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League and Franchises as Wealth Builders: Revenue Streams and Profit Returns on Investment for Team/League Investors and Their Joint Venture Partners
Note: This article is relevant for any team in a similar situation, whether NFL or UCFL.
The Proven History of Football Leagues and Franchises as Wealth Builders
Whether the league becomes a Fortune 500 or Fortune 1000 company, its potential now and over time is huge. It took the NFL over 60 years to get going, and even then it still needed a vision from someone strong enough to articulate the NFL vision. For the NFL this meant two commissioners, Pete Rozelle (1960-1989) and Paul Tagliabue (1989-2006), Pete from advertising, Paul the NFL attorney serving Rozelle.
Rozelle (the L.A. Rams GM) was elected only after 28 ballots failed to get a winner, due to feuding owners split on what to do about half filled stadiums, little in TV contract revenue, and their outmoded 1930s business model. Rozelle was a compromise candidate. As new Commissioner, working with the approval of the owners, introduced gate and TV profit sharing (which the American Football League did, making it easier later for the merger). Adapting the NFL model to be more like the AFL model, the NFL established that all teams would shared equally in revenue sharing and the player draft. The key was simple: it acknowledged that their competition is not other teams but for the fans’ sports and entertainment dollars. Under Rozelle the league expanded from 12 to 28 teams.
Tagliabue had controversy also. It took a number of ballots and several nominating committees to get the job done. The league expanded from 28 to 32 teams. Tagliabue kept the labor peace, implemented a hard salary cap, strengthened revenue sharing, established a firmer financial foundation for lower revenue teams, and greatly increased the value of teams and wealth of the owners. Expanding promotional rights to league-wide, not just at the local level, increased the amount shared by all. Under Tagliabue, the NFL became "the world's most lucrative sports league with annual revenues that tower over its three main North American rivals ... despite the fact that the NFL plays a much shorter schedule and only a fraction of the number of games."
Timeline: Spring-Summer season; January draft; training camps mid-Februray thru mid-March; two-week pre-season beginning mid-March; main season and playoffs April thru July.
Paul Tagliabue is known for many things. According to Forbes in 2006, his "greatest legacy: wealth creation." We can bring a measure of that to our league/team investors and their joint venture partners. Bottom line: teams in non-NFL cities can achieve great returns with lower costs and high margins.
The upshot: soaring franchise values. For example, the price paid for NFL expansion teams rose from $206 million in 1993 to $700 million in 1999 — an annualized increase of 22.6%. In 2012, the average NFL team was worth $898 million, 212% more than when Forbes began calculating team values eight years ago. Football team values have increased 11 times more than the S&P 500 since 1998. Profitability? In 2005, the average NFL team posted $30.8 million in operating income (earnings before interest, taxes, depreciation and amortization), versus $5.3 million in 1997.
How Our League and Franchise Will Build Build Wealth
Our league and teams will demonstrate how to create joint ventures to join their main economic engine and/or to create incubators to do the same, with those riding the anchor's coat tails providing the financing/funding, and sharing the profits with the league/team. An added feature would be to create a Private Equity Fund to finance these joint ventures and to launch the incubated.
We have become a risk-averse and ponzi-like nation (invest without risk and get returns at others' expense). Even politics has become like a ponzi scheme. Our framework promotes prosperity and growth not only for the teams’ investors and local joint venture partners, but will promote prosperity and growth for team communities as well.
The approach we are using with this new league beats the risk averse by first using people's money who can afford to wait for the break even year (2nd) and profit years thereafter (3rd or 4th, etc.). We begin with my revenue generating strategies put together in 2000 (40 Revenue Streams in 26 (Mostly Local Revenue) Categories, with #40 being "etc.)" to which we add social media and creating new channels and networks for the league and each team, so that by year three there will be no losses, only profits, and they'll grow from there. We understand the Profitable Game Changers for Professional Sports Business Development as we apply what Sports Illustrated listed in 2011 as the Six Main Revenue / Wealth Drivers of the NFL.
We know the Who, What, When, Where, Why, and How to delivered a new league), to get "there" from "here” to launch the development stage that will enable launching the league in 2014, NLT 2015). Beacon on the Hill Sports Marketing answers the question: Why buy an NFL team and move the team to Los Angeles to play in the renovated Memorial Coliseum? And Beacon on the Hill Sports Marketing answers in detail, YES! A local professional football team can profit and make money!
Page content written / posted: 07-26-13
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