Finance Uncategorized

The NFL’s upcoming platinum anniversary

Much has been made about Los Angeles lacking an NFL team, but four fundamental reasons exist for this market void.

(Kirby Lee/Image of Sport-US PRESSWIRE)
(Kirby Lee/Image of Sport-US PRESSWIRE)

With the start of the NFL season just around the corner, and with the recent sales of the Dodgers and Clippers yielding record prices, attention once again is focused on why Los Angeles is without a football team to call its own. Given that the Rams and Raiders left in 1995, the NFL’s Platinum anniversary will be here before we know it. For many, this absence is unconscionable and must be remedied. For others, the absence of an NFL franchise is a case of “out of sight, out of mind.”

Much has been made about the country’s second-largest media market lacking a team. While the debate about obtaining one has periodically raged, it far more often has simmered. Having followed the situation closely and consulted for public and private sector interests along the way, I believe four fundamental reasons exist for this market void.

Lack of Political Cohesion

Multiple sites throughout and beyond L.A. County have been under consideration at one time or another. In a city where its 15 council members yield substantial power and influence, selecting a single preferred site has proven difficult. When political turnover is added to the equation, speaking with a unified voice has been challenging.

Although much attention has been placed on various stadium locations downtown, including one pitched by sports and entertainment behemoth Anschutz Entertainment Group (AEG), there have always been other sites seemingly under consideration in and around L.A. Other regional cities have attempted to make compelling cases for a team as well, most notably Anaheim, Pasadena, The City of Industry, Inglewood and Carson. Adding these to the mix, however serious their efforts, serves to cloud the political debate and disenfranchise many taxpayers.

Private Sector Success

Adding to the political uncertainty has been the private sector success of Staples Center and, over time, the rollout of L.A. Live. In the lead-up to Staples Center’s opening in 1999, politicians hotly debated the merits of providing public sector subsidies to the project. Advocates believed doing so would revitalize the downtown area, ultimately leading to a meaningful economic impact. Opponents believed that if investing in such projects was a good use of funds, the private sector would flock to them and realize a compelling return on investment.

With only a modest and initial use of public funds (which were ultimately repaid from proceeds raised from the project), Staples Center and L.A. Live have thrived and become a glowing example of what is possible when a deep pocketed and exceedingly strategic private sector organization implements its vision. The success of AEG’s vision has all but eliminated the pledging of tax dollars to a stadium project in the city.

Uncertain Demand

It’s clear that many want to supply the region with a team, but has demand for a franchise been satisfactorily demonstrated?

When considering whether Angelenos demand a franchise, the discussion rightfully centers on the competition for the sports and entertainment dollar in Southern California, including its existing bellwether sports franchises. Add to this the weather and location-inducing alternatives such as the beaches and mountains, as well as the region’s football transplants and historic success of college football in the market.

One of the unmistakable signs of the NFL’s popularity can be seen Sunday afternoons throughout greater L.A. as bars and restaurants proudly display team flags. Drive down Pacific Coast Highway and every block or two team’s flag waves from a bar in the afternoon sun. A Patriots flag. Or a Broncos flag. Or one for the Packers, Steelers, Cowboys or Bears. To what extent would these fans support a team in L.A. when they are able to commiserate with their own ilk at a “home town” bar?

Perennial college football powerhouses USC and UCLA also garner tremendous time and attention. Nowhere else does a major U.S. city boast two teams with winning traditions and a deep-rooted crosstown rivalry. Moreover, assuming they can afford to do so, to what extent can even hardcore football fans carve out both days of the weekend for football?

Failure is not an Option

Taking into account the factors highlighted above, among numerous others, the NFL realizes it cannot make a mistake in this market.

It knows that L.A. requires a winning team, one that wins with flair and masters the convergence of sports and entertainment. This requires an optimal mix of committed and knowledgeable franchise ownership, a gameday experience that reflects the market’s demands and, most importantly, a stadium deal that makes economic sense for the league, the venue operator and team owner.

The ability to achieve this will bring with it substantial revenue from corporate and everyday fans. Stadium naming rights and sponsorship, as well as personal seat licenses, ticket revenue and other game day expenditures, would make any L.A. franchise among the most highly valued in the league.

But, for the time being, this possibility appears as elusive as ever. A decade ago, I was quoted in the Washington Post as saying, “Trying to figure out the NFL and Los Angeles is like trying to solve a Rubik’s Cube with your eyes shut.” Doesn’t seem as if much has changed since 2004.

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David Carter is the Executive Director of the USC Sports Business Institute and is an associate professor of sports business at USC’s Marshall School of Business. Bio

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