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Quick takeaways
- The NFL's success is attributed to a league-first mindset prioritizing competitive balance and revenue sharing.
- The NFL recognized the revenue potential of television and struck deals to broadcast games, establishing television as a significant revenue stream.
- The merger between the NFL and AFL solidified the NFL's position as the premier professional football league in America.
- Joe Namath's signing with the Jets showcased the growth of the AFL and its ability to attract top talent.
- The merger between the NFL and AFL set the stage for the modern NFL and positioned football as the dominant sport in American culture.
- The NFL's strong value capture is evident through multiple media rights deals and the ability to extract revenue from networks and communities
Deep dives
The Birth of Professional Football
The NFL and the AFC were both formed in the early 1900s, with the NFL being the dominant league. The NFL owners embraced a league-first mindset, prioritizing competitive balance and revenue sharing. They implemented strategies like scheduling and the draft to maintain competitiveness. Meanwhile, the AFC struggled due to the dominance of the Cleveland Browns, leading to their eventual merger with the NFL. The NFL began to recognize the potential of television as a revenue stream and made deals to broadcast games, especially away games. The popularity of television broadcasts increased over time, leading to the growth of the NFL and the rise of national televised football games.
Competition with the AFL and the Rise of National TV Contracts
The birth of the American Football League (AFL) brought competition to the NFL. Led by Lamar Hunt, the AFL aimed to challenge the NFL and capitalize on the growing popularity of television. The AFL started with six teams and eventually expanded to eight. The competition between the two leagues led to the rise of national TV contracts, with the NFL adopting a league-first mentality. They recognized the value of television and worked to ensure competitive balance among teams. The AFL eventually merged with the NFL, solidifying the NFL's position as the premier professional football league in America.
The Impact of Television and the Growth of the NFL
The growth of television in the 1950s and '60s played a pivotal role in the expansion and popularity of the NFL. As TV set sales increased, more people had access to watch football games from the comfort of their homes. The NFL recognized the revenue potential of television and struck deals to broadcast games, initially focusing on away games. The televising of games expanded the league's reach and exposure to a wider audience. The NFL's business model shifted as TV revenues began to surpass ticket sales, establishing television as a significant revenue stream for the league. The NFL's successful embrace of television contributed to its growth and established its position as the dominant professional football league in America.
The Merger Negotiations and War
In 1966, negotiations for a merger between the NFL and AFL began in secret, led by NFL Commissioner Pete Rozelle and Dallas Cowboys GM Tex Schramm. Meanwhile, Al Davis became the new commissioner of the AFL. The NFL fired the first shot by signing a player from the AFL, which escalated tensions. Davis retaliated by signing star players from the NFL, including quarterbacks. Eventually, the two leagues agreed to a merger with combined TV contracts and a new pro football world championship game. The NFL maintained its antitrust exemption with the support of President Lyndon Johnson. The AFL franchise owners paid $18 million over 20 years to join the NFL. This merger paved the way for the modern NFL and its dominance in American sports.
The Role of Joe Namath
Joe Namath, quarterback for the New York Jets, became a cultural icon and symbolized the popularity of football for men, women, and children alike. His star power and popularity demonstrated the potential of football as a national event and entertainment. Namath's signing with the Jets showcased the growth of the AFL and its ability to attract top talent. The AFL had successfully positioned itself as a legitimate competitor to the NFL, challenging the traditional dominance of baseball and college football.
Legislative Support and Finalizing the Merger
In October 1966, the merger between the NFL and AFL was officially announced, following the passage of a law granting an anti-trust exemption for the merger. President Lyndon Johnson signed the law, solidifying the legal framework for the combined leagues. The merger allowed for a single common college draft and promised at least four new teams and expanded the league to 28 teams over the coming years. The AFL franchise owners paid $18 million to the NFL owners as part of the merger agreement. The merger set the stage for the modern NFL and positioned football as the dominant sport in American culture.
The rise of the NFL and its strategic foundation
The NFL's success can be attributed to a combination of factors, including national television coverage, post-war prosperity, Madison Avenue's influence, and a league-first mentality.
The impact of fantasy football and sports betting
The popularity of fantasy football and the growth of sports betting have contributed significantly to the success of the NFL, driving fan engagement, viewership, and revenue opportunities.
Challenges and controversies
The NFL has faced challenges and controversies, including the health risks associated with concussions, the handling of the Colin Kaepernick protest, and concerns over player safety and long-term well-being.
The NFL's Cornered Resource and Value Capture
The NFL has a cornered resource in professional football as the only game in town, allowing them to capture an immense amount of value. Their strong value capture can be seen through their reselling of media rights multiple times over and their ability to extract revenue from networks and communities. The NFL's business model relies on scale economies, where the revenue generated from TV deals justifies the high costs associated with producing high-quality games. While concerns remain around player safety, youth participation, and international expansion, the Lindy effect suggests that the NFL's staying power and success will continue for the long term.
The Bull Case for the NFL
The bull case for the NFL lies in its continued dominance and success as a sports entertainment business. Despite challenges and controversies, the NFL has a strong cornered resource with no viable competition, ensuring its stability and relevance. The Lindy effect further supports its long-term prospects, emphasizing that the NFL, with its loyal fan base and cultural significance, will remain a giant and thriving industry. The legalization of sports betting also presents an opportunity for the NFL to generate additional revenue. Despite concerns, the game of football continues to captivate audiences, solidifying the NFL as a resilient and enduring force in the sports world.
1.
Introduction
2min
2.
The Story of the NFL
2min
3.
The Business of Pro Football
2min
4.
Intercollegiate American Football
3min
5.
The Beginning of the NCAA
2min
6.
The Origins of American Football
2min
7.
The Importance of Professional Football in the United States
3min
8.
The NFL Sponsorship - The One Concession That Will Be Made
2min
9.
Jim Thorpe, the President of the Pro Football League
2min
10.
Jim Thorpe, the First President of the Pro Football League
2min
11.
The Uphill Battle of Pro Football in the 20s
2min
12.
The History of the NFL
2min
13.
The NFL After World War II
2min
14.
Pro Football and the NFL - Is There an Opportunity?
2min
15.
All America Football Conference - Cleveland Browns
2min
16.
The AFC and the Cleveland Rams in the AAFC
4min
17.
Paul Brown, the First Coach to Start Racial Integration
3min
18.
The Most Entertaining Game on the Field
2min
19.
The AFC Model of the Cleveland Browns
2min
20.
The Business Model Is Around the Gate or Ticket Sales
2min
21.
Pilot.com - A Startup Focused Accounting Firm
3min
22.
The New Commissioner of the NFL, Bert Bell, Revises the Schedule
2min
23.
Free Agency With a Salary Cap Is Not Free Agency
2min
24.
The NFL and Televisions Impact on the NFL
3min
25.
Baseball and Home Television in the Early 50s
2min
26.
TV and the NFL - It's a New Revenue Line
2min
27.
TV and Football - The Greatest Game Ever
2min
28.
Is the NFL a Business?
2min
29.
The Birth of the American Football League
2min
30.
The New AFL - The League First Mentality
2min
31.
ABC Sports Networks - Rune Arlage
2min
32.
The NFL's New Commissioner Isn't Here Yet
3min
33.
The NFL Has Just Gotten Too Big
2min
34.
The NFL and the NFL - What Rosel Wants to Do in the NFL
3min
35.
How Does Roselle Run the NFL?
2min
36.
Sports Illustrated and Pete Roselle
2min
37.
Rossell and the AFL
2min
38.
Is the NFL the Business or the Teams the Business?
2min
39.
The Kennedy Relationships With Pete Rossell and the NFL
2min
40.
Is This Good for America?
4min
41.
NFL Films - The Ultimate Embodiment of Pete Roselle's Mindset
3min
42.
NFL Films
2min
43.
The NFL Is Structured Like TV and Rizelle Works for the Owners
2min
44.
How to Add Sheen to the Product
3min
45.
AFL Teams Collectively Worth 140 Billion Dollars Today
2min
46.
The AFL and the NFL
3min
47.
Joe Nameth - The First Modern Cultural Celebrity Athlete
2min
48.
The First Professional Athlete, Broadway Joe Nameth
2min
49.
The Most Cost Effective Way to Keep Your Employees Connected
2min
50.
AFL NFL Draft Signing
2min
51.
The AFL's Sworn Enemy
2min
52.
The AFL and the Cowboys - What's the Deal?
2min
53.
The New Head of the AFL, Al Davis
2min
54.
The Giants Owner, Wellington Mara, Says, You Want a Kicker?
2min
55.
The AFL's GM Don Davis Wants to Sign the 49ers Quarterback, Roman Gabriel
3min
56.
The AFL and the NFL - The New AFC World Championship Game
2min
57.
The AFL's Deal With the Giants and the 49ers
3min
58.
New Orleans Saints vs New Orleans Colts
2min
59.
Congressman Boggs, I Don't Know How to Thank Me
2min
60.
TVification of America - This Is a World Championship Game
2min
61.
Super Bowl One Live at the LA Coliseum
2min
62.
The Super Bowl - The NFL and the Super Bowl in Super Bowl Three
2min
63.
Super Bowl Three, the Colts vs the Jets
2min
64.
The New Owners of the NFL and the NFL
3min
65.
The NFL Is Not a Primetime Sports Network
2min
66.
The NFL Primetime Experiment Can Work
2min
67.
Is There a New Meteorite for the NFL?
2min
68.
ABC's Going to Lose Monday Night Football
2min
69.
What Is New for Monday Night Football?
3min
70.
The ESPN Theme Song
2min
71.
Watch Highlights of Monday Night Football
2min
72.
ESPN and Monday Night Football
2min
73.
The NFL Is Getting Better, Isn't It?
3min
74.
The NFL and Television - What Did Rosel Really Do in the 70s?
2min
75.
Is the Salary Cap Keeping the Competitive Balance in Place?
3min
76.
What's the Rossell Rule in the NFL?
3min
77.
Is There a New Era for the NFL?
2min
78.
Is the NFL Really Doing 18 Billion a Year in Revenue?
3min
79.
The Rise of Fantasy Football and Sports Betting
2min
80.
How Does the NFL Work?
2min
81.
How Does the NFL Make Money?
2min
82.
Concussion and the NFL - What's Really Bad?
2min
83.
I Don't Want My Son to Play Football
2min
84.
The NFL and the Social Media Era
2min
85.
The Commissioner of the NFL Is the Ultimate in Shareholder Responsibility
2min
86.
Colin Kaepernick and the NFL
2min
87.
The NFL Black Balled Colin Kaepernick
2min
88.
The End of the Hero's Journey
2min
89.
The NFL Has Never Figured Out Internationally, Right?
2min
90.
The NFL Flywheel Is No Longer Spinning Faster
2min
91.
Is College Football Competitive to the NFL?
2min
92.
Media Deals Go Up, but Average Viewers Stay the Same
2min
93.
The Media Rights Are Worth So Much More When the Number of Audience Impressions Stays the Same
2min
94.
Is There a Market for NFL Rights?
2min
95.
Is Amazon the Exclusive Destination for Thursday Night Football?
3min
96.
The NFL Is an Oddly Small Business
2min
97.
Is There a Multiple Expansion in the NFL Market?
2min
98.
The NFL Will Make the Transition to Digital Distribution
2min
99.
NFL Players Wear Helmets, Basketball Players Don't Wear Helms.
2min
100.
The NBA Is a League and the MLB Is a League
2min
101.
Is the NFL Branding Power a Good Idea?
2min
102.
What's the Value Creation Value Capture of the NFL?
3min
103.
Is There a Value Capture Pioneer in the NFL?
3min
104.
Football Brain Injury - I've Passed Away
2min
105.
What's the Bull Case for the NFL?
4min
The NFL — it’s almost synonymous with America today. And its history is a fascinating lens to explore the nation’s development over the last 100 years, from WWII to TV and suburbs to the Internet and social media. What began as a quasi-illicit league in small midwestern towns is now the single largest media property in the world today by revenue. And whether you watch football or not, this is one incredible business story. Acquired is ready for some football — let’s kick this Season off right!
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Statsig: https://bit.ly/acquiredstatsig24
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Crusoe: https://bit.ly/acquiredcrusoe
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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