Can the NFL pay for Zygiworld?

>> 2.24.2011

A little while ago, I wrote a post called “What Jerry Jones and the NFL Can Learn from Detroit,” comparing the gorgeous-but-abandoned Michigan Central Station to the new Cowboys Stadium. I explained that the push to build more Jerryworlds was a major factor in the CBA negotations:

In the mid-90s, teams explored the brave new salary-cap world, and realized that unshared revenue like luxury suites and concessions not only didn’t have to be shared with other owners, it didn’t have to be shared with the players! This kicked off almost two decades of teams building new stadiums filled with luxury suites and swank accommodations. Teams, for the most part, took advantage of easy credit and/or public financing. Jones used $325 million worth of public funds, secured $625 million of credit—and received a $150 million loan from the NFL.

That's the money the owners are looking to keep from the players: nearly a billion dollars a year to help build the Vikings’ Zygiworld, the Bills’ Ralphworld, and many others. Even the Panthers, a team whose stadium is was built in 1996, are already talking about building another one. Over the next ten-to-twenty years, most NFL cities will feel the pressure to either build a similar monuments to unbridled growth and fantastic excess—or risk their teams’ Ownerworld being built in another town.

Kevin Siefert, at the ESPN NFC North blog, passed  along the work of Cory Merrifield from SavetheVikes.org, who estimates the bill for Zygiworld at somewhere between $900 million and $1.2 billion.

This, right here, is what I was talking about. The economics of billion-dollar stadiums are unsustainable. Teams can’t pay for them; the average NFL franchise is worth $1.02 billion. Cities can’t pay for them; municipalities nationwide are scraping the bottom of the barrel. So, the NFL is hoping to skim a billionish off the top of all the money the NFL generates, and set it aside to help build these stadiums nobody can afford—essentially, the players and fans of all 32 teams will be building these new stadiums, one at at time.

As I said in my prior post, this directly contradicts the letter Commissioner Goodell wrote to fans, explaining why owners were asking the players for big financial concessions from the players:

“Economic conditions, however, have changed dramatically inside and outside the NFL since 2006 when we negotiated the last CBA. A 10 percent unemployment rate hurts us all. Fans have limited budgets and rightly want the most for their money. I get it.”

Either Commissioner Goodell doesn't get it, or he’s lying through his teeth. Current “economic conditions” make building a round of billion-dollar temples to football and consumerism illogical, if not impossible. Who will fill these stadiums, if ticket prices are hiked to pay off the debts incurred? What businesses will flush millions down the toilet for naming rights? I already call New Meadowlands Stadium “Your Company Name Here Stadium” because they haven’t been able to find an eight-digit taker.

The NFL might be able to swing this in their negotiations with the players.  They might be able to build Zygiworld, and a few more after that. But, to what end? What happens when the NFL’s bubble bursts, and these multibillion-dollar mega├╝berdomes are playing to half-empty crowds? What happens when franchises start going insolvent because their revenue isn’t covering their debt payments?  The NFL will only be able to cover that up with league money for so long.

Goodell says that these negotiations are about structuring the league’s finances in a responsible way, so to accommodate the huge piles of new revenue surely coming around the corner. But the NFL has to bring its visions of unrelenting double-digit-percent-every-year growth in line with the struggling-to-hold-steady local and national economies it’s part of. I hope, for all of our sake, that time is now, while things are stable—not when franchises are moving left and right to try and finagle one last sweetheart deal.

2 comments:

Angus Osborne,  February 24, 2011 at 1:22 PM  

The especially irritating aspect of building Jerryworld etc., is that a huge stadium doesn't make the actual sport one bit better.

Matt,  March 1, 2011 at 12:33 PM  

Angus hit the nail right on the head. Let's all remember that these crazy stadiums only host 10-12 NFL football games a year and pack in a maximum of around 100,000 people. Even considering outrageous ticket, food, souvenir, and beer prices, there's only so much revenue any one stadium can generate solely from NFL football (of course, stadiums are used for a myriad of other events). The vast majority of the NFL's money comes in from the fans watching on TV (i.e. advertising dollars) and buying NFL merch in stores and online. They only see these stadiums in cut-aways to commercials. Now, I LOVE going to NFL football games, but I go to enjoy watching the game with fellow fans while having some greasy food and beer - pretty much the same thing I do if I watch the game anywhere else. Turning these stadiums into football-themed amusement parks and jacking up the entrance fee just means I'm that much more likely to stay home. Why pay a premium for an experience that is in no way superior?

To me, these megastadiums are all about ego. 32 billionaires trying to one-up each other. I really enjoy going to Ford Field for games, but one thing absolutely kills me every time. Ford Field opened for the 2002 season and cost $430 million. In 2009, the Lions made the most significant alterations to their logo and uniforms since about 1970. Now there's old logos everywhere I look in this half-billion dollar building.

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