December 09, 2008

The Future of Arena Football

DON'T WRITE OFF the Arena Football League just yet. At least, that's the conclusion I've come to after poring through news reports that have -- perhaps a bit prematurely -- proclaimed the "Arena One" league may soon go the way of the dodo bird. Supposedly, the league's future is in doubt after a major potential investor backed out of a deal to fund the league to the tune of $100 million, and several teams are in reputed financial distress. Adding fuel to this panicked talk is the fact the league's schedule, free agency and New Orleans dispersal draft have been delayed; the fact no permanent commissioner has been appointed; and the fact the economy sucks eggs. But I still think it's too soon to write the thing off for dead.

That said, running an AFL team is expensive, and so reports some teams are experiencing financial headaches does not surprise me. Consider the costs of overhead, for one thing. You have to rent out the arena, pay your front-office staff, pay your football staff, pay for travel costs, arrange travel accommodations, buy equipment, pay league fees, advertise like a banshee and give away bunches of free tcotchkes to your season-ticket holders. All these things are expensive, even the free tcotchkes. Those T-shirts don't print themselves, you know.

Notice how we haven't even gotten to player salaries yet -- although player salaries are undoubtedly a big deal, and are likely at the heart of the league's troubles. In 2009 the salary cap for each team will be just shy of $2.1 million, according to the AFL's contract with its players' union. What is less well known is that the teams also have a minimum compensation floor they must pay their players -- and for 2009, that is just north of $1.8 million. So although a player can make as little as $32,000 a year (and get things like housing benefits) while playing in the AFL, the minimum salary distribution drives up the costs for star players, who can make six figures.

Such sums would be fine if teams had ancillary revenues, particularly television revenues. But teams supposedly get very little in the way of revenues from the AFL-ESPN deal, according to published reports. So that probably leaves teams with gate revenues and local sponsorships as their main revenue generators. That's a doable proposition in the minor leagues, but probably not so much in a semi-major league like the AFL.

Yet I remain hopeful this situation can be resolved. Faced with teams going into bankruptcy -- a lose-lose situation for everyone -- I would think the AFLPA would be willing to work on the salary cap and minimum salary distribution issues, and be willing to accept lower compensation. But this will only happen if the players feel they're being dealt with on the straight and narrow and have the ability to share in future gains.

That said, it seems pretty clear the AFL has one shot to get this right. The public-relations damages stemming from this whole affair are increasing daily, and recovering from them will take a lot of work. People won't buy tickets for games they think they may not get to see -- and regardless of whether that fear has any basis in reality, perception is king.

Also, since there is a market for spring football, the AFL has to act fast to prevent other potential competitors from taking the field. Even one lost season would be a death knell for the league, as people's attention went elsewhere and savvy entrepreneurs imagined ways to capitalize on its absence.

Which leads us to the bright side of this whole mess, such as it is. The lower leagues for arena football aren't affected by this at all, and will gleefully plow ahead regardless of the turmoil facing Arena One. Should the AFL fail, it should mean an influx of talent to these leagues, and better games resulting from it. So there's that, I guess. But even though every cloud has a silver lining, you've still got to deal with a storm -- and I just hope a downpour for the AFL isn't in the forecast.

Posted by Benjamin Kepple at December 9, 2008 02:21 PM | TrackBack
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