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The Economic Structure of the NFL

In: The Economics of the National Football League

Author

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  • John Vrooman

    (Vanderbilt University)

Abstract

Sports leagues are unique in that individual clubs are mutually interdependent in their cooperative production of competitive games. As joint members of natural cartels each sports team is only as strong as its weakest opponent. Over the last half-century the National Football League (NFL) has become the most economically powerful sports league in the world largely because it has also been the most egalitarian. In 2010 NFL clubs pooled and shared two-thirds of over $8 billion in revenues among 32 franchises. The underlying source of NFL economic strength has been a survivalist “league-think” mentality that developed from the outset of the NFL-AFL war 1960–1966. Evenly shared national media money has grown at a compound rate of 12% from $47 million annually at the time of the actual NFL merger in 1970 to $4 billion under 2012–2013 TV contract extensions. Over the last 2 decades, however, a major threat to league-thinking solidarity has emerged from an individualist counterrevolution in unshared venue revenue. During the luxury-seat stadium building frenzy that followed the watershed 1993 Collective Bargaining Agreement (CBA), the proportion of team-specific venue revenue has doubled from 10 to 20% of total revenue. This once-tight syndicate now finds itself split into those teams with new venues and those without.

Suggested Citation

  • John Vrooman, 2012. "The Economic Structure of the NFL," Sports Economics, Management, and Policy, in: Kevin G. Quinn (ed.), The Economics of the National Football League, edition 127, chapter 0, pages 7-31, Springer.
    • Handle: RePEc:spr:semchp:978-1-4419-6290-4_2
    DOI: 10.1007/978-1-4419-6290-4_2
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    Citations

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    Cited by:

    1. Ian Gregory‐Smith, 2021. "Wages And Labor Productivity: Evidence From Injuries In The National Football League," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 829-847, April.
    2. Budzinski, Oliver & Müller-Kock, Anika, 2016. "Market power and media revenue allocation in professonal sports: The case of formula one," Ilmenau Economics Discussion Papers 102, Ilmenau University of Technology, Institute of Economics.
    3. Quinn Keefer, 2015. "Performance Feedback Does Not Eliminate the Sunk-Cost Fallacy: Evidence From Professional Football," Journal of Labor Research, Springer, vol. 36(4), pages 409-426, December.
    4. Steven Salaga & Brian M. Mills & Scott Tainsky, 2020. "Employer-Assigned Workload and Human Capital Deterioration: Evidence From the National Football League," Journal of Sports Economics, , vol. 21(6), pages 628-659, August.
    5. Nancy Ammon Jianakoplos & Martin Shields, 2012. "Practice or Profits," Journal of Sports Economics, , vol. 13(4), pages 451-465, August.
    6. Quinn A. W. Keefer, 2019. "Do sunk costs affect expert decision making? Evidence from the within-game usage of NFL running backs," Empirical Economics, Springer, vol. 56(5), pages 1769-1796, May.

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