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Why can’t the NFL sue Kroenke for not abiding by its own rules? Why can’t NFL owners refuse to play against Kroenke’s team? Wouldn’t take much before Kroenke would have to cave since these projects are always financed on a shoestring and missing substantial revenue at the beginning is usually terminal.
They can.
But they aren’t guaranteed a victory in that lawsuit.
But beyond that…why sue? What would the real motive of the lawsuit be? The NFL says it wants a team in LA, maybe two, and I think they are probably speaking the truth there. Not because an LA team will make the league appreciably richer. But because it’s LA. It’s a good place to have a team. 2nd biggest market; you want that community invested in the NFL. Great place for Super Bowls. It’s LA.
The problem has been that since the mid-80s, people have been trying to build a new stadium there, and 30 years later, there’s still no stadium. There are a couple of projects that are waiting at the stop light…but they aren’t advancing because those guys want to buy a team before they build a stadium. And nobody is selling a team. So…they sit there waiting.
Meanwhile Kroenke has a plan, has the financial backing, and will undoubtedly clear the legal hurdles to build his site. It’s a damn sexy-looking plan, and LA likes sexy. And, frankly, the NFL likes sexy.
So their gonna sue Kroenke to stop him because….they don’t like him personally? Or the way he entered business without kissing their rings first? Yeah, that’s an emotional reaction, and billionaires get over their emotions when they study the balance sheets. The only reason to oppose him is because an owner wants LA himself. But that just isn’t going to be enough to stop him.
I think Mackeyser is right. If it comes down to litigation or relocation fees, the NFL will take the fees.
<div class=”d4p-bbt-quote-title”>wv wrote:</div>
Someone needs to write a book
about this whole move-to-StLouis/move-to-LA
thing.
Or at least an article in the Atlantic
or New Yorker or Field and Stream
or somethin.w
vMatt Taibbi.
LoL.
Lets email him. Or a tweet..
https://twitter.com/mtaibbiw
v<div class=”d4p-bbt-quote-title”>SunTzu_vs_Camus wrote:</div>
The money sharing will loosen their tongue….This has come up before. LA is not going to contribute any real money to the NFL. The league gets part of the gate but divided by 31, that’s not much. There is no such thing as individual team local tv contracts. There’s no gain in tv viewing because everyone in LA who is going to watch NFL football already does. Really, unless I overlooked something, there’s no financial windfall.
.Corporate luxury boxes?
Luxury suites rule in professional sports revenue
By Mark Koba, CNBC.com
Updated 2/4/2012 11:55 AMComments
All 137 luxury suites at Lucas Oil Stadium were sold out months before the opening kick-off for Super Bowl XLVI, according to stadium officials in Indianapolis.
Media day in Lucas Oil Stadium in Indianapolis on Tuesday, site of this year’s Super Bowl.
By Mike Fender, Indianapolis Star
Media day in Lucas Oil Stadium in Indianapolis on Tuesday, site of this year’s Super Bowl.
Enlarge
By Mike Fender, Indianapolis Star
Media day in Lucas Oil Stadium in Indianapolis on Tuesday, site of this year’s Super Bowl.
With a minimum reported price of $80,000 per box, that kind of money has turned luxury-suite revenue into one of the most dominant forces in sports, analysts say.
“Luxury suites have been growing in importance since the 1990s and are an essential part of any new stadium being built,” says Emily Sparvero, assistant professor at the Sports Industry Research Center at Temple University.
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In the past 20 years, 75% of American sports teams have either built or remodeled their venues, with luxury suite additions being a major reason for the construction and renovation.
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Ticket sales, once the main source of any professional team’s financial success, are now just part of the revenue mix, along with television contracts and heavily marketed merchandising.
Whether it’s the NBA, NHL or Major League Baseball, suites now account for anywhere between 5% and 20% of total team revenue, according to the latest statistics. What started out as a status symbol has evolved into a necessity.
“With greater payroll expenses from player free agency, owners have to find ways to raise more revenue,” says Mark Conrad, an associate professor at Fordham University’s school of business. “Luxury boxes provide a constant flow, no matter how good or bad the team is playing. The payment is already made and it’s part of the revenue generated by the facility.”
The money can be huge. While the number of suites varies — the new Yankee Stadium has 68 while Dallas Cowboys Stadium has 300 — any given suite can sell from $224,000 to more than $900,000 per year.
Demand is high, even if the suite — or stadium — has yet to be built. The NFL’s San Francisco 49ers want to build a new facility, and even though the project is still being planned, the team says it’s already sold $138 million in luxury suites.
As for who’s buying the suites, it’s a matter of money, as well.
“Corporations and high net-worth individuals are purchasing suites,” says Chad Estis, president of Legends, the premium ticket sales company that handles teams such as the Cowboys and Yankees.
“The most common reasons to purchase a suite are to entertain and build relationships with clients and prospects or for families to spend time together,” adds Estis. “And if you deliver the right experience, suite holders can be some of the most loyal supporters of a team.”
What suite holders get for their generosity is definite luxury. The benefits most often include:
• Luxury, theater-style seats
• Multiple flat TVs
• Private entrance to the stadium on game day
• High-end food and premium liquors
• Access to team events and playersLuxury suite buyers get sweet tax benefits as well. Corporations that buy them can deduct anywhere up to 50% of their cost, as well as that of refreshments for business purposes.
Not everyone, however, sees a perfect game plan with luxury suites. Larry DeGaris, an associate professor of sports marketing at the University of Indianapolis, says there are pitfalls.
“The danger in chasing corporate dollars is that they tend to evaporate during down financial times,” DeGaris argues. “Though luxury suites seem to have weathered the recent economic storms well, probably because corporate profits have been healthy.”
But not all luxury suite buyers make it through the bad times.
Phil Matalucci runs Luxury Suite Alternative, an online firm that matches event buyers with suite owners. He once sold luxury suites for the Philadelphia Eagles and the NBA’s 76ers, but found some buyers wound up over their heads.
“One guy came to me and said he wanted to get out of his suite contract, so I started reselling his seats,” says Matalucci, who registered $2 million in sales last year.
“The economy turned upside down and some businesses were asking, ‘What do I have this box for?’ ” Matalucci says. “Other firms say, ‘Why do we need to go to all the games?’ They need help in selling the tickets, and that’s where I come in.”
Tickets for the traditional fan are also caught up in the luxury box rage, says Kara Boatman, an economics professor at Saint Mary’s College of California.
“With more luxury suites, that meant fewer regular seats, and team owners raised prices to cover some of the cost of building the suites,” she says.
Boatman argues that the luxury-suite phenomenon was pushed by the NFL’s revenue-sharing model, which until July 2011 allowed owners to keep all funds from luxury suite sales and drove up the average ticket price.
Because the revenue from luxury suites in the NFL must now be shared with players, as it is in Major League Baseball, that could change how suites are viewed in the future, adds Boatman.
“NFL owners still have some enticement to build suites, but the lower revenue will reduce the incentive relative to what it is now,” she says.
As for the average fan who occupies the less expensive seats, don’t worry about them, says Bill Ordine, a former sports reporter in Philadelphia and Baltimore who now runs a sports fantasy and promotion website.
“Fan loyalty is always based on team performance rather than a sense of being disadvantaged because of luxury suites,” Ordine says. “Besides, most fans aspire to be rich enough to afford a suite.”
There’s no question about the ongoing loyalty for luxury boxes from team owners. While the building boom of new or renovated stadiums may be over, says Fordham’s Conrad, luxury suites and their revenue are literally set in cement for now.
“Luxury suites are here to stay for the next few decades. Most franchises have them. You can’t really tear them down,” says Conrad. “As long as there is demand, they will be a good source of revenue.”
http://usatoday30.usatoday.com/money/economy/story/2012-02-04/cnbc-super-bowl-suites/52948968/1
AgamemnonWith greater payroll expenses from player free agency, owners have to find ways to raise more revenue,” says Mark Conrad, an associate professor at Fordham University’s school of business. “Luxury boxes provide a constant flow, no matter how good or bad the team is playing. The payment is already made and it’s part of the revenue generated by the facility.”
Remember, the issue for me is whether or not relocation to LA gives other teams increased revenue.
The luxury box thing is interesting–but IS luxury box money shared revenue? (Maybe the article said, and I missed it.)
So let’s say it IS. What percentage does the league get?
Let’s pretend every team gets an equal share. I doubt that’s true, but let’s say it is.
If the Rams made 138 M in luxury box money…divided by 32, that would be about 4.3 M a year.
Compare that to annual revenue to the NFL as a whole from the tv contracts–6 B a year.
..
In the article it said that luxury boxes used to just go to the home team. Since the new CBA, it is shared with the players. I don’t think it said how it was shared though.
AgamemnonOld article but still kinda interesting, i thot.
Mainly cause i understood it :
http://proplayerinsiders.com/nfl-player-team-news-features/nfl-team-parity-and-revenue-sharing/w
vThe lack of luxury box revenue was the most intractable complaint Bidwill had with Busch II.
revenue sharing is an inter esting subject
http://quizlet.com/5266226/revenue-sharing-and-competitive-balance-flash-cards/
==============I didnt realize the NBA was worse even than MLB
as far as competitive balance and parity…http://misixanalytics.blogspot.com/2011/08/revenue-sharing-in-sports-analysis-of.html
With regard to the new CBA in the NFL, the owners will continue to share 70-80 percent of revenues from media deals, national sponsorships and merchandise sales, which amounts to the majority of the overall revenues because the NFL’s national TV deals are worth billions of dollars. For local revenues, 60 percent of ticket sales go to the home team and the remaining 40 percent goes to the revenue pool. In the new deal, a 10 percent local revenue tax on organizations considered to be large market teams has been added. The NFL has yet to sort out how they will determine whether or not a team is considered large market. The addition of the tax was a response to the increasing gap in retained team revenues (i.e. those not added to the revenue pool such as luxury box sales).
Because the main goal of revenue-sharing is to promote competitive balance, it’s important to be able to quantify it. One way to compare and measure competitive balance is looking across seasons within a league. In this context, competitive balance suggests that each team has an equal opportunity to win a reasonable number of games any given season. A way to quantify this measure is referred to as team-specific variation, or turnover ratio. It considers the change in relative positions of the teams in the standings each year by measuring the variation in win percentages (note: the statistic adjusts for the amount of games played in each league). For comparisons sake, the smaller the ratio, the more competitively balanced the league. The following chart illustrates the changes over time of this ratio for the three leagues and provides the concurrent revenue trends. The vertical axis on the left demonstrates the trend in the revenues by league over time, and the one on the right documents the competitive balance ratio.
From the chart, the NFL appears to be the most competitively balanced. MLB isn’t all that far behind, and the NBA is clearly the worst across seasons. The revenue pattern mirrors that of the competitive balance ratio: NFL highest, MLB next and NBA lowest. While the issue of cause and effect between revenue-sharing and competitive balance has been widely debated, it is hard to deny that some sort of relationship seems to exist. Empirical evidence by distinguished sports economist John Vrooman of Vanderbilt University supports this notion. Here’s a link to one of Vrooman’s studies conducted on the topic.
In all, the competitive balance ratios of the three major sports leagues seem to reflect the revenue-sharing structures of each league respectively. The NBA is noted as having the league with the lowest level of competitive balance across seasons. This can be partially attributed to a failure to share the bulk of total revenues in the form of ticket gate receipts and local broadcast deals. For example, the Los Angeles Lakers get to keep most of their $1.9 million in ticket sales, as well as 100 percent of the $3 billion local TV deal that they signed with Time Warner Cable. Further, the MLB is shown to be a close second to the NFL with regard to competitive balance, which can be characterized by a slightly lower percentage of shared revenues, a lenient luxury tax and a relatively lower salary floor. Lastly, with the highest amount of shared revenue, most significant payroll floor and the strictest salary cap, the NFL’s revenue-sharing structure is likely the cause of its competitive balance. In the end, the amount of revenues shared and brought in by each league would support the notion that more competitive balance translates into greater financial success.
* All revenue data in this post was taken from rodneyfort.com.
w
vgreat post, wv!
Very informative!Nothing like facts ‘n stuff.
Thanks. I will start a thread
on revenue sharing sometime.
Its actually quite interesting.
All the pros and cons and various
perspectives and approaches to it.w
vhttp://fox2now.com/2015/01/11/david-peacock-discusses-stadium-proposal-with-fox2/
(KTVI) – The proposal for a new downtown St. Louis riverfront stadium brought with it many questions. Why downtown? Why no retractable roof? Will the public vote on the funding?
FOX 2 Sports Director Martin Kilcoyne sits down with Dave Peacock, the co-chair of the St. Louis Stadium Task Force.
Watch video at webpage.
AgamemnonMy goodness. You guys have really gone to town on this subject. Good stuff too. I’ve read a few of the posts.
I think we all agree that the Rams are moving back to LA. If we just approach this from a business standpoint it makes perfect sense.
Stan’s plan benefits the league as well. I think Stan was cognizant of that and made sure that there was stuff benefitting the league in this deal.
One huge benefit is the league’s network is in LA and now they are going to have a marquee base of operations with a studio built either into that stadium or on the same grounds near it.
Nobody and I mean nobody in St Louis is trumpeting the ugly edifice that is Peacock’s proposal. Most telling is that the Governor and the Mayor didn’t bother to show either.
64,000 seat 1970s style stadium that is going to cost a billion dollars. 2,000 seats less in seating capacity than the Edward Jones dome. 16,000 less seats than the palace that Kroenke is going to build in Inglewood.
As for the league stopping Kroenke from moving? I get the sense the league gave Kroenke the okay to announce this deal.
I heard a local sports guy a few weeks ago, John Ireland on ESPN LA and he is the play by play guy for the Lakers as well and his take on this initial no teams moving in 2015 was some kind of negotiating ploy. It was about a week later that The City of Champions Project in Inglewood was announced.
I don’t think Kroenke is the type of guy who would deliberately try to piss off his business partners. Those being the other owners in the NFL.
The NFL is not a bunch of dummies, I think they knew this was coming. They also realize that keeping the team in St Louis for 2015 is not a good idea because the atmosphere there is going to be toxic. I think you will see Kroenke move the team and it may even appear he’s doing it against league wishes. This way he takes the hit as Simon Legree the evil villain and the league will work things out as the did in 1995 and the Rams will be in LA. Remember this. The Rams played in Busch Stadium in 1995. The Dome was not ready when they moved there. So now they play in either the Rose Bowl or the Coliseum until 2018.
Grits
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