NFL: The One Place Where Small Market Teams Can Still Thrive

The 2011 Super Bowl was billed as a battle between two old-fashioned, iconic franchises.

Prior to Green Bay’s win last night in Super Bowl XLV, the Steelers and Packers had combined for 11 NFL championships and seven Super Bowls.

When one thinks of the historic pillars of the National Football League, the Steelers and Packers are two franchises that immediately come to mind.

On Sunday evening, as I watched this epic battle between these two historic titans unfold on sports’ biggest stage, I couldn’t help but think that this type of thing could only happen in the NFL.

Only in the NFL could a small city, a town really, house a football superpower like Green Bay.

Only in the NFL could Pittsburgh hope to put together a championship team...any championship team.

And that, folks, is the main reason why the NFL has evolved into the most popular sport in America...by a landslide.

You see, in places like New York, Chicago, Los Angeles and Boston, baseball fans are abundant.

But in places like Pittsburgh, Kansas City and Milwaukee, you might as well not even watch professional baseball because your team is NEVER going to be consistently successful the way MLB is currently structured.

Sure, a small-market MLB team may catch lightening in a bottle every now and again, before being forced into a fire sale because it can no longer afford its talented young players.

Places like Indianapolis and Green Bay would never even be able to house an MLB franchise.

The NBA, despite its salary cap, has been heading down that same road in recent years.  

The NFL, on the other hand, has not strayed from its model of complete parity. As a result, football’s popularity has skyrocketed in every corner of the country, and every team, as well as the league in general, has made more money than anyone could have ever imagined.

When it comes to sports, parity is the key to an irresistible product, and the NFL has mastered this craft.

Football has become must-see TV on Sundays because a game between the Kansas City Chief’s and the Tampa Bay Buccaneers is actually exciting. No one cares about a baseball game between the Kansas City Royals and the Tampa Bay Rays. Heck, the highlights of a game like that might not even make it onto SportsCenter.

Many years ago, the NFL realized that although a high volume of the population was located in major cities, there was still a massive market outside areas such as New York, Los Angeles, Chicago, etc. For that reason, NFL decided that parity would be the best way to grow their sport on a large scale, and needless to say, they were right.

All television, advertising, apparel and sponsorship profits are pooled together and equally distributed amongst all teams.

Now, those Wall Street executives from New York and Tea Party supporters from Boston might immediately cry “SOCIALISM!!” and want to sew a large “S” onto Roger Goodell’s suit.

But here’s a little secret for you—when it comes to professional sports, socialism is far more successful than capitalism. One needs to look no further than the NFL vs. MLB.

MLB is capitalism in its purest form, and its decline when compared to the NFL over the past two decades has been nothing short of epic.

Residents of New York, Chicago, Boston and Los Angeles probably think that baseball is the best-run league in the country, and the fact that the Yankees are ALWAYS going to be contenders is just capitalism separating the strong from the weak.

But the fact of the matter is that when it comes to professional sports, if unregulated, the size of the market directly impact’s a team’s chances at success.

The Yankees are able to earn far more money from advertising, sponsorship, apparel and television than teams like the Royals not because the Yankees have managed to come up with a new and ingenious business plan, but because New York is eight times the size of Kansas City.

This allows the Yankees to charge significantly more for advertising, sponsorship and television rights because their customers (corporations, television networks, etc.) can reach a much larger audience working with the Yankees than with the Royals.

Folks, that’s a result of nothing more than location.

George Steinbrenner, although intelligent and revolutionary in many ways, was not the Bill Gates or Steve Jobs of Major League Baseball—his team simply happened to be located in the largest market in the country, where even a minor level of business acumen would have created the revenue monster that the Yankees have become.

The NFL has eliminated any advantage gained solely by location. If your front office is intelligent and makes the right moves, your team will be successful, whether you are located in New York or Green Bay.

The result?

As of 2009, 19 NFL teams were worth more than $1 billion, and the Oakland Raiders were the lowest valued team at $797 million.

In MLB the New York Yankees are the only team worth more than $1 billion, and the Oakland Raiders would be the fourth most valuable MLB team.

Some may squawk at this type of socialism applied to anything in America.

But while those squawk, the NFL will continue laughing all the way to the bank.