You Decide: What Can the NFL Teach Us About Business?bladenonline 12/07/2018 0 COMMENTS
By Dr. Mike Walden
Many consider the National Football League (NFL) to be the most successful professional sports organization in the world. To many, having an NFL team is a signal a city and region have arrived and are in elite company. This is one reason why NFL franchises sell for in the multi-billions of dollars.
But the NFL wasn’t always a success, as recounted in John Eisenberg’s fabulous new book, The League. The New York Giants were purchased in 1925 for $500 ($7140 in today’s purchasing power). Many teams floundered and disbanded – including an earlier NFL team in my hometown – the NFL Cincinnati Reds – which lasted only two years from 1933-34.
Eisenberg describes the birth of the NFL in the 1920s and its numerous struggles over many decades to achieve the predominance it has today. And, although I don’t know if Eisenberg intended this, the NFL’s story reveals some rules about economics that are applicable to any business and industry.
First is perseverance. Starting and running a business and making it successful is hard, and often takes years. When the NFL (its original name was the American Professional Football Association) was formed, football was considered a college game.
Indeed, many thought paying individuals to play football was wrong (although payment was well established for professional baseball). For years, attendance at NFL games was a mere fraction of the number attending college games. Although some NFL team owners had deep pockets (such as Tim Mara of the New York Giants), others like George Halas of the Bears and Art Rooney of the Pirates (later Steelers) had to constantly borrow or rely on good fortune to stay afloat.
By the 1930s the NFL owners knew they had to innovate in order to compete with the colleges because they were still losing in attendance and notoriety. Innovation is a fancy word for “shaking things up” or “trying something new.”
The league’s goal was to make the professional game more exciting than the college game, hoping that excitement would lead to attendance. How did they do this? Their innovation was to change the nature of the game, by shifting away from the running the ball, which dominated the sport, to passing the ball. So the NFL enacted rules to make the passing game more lucrative and useful to coaches. It worked. Point totals rose and with them went excitement. Attendance soared.
Branding is another important business tactic. Using names, logos and advertising, branding is a way to quickly communicate to potential buyers a positive image of the company. Of course, ultimately the image must be backed-up by reliable and usable products and services. So when success was not achieved at the box office in the early years of the NFL, several teams were quick to realize they needed to revise their brand. Here are two examples.
The Chicago NFL team owned by George Halas was originally known as the Staleys, after a company that sponsored the team. In Chicago the Staleys played at Wrigley Field, home to the pro baseball team, the Chicago Cubs. Hoping the popularity of the Cubs would rub off on his football team, Halas renamed his team as a larger version of the Cubs – the Bears!
Going in the opposite direction of rebranding was the NFL’s Pittsburgh team, the Pirates. Owner Art Rooney first named the team the Pirates to again capitalize on the popularity of the local baseball team by the same name. In fact, several early NFL teams used this idea, but it didn’t work for Rooney. So, after struggling during the Great Depression of the 1930s, Rooney tried a different image by renaming his team the Steelers, after the dominant industry of Pittsburgh. The new name “took”, and the rest is history!
Even successful industries have to deal with adapting new technology, and the NFL was no exception. Owners were initially worried the development first of radio, and then of television, would hurt their business by keeping fans away. Yet over time they incorporated use of these media as they found radio and TV expanded both their fan base and revenues.
Last, successful businesses must learn how to adjust to new competitors. In the case of the NFL, new competitors came in the form of several upstart rival leagues, including the first American Football League (AFL) in the 1930s, the All-American Football Conference (AAFC) of the 1940s, and a later version of the AFL in the 1960s. In the case of the AAFC and the 1960s AFL, the NFL tried a “beat them, then join them” strategy. Only the Cleveland Browns survived the AAFC, then later joining the NFL. Faring better, all teams of the 1960s AFL were ultimately absorbed into a reorganized NFL.
Perseverance, innovation, branding, adapting new technology and adjusting to new competitors are all challenges the NFL faced in its almost 100 year history. These are also challenges most businesses face. You decide if even the smallest business can learn from the mighty NFL.
Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.