Page last updated at 10:59 GMT, Monday, 1 February 2010

American football faces financial reform

By Caroline Hepker
Business reporter, BBC World, New Orleans

New Orleans Saints quarterback Drew Brees
Quarterback Drew Brees is well paid in a "socialist system"

Most of the pros wear earplugs. American football is ear-shatteringly loud.

Inside the 70,000 seat Louisiana Superdome it is clear why fans love it.

The New Orleans Saints collide, crunch and sprint across the field in their crucial play-off game against the Arizona Cardinals.

Occasionally, giant screens flash "TOUCHDOWN" and sparkling cheerleaders pose on the sidelines.

But few of the New Orleans Saints fans in their gold and black supporters' jerseys will have given much thought to how America's most popular sport is run.

It is a unique business model.

Socialist capitalism

The National Football League is a closed shop.

Saints play Arizona Cardinals
All NFL teams share in the vast majority of revenues on an equal basis

There are only 32 professional football teams in the United States and strict rules about who can own a team.

But uniquely, the teams share at least half of their revenue from lucrative TV rights, merchandising and ticket sales.

"The revenue sharing keeps all 32 clubs in the hunt," says Mike McCarthy, who writes about the business of sport for the national newspaper USA Today.

"Every year they get to split up a huge amount of TV money, so you don't have this huge gap between the richest clubs and the smallest clubs.

Any team can compete for the Super Bowl title every year in America. Particularly in a capitalist country like ours, that is very unique. As one NFL owner put it 'we are 32 fat cat republicans who vote socialist'."

In contrast, in other sports leagues the burden of rapidly rising player salaries has broken smaller clubs, leaving larger ones to dominate the landscape.

Think of Premier League football in the UK or US professional sports such as basketball, baseball and ice hockey.

Limits on pay

Salaries for players such as the Saints star quarterback Drew Brees are limited by a centrally set budget.

This season, team bosses were limited to $127m (£80m) for their entire squad of players.

That means some footballers are handsomely paid - Mr Brees has a six years $60m contract.

But the system has other benefits too, explains Marc Waller, the NFL National Football League's chief marketing officer.

"We have a sort of socialist capitalism, I think is the best way to describe it," he says.

"Essentially all teams share in the vast majority of revenues on an equal basis."

"So whether you come from New York or Green Bay, irrespective of the size of your market, the size of your fan base or your TV audience, revenues are shared equally and equitably, which is fantastic.

Costs are controlled in a similar way, Mr Waller explains.

"There is a salary cap, everyone has the same salary cap - so you can't buy your way to the best players."

One business?

But not everyone thinks the NFL model is the right one.

New Orleans Saints fans
The NFL system means even small teams can stay in the league

The US Supreme Court is currently deciding on a case about whether the NFL is one organisation or 32 separate businesses.

The case could have big implications for holding the league accountable and will have ramifications for many other sports leagues, from tennis to basketball.

Then there is the union that represent football players, past and present.

The National Football League Players' Association is negotiating to renew the collective bargaining agreement between players and bosses, which expires at the end of this season.

They have been locking horns over pay.

DeMaurice Smith, executive director of the NFL Players' Association, says the team bosses now wield too much power: "We are in a situation where the owners believe the players should take about 20% less than they are making right now."

Superdome rebirth

With no new agreement in sight, the lynchpin of the NFL could crumble.

The deal that caps player salaries has in the past prohibited players from going on strike - such as the walk-outs that have plagued the National Hockey League over the last two decades and damaged the popularity of ice hockey.

And yet, the New Orleans Saints would not have a home stadium in the city known as "the Big Easy", without the NFL, according to Doug Thornton.

This neat former college football player now manages the Superdome for the State of Louisiana.

He was also there when desperate New Orleans residents used its damaged shell to shelter from the wind and the rain.

He says the money from the NFL meant they could be a symbol of rebirth for the city

"After Katrina, people realised that there was a lot of misery and suffering in this building," he says.

"It played out on a worldwide stage. It was important to turn the Superdome back into a symbol of inspiration and hope, rather than a symbol of misery."

The building was returned to commercial operations a year after the the hurricane struck.

"It has meant an awful lot to the people of New Orleans and to the fans," says Mr Thornton.

And what better come-back story for the Saints than to win the Super Bowl this February in front of an estimated 140 million viewers, for the first time in their 43-year history?

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