NFL Franchise Management: Owners, Operations, and Success

The Business of an NFL Franchise

• The National Football League (NFL) functions as a complex business machine, far more intricate than just big games and Super Bowls.
• Each of the 32 NFL teams operates as an independently owned franchise under the league’s broader structure, similar to a McDonald’s location.
• The NFL itself acts as the franchisor, with all 32 teams adhering to the same rules, brand guidelines, and a unified corporate structure.
• Owners benefit from shared resources, national advertising, and the league’s immense brand awareness.
• A protected territory model is in place, similar to any franchise, where each NFL team generally has a 75-mile radius market, with exceptions in very large cities like New York, Chicago, or Los Angeles where two teams might coexist.
• Teams share revenue with the league, akin to a royalty payment in a traditional franchise, which is fundamental to their value and not just about winning on Sundays but winning the brand game consistently.
• Brand consistency is paramount, aiming for a similar quality experience regardless of which teams are playing.

The NFL’s “Socialist” Business Model

• The NFL operates a closed-league system with an NFL franchise remaining in the League. This is unlike European soccer’s open-league model with promotion and relegation.
• This closed system guarantees every team membership in the top league, eliminating relegation worries and ensuring stable revenue, even for less winning teams.
• This stability makes NFL teams safer and more valuable investments, illustrating a “cooperative ecosystem” where rivals collaborate for individual success.
• This “socialist” approach at the league level forces rivals to work together, forging a shared destiny that ironically enhances individual rivalries.
• The salary cap is a key rule that limits every team to spending the same amount on players annually, preventing wealthier teams from monopolizing talent, keeping games exciting, and forcing creativity in roster building.
• For example, in 2022, the Washington Commanders NFL franchise made more in profits than Manchester City despite lower revenue, largely due to the salary cap.
• The player draft system further levels the playing field by giving the worst teams the first pick in the college draft.
• As a result of this structure, there is significant on-field parity; eight different NFL teams have won Super Bowls in a recent decade, compared to only five Premier League winners in the same period.

Collective TV Rights and Revenue Sharing

• A significant game-changer for the NFL was its collective TV rights and revenue sharing strategy with each NFL franchise receiving its share.
• The NFL was the first sports league to collectively sell its TV rights, doing so with CBS in 1961.
• This collective TV revenue is split equally among all 32 teams, regardless of market size, allowing even small-town teams like Green Bay to benefit equally with larger markets like New York or Los Angeles.
• This strategy enables all teams to grow rich together and remain competitive.
• The NFL also actively shaped the game for television, introducing TV timeouts, strategically placing two-minute warnings for premium ad sales, and even creating “Monday Night Football” and “Thursday Night Football,” which remain highly watched.
• They also welcomed cameras on sidelines and locker rooms, adopted instant replay in the 1980s, and updated rules to encourage more passing, which TV audiences prefer.
• This combined approach, particularly the substantial TV money in a closed league, makes the NFL the highest-earning sports league globally, with an average team worth over $5 billion.

The Role of the NFL Owner

• The NFL owner holds immense power over the NFL franchise which that person owns. Essentially functioning as the boss of the entire operation, responsible for day-to-day activities and massive business decisions.
• Owners set the team’s long-term vision, overall football philosophy, investment willingness, and tolerance for risk.
• They also appoint and have the power to hire or fire general managers, head coaches, and other top executives, directly impacting on-field performance.
• Beyond football, owners control major financial decisions, including budgets, player contracts, sponsorships, and managing revenue streams from tickets and merchandise.
• Balancing making money with investing in winning football games is a key responsibility.
• The level of involvement varies, with some owners like Jerry Jones being very hands-on, while others delegate.
• Owners also participate in league-wide meetings, vote on major policy changes (typically requiring a three-quarters majority), and serve on influential committees, central to initiatives like the Collective Bargaining Agreement (CBA) negotiations that shape salaries and player rights.
• Owners also serve as the face of the franchise in the community, building relationships with fans, local governments, and business partners.
• Their involvement profoundly shapes the team’s culture and success by establishing the organizational culture, fostering ambition, accountability, and innovation.

Critiques of NFL Ownership

• Some sources critique the individual NFL franchise as operating with a “medieval monarchy” setup, where the principal owner sits at the top. This could potentially lead to significant dysfunction within that NFL franchise.
• Critics suggest owners often lack a crucial combination of traits: benevolence, pragmatism, ambition, and intelligence.
• Hereditary succession or owners detached from reality can make it harder to develop essential leadership traits.
• Dysfunctional owners might make whimsical decisions, as historically seen with Al Davis and the Raiders, or allow unqualified individuals to influence key football decisions.
• The Green Bay Packers offer an alternative model, having operated successfully for over 100 years as a publicly owned, non-profit corporation with no single principal owner.

The General Manager (GM) and Head Coach

• To build a winning team, owners rely heavily on a crucial inner circle, starting with the General Manager (GM).
• The GM is typically responsible for all football operations, including assembling the roster, hiring coaching staff, negotiating player contracts, navigating the NFL draft, and making trades, usually reporting directly to the owner.
• The head coach is arguably just as pivotal, needing foundational traits like dependability and loyalty.
• A great coach must be an excellent communicator, able to cast a clear vision, inspire players, parents, and fans, and avoid profanity, opting for a richer vocabulary.
• Leadership by example and building unwavering trust are crucial, especially given the immense pressure in the league.
• Beyond communication and trust, coaches need to be great encouragers, constantly scanning for positive actions by players and offering affirmation, demonstrating genuine care.
• A great coach is also a great teacher, prioritizing fundamental skills like tackling and blocking over just fancy strategies.
• Hiring a head coach is a high-stakes decision for any owner, who seeks strong leadership, communication, flexibility, adaptability, the ability to build and trust a staff, a proven track record or clear potential beyond X’s and O’s, and a good cultural fit within the organization.

The Franchise Quarterback (QB)

• The franchise quarterback is considered the foundational leader of an NFL team, typically signed to large, long-term contracts.
• This is due to their high skill level, leadership, durability, and ability to elevate the entire team’s play, especially in big moments.
• Franchise QBs are recognized as the top players at the most important position, and their impact is enormous.
• They bring long-term organizational stability, a competitive edge, and make playoff and Super Bowl runs more attainable.
• The entire system often bends around them, leading to coaching and system fits tailored to their specific skills.
• Furthermore, franchise QBs significantly drive marketing, jersey sales, and fan engagement.

Team Management Tools and Challenges

• Teams utilize tools like the franchise tag to manage talent under the salary cap.
• The franchise tag allows a team to keep a key player who is about to become a free agent for one more year at a specific, usually high, salary based on top players at that position. It buys teams time to negotiate a longer-term deal.
• NFL ownership faces constant challenges in balancing business interests with team performance, a classic dilemma given the NFL’s estimated annual revenue of around $20.5 billion.
• Getting new stadiums built is another significant and often contentious challenge, as owners negotiate hard with cities and states for public funding, while taxpayers often prefer private funding or the money to go elsewhere.

Evolution of NFL Ownership: Private Equity and Video Games

• A major shift in the NFL landscape has been the entry of private equity and institutional funds into team ownership.
• The NFL, after holding out longer than other major sports leagues, made landmark rule changes to allow private equity investors and institutional funds to buy minority stakes in teams.
• This brings more capital into the league and individual teams, helping to fund expensive projects like new stadiums and facilities.
• However, there are concerns about team stability and owner loyalty, as fans question whether these new institutional investors will prioritize winning and community roots as much as traditional family owners.
• The primary purpose of this change is reportedly to allow existing NFL owners to monetize the significant appreciation of their assets over the years and enable even higher sale prices for teams by broadening the pool of potential investors.
• A popular video game, Madden NFL 24, particularly its franchise mode, offers surprisingly detailed insights into the complexities of NFL management.
• Madden forces players to make agonising real-world trade-offs, such as navigating the salary cap, deciding whether to pay aging superstars or invest in young talent, and prioritizing short-term wins over long-term financial health.
• The game also simulates player development intricacies, allowing players to earn experience points and skill points, develop through different stages (normal, star, superstar, X-factor), and even regress with age, mimicking a career arc.
• Players can also hire and fire coaches, upgrade their skills through talent trees, set team schemes, and experience real league events like trade deadlines, mock drafts, Pro Bowl rosters, and player retirements.
• An optional owner mode allows management of stadium upkeep, ticket prices, and concessions, mirroring financial responsibilities.
• The depth of Madden’s franchise mode demonstrates the multifaceted and strategic nature of real-world NFL management, offering a unique hands-on perspective on the constant balancing act required to build and sustain a winning football organization.