Against Football (9 page)

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
Miami
Arena?” I 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:

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.”