. Or 661 police officers.
Let us pause in astonishment and torment.
The closer you look, the worse it gets. Consider that in 2013, lawmakers in Minnesota voted to allot $506 million in taxpayer money to the Vikings to help them build a new stadium—despite facing a $1.1 billion state budget deficit. They did this because Vikings ownership had made noises about relocating the team, a tactic routinely used against politicians who live in terror of losing a franchise. The new stadium increased the value of the team by an estimated $200 million. The owners, who are multi-millionaires, pay $13 million per year to use the stadium, which sounds like a lot until you consider that they earn hundreds of millions in TV revenues, ticket sales, concessions, and parking. This helps explain why teachers and social workers get paid what they do in Minnesota.
Here’s the totally nutso part: the Vikings’ ownership actually underperformed. Based on research done by Judith Grant Long, a professor of urban planning at Harvard, taxpayers provide 70 percent of the capital cost of NFL stadiums, as well as footing the bill for “power, sewer services, other infrastructure, and stadium improvements.”
The perfect example: Seven of every ten dollars spent to build CenturyLink Field in Seattle came from the taxpayers of Washington State, $390 million total. The owner, Paul Allen, pays the state $1 million per year in “rent” and collects most of the $200 million generated. If you are wondering how to become, like Allen, one of the richest humans on earth, negotiating such a lease would be a good start.
In New Orleans, taxpayers have bankrolled roughly a billion dollars to build then renovate the Superdome, which we are now supposed to call the Mercedes-Benz Superdome. Guess who gets nearly all the revenues generated by Saints games played in this building? If you guessed all those hard-working stiffs who paid a billion dollars, you would be wrong. If you guessed billionaire owner Tom Benson, you would be right. He also receives $6 million per annum from the state as an “inducement payment” to keep him from moving the team.
That’s the same amount Cowboys owner Jerry Jones would pay each year in property taxes to Arlington, Texas, where his fancy new stadium is located. Except that Jones doesn’t pay property taxes because, like many of his fellow plutocrats, he’s cut a sweetheart deal with the local authorities.
In the old days, NFL owners were rich men who accepted the risk of losing money as the cost of doing business. Thanks to the popularity of the game, the NFL and its owners—with the collusion of politicians—have created what amounts to a risk-free business environment. According to Long’s data, a dozen teams received more public money than they needed to build their facilities. Rather than going into debt, they turned a profit.
Let’s take another big step backward.
Okay, so taxpayers have funded 70 percent of the construction costs of the stadiums in which NFL teams play, for which they receive a return of pennies on the dollar. But consider the economic impact if taxpayers were to receive 70 percent of the profits generated by those facilities: that is, a proportion equal to our investment. Given that the NFL is projected to earn in the neighborhood of $10 billion this season, that amounts to $7 billion from TV, tickets, parking, etc. (Again: no stadiums means no games.) Think about how much social good $7 billion would do in cities such as Detroit and Cleveland and St. Louis, where bright new stadiums rise above crumbling schools, closed factories, and condemned homes.
Or let’s say, more conservatively, that cities demanded a 50 percent share of the profits as rent. Or simply demanded that the owners remit to the taxpayers the sum required to build and maintain these stadia. This would still represent hundreds of millions of dollars.
This is not some socialist “redistribution of wealth” scheme. It’s not charity. That’s Fox News math. This is asking an immensely profitable business to pay investors (taxpayers) our rightful dividend.
The traditional line put forward by boosters is that a sports franchise generates prestige and jobs and economic growth for a particular city. It would be more accurate to characterize teams as parasites on the local economy. They suck money from local tax bases then send the gigantic profits generated by these expenditures back to the league office for disbursement to the owners.
Think about how insane our cultural priorities are that we’re allowing so much money to be siphoned from the public till and funneled directly into the private koi ponds of the nation’s wealthiest families. That arrangement isn’t even capitalist. It’s feudal.
Please try to imagine, if you would, what other industry could perpetrate such financial chicanery and still be considered a model corporate citizen? Think about this the next time the NFL ballyhoos one of its PR charity giveaways.
This is not a matter of politics, by the way. Conservatives who rail against government debt and liberals who lament the decline of social services should be equally outraged. Better yet: they should recognize that their loyalty to the NFL is what makes this ongoing confidence game possible. We are the ones who give the league its tremendous leverage over politicians. We shouldn’t be surprised that it uses this leverage. That’s what capitalists do.
A relevant memory: A few years ago I traveled down to Miami, where I worked as a reporter during the early nineties. A friend was driving me around downtown when I noticed what looked like a large-scale demolition project.
“What’s that?” I said.
My friend shook his head. “They’re tearing down the arena,” he said.
The arena had just gone up when I moved to town fifteen years earlier, as a home for the NBA’s newest franchise, the Miami Heat. It had been built with public money, naturally. But that was okay, because the arena was going to be the savior of an impoverished area known as Overtown.
Now the building was being razed, a pink elephant that had cost taxpayers more than $50 million. It had diverted precious funds and political will from legitimate plans to economically develop Overtown, where, according to the most recent census figures, the per capita annual income is less than $15,000, and half of all children are living in poverty. Now, county officials were spending $210 million in public money on a new bayside arena for the Heat.
During my time in Miami, I had spoken briefly with one of the few dissenting voices, a county commissioner named Katy Sorenson, whose reaction to the Miami Arena plan I have never forgotten. Here is what she said:
The real quality-of-life issues are jobs and job training and child care for people seeking job training. It’s schools and health care and parks. It’s about making sure people feel safe … Those are the things that will really make this a great county. Not an arena. This is about a bunch of spoiled, overfed, overpaid corporate giants who are having an arena built by taxpayers so that a bunch of spoiled, overfed, overpaid athletes can have a place to play.
And now there sat the Miami Arena, floating in a vast landscape of concrete and blight, as the demolition crews did their taxpayer-funded work. All I could think was: this is the story of modern America under the influence of sports. The carnival comes to town and everyone gets drunk on the spectacle and empties their pockets and by morning the carnies are gone and what you thought was an enchanted kingdom full of prizes is just a muddy field on the edge of town.
But that’s not quite right, because fans form long-term relationships with their teams. The Browns started playing in Cleveland in 1945, for instance. They won eight championships in their first two decades and earned a zealous following. This did not stop owner Art Modell from announcing, in the middle of the 1995 season, that he was moving the team to Baltimore (itself abandoned by the Colts a dozen years earlier). Modell inked this deal the day before voters approved a plan that had been put on the ballot at his request to revamp Cleveland Municipal Stadium for $175 million. During the Browns’ final home game, fans set fires in the stands, heaved rows of empty seats onto the field, and tore bathroom sinks from the walls.
But Modell was merely following the rules of the modern NFL cartel. By moving to a new city desperate for football he secured a brand new stadium worth $220 million—with taxpayers picking up $200 million of that tab—where the newly minted Baltimore Ravens could play, rent-free, for thirty seasons, with Modell keeping every cent from tickets, parking, naming rights, concessions, and the sale of 108 luxury boxes and 7,500 club seats. Modell used the proceeds from personal seat licenses—fans who pay for the right to buy tickets—to build a $15 million training facility and cover his moving and legal fees. (Spurned Cleveland fans filed more than one hundred lawsuits against him.) Within a few years, his team—purchased in 1961 for $3.9 million and valued at $163 million before departing Cleveland—was worth $600 million.
The same scenario was playing out all over the country, with owners securing eye-popping deals (and thus multiplying franchise value) by moving to new cities, or threatening to. Houston lost the Oilers to Nashville. St. Louis lost the Cards to Phoenix. Because of the insatiable market created by us fans—particularly in jilted cities—the NFL could also auction off the right to expansion teams, thus increasing the pool of potential civic suitors for owners to wield against their hometowns.
Franchise Free Agency, as it is sometimes called, is better understood as a highly public Ponzi scheme. The league pits cities and citizens against each other and sweeps up the profits. A Houston billionaire eventually paid the NFL a $700 million expansion fee to replace the Oilers, outbidding Los Angeles. The public chipped in $250 million for a new stadium.
And what about poor Cleveland? The NFL graciously bestowed the city an expansion team (franchise fee: a paltry $476 million) and lucky taxpayers shelled out almost $300 million to build them a new home. A fairytale ending, NFL style.
As for my Raiders, our late owner Al Davis—a man best described as Corleonish—made a career out of extorting the City of Oakland. He moved the team to Los Angeles from 1982 to 1994, and secured $220 million in stadium renovations to return to Oakland, plus a training facility, moving costs and, presumably, his weight in cannoli. While the city is still paying off those renovation bonds, the team pays $525,000 per year in rent.
I would be remiss if I failed to note one more fiscal oddity. The NFL—unlike the NBA and Major League Baseball—is tax-exempt. How did this happen?
Funny you should ask.
Back in 1966, when the league was hashing out a deal with Congress that would allow it to merge with the AFL, lobbyists managed to insert a provision into the tax code allowing “professional football leagues” to be granted not-for-profit status. All the NFL had to do was pledge not to schedule games on Friday nights or Saturdays, to avoid competing with high school and college games.
The tax exemption (501(c)6, for those keeping score at home) was originally intended for “business leagues, chambers of commerce, real-estate boards, or boards of trade”—local industry groups that welcome new members. I wish all of you good luck in your efforts to join the NFL.
This does not mean that the league’s revenues are all untaxed. The NFL League Office distributes earnings to its member teams, which are for-profit entities and therefore should pay taxes. However, because owners have proven so adept at cutting deals to reduce their tax burdens, and because their records are private, no one knows what sort of tax rate owners pay on their profits. We can safely assume they do better at finding deductions than those of us who don’t own NFL teams.
As not-for-profit organizations go, the NFL isn’t exactly small-time. In addition to rent on their spacious Park Avenue offices, the league pays $60 million in executive salaries. Half of this sum goes to Commissioner Goodell.
Last year, Senator Tom Coburn, a conservative from Oklahoma, proposed legislation that would bar any sports league with profits exceeding $10 million annually from claiming tax-exempt status. Coburn has noted that NFL officials not only duck federal taxes but use their exempt status to avoid city and state taxes when they travel on league business, to the Super Bowl for instance.
Oh, one other key league expenditure: lobbying. The NFL pays $2 million per year for that.
Coburn’s proposal has never been debated, let alone voted upon.
Hosts on sports talk radio will sometimes argue that fans shouldn’t complain about the monstrous salaries athletes receive, because our support makes them possible. But the athletes are really just the public face of a much larger enterprise. We could call them pawns. A better analogy would be corner drug boys. They supply us our high and palm our cash. They run the risk while their employers, operating out of sight, collect most of the proceeds. Let’s at least be honest about whom we’re really enriching: the One Percent.
Most fans turn to football for idealistic reasons. We love being immersed in its gallant meritocracy. We want to believe the game is played primarily for honor, not money. But, as the game has morphed from a ragged outlier into a corporate juggernaut, we’ve evolved as fans, too. Think about how much time we spend these days obsessing over the economics of the game. Hardcore fans think as much about salary cap hits as corner blitzes. We crunch numbers and debate player valuation and second-guess every move management makes.
Is it any wonder fantasy football leagues have become so popular? The fantasy, after all, is one of ownership, of competing to see who can best manage human capital. I spent two years in such a league. After a while I didn’t really care which teams won anymore. I just wanted to score more points than everyone else. I was rooting for my own acumen.
With considerable regret, I must now ask you to take one final step backward, so as to ponder the NFL’s long-range game plan.
In 2010, Roger Goodell (whose pay is based largely on how much he can grow profits) announced that he hoped the NFL would reach revenues of $25 billion by 2027. This represents an increase of 250 percent over the next fourteen years. It would put the NFL on par with global Goliaths such as Nike and McDonalds, and exceed the entire GDP of more than a hundred countries.
Where do you think these additional monies are going to come from? They are going to come from you and me, in the form of more public subsidies for more palatial stadiums, and higher prices for tickets, parking, and all the rest.
In an era of DVRs and digital streaming, football games remain one of the few events some people (i.e., us addicts) insist on watching live. And we don’t just tolerate the commercials during games, in the case of the Super Bowl we actually celebrate them. This has made NFL football, by far, the most valuable entertainment commodity in the world. And it’s what makes the league’s monopoly status so lucrative, according to John Vrooman, an economist at Vanderbilt University who has written extensively about the NFL’s fiscal ploys.
League officials can negotiate all-or-nothing broadcast rights and advertising rates, and thus set prices much higher than individual teams in competition ever could. Those higher prices inevitably (and invisibly) get passed on to us consumers, who wind up paying more for cable TV and products.
Vrooman predicts the league will eventually limit access to games unless fans are willing to pay a premium. “The monopoly rule is to gouge half as many fans more than twice as much on everything,” he says. League officials and owners insist they won’t turn football into a luxury item. But that’s exactly what they’re doing right now by building all those corporate suites and broadcasting certain games exclusively on the NFL Network.
The tremendous value of these games is the reason Goodell—even in the face of a growing crisis over player health—is quietly pushing to increase the season from sixteen to eighteen games, and to expand the playoffs.
We fans can romanticize the game all we like, but Goodell and his bloodless syndicate deal in leverage and maximization. Here’s how Brian Rolapp, the Chief Operating Officer of NFL Media, and the man tasked with making sure pro football dominates the digital age (he just brokered deals with Verizon, Twitter, and Microsoft) puts it: “We’re really in the business of aggregating America around events and around our game. There are fewer and fewer places that can do that. If you can aggregate audiences, you are going to be more and more valuable.”
How romantic.
Let us return, then, to that scene at the NFL Combine, to those defensive backs who have just finished their drill and heard that inspirational speech about the privilege of playing in the NFL and making the right decisions. “We all know why we’re here,” Bradley Roby shouts. “ ‘Get money!’ on three.”
It’s easy for fans to dismiss a moment like this as reflective of some unfortunate “ghetto mentality.” It becomes much more depressing to admit that Roby is parroting the guiding ethos of the NFL, and the private sector.
The truth is, I have a lot more respect for Roby. If you grew up amid the kind of deprivation that a lot of NFL prospects did, and football represented your one best chance to lift yourself and your loved ones out of poverty, why the hell wouldn’t you want to get money?
It’s a lot tougher for me to sympathize with mercenary executives and team owners who were born into affluence. Why must they squeeze every penny from their position of cultural power? Do they feel no shame in snatching taxpayer money they don’t really need from impoverished communities? Is the acquisition of capital the only way they know how to keep score? At what point do we admit that the NFL’s true economic function is to channel our desire for athletic heroism into an engine of nihilistic greed?