It appears that the 31 National Football League owners and Green Bay Packers board of directors are a bit peeved at some former customers who have decided going to a stadium to watch an NFL game is not the thing to do anymore. But the league thinks those customers can be recaptured by tweaking the day of game experience by installing some gadgetry that will enable consumers to share some of the same benefits as those watching the game at home.
In other words to combat a 4.5 percent decline in attendance since the economic meltdown of 2008, the league wants to make sure that Internet access at the stadium is available for those plopped down in their seats and scoreboards have the latest in video technology.
The media that follow the NFL seemingly have bought into the argument that the game-day stadium experience needs better video boards and wireless access. But it is time to do a little digging, maybe put a shovel into the ground about an inch deep and get to the bottom of the stadium attendance decline.
It has much more to do with money and disposable income than upgraded video boards.
I know a person who had season tickets for one of the New York teams for about 33 years. That person owned two tickets and worked his way down from the upper level of the stadium to a seat near the 50 yard line not too far from the field. Over the years he paid slightly more for a ticket going from about $25 per game per seat to around $100. But the new stadium was built and the bill came in one day, tens of thousands of dollars would be needed for the right to sit in those seats, just the right. And then if he and his friend wanted to but a ticket for the game, it was $700 a pop per ticket.
That person is a very successful professional who probably could afford to buy the right to purchase a ticket for a seat to an NFL game in the Meadowlands. But because of the cost, he declined the offer. For him, paying thousands of dollars on a weekly basis (eight regular season games plus two pre-season contests) just wasn't the right thing for him to do financially. If the team made the playoffs and had home games, thousands of dollars would have to be invested in those tickets as well.
It seems that all the gadgetry that the NFL wants to make available for people like him, and he loved his team, is not going to bring him back.
Now he knows his team is just a cold business with no real emotion, so why should he give back that kind of loyalty?
The reason the NFL is seeing a decline in stadium attendance has everything to do with money and nothing to do with in stadium gadgetry. There is the smoke and mirrors report from an industry-watching business, Team Marketing Report, which claims the average NFL ticket cost $77.34 in 2011. Apparently, the price of personal seat licenses was not factored into the price tag. Tickets now are well into the three and four figures for customers.
The NFL shouldn't be crying about losing money from empty seats. The 32 teams will get nearly $28 billion in television rights fees from various media companies between 2014 and 2022. Television dollars have been an essential part of professional football since 1960. American Football League founder Lamar Hunt co-opted a plan from Branch Rickey's stillborn Continental Baseball League that called for each of the eight American Football League franchises to split money equally from a five year deal with the American Broadcasting Company starting in the AFL's first season in 1960.
New National Football League Commissioner Pete Rozelle co-opted Lamar Hunt's AFL TV plan in 1961 but could not implement an NFL TV revenue sharing plan until Congress and President John F. Kennedy shielded the league from antitrust law violation. The Sports Broadcast Act of 1961 gave Rozelle (and every other sports league in the United States with the exception of the American and National Leagues of Major League Baseball because Baseball had a blanket antitrust exemption given to the business by the Supreme Court of the United States in 1922) the ability to take the NFL's 14 teams and sell the them as one entity to a television network. That piece of legislation, signed into law by Kennedy on September 30, 1961, gave the NFL the tools it needed to become a financial juggernaut.
Rozelle played off the two dominant American TV networks at the time, William Paley's Columbia Broadcasting System and David Sarnoff's National Broadcasting Company. and got them into a bidding war for NFL rights. Paley's CBS won the first round for the TV deal and landed NFL rights for 1962 and 1963. Sarnoff lost the NFL but stabilized Hunt's AFL by giving the league a five year deal starting in 1965 worth about $35 million. With that money, AFL teams were able to sign big name college players like Joe Namath. By 1966, the two leagues merged and Congress stepped in once again giving cover to the NFL and AFL by approving the marriage between the two rivals. President Lyndon B. Johnson signed the legislation allowing the 15 team NFL to realign with the nine team AFL.
The NFL is the most valuable TV property in the United States. The Super Bowl is now played in February and that is significant to television networks as February is a sweeps month and the TV ratings from that month are used to set advertising rates. The Super Bowl is the most watched TV show in the United States and the network that has the rights to the game almost always wins the February sweeps.
NFL games are ideal for advertising looking to reach men between the ages of 18 and 34 and 25 and 54. The league knows this and is able to extract billions from television partners.
Apparently the new football contracts have been very good for the individual NFL owners. The publicly owned Green Bay Packers reported a nearly $28 million profit in 2011. That is pretty good for a team that plays in the smallest market of any major sports franchise in North America. Because the other 31 NFL teams are privately owned, there is no way of knowing how successful a franchise is unless an owner decides to release financial records.
The guess is that all NFL teams are doing well.
The NFL knows that local TV affiliates want home team games and the Giants and Jets have bent the blackout rules since the opening of the new Meadowlands stadium to show games locally on CBS and FOX despite not selling every ticket in the place. The NFL has relaxed the TV blackout rules which called for the home team market and secondary markets not to receive a game on local TV if the stadium was not sold out 72 hours prior to kickoff. Now teams can lift the blackout if they so choose with a guarantee of 85 percent of the stadium tickets being sold.
It doesn't pay to get your television partners upset over a few thousand empty seats...or does it?
Indianapolis ownership however has decided that the Indianapolis market will not get Colts games if the team does not sell out the stadium.
Indianapolis Colts ownership apparently took advantage of the 1986 federal tax code revisions, signed into law by President Ronald Reagan, which allowed an owner to get as much as 92 percent of the revenues generated in a municipally funded stadium. Colts owner Jim Irsay has Indianapolis and Indiana politicians over a barrel with his lease and the situation was complicated by the fact the stadium is a money loser and the shortfall was solved by laying off municipal workers and raising taxes.
Under federal law, municipalities can take as little as eight cents on the dollar from revenues generated in a stadium to pay down the debt accrued from stadium or arena construction depending on the agreement between a team owner and municipality.
The in-stadium experience is probably going to cost customers more and more money as someone has to pay for wireless technology and better scoreboards. But price hikes are not just limited to NFL in-stadium customers. In Hamilton County, Ohio, the Cincinnati Bengals stadium is a chronic money loser and every year it seems Hamilton County officials have to find new revenue sources beyond the traditional tax hikes and municipal firings to pay off the debt on the facility which was exacerbated by the Bengals ownership being able to take as much as 92 percent of stadium revenues thanks to the Reagan-era tax code reform.
There is a reason for slumping NFL attendance. It is the high price of tickets. The economic meltdown in 2008 during the Bush era is still lingering with an awfully slow recovery. People don't have tens of thousands of dollars to throw at the NFL as the league is finding out in Santa Clara, California with the new San Francisco 49ers stadium being built and the grumbling about the cost of personal seat liscenses and game day tickets. That is the real reason NFL attendance has dropped. It has nothing to do with technology. Just ask the guy I know who started his season ticket subscription in the late 1970s and gave it up when he got the bill for his new prime piece of real estate in East Rutherford, New Jersey.
The cost of tickets is too damn high.