Mr. Chairman and members of the Committee, I am pleased to appear today on behalf of the National Football League to testify in respect of Senate Bill 952. I have submitted a more detailed written statement, and respectfully request that it be made a part of the hearing record.

The core element of S. 952 is its proposed requirement that each NFL club and each club from Major League Baseball -- alone among professional sports teams -- contribute ten percent of its national television revenues each year to a fund that would finance 50 percent of the cost of any new or renovated stadium. Indeed, the bill would impose such a requirement retroactively to all stadium projects that had not been completed on the day that the bill was introduced.

We strongly oppose this aspect of S. 952. These provisions are unnecessary and would have significant negative, unintended effects. They unfairly ignore the very substantial contributions that NFL clubs today make toward stadium construction. They would improperly interfere with state and local decision making on sports facilities. And by decreasing the amount of equally shared revenue received by each NFL team, they would threaten lower revenue clubs. Finally, if enacted into law, these provisions would risk undoing what is currently the most successful labor partnership in professional sports.

Needless to say, it is both prudent and common for soundly-managed businesses to use increased current revenues -- which may or may not be recurring over the long term -- to invest in new facilities that will help to secure the business’s success for the long term. The NFL and its clubs, together with the NFL Players Association, have been doing just that with respect to the investment of current revenues into new stadiums.

We have been working in numerous communities with state and local governments and business leaders to resolve stadium issues on a win-win basis. Specifically, the League and its teams, together with the NFLPA, have implemented programs for League-wide financial support to individual clubs seeking to construct new stadiums or to make major improvements in existing stadiums. In this decade alone, NFL club and League representatives have worked with state, county and city governments in 17 different states on 23 successful projects for the construction, renovation or improvement of stadiums used principally by NFL teams. Each of these projects involved, in one measure or another, public and private sector cost-sharing and financing partnerships.

These 23 successful projects involve not only a wide range of types of stadiums, but also a wide variety of arrangements for allocating stadium and related infrastructure costs among public and private parties. Each tailored to the specific needs of the involved community, they range from the largely privately financed Washington Redskins’ stadium in Prince George’s County, Maryland, and the Carolina Panthers’ stadium in Charlotte, North Carolina to the largely publicly financed, multi-purpose domed facilities used by the Atlanta Falcons and the St. Louis Rams. And they include new or renovated stadiums in communities as diverse as Denver, Detroit, Jacksonville, Nashville, New York, Oakland, Pittsburgh, Seattle, Tampa and elsewhere that involve public-private sector sharing of construction and financing costs.

The success of these efforts and the diversity of cost-sharing and financing arrangements involved in these projects demonstrate why the rigid stadium financing features of S. 952 would not serve any necessary purpose and should not be enacted.

Second, by forcing all NFL clubs annually to contribute 10 percent of their equally shared national television revenues to a stadium fund, S. 952 would seriously disadvantage the lower revenue clubs that are already struggling to make their revenues meet their expenses. The bill would, in short, exacerbate existing pressures on teams whose revenues in 1998 were anywhere from $10 to $20 million below the League-wide average; these clubs, which would experience no corresponding decrease in their fixed operating costs, depend on equally shared revenues to remain competitive. Far from promoting stability and competitive balance, this bill would therefore sacrifice the interests of the weaker communities and undermine the NFL’s longstanding and successful revenue sharing policies.

Indeed, by reducing the equally shared television revenue of all NFL clubs, S. 952 would sharply magnify a serious problem for the League -- the substantial disparity in overall revenues between the League’s higher revenue and lower revenue clubs. These disparities result from a variety of factors, including differences in market size and market demographics, adequacy of stadiums, team performance, and the extent of other competitive sports and entertainment offerings. League-wide efforts to address this issue include a supplemental revenue sharing "pool" by which the League redistributes revenue to the lower revenue teams in order to assist them in dealing with player and other costs.

There nonetheless continues to be a very substantial gap between the unshared revenues of the better-situated and performing teams, with the top quarter of teams by revenue having unshared revenues -- that is, revenues from certain local and stadium sources -- averaging more than $28 million in 1998 and the bottom quarter averaging some $7 million from those same sources. Further, because of the financial pressures created by player free agency and other player costs under the League’s Collective Bargaining Agreement, some lower revenue teams have in recent seasons been forced to spend 75 percent or more of their total revenues on player costs. Obviously, this puts such teams under great financial and on-field competitive pressures. Although this is one of the prices paid by NFL clubs for "labor peace," S. 952 would increase these financial instabilities rather than take account of them.

In contrast to S. 952, the League’s program for contributing financial assistance to individual teams for stadium construction directly ties the largest portion of the contributed assistance to revenues generated in the new stadium itself. Thus, the focus of the current League program has been to use revenues that are not equally shared as a source of private funding, and to avoid undermining the effectiveness of the League’s television revenue sharing arrangements.

Third, the bill would impose a uniform national standard in derogation of local public decisions about how to use community resources. In our efforts with state and local authorities to ensure win-win solutions to the problem of obsolete stadium facilities, stadium projects have received the most searching evaluations and have often been the subject of public referenda. Community leaders, the public, and teams have acted by recognizing that the benefits and burdens of stadium construction are properly shared. We have thus developed public-private partnerships that fairly apportion the costs of stadium-related projects and that distribute the benefits of those projects throughout the community. In each of these cases, city and state officials made exactly the kind of decision that they were elected to make -- how to allocate public resources. There is no reason for Congress to step in and second-guess either the decisions themselves or the ability of state and local officials to make them.

In this regard, it bears mention that we have worked for several years with the U.S. Conference of Mayors and come to a common understanding on issues of franchise movement and stadium funding. Mr. Chairman, I ask to insert in the hearing record a recent exchange of correspondence between the League and the Conference that reflects this close working relationship. Our new procedures for proposed franchise relocation, as well as our new stadium financing policy, were submitted with my written statement.

Fourth, S. 952 would seriously threaten the League’s collective bargaining agreement, a point that I know Gene Upshaw will discuss in more detail. Our current labor agreement is based on a sharing of revenues, including television revenues, between clubs and players, and required spending in certain amounts. As noted above, this collectively-bargained arrangement has created some significant economic challenges for NFL teams, which we have worked hard to address. But it has largely worked for both the clubs and the players and has been extended on two occasions. As a result, the NFL is the only major sports league not to have a strike or lockout during the 1990s. If key premises of this collective bargaining agreement are negated, as S. 952 would do, this carefully negotiated economic balance will be upset, and labor strife will be much more likely in the future.

The players recognize that they benefit from new and improved stadium facilities and the Union has worked with us in a constructive way to assist in funding individual projects. I am confident that we can continue successfully to negotiate such arrangements in the future. But those arrangements should be reached through negotiation between the parties and within the framework of the overall collective bargaining relationship.

In short, as I explain in more detail in my prepared remarks, we believe that the stadium financing provisions of S. 952 are unnecessary and that they would have serious and negative consequences for local communities, for state and local governments, for sports fans, and for sports teams themselves.