National Football Cartel

How the Arizona Cardinals and their NFL brethren exert monopoly power to extract billions of dollars from American taxpayers

More important, owners benefit from the rapid increase in the value of their franchise. The increase in the last few years has been astounding. In 1998, the Minnesota Vikings sold for $250 million. That same year, the expansion Cleveland Browns paid $530 million to enter the league. A year later, the expansion fee jumped to $700 million with the entry of the Houston Texans, which will begin play next season.

The expansion fee is primarily determined by the value of the NFL's television contract. Current owners seek compensation from newly admitted owners for the dilution of their share of future television revenue.

Losers:

Washington State University sports economist Rodney Fort says it's time for NFL owners to compete.
Washington State University sports economist Rodney Fort says it's time for NFL owners to compete.
Stanford University economist Roger Noll says professional sports have little, if any, economic impact on a community.
Stanford University economist Roger Noll says professional sports have little, if any, economic impact on a community.

First, working-class fans. Average ticket prices have increased 51 percent -- from $25.21 in 1991 to $38.09 in 1998. Parking fees, concessions, personal-seat licenses and seat renewal fees add to the cost of going to the game.

Second, taxpayers. During the last decade, 28 NFL teams have new or refurbished stadiums either completed or under construction. Taxpayers have subsidized nearly all of these projects.

The monopoly power exerted by the Cardinals and the NFL has gone virtually unchecked in Arizona, with local media outlets including the Arizona Republic and Tribune Newspapers the leading cheerleaders for the stadium. Both businesses generate substantial advertising revenue from their sports pages.

State political leaders have remained silent on the issue, other than independent gubernatorial candidate Richard Mahoney, who is staunchly opposed to public subsidies for professional sports franchises.

"Attorneys, lobbyists and people in financing are getting in on the front end of this deal and are making a lot of money on this irrespective if it enhances the team or improves the economy," Mahoney says.

Through a quirk in the voter protection act that is supposed to prevent the Legislature from repealing voter-approved initiatives, the Legislature may be able to change or rescind the stadium law because it was passed only by Maricopa County voters, says David Thomas, Legislative Counsel deputy director.

It is unlikely, however, that the Legislature will dismantle the stadium taxes, political analysts say, even though the state is facing an $800 million budget deficit that will require deep spending cuts.

The only force working against the NFL/Cardinals monopoly has been West Valley developer John F. Long, whose lawsuit challenging the constitutionality of the TSA is pending before the state Supreme Court. A decision is expected in the next few months. Until the court makes a ruling, the TSA is prevented from selling bonds needed to begin construction of the stadium.

There appears to be only one way to break the monopoly grip the NFL and its franchises exert on local communities:

Competition.

One proposal supported by several prominent sports economists is to instill the same competitive nature that exists on the field and turn it loose on the business of pro football by enforcing federal antitrust laws and breaking up the NFL into four or more independent leagues.

True competition, sports economists say, would force owners to field entertaining teams at the lowest possible cost. Every city that could profitably support a team would have one. The values of teams would fall, player salaries would decline and television advertising revenue would drop.

Fans would benefit from lower ticket prices and cities would no longer be held hostage to build taxpayer-subsidized stadiums. The Super Bowl would become more attractive because it would feature the champions of competing leagues.

"If you are able to break the complete and utter control leagues have over the number of teams and the location of them, then this problem will go away," says Fort.

Until then, the NFL will continue to enjoy monopoly profits, largely at taxpayer expense.

With no reason to change, and the illusion of economic competition fostered by football games, there is little wonder why the value of NFL franchises continues to soar, with the $1 billion mark not too far in the future.

As Stanford University sports economist Roger G. Noll says, "It's great to be a monopoly in a world where everyone else competes."


The Arizona Cardinals reported $30 million in locally generated revenue in 1999. The proceeds came from ticket sales, local television and radio contracts, suite rentals, concessions, advertising and parking.

How does this stack up in the scheme of things in the Phoenix economy?

It's comparable to a medium-size travel agency.

According to The Business Journal's Book of Lists, the Carlson El Sol Travel Company in Tempe reported $28.5 million in revenue in 2000 to rank fifth on the Journal's list of top minority-owned private businesses in Phoenix.

But if El Sol Travel decided to pack up and leave town, it wouldn't be a matter of public concern. Another travel agency would quietly and quickly fill the gap.

It would be entirely different if the Cardinals left, leaving Phoenix without an NFL franchise for years to come because the NFL controls -- as an unregulated monopoly -- which city will have teams.

The NFL requires a three-fourths vote of approval by league owners for a team to relocate to another city. If no team wants to move to Phoenix, which has proved to be a dismal supporter of NFL football, then Arizona would have to wait for an expansion team.

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