National Football League History

Company History:

The governing body for the most popular spectator sport in the United States, the National Football League (NFL) serves as a trade association for 30 U.S.-based franchised teams and operates an American football league in Europe under the name NFL Europe League. The owners of the franchised teams operated their teams much like stand-alone businesses, but shared approximately 75 percent of their revenue with other franchises. The NFL negotiated television and radio broadcast rights for the teams and maintained the right to market team names and logos through licensing agreements.

Origins

American football evolved as a hybrid of soccer and rugby during the early 1870s, gaining distinction from its two influences in 1876 when the first rules for the sport were written. By the 1890s, the new version of football was a popular activity at local athletic clubs, particularly in Pennsylvania where intense rivalry between two clubs led to the first payment to a player. In 1892 William 'Pudge' Heffelfinger was paid $500 by the Allegheny Athletic Association to play one game against rival Pittsburgh Athletic Club, marking the advent of professionalism in American football. Five years later, the Latrobe Athletic Association football team comprised entirely professional players, becoming the first team to field professionals for a full season. Other purely professional football clubs were organized in the ensuing years, as the epicenter of football activity moved from Pennsylvania to Ohio. Ohio was home to at least seven professional teams during the first decade of the 20th century, but the growth of football in Ohio and elsewhere bred a host of problems, each attributable to the professionalism that spurred the sport's growth. As the number of professional teams proliferated and competition became more heated, the salaries paid to players escalated rapidly. The lure of these rising salaries prompted players to switch continually from one team to another, going wherever the highest bid beckoned. In the search for talent, football clubs began scouting college players, hiring some while the players were still enrolled in school. The outbreak of these problems created confusion within the sport, compounded by the widely varying schedules each team maintained. By the end of the 1910s, there was need for order and discipline, for the establishment of a uniform set of rules and conduct that would govern the sport. The strongest cries for organization and structure emanated from the stronghold of professional football in Ohio, where the foundation for the NFL was laid.

Several attempts to organize a professional football league had been made early in the century, but each had failed until an attempt to form a league took root in 1920. In August the first organizational meeting for what later became the NFL was held in Canton, Ohio, at the Jordan and Hupmobile automobile showroom. In attendance were representatives of the Akron Pros, the Canton Bulldogs (arguably the best professional team in the country) the Cleveland Indians, and the Dayton Triangles. Their meeting marked the establishment of the American Professional Football Conference, which one month later at a second meeting was renamed the American Professional Football Association (APFA). At the second meeting, also held in Canton, the participants of the first meeting were joined by representatives of teams from three other states, including Indiana's Muncie Flyers, the Rochester Jeffersons from New York, and the Racine Cardinals from Illinois.

1920s: The NFL Takes Shape

By the end of the APFA's first year, there were 14 teams within the league, but the scheduling of games, both the overall number of games and the number of games contested between APFA teams, was left for each team to decide on its own. The league did not begin to exert control over its constituents until its second year of operation when a new president, Joe Carr of the Columbus Panhandles, was elected at the APFA meeting in April 1921. Carr, who presided over the league for the ensuing 18 years, became the NFL's first architect, establishing the framework that gave the league control over affiliated teams. He made his mark early in his tenure, drafting a league constitution during his first year in office. Carr also developed bylaws, assigned teams territorial rights, restricted player movements, and developed membership criteria for team franchises. Carr's inaugural year also included the debut of league standings, which enabled the designation of a league champion--previously an issue of considerable debate. In 1922, by which time membership within the league had increased to 22 teams, the APFA was renamed the National Football League.

Carr continued to give shape and structure to the NFL during the 1920s, making alterations that would endure for decades. He instituted the first roster limit (16) in 1925, and in 1927 resolved a fundamental weakness of the league by eliminating the financially weaker teams and consolidating the more talented players into a reduced number of financially stronger teams. Carr's most critical changes occurred during the 1930s, when the nation sank into a deep economic depression. The pernicious economic environment whittled the number of league teams to eight in 1932, the lowest during the 20th century, but amid the despair the NFL achieved important strides. In 1932 the first tie for first place occurred, prompting the need for the first NFL play~off game. The following year, Carr labored to give the NFL its own identity. Since its inception, the NFL generally had followed the rules of college football, but in 1933 Carr began developing separate rules that addressed the needs and style of the professional game. Some of these changes were born from the first championship game in 1932, which had to be held indoors because of freezing temperatures and heavy snow. The alterations included hashmarks and goal posts fixed on the goal line rather than the end~line, both of which were innovations required because of the limited space available for the 1932 championship game. Further, the forward pass was legalized from any point behind the line of scrimmage. Organizationally, the league was divided into two divisions in 1933, the Western and Eastern divisions, with the winners of each scheduled to meet in an annual championship game. The NFL also took charge of an annual draft of college players, instituted for the first time in 1936, the same year all member teams played the same amount of games in one year for the first time. The decade ended with Carr's death and the first television broadcast of a NFL game. In 1939 NBC aired a game between the Brooklyn Dodgers and the Philadelphia Eagles, at a time when there were 1,000 television sets in New York.

By the end of the 1930s, the NFL played a vital role in the sport of football, lending cohesion and legitimacy to what was becoming a national pastime. From the legacy of Carr's achievements, the NFL gained the structure to support its increasing influence over the game during the postwar period, when football developed into a multibillion-dollar business. One of the chief factors igniting such growth was the increasing fees paid by broadcasters to air NFL games. The value of radio and television deals increased in part because of the expansion of the NFL. From its early strength in Ohio, football, in terms of its popularity, moved eastward into the large cities following Carr's consolidation of the league in 1927. In 1946 the NFL became national in scope for the first time when the Cleveland Rams moved to Los Angeles. In 1950 the Los Angeles Rams became the first team to have all of their home and away games televised, an arrangement other teams secured as the 1950s progressed. Following the promulgation of a congressional bill legalizing single-network television contracts by professional sports leagues in 1961, the NFL reached a single-network agreement with CBS in 1962 for broadcasting all regular season games. The NFL~CBS contract, valued at $4.6 million annually, marked the beginning of an ever-increasing bidding war waged by the networks to secure the rights for NFL games. Two years later, CBS paid $14.1 million for broadcasting rights.

The exponentially increasing television deals were indicative of the growing popularity of football. By the mid~1960s, football was the country's favorite sport, eclipsing baseball (41 percent to 38 percent, according to a survey) for the first time. To take advantage of the widespread interest in the sport, the NFL developed ancillary businesses for the modern, lucrative era of football. In 1963 the league formed NFL Properties, Inc. to serve as the licensing arm of the NFL. The following year, the league purchased Ed Sabol's Blair Motion Pictures, renaming it NFL Films. Football's growth in popularity and its attendant revenue-generating potential also spawned the organization of competing leagues, nothing new to the NFL. Since its inception, the league had butted against rival leagues, including four leagues--each named the American Football League--between 1920 and 1940. By the 1960s, however, a new version of the American Football League (AFL) had taken root and proved to be a meddlesome entity with which the NFL was force to contend. Rivalry between the two leagues was litigious, resulting in an antitrust suit filed by the AFL against the NFL during the early 1960s. The legal battle dragged on for nearly four years, with the courts ultimately ruling against the AFL, but the ruling did not signal the end of the AFL. The rival league continued to flourish, securing a $36 million, five-year deal with NBC for television rights beginning in 1965. The resilience of the AFL led to a series of secret meetings between two team owners from the two leagues in 1966. Their discussions centered on a potential merger between the AFL and NFL, which was announced in mid~1966. Under the terms of the agreement, the merger created an expanded league comprising 24 teams, although the two leagues maintained separate schedules until they officially merged in 1970 to form one league with two conferences. In the interim, the two leagues played a World Championship Game, beginning in January 1967, the first of what later became known as the Super Bowl.

Rozelle Leads PostWar Growth

Overseeing the merger between the AFL and the NFL was Pete Rozelle, who held the title of NFL commissioner. Rozelle was selected as commissioner in 1960 and held the same title after the merger. Rozelle's tenure, which stretched until 1989, was as influential on the development of the NFL as Carr's effect on the league. When Rozelle took control, he inherited a fragmented league in which the team owners maintained substantial control. The league governed the game, but the team owners operated their franchises essentially like stand-alone businesses. Operating as such, the teams negotiated individually with broadcasters for the rights to air games, a state of affairs Rozelle disliked. He perceived a sporting event's greatest strength as representing a piece of programming and, to give the sport its greatest bargaining power when negotiating with broadcasters, he realized that the franchises needed to cease operating as fiefdoms and combine their strength under the NFL. To accomplish this, Rozelle convinced the owners to share their broadcasting revenue evenly among all franchises and to give the NFL control over negotiating broadcasting rights. Rozelle accomplished this diplomatic feat during the early 1960s, fueling the dramatic rise in broadcasting rights during the early part of the decade. Broadcasters, in the wake of Rozelle's shrewd maneuver, found themselves, in the words of one broadcasting executive, with 'about as much clout as the Dalai Lama has dealing with the Chinese army.'

Rozelle transformed football into big business, taking a league that along with its franchises generated less than $20 million annually in 1960 and developing it into a multibillion-a-year business by the end of his stewardship as commissioner. He did so by acting as a skilled promoter of the game, which again was a product of his emphasis on football as a piece of programming. With the millions of dollars the networks were paying for the rights to the NFL, they were obliged to promote the game themselves to ensure the success of their investment. Together with Roone Arledge, the head of ABC Sports, Rozelle created Monday Night Football, which debuted on ABC in 1970 and developed into one of the longest-running shows in the history of television. Rozelle also expanded, moving into new markets--a new term in the sports world--with the establishment of a franchise in New Orleans in 1967 and in Tampa Bay and Seattle in 1976. The NFL expanded internationally as well, playing its first game outside North America in 1976, when a preseason match was played in Korakuen Stadium in Tokyo.

Among the list of achievements during Rozelle's 29-year career as commissioner, the NFL also suffered its low points. Two players' strikes in 1982 and 1987 marred the league's otherwise strident progress. A litigious relationship with a rival league, the United States Football League (USFL), also diverted the league's attention, resulting in a $1.7 billion antitrust lawsuit filed against the league. The jury rejected all of the USFL's television-related claims in 1986, however. The 1980s also bore witness to a contentious battle between the NFL and the owner of the Oakland Raiders, Al Davis, formerly head of the AFL. Davis, who wanted to move his team to Los Angeles, prevailed, despite repeated attempts by the NFL to stop the team's relocation. In addition, television ratings for the NFL dipped during the mid~1980s amid escalating expenses arising from increasing player salaries. Integral to the league's ability to withstand the turbulence was the willingness of broadcasters to pay increasing amounts for the right to air NFL games, upon which Rozelle had predicated the league's success. Toward this end, the league demonstrated encouraging vibrancy by the end of the 1980s. When Rozelle retired in 1989, a new four-year contract was signed with the three major networks, ABC, CBS, NBC, and two cable networks, ESPN and TNT, valued at $3.6 billion, the largest in television history.

Rozelle's successor, Paul Tagliabue, took charge of the league in 1989, becoming the seventh chief executive to lead the NFL. Under Tagliabue's control, the NFL expanded during the 1990s, both domestically and abroad. In 1991 the NFL decided to expand to 30 franchises, leading to the debut of the Jacksonville Jaguars and the Carolina Panthers in 1994. By adding two more teams the NFL stood to make more revenue from ticket sales as well as increased television revenue. The league also launched the World League of American Football in 1991, after years of staging preseason games at international venues. When the new league began playing Europe, the NFL became the first sports league to operate on a weekly basis on two continents. Initially, the World League faltered, taking a two-year hiatus before resuming operation as the NFL Europe League in 1998. Although the NFL continued to contend with rising player salaries--a perennial problem predating the league's existence--broadcasters consistently demonstrated a willingness to keep pace with the league's rising expenses by paying vast sums for broadcasting rights. In 1998, as the NFL prepared for the century ahead, the market value of its programming showed no signs of weakening in the least. In a record-setting, eight-year deal with ABC, FOX, CBS, and ESPN, the networks paid a staggering $17.6 billion for the broadcast rights to NFL games. Clearly, the strength of NFL programming was sufficient to ensure the league's continued success into the next millennium.

Principal Divisions: NFL Enterprises; NFL Properties; NFL Charities.

Further Reading:

• "League's 1991 Sales Show No Recession," Sporting Goods Business, December 1991, p. 14.
• Lewis, Michael, "High Commissioner--Pete Rozelle," Time, December 7, 1998, p. 188.
• "NFL Sacks Itself," Fortune, January 21, 1985, p. 10.

Source: International Directory of Company Histories, Vol. 29. St. James Press, 1999.

Directory of Sample Business Plans Directory of Company Histories Contact Us Advertise