Another football league?

Via King Kaufman, who does an interview with one of the investors, we have this NYT article about a proposed Friday night football league called the United Football League (UFL), which would play in the fall and thus compete with the NFL. The founder is Bill Hambrecht, who as a part owner of a USFL franchise, knows a thing or two about going up against the great football hegemon. Which doesn’t mean he has learned all the lessons from that experience, as this suggests to me:

Where others might be daunted by the N.F.L.’s success and power, though, Hambrecht came to believe its monopoly status gave him an opening. “I really started thinking hard about this after the Los Angeles Rams left to go to St. Louis and the Houston Oilers went to Nashville,” he told me over drinks recently. “Why do you leave two of the top 10 TV markets in the country for these two smaller markets?”

The answer, of course, is that the N.F.L. doesn’t really have to worry about where its teams are located, since most games are televised and the bulk of the league’s revenues come from its network contracts. What’s more, with the right stadium deal and enough corporate sponsorship, team owners can make as much (or more) money in smaller cities as they can in larger ones. That’s why the N.F.L. does just fine despite not fielding a team in 21 of the country’s top 50 markets — including such enormous metropolitan areas as San Antonio, Las Vegas, Orlando and (of course) Los Angeles. Nor does the N.F.L., which now has 32 teams, have much incentive to expand. On the contrary: expansion dilutes the TV money. (Greg Aiello, the N.F.L.’s spokesman, told me that “expansion isn’t on the table right now.”)

So the first step in Hambrecht’s plan is to enter big cities where the N.F.L. isn’t. As Mark Cuban put it to me in an e-mail, “There are quite a few good-sized non-N.F.L. cities that can support a pro team.” So far, the U.F.L. has decided to put teams in Los Angeles, Las Vegas and Mexico City. (Cuban is considering taking the Las Vegas franchise.) Each owner will put up $30 million, giving him an initial half-interest in the team; the league will own the other half. But eventually the fans themselves will become shareholders — because each team is going to sell shares to the public. Then the owner, the league and the fans will each own a third of every franchise.

First, I like the idea of fans as shareholders. Not sure how that will work in the real world, but I think the concept of selling stock in a team will appeal to a lot of people, and therefore will be a success from a capital perspective.

But there’s some real disingenuousness in these paragraphs. The NFL only has 32 teams, so in the best-case scenario it would be leaving 18 of the top 50 markets out. Obviously, the NFL has a gap in Los Angeles, but it’s interesting that the UFL is talking about Las Vegas, Orlando, and San Antonio instead of San Juan, Portland, and Sacramento, all of which are larger metropolitan areas than those three. Vegas is the hottest city without a major sports team, but it’s not like Orlando (three NFL teams in Florida) or San Antonio (traditionally Dallas Cowboys turf) are un-served.

Another head-scratcher to me is in the interview Kaufman does with Hambrecht:

I think it strikes a lot of people as odd, though, for people like you and Mark Cuban to say, “This is the new business we’re going to invest in in sports, competing with the NFL,” as opposed to, say, getting in on maybe not the ground floor, but the second floor, with something like lacrosse, where there’s obviously huge potential for growing from almost nothing.

Well, the people that understand the business understand exactly why we’re doing it. We’ve had some very interesting conversations with some NFL owners and others. Hey, they understand. Football is the most valuable content that there is now in the media world. By design, they’ve restricted the supply to get a monopoly price out of the consumer. Look at the fights they’ve had with Comcast.

It’s almost an obvious monopoly, and they have left 40 percent of the market open. They have not kept up with the demographics of the United States. It’s still basically a Rust Belt league. You just look at the map, it’s really kind of fascinating to look at it compared to the population. It’s shifted and they haven’t kept up with that. So, you know, if it were any other business, there’d be people filling that market.

This is the one major sport that’s left a good part of the market open. As we move along, particularly in the media world, it’ll get a lot more understandable and hopefully a lot more believable.

Again, look at the MSAs-by-population chart. Pittsburgh and Buffalo are shrinking, New Orleans has shrunk since 2000, though not because it’s a “Rust Belt” city, and Cleveland is growing slowly, but again factoring out the LA anomaly, I’m not sure where the NFL is losing out on national population trends. Besides, how is it that the NFL is the “one major sport that’s left a good part of the market open”? You could make the same case for Major League Baseball, which ignores all six of those major metro areas I mentioned above. Only the NBA would seem to have the market as Hambrecht sees it covered.

I’m not going to say Hambrecht is totally wrong here – even if I thought he was off his nut, the UFL is still in its conceptual stage, so what exists now and what will be when they kick off may be two different things. Read the Salon interview and see what you think. I think if I were a zillionaire I’d have find more productive ways to squander my money, but hey, I’m not, so what do I know?

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9 Responses to Another football league?

  1. Great! I have a boatload of money burning a hole in my pocket just waiting for something useless to use it on.

  2. Kent from Waco says:

    First off, if they target Friday nights they will run a whole lot of football powers the wrong way. Traditionally Friday is High School, Saturday is College, and Sunday is Pro. The WAC rubbed a lot of powers the wrong way when they started doing Friday nightb games a few years ago.

    Secondly, insead of starting a new league the smarter solution would be to expand the CFL I think. I’m not sure there are 16 or so untapped major markets, but there might be a handful. CFL expansion into the US would be interesting.

    Finally, I remember the old USFL. I was living in Portland at the time and I went to one Portland Breakers game to see Hershel Walker. No one much cared. And that was a big money league too. If I remember, the Donald Trump was involved.

    I just think people aren’t that interested in watching 2nd rate football, especially on TV.

  3. Kent says:

    Again, look at the MSAs-by-population chart. Pittsburgh and Buffalo are shrinking, New Orleans has shrunk since 2000, though not because it’s a “Rust Belt” city, and Cleveland is growing slowly, but again factoring out the LA anomaly, I’m not sure where the NFL is losing out on national population trends. Besides, how is it that the NFL is the “one major sport that’s left a good part of the market open”? You could make the same case for Major League Baseball, which ignores all six of those major metro areas I mentioned above. Only the NBA would seem to have the market as Hambrecht sees it covered.

    Another comment. MSA size is not everything. I’ve lived in PA and been to Pittsburg many times and if I was an owner, I’d take that rabid Steeler fan base over some fast-growing rootless sunbelt city any day. People in Pittsburg, Cleveland, Buffalo, and Green Bay bleed for their teams. They grew up with them, their parents grew up with them, and their grandparents grew up with them. You’ll never buy that kind of fan base in some new city of migrants from elsewhere in the US like Vegas. Not going to happen. Even if Vegas grows to twice the size of Pittsburg. Heck, 2 or 3 hours west of Pittsburg is State College, with a population of 38,000 yet Beaver Stadium at Penn State with capacity of 107,000 is always sold out and it is the 2nd largest college stadium in the country and actually the 6th largest stadium in the world

    http://en.wikipedia.org/wiki/Beaver_Stadium

    By comparison UNLV, which is a major Division I university with 31,000 students in a major metro area draws an average home attendance of less than 20,000 students and barely fills it stadium half-full. There are high schools in Texas that rival UNLV for home attendance for God’s sake. Would you rather base a team on the western PA football fan base or the Vegas fan base? Seems like a no-brainer.

    These days with dozens and dozens of sports channels on TV, and when most people living in these newer cities really aren’t from there, I just don’t see new teams inspiring much interest at all, especially in new leagues. MLB and NFL expansion would be a different thing, because those products are so widely followed everywhere. But a new league?

  4. Kent from Waco says:

    Now what would make a new league really interesting is if it was run like European soccer where teams are promoted up or demoted down based on performance. So if you had some new pro football team in San Antonio that was kicking ass in a 2nd division league and they had a chance to move up to the NFL and bump a mediocre team like the Lions or Cardinals down to the 2nd division. Now THAT would be interesing. Of course with the way the NFL is run it would never happen in a million years. But still.

  5. M1EK says:

    San Antonio and Orlando may have 2 or 3 in-state teams, but not exactly close. Who in San Antonio drives the 5 hours to Dallas or 3 to Houston to catch games? Orlando at least has Tampa only 1.5 hours away, but Miami and Jacksonville are way too far for all but the die-hard.

  6. Mac says:

    The important thing is that they don’t put a team in Birmingham. Kiss of death.

  7. Thomas says:

    The important thing is that they don’t put a team in Birmingham. Kiss of death.

    This is true. The only thing common to the WFL of the 1970s, the USFL of the 1980s, the WLAF (before it became NFL Europa) of the early 1990s, the CFL’s short-lived US expansion of the 1990s and the XFL of 2001 is that they all head teams in Birmingham.

  8. Jim D says:

    Atleast the AAFL has a redeeming social philosophy (players must have a college diploma):

    http://www.allamericanfootballleague.com/aboutus.html

  9. Jim D says:

    Of course, the specter of a Mexico City football team playing a San Antonio football team in the Alamodome is also too much to bear.

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