Sports Media Review by Jonathan Weiler

Wednesday, June 7, 2006
3:19:00 PM EDT

First, a brief excerpt from an exchange between NHL commissioner Gary Bettman and Mike and the Mad Dog on the FAN . 

After agreeing with Bettman that the new salary cap is a good thing for the NHL, but noting that TV ratings are atrocious beyond belief, Russo commented “…that (salary cap) makes it harder for big market draws. The Rangers, Toronto, Detroit to make the playoffs…which hurts your ratings…that’s a catch-22 you have to play with.”

Bettman then noted that no one complains when Jacksonville and Green Bay make the Super Bowl (Jacksonville’s never actually made it, but we’ll leave that aside). 

Russo: “yeah, but the NFL, they’re bullet-proof from a ratings standpoint.”

Bettman: “they got there over twenty years of great competitive balance, having the type of partnership and salary cap that we finally got what you really have to look at is what’s the best thing they can do for their fans and that’s giving them the belief and the hope that their team can win…” 

Where to begin? Tampa Bay won the Stanley Cup in 2004. Tampa Bay is one of the smallest NHL markets. Carolina, heralded as another small market team that can now compete, made the finals in 2002. The big-market Rangers were horrible for years, missing the playoffs for seven straight seasons, an exceedingly difficult feat in the NHL. After the introduction of the cap this season, they became an excellent team. Detroit was consistently great before and had the best record in the NHL this season. What’s the point: well, for one, the repeated overstatement of the relationship between market size, payroll and winning (the former two of which are often not, contrary to conventional wisdom, the same thing). Did the NHL have some problems with revenue discrepancies before? Yes, it did. Like baseball, local TV contracts drive much of the sport’s revenue picture. This inevitably breeds, from a competition standpoint, an unfair system.

But, more frustrating than the misconceptions about the relationship between market size, payroll and winning is whether the health of the sport as a whole and its popularity among fans is dependent on a salary cap (or payroll restraint more generally). This is where sports commissioners appear unable to help their dishonesty. 

The NFL has been a television monster since the 1960s, and the most popular sport in America for nearly forty years, a multi-billion dollar business whose championship game has become a virtual American holiday, drawing in excess of one hundred million viewers for every game and dotting the list of the highest rated TV broadcasts of any kind of all time. In the 1970s the NFL was, it could be fairly said, dominated by a small handful of teams – the Steelers, the Cowboys, the Dolphins and, to a lesser extent, the Raiders and Vikings. The 1980s were also dominated by a handful of teams – the 49ers, the Redskins, the Giants and the Bears and all those teams, to boot, can fairly be described as big market teams. The sport was enormously popular throughout those two decades, already far and away the dominant sport in America, especially by the 1980s.

The salary cap, of course, was first implemented in 1994? So, what in God’s name is Bettman talking about? The NFL’s enormous success and popularity pre-dates by decades the introduction of the salary cap and also survived intact (to put it mildly) through two decades of dominance by a small handful of teams, i.e., a lack of competitive balance. In fact, the sport’s TV ratings have been in pretty steady decline for the past decade. Now, this is, to a substantial degree, due to the fracturing of the television market, but there is no real argument to be made that there was any connection between the sport’s popularity, the lack of a salary cap or competitive balance before 1994. 

Major league sports commissioners are not interested in salary caps or salary and payroll restraint more generally because of competitive balance. They are interested in payroll restraint because of how that affects the bottom line. Commissioner Bud’s statements about these issues suggest that even he doesn’t take himself seriously. Whereas before 2002, Bud repeatedly insisted that the discrepancies in payroll and the lack of revenue sharing were anti-thetical to competitive balance, which was hurting fan interest in the sport, he has spoken glowingly about improvements in competitive balance since 2003. But, guess what? Payroll discrepancies are far worse now than they were in 2002. If Bud really believed that lack of payroll restraint and payroll imbalance was the linchpin issue upon which the health of the sport rested, he would not be so much more positive about its health now then he was four years ago. The consequence of 2002 was not to close the spending gap in order to improve competitive balance – it was to ensure that the owners as a whole got to keep a larger share of their enormous revenues and that the Milwaukees of the world got their money for nothing.

If a sport increased its revenues because of increases in ticket prices and other successful ventures and at the same time saw only better off fans go to the games, saw a decline in its TV ratings (which, the NFL has shown, need not affect its lucrative TV contracts, though those contracts have not been profitable for the networks that signed them) – in other words, saw access to its product decline in terms of overall numbers of people watching, but made more money anyway – do you think any commissioner would care? 

In fact, this is the growing trend in major professional sports. It’s become less affordable for the typical person to go see a game. The new stadia are being built more than anything to accommodate big corporate sponsors and well-heeled fans who can buy luxury boxes and pay higher prices for tickets and concessions. Neil DeMause, co-author of Baseball Prospectus’ great new book, Baseball Between the Numbers, argues that a dramatic increase in spending on sports over the past fifteen years or so is being driven by the upper echelons of American society, and professional sports’ business strategy is increasingly focused on catering to that stratum of the income distribution. And, there is a special payoff to this kind of approach because of the enormous entry barriers to pro sports leagues. As DeMause puts it, “In another industry, the increase in high-end demand would lead to an increase in supply…” But, while “you can open another two hundred Nordstroms…you can’t add two hundred teams to the AL East.” (As an interesting and related side note, Demause cites the work of a stadium consultant who notes that, because of the luxury boxes in the “cozier” new ballparks like the new Comiskey, fans in the upper deck are farther away from the action than they were in the old, presumably fan un-friendly ballparks. Smaller foul territories are great for fans sitting in the front rows – and hitters – but folks who are relegated to the upper deck are farther out in left field than they were before).

“Competitive balance” is the populist trope that commissioners use to convince the sporting public that they’re on the side of the little guy. It’s the silver bullet in commissioners’ public relations efforts with the public which is, in turn, an easy mark because of its resentment over high salaries and the presumed link between those salaries and all attendant ills of modern sports. But, Bettman and co. are playing the public for suckers. Balance sheet, not competitive balance is the name of the game, and only by sleight of hand can sports commissioners say that the purpose of payroll restraint is to serve the larger public.

Why Mike and the Dog lap this stuff up is another story.

 

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