COMMISSIONER PAUL TAGLIABUE
With Terry Lefton, Sports Business Daily/Journal

Sept 12, 2002

TL:  We can start with your State of the Union message …

PT:  I think we are coming into the season with a lot of momentum. Last season we had really strong balance around the league.  We had a lot of talent, a lot of player talent.  Barring some unforeseen developments, we should have a very strong season.

TL:  We’re only a week after the fact, but can you call last Thursday (9/5) a success from the data you collected?

PT:  The main thing about the first week was the strength of the play.  The excitement – the three overtime games.  Certainly the Thursday Kickoff was successful, both for New York City and the league.  The audience was large.  So we thought it was an affirmation of what we thought it would produce.

TL:  What were the goals for the opening of the season?

PT:  I think the goals were mostly to start the season off with a focus on the NFL before the games were played, not just Sunday and Monday when the games are reported on.  We also wanted to do something in a bigger context for the city of New York to give back – with the Giants and the Jets being a big part of that.  Those were the main goals.

TL:  What about doing it again?  I heard cities are trying to bid on it now?

PT:  I think we’ll do it again.  We’ve tried to explore this type of primetime kickoff concept back in the early ‘90s.  I remember in 1991 we had a special series of events on the Mall leading into the Monday night game in Washington.  I think we now have found the key elements are using ESPN and the Thursday night game, and generating excitement that transcends football and gets into a fan fest, music type entertainment.  It’s been good for the city and good for the league.

A lot of owners have asked if we are going to rotate this around.  ‘Would my city be the type of city where this would be a powerful thing?’  I think the larger cities with a large population and a large downtown would be a more applicable fit – Chicago, San Francisco, Dallas, Miami….

TL:  Security is still a big concern.  Is it as big and can you even quantify that compared to a year ago?

PT:  For us it’s still a big concern.  The events of the past several days, including the elevated alert on Tuesday (9/10) and continued emphasis by the federal government on a need for security, really vindicates what Milt Ahlerich and Jeff Pash have been doing.  The FAA will not be granting wavers for flights over the stadiums.  We felt all along that this is an area that needs lots of emphasis.  It’s important to be prudent and wise and do it right and provide security without impeding the fans experience.

TL: Do you have a number on how much more clubs spent on security last year?

PT:  I do not have a number.  But I know most owners have been taking it more seriously.  We’ve been taking it seriously on a league level.  Some of it is personnel, some of it is capital investments, some of it is operations and equipment.

TL:  Where are your revenue growth opportunities right now?

PT:  Probably across the board.  With the number of new stadiums we have and the quality of the stadium experience on game day teams are getting into, one has to assume stadium revenues would grow.  Television revenues would grow.  I think the sponsorship and other revenues would grow too.  The product is strong.  Given the interest in the game and the growing number of media outlets, I think the NFL is well positioned for revenue growth.

TL:  Tell me why TV revenues will go up.

PT:  Because there are more platforms out there and more and more channels of distribution, and that creates even more opportunities for a new product.  As long as you have a strong product to start with and distribute it in additional ways, your revenues are always going to grow. 

TL:  What kind of new sponsorship model have you been trying to develop in the past 5 or 6 months?

PT:  I think we’ve tried to develop a new sponsorship model over the last 6-8 years not just 6-8 months.  The key for me is that we seem to have finally taken into account the macroeconomic changes in the marketplace that have affected our league and other leagues.  I think the sponsorship and promotional opportunities flow out of those macroeconomic changes.  That includes the growth of media and the proliferation of international programming and outlets such as ESPN.  Not just ESPN, but stations at the local level, regional level and new sports channels -- the strength of radio in the local markets and the new stadiums.  We have been speculating for the last 6-8 years that we could do better with our sponsorship models.  On the other side of the coin, you had the commoditization of the brand resulting from all the licensing and its been apparent for sometime that that had to be pulled back to avoid commoditization as well as clutter in some cases or compromising of the brand integrity.  I think it’s been a 6-8 year process that has culminated in a couple of areas, starting with the Reebok relationship and the restructuring of our apparel licensing model.

TL:  I understand the licensing deal, less is more you clean up the market.  What I can’t easily quantify is the sponsorship.

PT:  I don’t think less is more, that’s an oversimplification.  I think it results from a number of things.  One is that there have been numerous macroeconomic changes in the marketplace – including media and stadiums that are very important to the marketplace.  The second would be a clearer understanding that I’ll call the potential for league platforms relative to team platforms.  That includes the league position to the postseason and that includes last season leading into the Super Bowl.  That includes the promotional advertising trying to have the postseason seen as a tournament leading up to the conference championship games.  The conference championship games in and of themselves are mega television attractions second only to the Super Bowl.  With the Super Bowl itself, trying to understand better the various elements and opportunities at the Super Bowl.  Whether it’s the NFL Experience with the emphasis on youth, whether it’s entertainment and what we did with MTV over with CBS at the game or the halftime show and the opportunities there. I think that’s a part of it.  The third part is just the clearer understanding, led by a lot of the work John Collins has done, of what our brand represents, but far more than that: what are the components of our audience?  What accounts for the size and the passion of the NFL fanbase?  It obviously runs from the younger to the older.  And then the demographic mix.  I think there are a lot of things that underlie the way we changed our focus on sponsorship.

TL:  How do you expect that to be impacted by the trust expiring?

PT:  What we are really looking at is incremental extension of the trust as we develop the business arrangements.  We’re incrementally extending these relationships on a league wide basis.

TL:  How do you feel about your overseas efforts?

PT:  The key thing about our overseas operation is that we are coming to a point where we understand the strategic partnerships that we have over there and what are the key variables of growing the game over there.  We have a lot more clarity about that.  In Europe, we’ve had really strong success, not just in attendance but also in terms of sponsorship relationships with major companies, marketing and customer service to the NFL Europe league.  In Japan, we took an important step playing a game outside of Tokyo and playing in Osaka.  We’ve had some important progress in terms of the extension of television contracts.  In Japan, I think we are making progress in all these areas – both on the ground and in the future.  Overall it’s an area we see as expansive. 

TL:  Are they growing the game tangibly over there?

PT:  I think so.  The fact that the Prime Minister of Japan was at the game on Monday night was an example in the sports and business community that the NFL is making progress in important ways.  When I was over there, I met with CEOs of major companies and they all appreciate, despite the World Cup having just been held jointly by Japan and Korea, that NFL football has real appeal and is developing roots over there.  To an extension of the University programs that exists, we’re now for the first time having discussions with the university football and other programs about partnership arrangements and joint efforts and I think that is real progress.

TL:  For LA, I’ve read and heard that you would not put an expansion team there you would have to move a team there.  Is that accurate?

PT:  Number one, the working group of owners is a sounding board for what our office is doing in monitoring what’s going on in Los Angeles. Make it clear that number one there is a very important fan base and we understand that for a stadium is going to be built there, there will have to be a very heavy component of private investment. We’re not positive about looking for a huge expenditure of public money.  On the issue of the team there, when we expanded to 32, the consensus among the owners was that was enough for expansion for a while.  On the other hand, there are owners who have said if a stadium can be developed in Los Angeles they wouldn’t rule out the addition of a 33^rd team, but only for that market.  The third thing is we’re looking at the greater Los Angeles area and the Rose Bowl.  Once again, they have come to us with their plans to making that a world-class facility.  It could be a new stadium it could be a renovation but it would have to be a world-class facility and it would have to be state of the art.  They just can’t make cosmetic changes.

TL:  How important is it to get the LA thing done by the next TV contract?

PT:  It didn’t seem to be a factor when we negotiated last time. It’s a little hard to anticipate 2 or 3 years in advance.  Having a team in a major market is important for us.  Having at team in a market where they have an interest in football in general is important to us.  It’s one of the very few large markets where college football is very strong.  It’s an area of the country where high school football and youth football is very strong.  We’ve had some youth football clinics recently in the Los Angeles area, and more than 2,000 high school coaches attended in August.  That’s an important area.

TL:  Is there any provision for concessions?  How do you feel about giving back enhancements.  I know FOX in particular they were asking for enhancements as an advertising vehicle.

PT:  I met recently with Roger Goodell and our TV people continue to talk with FOX about our advertising policies and we’re trying to be enlightened in that area.  Generally we’ve been very responsive to their interests. 

TL:  What’s the parliamentary procedure if that were to happen?  Do all your broadcast partners have to agree to that?  Would you sign off on that?

PT:  If we had any changes in our contract it would certainly have to be approved by the league.  We’ve had discussions with the Players Association about the futures of television and the revenue streams.  We’ve had the ability to prorate some television revenues within the next 4 or 5 years under our agreement with the Players Association.  We are certainly looking at the media environment and trying to be realistic about events around the world and how it will affect the health of the economy and the media and how that affects corporate spending and advertising and not just be cavalier about the kinds of assumptions we make about television revenues. 

TL:  The ultimate forms of distribution you talked about, would either of those be digital cable?

PT:  I would think probably so.  We’ve had discussions with a lot of people in the television business about the NFL channel.  Beyond that we’ve been talking about enhanced services including game telecast that would have video-on-demand features and interactive features that could make the game even more attractive.

TL:  Are you talking about an enhanced package?

PT:  Yes. It would be a win-win for the networks and for the fans.  I think those things will develop in the coming years.  We’ve been looking at ways – in that context – of restructuring the Sunday Ticket package and seeing what the best way is to distribute that.  So basically we’ve been having discussions at a couple levels:  At one level, an NFL Channel. The second level an enhanced telecast, which would be an enhancement of existing network telecasts.

TL:  With enhancement telecasts, is that something I would pay more for as a consumer?

PT:  No. I think it would be some sort of premium service in digital cable space or satellite space.

TL:  Where do you stand on having the Super Bowl in the cold weather? 

PT:  We’re going to be taking it up with our membership at our league meeting here in New York at the end of October.  We’ve had people working on the idea in the Jets and Giants ownership.  The Redskins ownership has been working on the idea pretty actively in the Nation’s capitol.  One of the things we’re addressing will be the playing conditions and the field itself.

TL:  Do you see going to soccer style marketing with logos on uniforms?

PT:  It’s part of broader question of where television advertising is headed.  There are many open questions about how television advertising evolves.  It could include different approaches like logos on the screen.  It could include a whole slew of different advertising issues.  I don’t think you can separate those issues, whether it’s advertising on uniforms or on the screen, they are all apart of television advertising.  It’ll be addressed by us as a television advertising issue.