Opening remarks, David Baker, Commissioner of the Arena Football League
We are very excited to announce that the National Football League (NFL) and the Arena Football League (AFL) are entering into a strategic alliance, including an exclusive option for the NFL to purchase an equity interest in the AFL. In the 13-year history of the AFL, there hasn't been a better day for us. This agreement brings stability, credibility, and visibility to our product. We think it's not only good for the NFL and the AFL, but for football in general. The AFL has a young demographic group, and according ESPN Chilton Sports poll, 1/3 of AFL demographic is below age of 24, 80% is under age 44. Our goal and our vision to have a fan-friendly year-round and worldwide football program will be significantly enhanced through this alliance with the NFL. I want to thank Commissioner Paul Tagliabue, Roger Goodell, and Neal Glat from the NFL for all they have done to get us to this point and to embrace that vision. Also to Neal Pilson, who has been intimately involved in the building the NFL in the 70s and 80s, and is now helping us build the Arena Football League. We now have 15 teams that will play in 1999 and minimum of 18 teams in the year 2000. Most recently, Los Angeles has been awarded a team to play in the STAPLES Center, and Tom Benson, owner of the New Orleans Saints, has also been awarded a team for the year 2000. We are excited what this alliance can do for year-round, worldwide football, for small to medium size markets. From our very first meeting this vision was embraced by the NFL, and we are excited to stand in an alliance with them today.
Opening remarks, Roger Goodell, NFL Executive VP of League Development
This relationship extends back about two years when David Baker came in to visit with our commissioner, Paul Tagliabue, and we spent a significant amount of time learning the vision of the AFL and how it might compliment the NFL. The more we learned the more we became interested. Under the leadership of David Baker and Neal Pilson, we have been extremely impressed with their plans. That resulted in last May of 1998 approving a resolution that would allow our owners to own the individual AFL clubs. The bottom line is that we're in the football business. This deal will enhance our stake in the game. We believe this deal is complimentary to our efforts to promote football on all levels, and we believe it's an exciting brand of football that through its counter-season will create a year-round football product. We feel it has great potential from an international perspective, and we think the strategic alliance is going to help us gain football fans around the globe. The exercising of the option is subject to a ¾ vote of our membership.
Opening remarks, Neal Pilson, President of Pilson Communications
I got involved with the AFL 3 years ago, shortly after leaving CBS. I saw the league as a growth opportunity, as a sport that had been around for 10 years. They had built an entertainment platform with a young fan base. The strategic partnership with the NFL reaffirms the perception that the AFL is in the category of growth sports. The AFL has moved into several of the major markets, including Los Angeles. It reaffirms the opportunities both for the AFL and the NFL. The NFL will now be able to participate in this growth and the AFL will benefit from the strategic partnership with the NFL.
Q. (Oregonian) Does the alliance have anything to do with the continued rumbling of Ted Turner/NBC?
A. (Goodell) No it doesn't. We began these discussions two years ago, and we feel that the AFL vision is one that compliments the NFL's vision, which is to promote the game at all levels, provide the opportunity to participate in the sport on a year-round basis. We think it's an exciting brand of football that we want to be associated with.
Q. (Orlando Sentinel) Is there money involved in this option, and is there any truth to the rumor that this agreement might include changing the name of the AFL?
A. (Baker) Yes, there was money involved in this option, and there is money involved in the purchase of this option. In many respects, we have been dating the past two years, and this might get us engaged. During this time period, we are going to be doing the things we need to do to get married. That included careful analysis of our growth, strategic expansion plan, marketing plan, operations excellence plan for our league. Nothing has presently been decided, but there now is the opportunity to begin doing things that are good for our league and the football business. A number of name changes have been discussed but nothing has been decided upon.
(Goodell) From the NFL perspective, there were economic aspects of the deal but it was never looked upon from that perspective from the NFL. It was looked at as more of a strategic alliance, and how do we make this alliance work for the fans of football.
Q. (Des Moines Register) What will fans see in the AFL five years from now if the option to purchase goes through?
A. (Goodell) You would see more of it. An exciting brand of football played in a number of markets. We have looked at a number of aggressive expansion plans with respect to the AFL, but most importantly, we want to make sure we can find ways that we can deliver the AFL and to more fans, and football in general to more fans. Those are part of our overall efforts here at the NFL, and I think that's what you would see down the road.
(Baker) Our business plan has revolved around the concepts of stability, credibility, and visibility since I've been commissioner. This is a relationship that will clearly help our stability. In our last two years of discussions, even if we had not entered into an agreement for strategic relationship and an exclusive option, what we've learned from the NFL in terms of how to operate, making our teams stronger, promoting football to youth, that has been invaluable to us. As we move forward, it will be even more valuable to us. It gives us stability and the recognition of Arena Football as a football-based product; a different game but a football experience where young people can buy an affordable ticket and sit along the sidelines and not just seeing the hit, but feeling the hit. It lends so much credibility to us to have the NFL recognize that. In terms of visibility, we think this will provide us with more teams nationally and internationally. We think this deal will also help in terms of our television agreement, through which we can hopefully get a lot more people who haven't seen Arena Football the chance to see it.
Q. (Milwaukee Journal Sentinel) What is the biggest advantage for the NFL? Do you look at this a possibly another farm system, like NFL Europe? Do you look at it as a way to provide football to fans year-round?
A. The first AFL game I ever attended was in Milwaukee and we spent some time talking to fans after the game. The fans said the AFL is the only thing that gets them from the end of the NFL season to the beginning of the next NFL season, and gives them their football fix. Those comments were one of the reasons that drove us to continue looking at the AFL. It was complimentary to the NFL; it wasn't a minor league game. It's just a different way to experience the game. When you're sitting there in the second row and see that kind of contact and you're so close to the action, it's really a unique experience.
Q. (Oakland Tribune) What is the biggest benefit to the NFL other than the fact that the fans have somewhere else to go to watch football?
A. (Goodell) It helps us from a fan development standpoint, where more people will be able to experience the game firsthand and see a different perspective of a football game by being so close to the action. That has been a big part in our drive to attract new fans, and the AFL is a growth opportunity. There will be more and more football teams playing in more and more markets, and that will allow people to experience football more on all levels. It helps us in the growth of the game of football, which has been an important issue for this office.
Q. (Albany Times-Union) What does this deal do to international expansion plans?
A. (Baker) As Roger mentioned, it's great for fan development not only domestically, but internationally as well. The AFL has played 12 games in Europe and Canada, and all of those games have been at capacity or near capacity. In some instances, it's difficult for foreigners to grasp a uniquely American product because you can go thirty miles and be in a different culture. But in our instance, fans are extremely close to the action so they understand the game better, and rock music is played between plays, which sometimes helps to cross cultural borders. Expansion related we have had significant interest in Mexico City, Canada, as well as Europe.
Q. (Arena Fan Online) Has any additional television expansion coverage been secured?
A. (Pilson) We have not had any discussions with the NFL regarding television coverage. As you know we have an agreement with ESPN, and we will be discussing the renewal of that agreement very soon. Our ArenaBowl XIII will be on ABC Sports. Negotiations will continue to be held by the AFL, but we're hoping the greater visibility that our league will get through the alliance with the NFL will help us in negotiating expanded television opportunity both nationally and regionally.
Q. (Arizona Republic) Will there be any inroads in national sponsors that might help increase the salaries of the players?
A. (Pilson) We certainly hope to secure additional national sponsors, and that will help us in our television negotiations because we'll make a media component to the league's national sponsorship arrangements. As I indicated, we will be negotiating those deals ourselves. We anticipate this agreement with the NFL will give us greater visibility, make us more attractive to national sponsors and advertisers, and enhance our television opportunities.
(Baker) In our two-year relationship with the NFL, they are very business-like and very deliberate about what they do, and nothing is done without a purpose or reason. For them to be excited about our future is a great compliment to everybody from Jim Foster, our founder, to everyone who has participated in it. If they're excited about it, there should be some opportunity for sponsors out there who now want to be in on the ground floor who can help us in the future. For many respects now, the work is just beginning for our league. The partnership brings to us many more opportunities that we need to handle responsibly, and well.
Q. (Sports Business Update) Is the NFL specifically going to help the AFL in attracting sponsorships?
A. (Goodell) We have discussed a variety of relationships as to how we can make the AFL more attractive to sponsors. That relationship extends down from ticket sales to how we can get more people involved in the game.
(Baker) The NFL has been extremely helpful in guiding us as an emerging league, but with the ownership of the NFL. A number of NFL owners have expressed an interest in having AFL franchises in their cities, and as you know, the NFL amended its constitution last May to allow owners to do so.
Q. (Dick Butkus Football Network) Is the AFL planning to have an all-star game during Super Bowl week?
A. (Baker) Presently, the AFL does not have an all-star game, and we've talked about a number of alternatives. If we participate in this time, clearly we would like to have the NFL participate in it as well. That may come out of future discussions, but nothing has been decided upon.
Q. (IS Wire) Could this agreement be taken as a model for the future that high profile leagues will form relationships with lower profile leagues in all sports?
A. (Baker) The AFL doesn't consider itself a minor league, but rather an emerging league. Emerging in terms of expansion and other future announcement. Over the last three years we have averaged well over a million fans. According to an ESPN Chilton Sports Poll, only 23% of the public know about the AFL, but of the 23%, 78% love it. That's a higher response than you see in other major league sports. We have to get more people to know about the AFL, and the alliance with the NFL will help us to do that.
(Goodell) Arena Football is an exciting game of football, and one that is an alternative to our game of football. We see it as complimentary and we think it has a tremendous future. That's why we created an option for investment in it.
Q. (Oakland Tribune) Are there any finalists for the 18th team, and are any NFL owners?
A. (Baker) We have five or six finalists for the 18th team. If there was an NFL owner that was interested, we would review that application more favorably because of the cross-marketing opportunities and connection to the area. We are looking for cities that have a good arena, financially qualified ownership, and people who respect our game and are willing to invest not only their money, but also their time and heart too. The issue isn't whether we will grow, but how fast can we grow and do it effectively.
Q. (Albany Times-Union) How long will it take the NFL owners to vote on the option?
A. (Goodell) We expect in the next 12-24 months that we will see some significant discussion on the NFL level with respect to moving forward with the AFL.
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