How the NFL is Truly Penny-Wise and Pound Foolish

When did the NFL begin to stand for the National Foolish League?

The fallout over the officiating fiasco has dominated the media and water cooler conversations for the past two days, and rightly so.  As more and more comes to the surface, the underlying issue has become very clear.  The NFL locked out their professional referees over three point two million dollars.  That’s right, $3.2 million.  This is a rounding error for the multi-billion dollar NFL.  How foolish is this?  Let’s break it down…

There are thirty-two teams in the league.  All, except for Green Bay, are owned and controlled by very, very wealthy individuals.  While many of the athletes playing in the league are rich, the people who sign their paychecks are wealthy.  So, to resolve this issue, we are looking at a cost per team of $100,000.  Let’s break it down a bit more.  Each team has ten home games per year (2 are pre-season and season ticket holders are required to purchase the entire package, even though pre-season games are really practice scrimmages).  So that’s $10,000 per home game.  Each stadium seats around 60,000 fans that are paying a reported average ticket price of $78.38, according to the Team Marketing Report published on ESPN.com.  The actually average prices range from $54.20 (Cleveland Browns) to $117.94 (NY Jets).  If we just take the average, we can estimate each team is taking in $4,702,800 per game through attendance.  That doesn’t include the $12 beers, parking, and other obnoxiously inflated concessions.  It also doesn’t include the vast revenue dollars that are shared by each team from the networks.  To resolve this issue, the owners would experience an increase in operating costs of 0.21% against gate revenues.  This equates to 17 cents per fan, per game.

Why would a business leader destroy the value of their product, place their employees at risk of injury, insult the intelligence of their customers, and erode the goodwill of their brand over pocket change?  Is this really about economics or is it motivated by some other less transparent objective?

I think it speaks for itself.

© 2012, Terry Murray.

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