COMMISSIONER TAGLIABUE INTERVIEW WITH
SPORTS ILLUSTRATED’S PETER KING
10-23-97

Peter King: Why do you want to marry the labor and TV contracts for longer than four years, and what chance do you have to do that?

Paul Tagliabue: The advantage to doing it is that we could have five or six-year TV deals, or maybe four-year deals with option years for the league, so that we would have television revenue for the league stabilized for a number of years. If we could have the labor agreement run to the same point, that would give us guaranteed labor peace and TV revenue. What’s in it for the union is that we could get commitments out of the networks that would be at higher levels than they otherwise would be.

From the networks’ standpoint, the longer-term the investment, the better the investment is. I think Gene Upshaw has recognized in the past the importance of labor peace for television. I talked to Gene about a month ago as to where we are going or could go with television.

PK: He seemed reticent to doing a long-term deal when I asked him about it last week because of concerns about re-opening the deal if the economic situation changed drastically.

PT: In my conversations he’s been tentative because he does not have a full understanding of the TV potential in specifics. We need to sit down and give him the specifics. He’s always been very strong conceptually about extending the deal. If we can do a seven-year deal for labor and TV, that would be ideal. If we can’t do that then we are going to have to take a very different approach to TV, maybe doing a three-year deal with cable for instance.

PK: Why a shorter-term deal on cable?

PT: If we can have TV in synch with labor, then we have the ability to plan both together. If we can’t do this for the long term, there are a number of clubs who don’t want this agreement, because there are a number of clubs who are spending so much against their revenue. The bottom quarter of the league is spending close to 70% of their revenue on players. That doesn’t work. One of the issues we need to talk about is equity. The reason for that is that those clubs have been forced to raise their player payrolls hugely since 1992. Teams like Pittsburgh have doubled their payroll in five years from the low 20’s to the mid-40’s (millions). We all understood that could happen with free agency. Some clubs spend 50% of their revenue on payroll, while others spend far more. The advantages of a seven-year arrangement is you can plan the growth of the cap intelligently. If you can’t secure that advantage, then you need to take a different approach which is to have a mix of long-term and short-term deals.

PK: Do you think it’s smart to be able to come back to cable because they are more unpredictable in their ratings?

PT: In some ways they are more predictable because it’s a committed sports audience. The concern we all have is that once TV becomes 60% to 70% of your revenue, it’s not good to have all of your contracts expire at once.

PK: How much more revenue could you produce over a long-term deal?

PT: That’s what we’re trying to determine now. It’s both the certainty of the revenue stream and the network’s willingness to put money in during the early years of the deal. It could be a lot more money in three ways: the amount, the certainty and how it gets brought.

PK: Will CBS be involved somehow?

PT: It’s unlikely we will create additional packages. I think the current packages are proven to be attractive. To add a package throws out of whack a good balance between Sunday afternoon and prime time. The key thing that needs to be recognized is the Sunday night prime time package and the attractiveness of it. It’s been underscored this year. With the depth of teams that can compete week in and week out, it gets better and better. Any night other than Sunday and Monday dangles fans in the middle. They don’t know if it’s the first night of this week or the last night of this week. We are considering putting the late Saturday games

in prime time.

PK: Is it smart to always have one network out of the loop, always a chaser?

PT: Our focus is on the strength of the packages we have. FOX has made a strong commitment to us and yet they have to lose Dallas three times and Green Bay three times. Any package you add has to be a good, strong package. By definition you are diluting one of the other five packages, so it’s not fair to the networks or the fans who expect a good, strong package. The AFC package is doing well. The Jets got a 20-plus rating last week in New York. The NBC ratings were as high last year as they were in the mid-1980s. There has been no erosion over a 10-year period. We did our schedule for NBC this year that was consciously loaded for the playoff run. You can’t do that if you start cherry-picking a game for Thanksgiving or adding another game on a Saturday night.

PK: Do you think the structure of TV will remain the same?

PT: Yes. The things we are talking about doing is taking the Saturday 12:30 and 4:00 o’clock games and moving them to 4:30 PM and 8:00 PM, slots that would be prime time television. Number one, it recognizes that people are doing more and more things on Saturday afternoon in December, including working. We’d pick up a much bigger audience. People would all of a sudden see two games on Saturday night and it would flow into Sunday’s excitement. Other than that, I think it’s working very well.

PK: What do you do to try and have teams harden the cap?

PT: That’s not the only way to approach it. One way is to look at how the revenue is split. We have two elements of the system; straight Designated Gross Revenues (DGR) and excluded DGR, where instead of 63% going in, about 48% goes in. That’s been growing a lot faster than anyone ever expected because of stadium-related revenue. There are going to be some adjustments there that will help both sides, particularly the bottom quarter of the teams, without changing the cap. There are a lot of things you could do -- things to the rookie pool -- that wouldn’t affect the veterans or the players that have proven themselves, but it would still help the system.

The other thing that needs to be recognized is that a lot of these stadiums have a big owner investment. The union has worked with us to exclude from DGR club-seat premiums and other revenue that is going into stadium debt service, but there has to be more of it. There has to be more recognition that when we invest in a stadium it has to come out of DGR because it benefits both sides long term. There are a lot of things we call "economics of the 90s" that we did not have in front of us when we did the deal back in 1991 and 1992. Stadium renovation is another part of it.

Gene and the union are prepared to cooperate. I think there can be some meaningful tradeoffs to help the bottom quarter of the league where this system hits hard. Overall, the amount of movement is tolerable. The competitive impact seems to be positive.

The biggest negative is that we can’t have clubs spending 75% of their revenue on player salaries survive. They will either get sold, by the Mike Browns and Dan Rooneys, to someone who has a deep pocket, or they become non-competitive. You can only spend your cash reserve once, and that’s the problem with Green Bay. They spent their cash reserve and now they have to look at a new stadium. How do they get capital? That’s what has to get addressed.

PK: How much will the Cleveland franchise cost?

PT: No one has the foggiest idea what the franchise fee is going to be. The numbers that have been thrown out in news reports are foggy. No one has done any analysis. So much of it is going to be dependent on television. So much of it is dependent upon long term labor peace and the expansion stocking plan. It’s also dependent upon if we give them a half-share of television or a full share of television. Those are the variables that no one has addressed.

PK: Do you think the new Cleveland team, if it’s an expansion team, will be stocked the same way Carolina and Jacksonville were stocked?

PT: The big issue will be the veteran free agency issue, as it was the last time. Carolina and Jacksonville, even with their additional draft choices, still had far fewer young players on their roster than many of the established teams. The big question is what is their access to veteran free agents? In the NBA, they gave the expansion teams a more restricted cap. I think most people recognize that double draft picks is fair, and it’s something we can do on a conditional basis. With free agency, all of the existing teams have a lot of high-salaried players already, so they have a limited amount of room. A new team comes in with nothing on its roster, so it has a lot of room. Where that gets set in regards to new levels of television and to the cap is going to be the big issue

PK: You sound like you favor an expansion team in Cleveland.

PT: I think a lot of people do. I think the new Browns will be one of the great sports stories of the century. It’s never happened before. A legendary franchise, that faced a severe stadium problem, is kept alive in its community after a three-year period. The closest analogy is the NY Mets, in the sense that the Dodgers left in 1957 and the National League came back with a team some years later. But it wasn’t the Dodgers, it was the Mets. There was a lot of re-identification with the Mets. But here, it’s not a new team in the league. It’s the team! Think about the Hall of Fame in 1999, the Cleveland Browns against the Dallas Cowboys. How many people are going to try to get there? And then Monday Night Football opens up with Cleveland against whomever, just like it did with the Browns and the Jets in 1970.

PK: Why does the NFL need to be in Los Angeles?

PT: Two reasons. One, there are a lot of football fans there. The Super Bowl rating there was a 70-plus share of the market, one the highest in the country. Two, there are more people there than in 42 states in the union. If we’re in the business of servicing fans, it’s a market we should be in. I think the same analysis applies to Houston, and Cleveland.

PK: Does LA become a market just by having a team there? Can there be a following of sold-out games, unlike what there was at the end with the Raiders and Rams?

PT: I think so. Look at the interest in New York in the Jets and Giants. The fact that the Rams and Raiders did not sell out when they were bad probably says something about management, not the fans. And the quality of the stadiums also. I have no doubt about LA. We had some people who pushed the theory that the smaller the market, the more successful you will be. It didn’t make sense. The bigger the market, the more potential for success. The Bears and Giants have demonstrated that when they won the Super Bowl.

PK: Does Al Davis have a legitimate stake to the territory of LA?

PT: No. It’s ridiculous. There’s nothing to this notion that something happened in the 9th Circuit in the Raiders case having to do with the league’s opportunity in LA. Nothing in the Raiders case or anywhere else in the universe supports the idea that you can move a team and then split like an amoebae and become two franchises.

PK: What about Houston? They seem so far away from LA and Cleveland.

PT: I don’t agree with that. I think they were fractured up until this point, and as long as the Oilers were playing in Houston as a lame duck, any effort to get another NFL team was going to be fractured because people were going to be dwelling on the past or gazing in limbo rather than working on the future. Now, with the new mayor, the emergence of several business leaders, and the sense that they now have, all the pieces are coming into place. The passage of the referendum was important. They now know that it takes the business community coming together. They haven’t done it yet, but they understand that it needs to happen, just like it did in Cleveland, in Carolina and in St. Louis.

PK: By 2010 will there be a team in the NFL from outside the United States?

PT: I would think the chances of that are very high.

PK: Canada, Mexico or London?

PT: I would think you would have to put North America first, but a lot really depends on television and the growth of private television.

PK: Who’s more ready to be a franchise now, Toronto, Montreal or Mexico City?

PT: It’s hard to answer that because you are comparing apples and oranges. There is tremendous fan interest in both Canada and Mexico. I think the population of Mexico

City is equal to the population of all of Canada. In Europe, the greatest fan interest in football is in Germany. It’s not just fan interest, but people playing the game. I think you have the potential for players to start coming out of Germany, and that might leapfrog Germany over the U.K. by the year 2010. I would have to add a German city to the list if you are talking 2010

PK: It appears to be a scintillating season. What have you done to make games not boring, like we said they were four years ago?

PT: I don’t think it was boring in 1993, although some things were a negative, like the double-bye week. Three things have happened. First, we’ve really played close attention to the game and how the dynamics of the game have changed. The changes we made in 1994 and 1995 have really opened up the game. We concentrated on one thing. Don’t allow the defense, through situation substitution and growth of squad size, to unfairly neutralize the great athletes.

We made changes that allowed quarterbacks, running backs and wide receivers to perform. Secondly, there is the reality that there are a lot of good young players coming up through the high schools and colleges. There are a lot of good young players like the Terrell Davises and Curtis Martins. In 1993 we had a lot of veteran teams, but the new system and expansion has forced teams to look for new talent, and guess what? They are there. Under the old system, some of those young players were kept back as reserves.

I think the system has pushed the talent out onto the field, rather than having a certain amount of the talent spend time as backups. All three things have had a very positive impact. I think the most important is the emergence of the great young player. In some ways the college game has become more like the pro game because of the elimination of systems like the wishbone. The coaching in the pros is phenomenal. There are 16 coaches on a team. That’s one coach for every four or five players.

PK: What will be the increase in TV fees?

PT: We don’t know until we get much further down the line. Guessing is a pointless exercise. So much of it is dependent on how the deals are structured.

PK: What will the league do to help minority coaches?

PT: We are continuing to work on it. A lot tangible has happened already. I’ve heard from many minority coaches and the feedback I’ve received is positive. With Joe Bailey, a member of a search firm, we’re putting together an analysis that will be available to any club that deals with what it takes to be a successful head coach in the NFL. What are the models out there? What are the differences between the attributes it takes to be a successful coach vs. the attributes it takes to be a successful coordinator? Who are the examples with those kinds of attributes? The clubs that are looking to hire a coach can inherit a very useful analysis of what it takes to succeed and examples of the deep and diverse pool that’s out there in the NFL and college.

This seemed to be the most significant thing we could do. What you recognize when you analyze the head coaching process is that it’s something you do only once in a while, maybe once or twice a decade. Many times the people in the organization are doing this for the first time. The people who hired the previous coach are no longer there. You must do it in a short amount of time under a lot of scrutiny. This seemed to be the best thing we could do to help. It gives you a huge head start.

PK: Will you be moving the draft or combine?

PT: We’ve moved the 1999 combine back a week or two.

PK: What about allowing sophomores in the draft?

PT: I think we can win if we were challenged. We’re going to stick with our policy.

PK: Will you be Commissioner into the next millennium or are there other things you want to do?

PT: There are other things I want to do, but I don’t have any other plans besides being the Commissioner.