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Commentary > Business of Sports  
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Big Money thinking small
Arena football has found fans, profits and longevity, but taking the next step will be difficult.
April 19, 2002: 4:47 PM EDT
A weekly column by Chris Isidore, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Arena football is probably the most successful U.S. sport you've never watched.

The sport kicks off its 16th season Friday, making it a senior citizen in the world of start-up leagues which normally have the life span slightly longer than fruit flies. Most of the teams are profitable. An average of about 10,000 fans are expected to attend each game this year.

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Played in basketball or hockey arenas, as its name implies, the indoor 50-yard version of football is a high-scoring if not high-visibility product. Its average 0.4 rating last season makes the defunct XFL football league look like the Super Bowl in terms of viewership.

But that may be about to change.

First of all, an agreement with NBC will give the league better network exposure than the National Basketball Association starting next year.

The Arena Football League is seeing values of the teams shoot up with the promise of better network exposure than the NBA.  
The Arena Football League is seeing values of the teams shoot up with the promise of better network exposure than the NBA.

The league has a low cost structure -- team payrolls can't exceed $1.6 million, putting average player pay at about $60,000 -- coupled with growing revenue that is helping to attract big-name owners from other sports.

That is helping to drive up the value of franchises like an Internet IPO in its heyday of the late '90s. Franchises might have been worth $400,000 a few years ago but this past off-season saw two teams go for $12 million.

Owners from the nation's major sports teams also are attracted by the chance for cost savings with their existing sports holdings and greater growth potential than their main holdings.

Jerry Jones, owner of the National Football League's Dallas Cowboys who says arena football is the growth sport of the coming decade, is the owner of the new Dallas Desperados, a team he bought for $4 million.

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Jerry Jones Jr., the Cowboys' vice president of marketing, is president and general manager of the Desperados, and Cowboys' special team coach Joe Avezzano will be the new team's coach.

"Synergies, that's a word we use around here a lot," said Jerry Jones Jr. "One of the first things we did was take the 20 people in the Cowboys' ticket office and have them started calling Cowboy season ticket holders to see if they're interested in Desperados season tickets."

The new broadcast agreement with NBC will move the league's start to February, soon after the Super Bowl. In an era of spiraling network losses for major sports broadcasts, the NBC-AFL agreement doesn't include any kind of rights fee. NBC will instead split the revenue from the broadcasts after certain costs with the league.

The network will also get 5 percent of any future growth in the value of franchises.

While Jerry Jones Jr. said he can't imagine the NFL agreeing to share the growth in team valuations with its broadcasters, it's apparent the networks are becoming more and more cost conscious about rights fees.

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"For us, this is the kind of deal that we've been talking about for the past four years, each time we've decided for one reason or another to walk away from what we considered to be un-economic models," said NBC Sports President Ken Schanzer on a press call announcing the AFL deal.

But the XFL's failure shows that network time alone won't bring success to a league. The drop-off in viewers started almost immediately for the XFL, with an 11.5 rating for the first half-hour of the opening game dropping to an overall 9.5 rating for the first night to just less than half of that the second week, and to a 1.5 rating for the last couple of games of the regular season.

NBC and AFL officials insist the sport's current fan base and popularity with young fans, coupled with NBC's marketing track record, should equal the growth to lift the sport to major league level.

"The bottom line is we did not deliver the goods with that league," said NBC Sports Chairman Dick Ebersol about the XFL failure. "This sport (arena football) is well organized at the grass roots level, operations and players, rules and regulations ... all those things that were part of us tripping ourselves up a year ago with the XFL."

But arena football is far different from traditional pro or college football than the failed XFL. Being around for 15 seasons has not resulted in general acceptance. It drew only a 1.0 rating for its championship game on ABC last year.

That might be enough for low-cost teams to make a profit, but even double or triple that rating won't be enough to help NBC fill the void from losing the NBA or NFL games.

While the sport does have some loyal fans, it's risky to say that the recent broadcast deal and franchise sales prices will equate to success for the league. Remember what happened to most of those Internet IPOs that had people so excited about their growth prospects.  Top of page


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.