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How does the Merchandising work with the NFL?

this is a discussion within the Saints Community Forum; I am curious how much of the revenue from merchandising is shared between the league and it's franchises. Anyone got any hard figures?...

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Old 11-24-2004, 02:14 PM   #1
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How does the Merchandising work with the NFL?

I am curious how much of the revenue from merchandising is shared between the league and it's franchises. Anyone got any hard figures?
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Old 11-24-2004, 02:31 PM   #2
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How does the Merchandising work with the NFL?

i found this....

NFL Revenue sharing

Basically the NFL shares virtually all revenues equally among the teams. The $2.2 billion the league gets from broadcast contracts is split equally among the teams. So too are national sponsorships and licensing fees.

The league also shares gate receipts among the teams. Currently 40 percent of the gate receipts from NFL games go into a pool that is eventually divided equally among the teams. This took effect in 2002. Previously the league had earmarked the 40 percent of gate revenues for the visiting team.

Revenue sharing in the NFL is nothing new. It\'s been around for more than 40 years. In the early 1960\'s then NFL commissioner Pete Rozelle suggested that all television revenues ($320 million back in those days) be shared equally among the teams and the owners at the time improved.

Over time the policy has developed into what it is today. The goal is to promote parity and stability. The sharing of the league\'s massive broadcast revenue is the key element.

\"No other league distributes revenues across its entire membership in a manner that comes close to giving each team an equal and solid television revenue base. This policy is a major underpinning for team stability,\" NFL Commissioner Paul Tagliabue once said in a speech to the Economic Club of Washington.

To some the revenue sharing in the NFL equals some kind of welfare state. Socialism is moniker some might prefer. But the league sees it another way. The product is the NFL and the teams are partners in promoting and selling that product.

Sure, the teams compete on the field, but as a group they compete with other entities for the entertainment dollars of the public.

Tagliabue summed it up this way in remarks to the Senate Judiciary Committee back in 1999:

\"Approximately 60 percent of the revenues of the average NFL club today come from the joint presentation of NFL games on national television networks. These revenues are shared equally among all clubs without regard to any club’s market size or revenue potential.

\"As a result of the sharing of these and other revenues, the economic advantages of the clubs in the better-situated markets are balanced, albeit not always fully offset, by revenue sharing with the clubs in smaller, less well situated communities, such as Buffalo, Cincinnati, Green Bay, Indianapolis, Kansas City, or New Orleans.

\"We have also instituted supplemental revenue sharing policies to give additional direct financial support to clubs whose revenues may otherwise be insufficient to field a competitive team.

\"This kind of revenue sharing is inconsistent with the manner in which independent economic competitors conduct themselves. It is the way business partners conduct themselves, seeking to compete not with each other, but with other outside independent competitors in the marketplace, including other sports leagues and other sports and non-sports entertainment.\"

Of course, the NFL has a big advantage. It\'s revenue base is huge. The $2.2 billion in gets from its TV deals annually is more than all NHL yearly revenues combined.

All NFL games are broadcast on a network, eliminating the problem of a huge disparity in local television broadcast rights among different size markets. The NHL\'s presence on national networks pales in comparison.

It also helps that the NFL has had revenue sharing for four decades. It\'s ingrained into the league. That\'s a tradition the NHL doesn\'t have.

The NHLPA, for its part, has no problem with revenue sharing. It has even proposed some revenue sharing ideas for the league. But Bettman says revenue sharing doesn\'t work without cost certainty.

And what Bettman means that what players get in compensation should be tied to how much the league brings in in revenues. The NFL does that through the salary cap

if you made it through that...you may want to read this as well...

NFL salary cap

The NFL salary cap is complex. So complex that there are people dubbed \"capologists\" who help teams and the league work within the system. Basically, the NFL\'s salary cap, which came into being in 1994, is based on league revenues.

The official term is Defined Gross Revenues (DGR). The DGR is based on ticket sales, merchandise sales, and revenue from broadcasts. Once that amount is determined then the salary cap for each team is announced.

This season (2003) the players\' share is 64.25 percent of the DGR. So the maximum payroll for NFL teams, based on the DGR, is $75 million. There is also a minimum team payroll based on 56 percent of the DGR. This season it is $63.1 million. If a team fails to reach the $63.1 million level the then the players on the team roster will be directly paid the the amount the team falls short.

Although it\'s called a hard salary cap there is flexibility.

\"There\'s a lot of flexibility with the cap,\" Ed McGuire, cap expert for the San Diego Chargers, once said, \"It\'s really like everyday life, where you have your budget that you have to live with, but you also have your credit cards that give you some room.\"

In other words, it\'s a matter of how much you want to borrow from your future to pay for the present. The way teams can do this is through signing bonuses and back loaded contracts. That\'s how teams get around the salary cap.

To explain how this works we\'ll turn to the NFL Salary Cap FAQ put together by Al Lackner of AskTheCommish.com.

\"Teams with heavy payloads learned quickly that the best way to combat the Salary Cap was to circumvent it. They did this by back loading contracts, pushing all of the big money to the end of the contract. For example, a 5-year, $20 million contract (not counting a signing bonus) signed in 2003 as described above would probably allocate the money in the following manner:\"

\"Year 1 (2003): $450,000 (min. cap given to players with 4+ years experience)
Year 2 (2004): $1 million
Year 3 (2005): $1.5 million
Year 4 (2006): $5 million
Year 5 (2007): $12 million\"

The problem here is that NFL contracts are not guaranteed. The team could release the player before the big part of the contract kicks in. The way around that it is through the signing bonus. Again, here\'s Lackner\'s explanation.

\"In order to convince the player to sign such a cap friendly contract, the team will fork over a large signing bonus. The signing bonus is guaranteed, so that money is the player\'s to keep if the team decides to release him later....

\"...The signing bonus IS part of the player\'s salary. So it counts against the cap. When determining team and player salary, the signing bonus will be prorated over the length of the contract.

\"For example, if a player signs a four-year deal with a $1 million signing bonus, $250,000 of that bonus will count toward team salary for each contract year ($1 million divided evenly over the four-year contract is $250,000 per year). If a team releases a player, the unamoratized bonus money (the remaining prorated bonus money) counts immediately against the cap.\"

This just scratches the surface of the complexity of the NFL\'s salary cap. There are several elements that go into it. What happens to teams that go over the cap? In theory, that shouldn\'t happen. That\'s because the league must approve all contracts and it\'s job is to make sure no one exceeds the cap. It has, however, happened and teams can be fined or lose draft picks.

When the players agreed to the salary cap in 1993 they also got something they had never had -- real free agency. It was a compromise. The players got the ability to market their skills on the open market after a certain length of service and the teams got a way to slow down the escalation in player salaries. Teams also got mechanisms to help keep some of their free agents

The NFL salary cap fits into the same theory as the league\'s revenue sharing plan. Again, we\'ll turn to Lackner for the description.

\"Basically, through the CBA the parties have realized that the goal of the players and the management should be the same—increasing the revenue pie instead of fighting over the existing amount—and the NFL has tailored the CBA to achieve that end.\"

Of course, there are plenty of criticisms of the NFL\'s parity driven system. The basic complaint among some is the system elminates greatness in favor of the common good. There are no great teams in the NFL anymore. There are no Packers of the 1960\'s, Steelers of the 1970\'s, 49ers of the 1980\'s or Dallas Cowboys of the 1990\'s.

\"Parity has had its say,\" Sacramento Bee writer Mark Kreidler once wrote for ESPN.com. \"The salary cap has had its utterly intended effect, which is to eliminate the habit of teams assembling dynastic models of success and replace it with the popular Anyone Can Win! notion, borrowed lovingly from your nearest Lotto outpost.\"

In the NBA, a dynasty still exists. That would be the Los Angeles Lakers, who once again are the team to beat in the National Basketball Association. In our next report, a look at the NBA system. A system NHL Commissioner Gary Bettman helped develop.

CBA Home

and here\'s the link...

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