Dark clouds over paradise?

DAVID NAYLOR

TORONTO From Saturday's Globe and Mail

The NFL is widely perceived to provide the ultimate in economic fairness and balance, a league where massive revenue sharing allows tiny Green Bay or Buffalo to compete on equal footing with places such as New York or Dallas.

But there is no more obvious evidence of the cracks in that theory than the appearance of the Buffalo Bills in Toronto this weekend.

The Bills are here for one reason: the $78-million dollars (all currency U.S.) they were promised by Rogers Communications for agreeing to play eight games over five years in Toronto.

No team wants to play a home game on the road. But in today's NFL, every club is under tremendous pressure to generate local revenue, something it does not have to contribute to the league's revenue-sharing pool.

In most cities, that means building new stadiums and deriving revenue from things such as naming rights, pouring rights and luxury suites — all of which fall into the category of non-shared revenue. In Buffalo, however, it means giving up home-field advantage and telling your players to get out their passports.

So how and when did the NFL's economic model start tilting toward a situation where market disparity has become a critical issue, just as it is in other sports?

The answer begins with Dallas Cowboys owner Jerry Jones, who took on the NFL during the mid-1990s and won clubs the right to make their own sponsorship agreements and keep that revenue for themselves. That created incentives for clubs catering to high-end customers and sponsors, which led directly to the NFL's stadium building boom that continues to this day.

Over the past decade, Philadelphia, Phoenix, Seattle, Cincinnati, Pittsburgh, New England, Indianapolis, Tennessee, Houston, Denver, Washington, Detroit and Cleveland have all built new stadiums, with Dallas jumping on board next season and New York and Kansas City after that. Other clubs, such as Chicago and Green Bay, renovated their stadiums in order drive extra non-shared revenue from them.

In Dallas, the new stadium will have more than 200 suites, each leasing for more than $350,000 a year, and stadium sponsorship is expected to bring in $50-million more.

In Buffalo, where the corporate base is small and the fan base price-sensitive despite having the lowest average ticket price in the NFL, there are no dreams of building a new stadium to fetch higher prices and put the Bills on par with other clubs. As a result, the Bills have a tough fight to keep up with the revenue growth of other clubs.

The NFL has a salary cap and a massive television contract that covers most of its player costs. But that cap has risen sharply in the past few years, from $51.5-million in 1998, to $85.5-million in 2005 to $116-million this season and a projected $123-million next year. And much of that recent bump is because more local, non-shared revenue is being included into the salary-cap formula, something the players demanded leading up to the signing of the latest collective labour agreement in March of 2006.

The National Football League Players Association, understandably, was upset its members were not benefiting from NFL clubs' new-found riches, the non-shared local revenue that stemmed largely from the league's stadium building boom.

But by negotiating a 59.5-per-cent share of a revenue pool that includes the local revenue — in place of a 65-per-cent share of one that did not — the players upped the ante on teams such as Buffalo.

The result is that in today's NFL, the salary cap jumps every time Jerry Jones takes in another nickel, whether Bills owner Ralph Wilson does or not.

That's why Wilson was one of two owners who voted against the current labour agreement. And why he subsequently teamed up with New York Senator Charles Schumer to spearhead a revamped revenue-sharing plan to address the NFL's new economic realities and the effect they are having on places such as Buffalo.

Schumer and Wilson managed to persuade the owners to approve a four-year plan that sees $430-million shared from the league's top 17 revenue producers to the bottom 15.

"Without this agreement, I'm not sure we could survive," Wilson said of the plan when it was announced in March of 2007. "This is not the total solution. It's sort of a Band-Aid situation."

It's a situation that still left Buffalo looking for ways to improve the bottom line, which is why Wilson signed off on the games in Toronto. And if the NFL's new economics are challenging Wilson, an owner with no debt on a franchise he bought for $25,000 in 1960, just how will it be for an owner who has to finance the team at a purchase price that could approach $1-billion?

The bottom line is that the league's economic model that once protected teams such as Buffalo no longer exists. Barring a massive shakeup in the way the NFL does business, the Buffalo Bills will be fighting for survival in Western New York under any ownership group.

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