The NFL

The NFL is nearly synonymous with America today. Practically nothing is more quintessentially and universally American than tuning in every Sunday (and Monday, and Thursday… and sometimes Saturdays and holidays too) to watch the world’s most beautiful ballet of violence. It generates the most revenue of any sports league globally and sets new records for team valuations each year. But it wasn’t always this way. The history of the NFL mirrors America’s own development: scrappy small-town teams rode the successive growth waves of the automobile, TV, the Internet and social media to grow larger than the even the founders’ wildest dreams. Whether you watch football or not, the NFL is one incredible business story, and one that we’ve taken more lessons from over the years for Acquired itself than perhaps any other episode we’ve made. Note: This is a remastered release of our original January 2023 episode, updated to today's Acquired production standards. It also features a full hour+ followup section at the end covering the seismic shifts in the NFL’s business since the original episode’s release. Much has happened in those three years: Taylor Swift entered the league (via merger 🙂), streaming went mainstream (and took over Thanksgiving and Christmas), sports gambling exploded from 46 million to 76 million bettors, and — in perhaps the most surprising development — private equity finally stormed the gates of the NFL. Oh, and average franchise valuations grew by 60% from $4.5 billion to over $7 billion. Communist capitalism is alive and well! Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26Links: Innovation Summit details and all Super Bowl LX Week events in San Francisco https://www.sfbayareasuperbowl.com/super-bowl-lx-events (note content from the Innovation Summit will be posted publicly the week after the Super Bowl — we’ll update this page with links when available)America’s Game https://www.amazon.com/Americas-Game-Football-Captured-Nation/dp/0375725067Sports Illustrated’s oral history of the famous Joe Namath “pool photo” https://www.si.com/nfl/video/2017/02/01/super-bowl-joe-namath-classic-pool-photoAll episode sources https://docs.google.com/document/d/1Bj5q0m6qi6SIEcaM2t6mVvYPoQ5VNlqHgdat8PaKQHE/edit?usp=sharingCarve Outs: The Menu https://www.imdb.com/title/tt9764362/Peyton’s Places https://www.imdb.com/title/tt10241812/ More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC 00:00:00 Start 00:00:37 Intro - Welcome to the Remastered NFL Episode 00:06:05 Origins of Football & the Forward Pass (1869-1905) 00:14:34 The Founding of the NFL (1920) 00:41:52 Bert Bell's "Any Given Sunday" Philosophy (1946) 01:03:28 Pete Rozelle Transforms the League (1960) 01:56:34 The Creation of the Super Bowl (1966) 02:09:47 Monday Night Football Invents Modern Sports TV (1970) 02:37:19 The NFL's Business Model Explained 02:39:28 CTE & the Kaepernick Controversy (2016) 02:48:36 Analysis: Playbook & 7 Powers Analysis 03:21:04 2026 UPDATE: Netflix, Youtube, Amazon Streaming, T-Swift, Gambling & New TV Deals 03:57:11 Private Equity Enters the NFL (2024) 04:14:08 Conclusion & Thank Yous ‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  So in my headphones I have, are you ready for some football? Yeah, I was listening to that, too. Yes. Dude, it gets you so pumped up. It totally does. I feel like I grew up on the Fox Sports theme.

• 0:15Ben Gilbert?

  It always makes you think of Thanksgiving. It makes me think of, I think it was a Jock Jams tape that I bought.

• 0:37Ben Gilbert?

  Welcome to this special remastered edition of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

• 0:45David Rosenthal?

  I'm David Rosenthal.

• 0:47Ben Gilbert?

  And we are your hosts. Three years ago, in January of 2023, we released an episode on the National Football League, which, David, I think is absolutely an essential part of Acquired canon.

• 1:00David Rosenthal?

  Totally agree. We took so much from that episode.

• 1:03Ben Gilbert?

  But listeners, a few things have happened since then. One, the NFL has become even more of a juggernaut. Two, Acquired's audience grew a lot, so many of you never heard that episode. And three, the ultimate Acquired-universe crossover happened between the NFL and Taylor Swift.

• 1:26David Rosenthal?

  Yes. It was kind of a bad timing when we made this originally, because it was right before that happened.

• 1:32Ben Gilbert?

  Yes.

• 1:33David Rosenthal?

  But Ben, you forgot the most important thing, which is that this year, in 2026, we are hosting the Super Bowl's Innovation Summit at the Super Bowl in San Francisco this year.

• 1:44Ben Gilbert?

  Yes, we are. Listeners, details on how and when you can watch that are in the show notes. So to help us come up to speed and prepare for that, and to help you get pumped for the Super Bowl, we decided to remaster our NFL episode to today's acquired production quality standards. We also decided to update the episode with everything that has changed about the league, from streaming on YouTube and Netflix and Amazon and all those deals, to our updated thinking on the international strategy for the NFL, and of course, how the influx of gambling being legalized has affected the league.

• 2:21David Rosenthal?

  And at the very end, we have the wild story of how private equity has entered the league too. So make sure you stay tuned for that because it is nuts.

• 2:30Ben Gilbert?

  Yes, we're going to put all of these updates in a special new section right at the end of the episode. So listeners, it is time to throw it over to myself from 2023 and on to our remastered episode of the National Football League. Football is America's favorite sport by far. In fact, football is more than three times as popular as the next highest sport, basketball. The Super Bowl is watched by over 100 million viewers every year in approximately two thirds of American households. My favorite Super Bowl stat is that it's the weekend with the fewest weddings planned of the year.

• 3:11Ben Gilbert?

  It is the NFL's world and Americans are just living in it, especially the TV networks, which have been reduced from pillars of our nation in their heyday to largely distribution channels for the NFL today, plus some other lesser programming sprinkled in. Of the top 100 TV broadcasts aired last year, 82 of them were NFL games.

• 3:31David Rosenthal?

  Wow, that is wild.

• 3:34Ben Gilbert?

  Totally wild. But how did we get here? How did this game become the most valuable media property in America? The story is one of incredible cooperation, of belief in growing the pie over a century, and just like our benchmark episode, of communist capitalism at its finest. The NFL owners have made bold, long-term bets in choosing to divide their revenues equally in a way that no other sports league has. Of course, the NFL hasn't been free of controversy. From the horrible recent on-field collapse of Damar Hamlin to the epidemic of CTE among former football players, players are clearly putting their

• 4:16Ben Gilbert?

  lives at risk. And the modern fans' relationship with the sport is complicated. I personally love watching football. It has been finely tuned over the years to be maximally, maximally entertaining, but it comes with cognitive dissonance for me every time I tune in, and I know many others feel the same. Whether pro football is your favorite pastime, or you think it's a societal ill, there is no denying the incredible role that it plays in all of our lives today. Now, listeners, just like our NBA episode a couple of years ago, this is an episode on the business of football. It's not specifically about things I learned reviewing game film, or the merits of the I-formation. Today, we're talking about the business.

• 4:57David Rosenthal?

  But we do have some sports thank yous to Michael McCambridge, author of America's Game, which provided much of the research for this episode. And it's just like the definitive biography-style history of the NFL.

• 5:11Ben Gilbert?

  Well, after you finish this episode, come discuss it with the other smart, curious, kind members of the Acquired Slack at acquired.fm/slash/Slack. And listeners, this is not investment advice. David and I may have investments in the companies we discuss. All right, David, take us in. Where are we starting?

• 5:30David Rosenthal?

  All right. We start on November 6th, 1869, on the campus of Rutgers University in New Brunswick, New Jersey, just a very short train ride up from Princeton, New Jersey, as I know well from my time there, where indeed, a group of about 25 or so Princeton students were up at Rutgers to visit a similarly sized group of Rutgers students. And they were there to play a game of football. Now, what was football in 1869?

• 6:08Ben Gilbert?

  This is not someone dropping back in the pocket and throwing a 70-yard bomb.

• 6:13David Rosenthal?

  No, no, no, no. It was essentially what today is classified as mob football, quote unquote, or medieval football. This had been played for centuries in England, and Basically, the only goal of the game was for one side to get a ball to a certain spot on the other side. And that was it. There were no rules. Any number of people could participate on either side. You could do anything up to and including maiming and killing people on the other side, or your own, which happened quite frequently.

• 6:50Ben Gilbert?

  I mean, keep in mind, this is four years after the end of the Civil War.

• 6:53David Rosenthal?

  Yes. So now, why were these two groups of Princeton and Rutgers students so interested in playing this game?

• 7:00Ben Gilbert?

  This terribly violent game.

• 7:02David Rosenthal?

  Well, back in England, it was quite popular among public school students. Now, public schools in England are like private schools in America, and they were starting to adapt it into an actual sport. And so like any sort of stepchild nation, these American college kids were kind of trying to keep up with the social elite back in the mother country and do the same thing, bring football in a codified way to schools. In America, there were 25 players per team, so 50 people on the field, a round ball that could not be picked up and carried, couldn't be thrown, and the object was to kick the

• 7:43David Rosenthal?

  ball through the opponent's goal for which you received one point.

• 7:49Ben Gilbert?

  Okay, so a soccer with 25 people on a team.

• 7:51David Rosenthal?

  Yes, but that was the start of what would become intercollegiate American football. And this becomes, just like back in England, wildly popular. And over the next five to 10 years, it gets more and more codified and formalized amongst the Ivy League. It kind of comes to be seen as this integral part of the college experience, this character building experience. It's also still wildly dangerous. There are like deaths, serious injuries, very, very common through this period. Finally, 1905, there are 19 fatalities

• 8:30David Rosenthal?

  in intercollegiate football in the US, and a serious injury at Harvard to one Theodore Roosevelt Jr., son of sitting President Theodore Roosevelt. So this is a major event. After that happens, Teddy Roosevelt calls a summit of all the major colleges and universities in New York City. And says he's going to outlaw the game in the US unless they adopt major changes to make the game safer.

• 8:59Ben Gilbert?

  And you also have to imagine, of course, it hits close to home for him with his son, but he's sort of viewing this as, hey, the people that are best and brightest are playing this game that is actually hurting the nation. We are cutting down people in their prime and we kind of have to do something about that.

• 9:15David Rosenthal?

  Yeah. And it's a fine line, right? Like, I think the violence is a critical part of this sort of rite of passage. And Teddy Roosevelt probably kind of likes it because this is a training ground for future

• 9:30Ben Gilbert?

  Military.

• 9:30David Rosenthal?

  governmental and military leaders of America. So I had no idea until doing the research, this summit that Teddy Roosevelt calls, and then he basically tells all the presidents of the universities, like, hey, you guys got to figure this out or I'm going to outlaw this. In response, they create the NCAA. Like, that is the beginning of the NCAA.

• 9:50Ben Gilbert?

  Oh, I didn't realize that.

• 9:51David Rosenthal?

  Yeah, it was to regulate and codify and make the game of collegiate American football safer.

• 9:57Ben Gilbert?

  Huh.

• 9:57David Rosenthal?

  Yeah, crazy, right? So following that, this new institution that becomes the NCAA, they institute the creation of a neutral zone, they abolish the use of wedge formations. So they do make the sport safer. I mean, there's still like a lot of injuries. There's not a lot of protective padding being worn here.

• 10:15Ben Gilbert?

  And a lot of this predates even leather helmets. People are just playing this in regular clothes.

• 10:21David Rosenthal?

  Yes. But they also make a change to the rules after this summit that would become the defining element of American football and fully differentiate it from soccer and rugby, which rugby itself came from soccer. Rugby is the set of soccer rules that the English public school rugby used, hence why it's called rugby. And this rule that the NCAA institutes is legalizing the forward pass.

• 10:52Ben Gilbert?

  In 1905.

• 10:54David Rosenthal?

  And that becomes obviously a defining characteristic of football.

• 10:58Ben Gilbert?

  And to underscore how much this changed things, football was exclusively a violent game to this point in history, American football. But when we think about American football today, you're watching Monday Night Football and the beautiful popping color and all the lights and all the slow mo, there's a beauty to the game. There's a romanticism. There's a moment where you hold your breath. The world seems to move slowly. It's a ballet. This introduced what would become the counterbalancing force to the incredible violence of football, which is the true beauty of watching it.

• 11:38David Rosenthal?

  Yeah, the beauty and the strategic element, too. The offensive playbook, the defensive coverages, the audibles. There's no way a casual fan can understand all of it. And yet, the ballet, as you say, is mesmerizing to watch. Collegiate American football just becomes wildly, wildly popular. It still is to this day. Like, it is a huge part of the American sports landscape, and it was even more so then.

• 12:05Ben Gilbert?

  All right. So the NCAA is formed. We've now got the forward pass. So, modern football, does that lead to the NFL?

• 12:12David Rosenthal?

  No. Again, very specifically, we're spending a lot of time on the origins of football in college here, but it's so important for understanding the NFL. This is a college thing. This is a American collegiate experience that these elite young men go through, this dangerous kind of war-like activity. There's the sacred element to it. So much so that while in the early 1900s, some professional teams do start to pop up around the country, these are teams, not leagues. So these are barnstorming teams that would go around, like there's no organized scheduled play. But they're viewed not only just as second rate to the college game,

• 12:57David Rosenthal?

  they're like dirty.

• 12:59Ben Gilbert?

  Why are you taking this esteemed thing that our best and brightest participate in and turning it into this entertainment act?

• 13:07David Rosenthal?

  Yeah, it's even more than that. Many people, especially the elite, viewed professional football as actually immoral because it was profaning this thing with money. The gripe that they had against it was the money. It wasn't the game. It wasn't how the game was played. It was the same game, often the same people who played in college.

• 13:24Ben Gilbert?

  Oh, I see. Like, it's supposed to be amateur.

• 13:27David Rosenthal?

  It's supposed to be amateur. This should not be a professional activity. This is a rite of passage for young men. So to the teens and twenties, like, that was very much the attitude. And for professional sports, there was one game in town, and that was baseball. Michael McCambridge has a great quote in The Beginning of America's Game where he says, "To say that baseball was the number one sport in America is to imply a hierarchy where none existed. Baseball towered above the sporting landscape like a colossus. The unquestioned national pastime, the only game that mattered. Most fans had come to accept baseball's primacy as something immutable, as much a part of the natural order of things as air and water."

• 14:08David Rosenthal?

  Of course, this is the era of the New York Yankees and Babe Ruth and Lou Gehrig and all these storied parts of American history. Baseball is very much a professional sport played for money, where the goal of teams is to make money, and the business model is they sell admission to the games.

• 14:24Ben Gilbert?

  Yep.

• 14:24David Rosenthal?

  So it's not like professional sports were all looked down upon, not at all. It was that football was this very special thing.

• 14:32Ben Gilbert?

  Yes.

• 14:33David Rosenthal?

  So into this dynamic environment, in 1920, enters the American Professional Football Conference, soon, in a few years, to be renamed the National Football League.

• 14:50Ben Gilbert?

  The founding of the NFL.

• 14:52David Rosenthal?

  And started on August 20th, 1920, when the heads of several of these barnstorming, quasi-professional football teams meet at the Jordan and Hupmobile Auto Showroom in Canton, Ohio. Now, the driving force behind this meeting being called is one George Halas, and he is currently in Decatur, Illinois, where he is an employee of the A.E. Staley Starch Company. And his main duty is to organize and coach and be the star player for the company football team.

• 15:29Ben Gilbert?

  Which of course is called the Staley's.

• 15:32David Rosenthal?

  Yes.

• 15:32Ben Gilbert?

  The sponsorship is so deeply rooted in the NFL that the very first team was actually named the sponsor.

• 15:39David Rosenthal?

  They weren't even sponsors. It was the employees of the company who played for the team. Now, Halas sort of had a mandate to go out and recruit employees who happened to be good football players. So these folks that come together at George Halas's instigation, they have a goal. They want to legitimize professional football in the eyes of Americans. And they develop a plan for doing so. They think they can really separate the pro game from the college game, make it a legitimate thing. And they have three parts to the plan. One, they are not going to sign any current college players. There's going to be a strict,

• 16:20David Rosenthal?

  strict demarcation between the college game and the pro game. They will not try and get any current college players to come play for a pro team, which would happen under assumed names. You know, you could imagine these college kids, they want to make money.

• 16:34Ben Gilbert?

  This is so ingrained in the NFL that it is basically still true 103 years later. Here we are in 2023. You still can't go to the NFL out of high school. You can only go with the junior year of your graduating class from college. You can go one year early in 100 years. That's the one concession that's been made.

• 16:55David Rosenthal?

  So point one, they're not going to raid the college game. Point two, they're going to endeavor to play the game at a high ethical and rules based standard.

• 17:09Ben Gilbert?

  Yeah, these teams that are coming together, some were independent, some were part of the Ohio League, some were part of the New York Pro Football League. So there are sort of slightly different rulebooks and slightly different customs that are going on. And this is the idea that no, we need to unify these things to set an expectation for fans.

• 17:25David Rosenthal?

  Yep. Standardize what the game is.

• 17:27Ben Gilbert?

  Yes.

• 17:28David Rosenthal?

  And then number three, perhaps the most important, they're going to make Jim Thorpe the president of the league. These guys are smart. Now, many of you probably know who Jim Thorpe was, but Jim was, at that point in time, the leader of the Canton Bulldogs, one of the teams that was strategically included in this discussion. And the meeting happened at that Canton Auto showroom, probably because of this. Jim Thorpe was the GOAT. He was the greatest athlete that had ever lived to that point in time.

• 18:00Ben Gilbert?

  Which is not to say like, if you put him through the NFL Combine today, he would win. It's sort of handicapped with all of what we knew about modern sports science of his day.

• 18:09David Rosenthal?

  The distance between Jim Thorpe as an athlete and any other athlete in the world at that point in time was greater than I think that distance has ever been since. So, Jim Thorpe was a Native American who was part of the Sacan Fox Nation and ended up playing college football at a small school called the Carlisle Indian Industrial School, which happened to be coached by a guy named Pop Warner.

• 18:39Ben Gilbert?

  Who, of course, is the person that all of the youth football leagues are named after today, Pop Warner League.

• 18:44David Rosenthal?

  He and Pop led this small, tiny Carlisle Indian Industrial School to a national championship while he was playing there against all these big Ivy League powerhouses and Ohio State and others. And the deep, deep irony, given what was about to happen with professional sports and the NFL becoming completely white. The first star player, the whole basis of the league, the first president of the league, was a person of color. In addition to playing professional football, the thing that is just unbelievable about Jim Thorpe, he won two gold medals in the 1912 Summer Olympics in Sweden, in the pentathlon and the decathlon. He had never competed in the decathlon before.

• 19:24Ben Gilbert?

  Oh, my God.

• 19:25David Rosenthal?

  The first time that he competed in the decathlon was in the 1912 Summer Olympics, and he won the gold medal.

• 19:31Ben Gilbert?

  Wild. Wasn't he also an outfielder with the New York Giants?

• 19:36David Rosenthal?

  Yeah, and basketball, and won gold medals.

• 19:39Ben Gilbert?

  Wild.

• 19:40David Rosenthal?

  So this new league. Proto NFL, formed in 1920 with 14 teams and about as much instant legitimacy as you could get from Jim Thorpe. They pretty quickly become the biggest professional football league in America. There's not a lot of stiff competition.

• 19:59Ben Gilbert?

  And they consolidated the smaller leagues to create this in the Midwest.

• 20:02David Rosenthal?

  Yes. But that said, the twenties and really the thirties too. It's an uphill battle, shall we say?

• 20:11Ben Gilbert?

  Oh, yeah. If you look at the, what is it, 15 teams or so that existed in 1920? There are three franchises that endured out of all of those. The rest of them, the Columbus Panhandles, the Akron Pros, the Chicago Tigers all went under and the only ones that stayed the test of time are the Decatur Staleys, the Racine Cardinals, and one we have not talked about yet, the Green Bay Packers.

• 20:38David Rosenthal?

  The Decatur Staleys would become the Bears, Chicago Bears.

• 20:42Ben Gilbert?

  The Bears, yes, actually named after the Cubs.

• 20:46David Rosenthal?

  That's right, because they played in Wrigley Field and Bears are bigger than Cubs.

• 20:50Ben Gilbert?

  Yep.

• 20:51David Rosenthal?

  So it was an uphill battle for a couple of reasons. One, even despite all their efforts, the stigma of professional football really does not wear off, especially in the twenties. So after the NFL is formed and starts getting publicity in 1922, then Michigan, sorry, Ben, Michigan, then Michigan head football coach Fielding Yost gives a very widely reported speech in New York City where he's talking about the new league and he says that, quote, "Pro football robs the great American game of many of its greatest character building qualities. The ideals of generous service, loyalty, sacrifice, and wholehearted devotion to a cause are all taken away."

• 21:34David Rosenthal?

  Now, of course, he's partisan because he's a college football coach, but this really was still the prevailing sentiment.

• 21:40Ben Gilbert?

  Yep.

• 21:41David Rosenthal?

  The other problems the NFL face are most of these teams are based in kind of small towns. They're not in big cities.

• 21:50Ben Gilbert?

  100% of these teams either fold or move to larger cities, except for the Packers. They're the only small market team that stood the test of time.

• 21:59David Rosenthal?

  Yeah, there was no TV. There was no internet like the market size was not unconstrained for these teams. The market size was quite constrained. They were filling a niche and a demand for football in these towns, but they weren't going to make that much money.

• 22:11Ben Gilbert?

  And they're massively loss making. I mean, these teams last two to five years. And there's another 15 teams that are formed between the Chicago Bears and eventually the New York Giants are formed around 1925 that stand the test of time. So it's amazing all these teams that spin up and spin down within five years of each other in this decade.

• 22:29David Rosenthal?

  It just became completely non-viable economically for small town teams to survive, except for Green Bay. And they all end up moving to the big city where they're very much playing second fiddle to the baseball teams.

• 22:40Ben Gilbert?

  Yeah. And most of these don't even end up moving. They just end up closing their doors.

• 22:44David Rosenthal?

  The other important thing, though, to say about the NFL during this time before World War II is that in the beginning, there was Jim Thorpe, who was the first president of the league. He's a figurehead. He's only president for a year and then they bring on a real administrator. But, you know, obviously he was Native American. He wasn't a white person. There were several black players in the league at that point in time and it was like, not a big deal. In fact, the first NFL champions in that first season, the Akron Pros, the star player and the head coach was a man named Fritz Pollard, who was black.

• 23:20Ben Gilbert?

  Wait, he's the star player and the head coach? I'd love that.

• 23:23David Rosenthal?

  Unfortunately, in the mid 30s, supposedly after George Preston Marshall comes into the league as owner of the Boston Braves that became the Boston Redskins and then moved to Washington DC, at his behest, they adopt the same policy as Major League Baseball and completely kick blacks out of the league. And it wouldn't be until after World War II and for the Redskins, not until 1961.

• 23:50Ben Gilbert?

  The Redskins commensurate with keeping that name for as long as they did. They were very, very, very late to integrate the team. I think they had some really big fan base in the South and there weren't a lot of NFL teams at that point in the South. And so it was both because he was racist and also because he realized he would probably lose a lot of his fan base who were also racist by integrating his team, which is like a horrible thing that it was a strategic advantage for him to get that fan base by having a exclusively white team.

• 24:26David Rosenthal?

  All this would continue kind of status quo, the league barely is creeping along until after World War II, when both America and the NFL would change forever and pretty radically. So after the war, when all the troops come home and there's the GI Bill, there's this new middle class in America that didn't go to these elite private school Ivy League institutions, or even the Ohio States of the world, or the Carlisle Indian Colleges. And they're coming home from the war. They don't have college educations. They may be now getting them through the GI Bill, but they have jobs, they have disposable income,

• 25:09David Rosenthal?

  they increasingly have radios and soon to be television sets. They want entertainment.

• 25:17Ben Gilbert?

  You sort of have this opportunity to be a new thing in America that people do with their time and dollars. And keep in mind, every owner's experience to this point is subsidizing losses. If you're bringing on other people to try and be co-owners of a team with you, or you're deciding that your family's going to sort of carry the weight the whole time, or that your company's going to carry the weight of the team, you're just subsidizing losses. So every single person involved in pro football ownership at this point is not even lip service for the love of the game, like purely just for the love of the game. But now, interestingly, there's a business opportunity.

• 25:51David Rosenthal?

  Yeah. And all these American GIs coming home from the war and their families, they don't have the same hangups and preoccupations about the college football game that the elite did before the war, because they didn't go to college during their younger formative years. So there is this big opportunity now, after the war, for professional football in the NFL to become a much bigger thing. And they probably would not have realized it, except their hand was forced. In 1944, right before the end of the war, a lot of people could see this opportunity. Football was a very compelling game. The NFL was only in What, I think eight cities at that point in time? To really realize it, you had to expand.

• 26:36David Rosenthal?

  You had to be in a lot more cities. And there were wealthy business people in cities all across America, East Coast, Midwest, the South, Florida, who wanted to add teams and come into the NFL. But the NFL owners weren't interested in expansion.

• 26:52Ben Gilbert?

  Right. And those eight teams, the Cardinals, of course, they're in Arizona today. You've got the Chicago Bears. You've got the Green Bay Packers, the New York Giants, the Detroit Lions, the Boston Redskins had since moved to Washington. You've got the Philadelphia Eagles, the Pittsburgh Steelers. And at this point, and this is crucial, the Cleveland Rams.

• 27:14David Rosenthal?

  Yes, the Cleveland Rams, owned by the forward-thinking Dan Reeves.

• 27:19Ben Gilbert?

  Yes. And this is the first Cleveland team that did not shut down, but instead moved.

• 27:24David Rosenthal?

  So the other potential ownership groups in other cities across America that won football leagues, at a certain point, come 1944, they were just like, well, to hell with you, NFL. We'll go start our own league.

• 27:35Ben Gilbert?

  Yep.

• 27:35David Rosenthal?

  So a new professional league gets founded, the All-America Football Conference in 1944.

• 27:41Ben Gilbert?

  The AAFC.

• 27:43David Rosenthal?

  And it's got some pretty serious firepower. It's organized by one of the country's preeminent sports journalists, based in Chicago. It's backed by some high-power ownership groups, including the famous Hollywood actor Don Amici in Los Angeles, wealthy businessmen in San Francisco, New York, Chicago, Miami. And they have reached a deal with the legendary Ohio State coach, Paul Brown. When he's coming home from the war, from his service, that he is not going to go back to the college game. He's going to come coach the new AAFC Cleveland franchise, named after him, the Cleveland Browns.

• 28:22Ben Gilbert?

  Yes, the man who transformed football, Paul Brown. And this is the very first time in sort of the modern NFL era where you have this real threat of two professional football teams that people really want to see in the very same city, the Cleveland Rams and the soon-to-be Cleveland Browns in the AAFC.

• 28:42David Rosenthal?

  Yes. And in a head to head war between those two franchises, the writing is on the wall of who's going to win and it's not going to be the Rams. Now, Dan Reeves thought that the NFL should be on the West Coast and should be truly national and he wanted to move the Rams to Los Angeles. But the NFL owners, by the bylaws, you had to have 100% unanimous approval of all the owners to move a team and they didn't want to.

• 29:08Ben Gilbert?

  And it makes a lot of sense. These teams have lost money forever. It's like, we're just on the precipice of having a real business here. Don't make us figure out how to get these other seven teams to LA once every, whatever it is, six or seven games.

• 29:21David Rosenthal?

  So now the war's ending. The A A F C and the Browns are coming in and then the dagger comes right before the 1946 NFL annual meetings in January. Dan Topping, who owned the NFL's Brooklyn Dodgers and also the New York Yankees, the baseball team. So like the highest profile, wealthiest owner in the NFL defects to the A A F C. So there's major crisis. Yep. First thing they do in the January 1946 annual meeting is they boot out the then commissioner. So the owners, they're like, okay, to lead this fight, we can't have somebody from the

• 30:05David Rosenthal?

  outside. We need to draft one of our own from the ownership group here in the inside, who's going to be able to marshal everybody together and lead a coordinated response to this existential threat. They install Bert Bell, who is the owner of the Philadelphia Eagles, as the new commissioner of the NFL. And he's tasked immediately with drafting a competitive response to the A A F C. And they decided it needs to be three things. One, they need to go meet the A A F C where they are, being nationwide and the West Coast and going to California. Two, the NFL, if they're gonna win, they need to put out a superior product, a better game on the field than the AFC.

• 30:50David Rosenthal?

  And then three, for the first time, they need to do a better job than the AFC, or at least as good a job at actually telling America about it. They have to go proselytize. They have to go win fans and win consumers' hearts and minds. So fronts one and three are basically all handled by Dan and the Rams. So immediately after Bell comes in as commissioner, he orchestrates approval for the Rams to move out to California. And it's a good thing they did because when play eventually starts in the 1946 season, the new Browns in Cleveland, for their very first home game,

• 31:30David Rosenthal?

  draw 60,000 fans, which is more than the Rams did for the entire season the year before.

• 31:38Ben Gilbert?

  Yeah, Paul Brown was quite the anticipated figure in Cleveland. He had coached at Ohio State. He had coached one of the Navy teams and he was sort of known for knowing how to whip a football team into shape, who would have to know the intellectual side of the game as inside and out as the physical part of the game. It was a huge part of his strategy to make people memorize the playbook and take written tests. And if they failed these written tests about the plays, about the rules, about Paul's strategy, he'd kick them off the team. No matter how good they were. And it's the first time someone really looked at the game and said, sure, it's a game, but actually this could be a science. He was almost like the first Moneyballer.

• 32:22Ben Gilbert?

  One of the first innovations he did was he was one of the first coaches to really review film and recognize patterns in plays and statistically manually tally, here's what we have to do against this team and that team. And here's what worked for us last year and here's what didn't work for us this year.

• 32:37David Rosenthal?

  Paul Brown was the first modern, not just football coach, but I think sports coach period in America.

• 32:45Ben Gilbert?

  And, you know, every human is flawed, so we shouldn't make him out to be the Messiah or something, but he was basically the first coach to start racial integration of the team and recognize that if we have the best players, then we're gonna win. So we just need to do whatever it takes to get the best players on our team. The other thing that he did, he employed an entire staff of assistant coaches year round. I think it was six people in addition to him. No other team did that.

• 33:08David Rosenthal?

  And on the racial integration front. The AAFC was going to be an integrated league from the beginning.

• 33:14Ben Gilbert?

  That's counter positioning right there.

• 33:16David Rosenthal?

  The NFL, and especially the Redskins, didn't have a lot of interest in doing so, but moving the Rams to LA forces the league to integrate because the LA Coliseum, where the Rams want to play, is a publicly owned building and it's controlled then as now by the LA Coliseum Commission. And when Reeves and the Rams come out to petition their case that they should come, be allowed to play in the Coliseum, well, the commission says, okay, we'll let you play here, but we're not going to allow any segregated home teams to use our stadium as their home stadium, so you're going to have to integrate the team. And this is where the public relations aspect of the Rams becomes clutch.

• 34:01Ben Gilbert?

  Ah, the Rams were so good at PR.

• 34:04David Rosenthal?

  So A, they agree right away. B, not only that, they say, great, we'll sign Kenny Washington, who before the war had been a hero in Los Angeles. He was a huge star for the UCLA football team. And all this was helped out by a savvy, young intern for the Rams, one young Pete Rozell, who helps craft a lot of this strategy.

• 34:30Ben Gilbert?

  But put a pin in Pete Rozell for the moment. So for a quick review of where we are right now, you've got the NFL. It's an 18 league. The Rams have just moved from Cleveland to LA. And then you've got this AFC that's starting to play. What year do they actually start?

• 34:47David Rosenthal?

  1946, same year that the Rams moved to California.

• 34:50Ben Gilbert?

  And the roster of AAFC teams is the Cleveland Browns that we've talked about, the New York Yankees football team, the Brooklyn Dodgers football team.

• 35:02David Rosenthal?

  Which defected from the NFL.

• 35:04Ben Gilbert?

  Yes, the Buffalo Bisons, the Miami Seahawks.

• 35:08Ben Gilbert?

  Which is interesting. That has nothing to do with the Seattle Seahawks. They just reused the same name. The San Francisco 49ers, the Los Angeles Dons. So you've got two LA teams. Now, you've got an AAFC team and a NFL team and the Chicago Rockets. So you've got the NFL and you've got the upstart AAFC that would only last four years, but would change the game quite a bit. And by forcing this competition, they forced the NFL to do a bunch of things that really was in the NFL's best interest, but they wouldn't have done absent competition. And this is the first time where we really learned the lesson. The football that people will watch is the most entertaining game.

• 35:50David Rosenthal?

  Yes, because this is something that would not be obvious, I think, for running this experiment. What is the most entertaining game? It's the most competitive game on the field. And for all that we were just lauding Paul Brown and he's legendary, the teams he coached, he was too good. His teams were too good. So the Browns end up winning all four AAFC championships. They only lose four games in four years and the game becomes boring. There's no drama. It's a foregone conclusion that the Browns are going to win. If your team is playing the Browns, so the Browns do great at home, but when they're on the road, they're like, well, the fans like, why am I even going to go?

• 36:31Ben Gilbert?

  Right. Watch my team get destroyed by the Browns? Why would I want to do that? By the way, those words have never come out of my mouth before, growing up a modern Browns fan.

• 36:40David Rosenthal?

  Well, the current Browns are not the same Browns as the old Browns.

• 36:43Ben Gilbert?

  They actually are the same. Importantly, the franchise and records stayed with Cleveland. The Baltimore Ravens are a brand new team that started in the 90s, not a relocated Cleveland team, despite the fact that they took the whole front office and team and ownership.

• 36:58David Rosenthal?

  That's some serious rewriting of history there by the NFL.

• 37:01Ben Gilbert?

  Yes. So to your point, the NFL learns this lesson here of, oh my gosh, we've been sort of fortunate that this didn't happen in our league, but it's really nothing intentional that we did. There's nothing structural that we did to ensure there was no Cleveland Browns in our league. It sort of accidentally happened. And by observing the counter example of boring football, where there's one dominant team, it kind of has to become a core tenet of our league now to fight these other guys of enough equality between teams that it is always very competitive.

• 37:35David Rosenthal?

  And it's even more important back then because there was radio, but there wasn't really TV yet. Even though we're in the post-World War II era, these first few years, five years after the war, the install base of TV was just starting to roll out across America. So this is still an in-person game. And so the business model of professional sports was ticket sales, in-person attendance at the games. I don't think the AAFC model of the Browns being dominant would work ever, but at least today, you could watch the games on TV. They'd be like, oh, I'm always going to see a show when the Browns are playing. That wasn't the case back then. You had to get butts in seats. That was the only way

• 38:16David Rosenthal?

  you were going to make money. This becomes a feedback loop. If you don't make money as a team, you can't afford to put a quality level of play on the field, which further tips the competitive dynamic out of balance.

• 38:30Ben Gilbert?

  Totally. And if you have a league that figures out how to make sure that it's always competitive, and when I say always competitive, what that translates into from a business perspective is, let's say every stadium has 40,000 seats and you have eight teams. That means you have the capability to sell 160,000 seats every weekend. And your goal is to sell 160,000 tickets every single weekend. And so what you basically need is to make sure that it's always a great game to come watch. And to your point, that the business model is around the gate or ticket sales rather than TV, that actually stayed the case until 1977.

• 39:09Ben Gilbert?

  That was the first year that the NFL made more money from television revenue than from ticket sales. That is a full 30 years later than the time period we are talking about here.

• 39:19David Rosenthal?

  Hmm, I didn't realize it was that long.

• 39:21Ben Gilbert?

  Yeah.

• 39:22David Rosenthal?

  Because television is going to come in a big way. But back to Bert Bell, the newly drafted commissioner of the NFL. This is his great insight that he realizes as he's marshaling the NFL owners in the battle against the AFC. And he adopts this as his mantra that literally, I mean, they made a movie with this title. On any given Sunday, any team in the league should be able to beat any other team. And he pushes this through with the owners and gets them all to agree to this of like, hey, the only way we're going to survive and prosper is if we agree that none of our teams can get so dominant that we end up with a Cleveland Browns situation.

• 39:59Ben Gilbert?

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• 40:20David Rosenthal?

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• 40:40Ben Gilbert?

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• 41:02David Rosenthal?

  In half? Which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor and Snowflake all stay audit ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 41:21Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance and the work to earn and prove trust. We're huge fans of Vanta over here and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V A N T A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you. All right. So David, Bert Bell, the new commissioner of the NFL adopts this mindset of we have to keep the game competitive always. What do they do structurally?

• 41:58David Rosenthal?

  Any given Sunday. So Bert and the NFL do two things. First, he completely overhauls the way the schedule works. So in the past, the schedule would be just like, yeah, whatever. You know, we're all going to play each other, you know, in random order. He realizes that the schedule is actually an incredibly important strategic lever. And he looks at the results from last year's season and arranges the schedule such that the weaker teams from last year play the other weaker teams for the first half of the season and the stronger teams from the previous season play the other stronger teams for the first half of the season. So that way he can come as close as possible to guaranteeing that roughly everybody's

• 42:43David Rosenthal?

  going to have statistically a relatively even 50/50 record going into the midway point in the season. So there's going to be drama about who's going to end up winning, even though the actual level of talent might diverge quite a bit within the league.

• 42:56Ben Gilbert?

  Yep. Even if you're a great team, if you've only faced great teams for your first several games, you're going to be a little banged up coming into the second half of the season.

• 43:04David Rosenthal?

  And the NFL still does this to this day.

• 43:07Ben Gilbert?

  Hmm. I didn't realize that.

• 43:08David Rosenthal?

  Yeah, this is like a kind of critical sleight of hand in making the whole thing work. But this is kind of like camouflaging. If there is a competitive balance problem underlying everything, this is only camouflaging it. How do you fix it?

• 43:20Ben Gilbert?

  Yeah.

• 43:21David Rosenthal?

  Well, there's no free agency at this point.

• 43:23Ben Gilbert?

  No, there isn't. And that's important because there's no way to just go sign a veteran player whose contract with another team is up to make your team better. You need to get brand new rookies into the league. It's pretty ridiculous. There actually wasn't a concept of free agency at all until 1993 in the NFL.

• 43:41David Rosenthal?

  I know, which is ridiculous. And so the NFL and Burt come up with the idea of having a draft of college players. And not just any draft, but a draft in reverse order of where you ended up in the standings in the previous season. So that the worst teams in the league get the first picks for the next season's draft.

• 44:03Ben Gilbert?

  And also in doing the draft, we just continue to see over and over and over again, the pro game having reverence for the college game because America has reverence for the college game. It's this idea that we will watch the college football game very carefully. And then we will create a day where on that day, that is when we will be eligible to go and pull the people out of that game and into our league.

• 44:28David Rosenthal?

  And it's incredible, the artifice that grows up around this.

• 44:31Ben Gilbert?

  Oh, 50 million people watch this thing today.

• 44:33David Rosenthal?

  I mean, we were watching YouTube videos in research of like Taylor Swift was at the NFL draft a few years ago when it was in Nashville. Like it's a huge event. It was actually the first big coup for ESPN when ESPN started in 1979 and 1980 was televising the NFL draft.

• 44:48Ben Gilbert?

  Genius.

• 44:49David Rosenthal?

  So these two elements stacking the schedule and then the reverse order amateur draft formed the nucleus of Bert Bell and the NFL strategy that it's had ever since, which comes down to league first, league first, team second.

• 45:02Ben Gilbert?

  Yeah, and there is a structural thing that they did too, which was to create a shared pool of ticket revenue. 60% of that revenue I get to keep because I'm the home team. And at this point in history, super early on, it was that the other 40% would go to the visitors. Over time, the league would evolve a structural thing so that 40% went into a shared pool that got divided among everyone else to sort of lean in harder to this shared mindset. And this is sort of before the TV revenues that are shared today. So David, maybe this is a time to talk about television's impact on the NFL.

• 45:38David Rosenthal?

  So. As we said, the AFC only operates for four years. The Browns are too dominant. The AFC folds after four years. Only three teams of the AFC's eight come over to the NFL. The Browns, the 49ers and the Baltimore Colts.

• 45:52Ben Gilbert?

  Who are of course now the Indianapolis Colts.

• 45:55David Rosenthal?

  Here we are now. It's the dawn of the 50s and television installed base is here. So TV set sales in America in 1946, the first year after the war, 7,000 TV sets sold in America. In 1947, there were 14,000 TV sets sold. So the market doubled. In 1948, there were 172,000 television sets sold and it only grew exponentially from there.

• 46:21Ben Gilbert?

  I love that you looked this up.

• 46:22David Rosenthal?

  By this point in the early 50s, there are 25 million homes in America with a television set. Man, did history turn on a knife point for the NFL's sake, from their perspective, like, thank God, A, the AFC, went into business and forced the NFL into a competitive response to expand, to change the game and to start to discover and understand this league first mentality.

• 46:50Ben Gilbert?

  Yep.

• 46:50David Rosenthal?

  And then also, thank God, they beat them by the end of the 40s and the beginning of the 50s, because now the NFL is the only game in town for professional football in America. And they're the only national league right as TVs are showing up. And really, actually, they are the only game in town for national sports television programming, period. Because there are other sports, most notably baseball, as we've been talking about. But baseball, if anything, they were a victim of their own success because it was the dominant professional sport. They made so much better attendance numbers. They had all the games, 162. The gate, the ticket sales were so important to baseball

• 47:35David Rosenthal?

  that with the advent of television, the baseball owners thought television was bad and they end up fighting it.

• 47:42Ben Gilbert?

  Well, so did the football owners for a while.

• 47:45David Rosenthal?

  Well, so did the football owners, but they had a lot less to lose.

• 47:48Ben Gilbert?

  Well, yeah, because pro football is still an underdog sport here. Even in the early 50s, they're like up and coming. They're trying to get more people to go to games. And baseball generates a ton of stadium revenue from filling their 40,000 person stadiums.

• 48:02David Rosenthal?

  Indeed, baseball had a lot to lose. And To be fair to all of them, in the early days, and I think for a long time, local market home television airing of home games absolutely depressed in-person attendance.

• 48:17Ben Gilbert?

  Totally. When the very first NFL TV deals were signed, and of course, these were individual local deals signed by team ownership and their local television broadcasting affiliate. It wasn't with CBS broadly. It was with, you know, whatever your local TV station is. They would blackout all the home games because they would say, uh, we need to fill this stadium. Because until 1977, the stadium, the gate, was actually the biggest form of revenue. And so why on earth would we cannibalize our experience when someone could just watch it from home? Absolutely not.

• 48:48David Rosenthal?

  It would later take a presidential order from Richard Nixon to end the home blackouts. And even then, only if the home games were sold out would the blackout be lifted. It wasn't until after September 11th that blackouts were lifted, even if the home game wasn't sold out. But it's a mess. But Ben, as you say, in the 50s, these early television experiments are being run with sports. And like, it is pretty bad. So the LA Rams, they do an individual deal in 1950 with the Admiral Television Company to broadcast the Rams games. But they put a clause in the deal because they'd seen what had happened with baseball,

• 49:28David Rosenthal?

  that Admiral would guarantee revenue back to the Rams for any loss in attendance. And this is a really bad deal for Admiral because attendance declines 50%, 5-0.

• 49:41Ben Gilbert?

  Which is crazy. Like for how bad the broadcasts were, the fact that that is a suitable replacement to going to the game. I mean, they would put like one camera up on the 50 yard line and they wouldn't do like any microphones. And they would just be like, all right, this is the game. And maybe they'd have some commentators.

• 49:57David Rosenthal?

  Oh, and it was in black and white on a tiny screen. Like, yeah. All of these things, but the industry was new. Everybody was figuring everything out. The TV set manufacturers, the networks, the content, the sports leagues. One of the big marketing messages was the game comes to you. You don't have to leave. Buy this appliance, put it in your home and it's like a magical window. Like you have a seat at the game and it really did depress attendance. A saying ends up being developed in baseball that sadly for baseball, they stuck to for a very, very long time. That radio wets the appetite, television satiates it.

• 50:37David Rosenthal?

  It's a new revenue stream, but it's hurting the golden goose of ticket sales.

• 50:41Ben Gilbert?

  And all the way through the 50s, it wouldn't really be a particularly large revenue line. But as it did start to grow, everyone's negotiating individually. It ended up being the case that the New York Giants were making $200,000. And this is in 1959 on their TV deal. The Packers were making zero.

• 51:00David Rosenthal?

  I think the Packers were making 5K. They did have a TV deal, but I think it was $5,000. This is the thing. Football, even amongst the individual teams, kept experimenting through the early 50s. Whereas baseball basically shut it down and turned away from TV. And one of the things that they figure out is, oh, television broadcasts depress the gate at home. But there's strong demand in local markets to see the teams away games when they're traveling. And so for the first few years, that's the main model of television broadcasts of the NFL is just showing away games. But there's like a lot of demand for that.

• 51:39Ben Gilbert?

  And it's funny because now we refer to this as a blackout. But at the time, because they were only selling to local affiliates, it's not that it was a blackout. It's that your local TV station only had the contract to broadcast the away games. There was nobody within your antennas reach that was broadcasting that game when it was at home.

• 51:56David Rosenthal?

  So this becomes a pretty meaningful revenue stream, even though, as you say, it would be a long time before TV would surpass the gate in revenue for the NFL. By the end of the 50s, the league as a whole, with all the 12 separate contracts, was making over a million dollars in TV revenue annually. Whereas at the beginning of the decade, it was less than a hundred thousand dollars. And it also becomes clear that certain football games.

• 52:25David Rosenthal?

  There's like a really big audience on TV for them. In particular, the 1958 NFL championship game, known as the quote, "greatest game ever played between the Giants and the Colts, led by Johnny Unitas." A sudden death overtime, dramatic win garners 45 million TV

• 52:47Ben Gilbert?

  Wow.

• 52:47David Rosenthal?

  viewers across the country, including President Eisenhower.

• 52:52Ben Gilbert?

  So was this a national broadcast?

• 52:54David Rosenthal?

  National broadcast of the NFL championship game that year.

• 52:59Ben Gilbert?

  Importantly, this is not the Super Bowl. David and I aren't being coy by not calling it that. Like, that is not what this was. And we're still missing about half the teams that will end up competing for the Super Bowl.

• 53:09David Rosenthal?

  Right, but 45 million viewers. This was unprecedented. There is a huge opportunity for professional football and television.

• 53:20Ben Gilbert?

  Yes.

• 53:21David Rosenthal?

  Which, once again, the NFL was not the one to totally recognize.

• 53:28Ben Gilbert?

  Competition does create the best product. And the NFL, time and time again, has had their hand forced and then reacted really well to a new upstart.

• 53:38David Rosenthal?

  Totally. So in this case, as the 50s draw to a close, once again, just like towards the end of World War II and the end of the 40s, there were a whole bunch more cities and ownership groups that wanted in. There's a clear business opportunity and there are only 12 teams at this point in the NFL. But once again, the NFL owners are kind of dragging their feet. They're like, ah, we don't really want to expand. You know, maybe we'd be open to the Chicago Cardinals. They're kind of struggling. If the ownership group that owns them were to sell, maybe we would allow them to be moved. But, you know, go talk to them.

• 54:15Ben Gilbert?

  And I really don't think this is like a business decision of we don't want more people taking our pie. I think they sort of recognize that there could be more money made if you have more cities, but it was more that the NFL owners at this point are a tight knit fraternity of people who all think the same way, who respect the game, largely who owned the teams when they were massively loss making. And so they kind of don't want to let anyone into their club, even if it would be good for business. And the NFL, as we know it today, is a business. But at that point in history, it was really like each of these teams are kind of on their

• 54:56Ben Gilbert?

  own island. They're deeply competitive against other players. They don't think of those people as fellow employees of the league. It's more like we each have our own club, but the owners of each club sort of have this thing with each other, this fraternal bond.

• 55:10David Rosenthal?

  They're willing to submit to this league first. Mindset because they know it's good for all of them, but that doesn't mean that they want to expand or change things.

• 55:19Ben Gilbert?

  And David, I am excited. We are finally here, the birth of the American Football League.

• 55:24David Rosenthal?

  The AFL.

• 55:25Ben Gilbert?

  Yes, their competition with the NFL and really the era of national TV contracts. This is the story of how the NFL became the league that we know today.

• 55:35David Rosenthal?

  Let's go. So the story goes that one of the potential new professional football team investors, a gentleman named Lamar Hunt, who is a young heir to a very large Dallas, Texas oil fortune, kept trying to talk to Bert Bell, the NFL, do anything he could to get an expansion team or buy the Cardinals. He just wants to own a football team.

• 55:57Ben Gilbert?

  Yep.

• 55:57David Rosenthal?

  So he's flying back from seeing the Cardinals and having been rebuffed. And he has a eureka moment on the plane. He's been hearing that there are all these other people who want to buy the Cardinals too, and get in line and this person in this city and that person in that city. And Lamar says, wait a minute. I don't need the NFL. I don't need the Cardinals. I've got a list of all these other wealthy people who also want to have professional football teams. Why don't I call them and we'll start our own league?

• 56:29Ben Gilbert?

  Yes, and thus begins the most successful attempt to challenge the NFL.

• 56:35David Rosenthal?

  By far. So in August 1959, he and several other owners form the American Football League with six teams, soon to become eight. The Dallas Texans, Boston Patriots, Buffalo Bills, Houston Oilers, Miami Dolphins, New York Titans, soon to be changed to the New York Jets, the Denver Broncos, the LA Chargers, and the Oakland Raiders. You've probably heard of most of those teams.

• 57:00Ben Gilbert?

  Yes, this one ended very differently than the AAFC did.

• 57:03David Rosenthal?

  Very, very differently. So at first, Bell and the NFL.

• 57:09Ben Gilbert?

  They're sort of trying to be pretend supportive until it's legit threatening.

• 57:13David Rosenthal?

  Yep. But then in 1959, right after the new AFL announces that they're gonna start their league and commence operations, Bert Bell dies suddenly. And so, once again, just like back with the AAFC, the league is in crisis and forced to act. And unlike the AAFC, things are gonna be a little different this time because of the television aspect.

• 57:40Ben Gilbert?

  Yes, and this is all being led by, you mentioned Lamar Hunt, who was the Dallas Texans owner.

• 57:47David Rosenthal?

  People might know them better as the Kansas City Chiefs today.

• 57:49Ben Gilbert?

  Yes.

• 57:50David Rosenthal?

  So Hunt, he's been studying the NFL. He knows about the league-first mentality. He's also been studying baseball. He's been meeting with baseball owners, including Branch Rickey of Brooklyn Dodgers and Jackie Robinson fame, who at that point in time was out of Major League Baseball and was trying to start a third independent league.

• 58:14Ben Gilbert?

  Independent baseball league.

• 58:15David Rosenthal?

  A third independent baseball league, yes. With some pretty radical ideas, really borrowing from the NFL and the league-first mentality. He wanted to embrace television in this new baseball league and have a radical solution where all the clubs in the league would share all of the revenue from a television deal.

• 58:35Ben Gilbert?

  Pretty crazy.

• 58:36David Rosenthal?

  So Lamar Hunt and the new American Football League, the AFL.

• 58:42David Rosenthal?

  They take this cast aside idea from baseball and they run with it. Hunt says, we'll just centrally negotiate one national television contract for the entire AFL and then we'll split the revenue completely equally amongst all the teams. This is like the epitome of the league first mentality. It'll be great for us and it'll help us compete with the NFL.

• 59:04Ben Gilbert?

  And in some ways, it's easy for the upstart to do this in counter position because they have no existing TV contracts, but they do kind of get laughed out of the room. They go to the TV networks with this and each of the TV networks are like, oh, cool idea, but like, who cares about your league? No one's going to watch this. So we hear your pitch. We understand that this is very innovative and breakthrough and very different than what the different NFL teams are doing and we don't really care that much.

• 59:33David Rosenthal?

  And the two major networks at the time, CBS and NBC, had deals with NFL teams, but there was another upstart TV network out there, ABC, and they were the perfect match. So Hunt goes to ABC and they find a young executive there. ABC doesn't even have a sports division at this point in time, but a young executive within ABC named Rune Arledge.

• 1:00:02Ben Gilbert?

  This is probably the fourth episode we've talked about Rune Arledge on.

• 1:00:06David Rosenthal?

  What a legend. So Rune would ultimately become Bob Iger's mentor and Bob Iger would rise through the ABC Sports ranks in the beginning of his career before taking over Cap Cities and then obviously all of Disney. So this is Rune's big opportunity. He sees, it's obvious at this point in time in the late 50s, that nationally televised football games, there's demand for it.

• 1:00:30Ben Gilbert?

  This is actually shocking. Like, I know to everyone right now, we're like, well, of course, but it used to be the case that Sunday afternoons kind of had a hole in their schedule, like CBS had no good programming. And so that's why they would originally agree to like, sure, we'll broadcast some NFL games. But no one expected the American public in their living rooms to take to football as an event, as an entertainment form delivered over the air to the living room the way that it did. And so the NFL sort of rebranded Sundays in America and turned it into a completely different way that people spend their time. And that was shocking.

• 1:01:08David Rosenthal?

  Well, and with those early NFL deals, it was like those were individual deals that teams made with networks and local stations. So it was like a local thing. It wasn't Football Sunday. It wasn't a national event.

• 1:01:23Ben Gilbert?

  Right.

• 1:01:23David Rosenthal?

  This was the first nationwide, network-wide contract.

• 1:01:28Ben Gilbert?

  The networks now had signal that people did want to behave in this way and they could feel safe sort of signing business deals and pursuing this because even though it wasn't what they expected, turns out there is demand for this product.

• 1:01:40David Rosenthal?

  Yeah. So ABC signs a league-wide, five-year TV rights deal with the American Football League for eight and a half million dollars over five years. It was by far, far the single biggest sports rights TV deal in history at the time.

• 1:02:00Ben Gilbert?

  $1.3 million to the league per year.

• 1:02:05David Rosenthal?

  And that was before the league had played a single game. So here we are now in January 1960, back to the NFL. They don't have a commissioner. Their upstart rivals, the AFL, who haven't played a game yet.

• 1:02:21Ben Gilbert?

  They have a multimillion dollar contract.

• 1:02:23David Rosenthal?

  An eight and a half million dollar, five-year TV deal with a national network that the NFL doesn't have. This is a real existential crisis. And unlike last time where they're like, okay, great, we'll just draft one of our own, Bert Bell, owner of the Philadelphia Eagles, to come in and lead us through this. They can't agree on a new commissioner. So it takes 11 days and 23 separate votes of the NFL ownership groups in a total knockdown, drag-out negotiation. There's multiple camps backing multiple candidates.

• 1:03:00Ben Gilbert?

  Yeah, the NFL has just gotten too big. Each of the owners has too many of their own interests to argue for. They're in dire need of something or someone to unify them.

• 1:03:10David Rosenthal?

  Indeed. By the end of the process, none of the original candidates are still in it.

• 1:03:15Ben Gilbert?

  Right. So in some ways, it's a tough position to be in because all the most qualified people are out. So you kind of have to pick someone that nobody hates, but probably won't be very good.

• 1:03:25David Rosenthal?

  But fortunately for the NFL, they were very, very, very wrong about that.

• 1:03:30Ben Gilbert?

  Lucky. Better to be lucky than good.

• 1:03:32David Rosenthal?

  Yes. They choose as the compromise dark horse candidate.

• 1:03:38David Rosenthal?

  33-year-old general manager of the Los Angeles Rams, former public relations intern, Compton College graduate, Pete Rozell, to be the new young commissioner of this league in crisis.

• 1:03:57Ben Gilbert?

  And create the NFL that we know today.

• 1:04:00David Rosenthal?

  And it was totally brilliant. I mean, A, Rozell grows into this just incredible leader, visionary, who does so many things that we're going to enumerate now for the league, for the game, for television, for America. But it was so not the owner's intention, they had to go to this compromised candidate and this young person.

• 1:04:19Ben Gilbert?

  Who most people hadn't heard of.

• 1:04:21David Rosenthal?

  Anybody else they were considering would have been of a different generation, wouldn't have understood the new America in the late 50s and early 60s. Like, these were all old folks who were running the league at this point in time. But Pete, nobody better embodied everything about America in the 50s and 60s. Like, young families, suburbs, West Coast, Los Angeles, television, PR, advertising.

• 1:04:48Ben Gilbert?

  Yes. Coming out of the PR background was the perfect positioning for him because he knew that every foot that we have to put forward has to be really polished. We got to stop doing things that are confusing, or cannibalizing each other, or send mixed messaging, or perhaps put a bad taste in Americans' mouth. And we need to figure out the very best media strategy, the very best strategy to make it so all the newspapers and all the TV stations talk about us all the time. The NFL and our teams and our players need to be on the lips of Americans as much as possible.

• 1:05:24David Rosenthal?

  And as GM of the Rams for only two or three years, the Rams were not a successful team on the field, even during his tenure. But he makes them into the most profitable team in the league. They actually start making a lot of money because he gets it, right? They're in the second biggest TV market in America, in LA, a very wide geographically spread out market where people want to watch football games on TV. He opens up a Rams merch- Merchandise store. He partners with Roy Rogers, Inc. The actor Roy Rogers had like a white label merchandise brand to bring actual high quality branded Rams jerseys, hats, mugs, et cetera. That becomes a huge revenue line for the Rams that nobody else has.

• 1:06:07David Rosenthal?

  So he's got the right background here and he comes in. This is pretty crazy. I mean, this is a very volatile, charged situation with a lot of elder and opinionated folks around the league that he's going to have to deal with. And within a year, he completely changes the NFL. So the first thing he does when he comes in as commissioner is he ratifies an expansion plan for the NFL to meet the AFL. Remember, one of the big reasons why Hunt and the AFL owners started the league in the first place is they wanted to bring pro football to more cities. The NFL was dragging its feet, just like back with the AFC. Now they realized they got to go meet the enemy on the field where they are.

• 1:06:51David Rosenthal?

  So the plan is to expand to both Dallas and Houston immediately to meet the AFL there in Texas.

• 1:06:59Ben Gilbert?

  Oh, and meet Lamar Hunt head to head, right on his own turf. I mean, he's leading the AFL effort and the idea of you're just going to open up shop and say, we're going to give away the franchise to a new owner of the Cowboys right here in your backyard.

• 1:07:13David Rosenthal?

  Yep, right down the street. Speaking of proximity and right down the street, the next move that Rozell makes, remember, he's from LA. He gets the importance of media, advertising, everything. At this point in time, the league offices were in Philadelphia because Bert Bell was in Philadelphia and he had been the owner of the Eagles. He's like, Philadelphia is not the place where we can run the modern NFL.

• 1:07:39Ben Gilbert?

  And Burt ran it a very idiosyncratic way, too. I mean, he had obviously no computer system, but like it was post-it notes and phone calls is how the NFL ran, like just not a professional organization.

• 1:07:49David Rosenthal?

  Oh, yeah. Famously the stacked scheduling. He would do it with Domino's on his kitchen table. So Rozell's like, no, this is not going to work. We're going to move league headquarters to New York, to Manhattan, first to Rockefeller Center, and then to Park Avenue, where the league is to this day. We need to be right there next to the television industry, next to the media industry, and just as important, next to the advertising industry.

• 1:08:15Ben Gilbert?

  Yes.

• 1:08:15David Rosenthal?

  These are relationships we got to cultivate with Madison Avenue. After he moves the headquarters to New York, Rozell contracts the Elias Sports Bureau, which did professional statistics for Major League Baseball. The NFL, up to this point, didn't have professional statistics arms that would distribute game stats and box scores out to all the newspapers across the country.

• 1:08:39Ben Gilbert?

  The only way anybody's going to write about us and give us space on the sports page is if we make their job easy and put the stats right in their hands every day.

• 1:08:48David Rosenthal?

  Speaking of writing about the NFL and publishing, the other thing that Rozell knows is, especially with a game like the NFL, which is a weekly drama, it's not just about like baseball with getting the daily box scores in the newspaper. You also got to create human stories and arcs and mythology around the game. And so he intentionally cultivates a tight relationship with Time Inc. and specifically Sports Illustrated. And over the course of the 60s, Sports Illustrated really becomes the major advocate for the new, modern game of the NFL. So much so that in 1963, just three short years later, Sports Illustrated names Pete

• 1:09:33David Rosenthal?

  Rozell its Sportsman of the Year, the first ever non-athlete that it had ever named Sportsman of the Year. Like, think about that, the commissioner of the league being named Sportsman of the Year. That is just a huge mindset shift.

• 1:09:46Ben Gilbert?

  We should also say the end of the 50s, beginning of the 60s, you know, baseball's still a dominant sport in the US. The dominant football franchises are college football franchises. The NFL's still an underdog and now they're being challenged by this new upstart. So they're sort of squeezed in the middle where like, people don't care enough yet, but they also have a competitive threat. And so Rozell is having to do some innovative things. David, didn't he like hire writers in-house at the NFL to craft the storylines and then send those to all the reporters who like were too busy to actually go to NFL games?

• 1:10:20David Rosenthal?

  Yes.

• 1:10:21Ben Gilbert?

  Because they didn't respect the NFL enough. But maybe if we send them the stories, then they'll tweak them a little bit and publish them.

• 1:10:27David Rosenthal?

  Famously, he did this, starting back when he was with the Rams. Even when he was a PR intern there, he would just write the stories for the reporters, which one ensured that they would actually get in the papers, but two, he could control and craft the narrative. Man, you can totally still see this to this day in the NFL, this ethos. It was so important and strategically advantaged for them. The NFL keeps such a tight grip on the narrative. And all this starts with Rozell. One other thing that he does immediately after taking over and moving headquarters to New York, that would end up paying huge, huge, huge dividends, is he also starts cultivating political relationships and influence.

• 1:11:11Ben Gilbert?

  Yes. So this is a perfect lead into what happens in 1961, right after Rozell is on the job, that would change the face of football forever.

• 1:11:21David Rosenthal?

  So it's obvious to Rozell, once the AFL signs their big deal with ABC, that that's the path forward.

• 1:11:29Ben Gilbert?

  Their $1.3 million a year deal.

• 1:11:32David Rosenthal?

  The league-wide revenue-sharing national deal with the national network. Now, this is not how the NFL operates at this point.

• 1:11:40Ben Gilbert?

  Nope.

• 1:11:41David Rosenthal?

  Rozell corrals all the NFL owners and gets them to realize that the NFL has to do the same thing. They have to give up their individual TV rights. They have to pull together and fight the AFL. So finally, after wrangling and politicking with the ownership group.

• 1:11:59Ben Gilbert?

  And the reason there's politicking is because Cleveland, Pittsburgh and Baltimore actually will end up losing money in the short term on this because Rozelle is pitching on, I'm going to go negotiate us a big group deal. And they're all three saying, we already have very good deals locally. We're very popular teams. We're in great football cities.

• 1:12:19Ben Gilbert?

  No, but ultimately they do say yes. And it really like speaks to the thing that has made the NFL successful, which is saying no to growing my slice of the pie to grow the greater pie.

• 1:12:32David Rosenthal?

  So Rozelle goes and negotiates with CBS, which was the dominant network, both in the country and had the majority of the individual team NFL deals. He negotiates a two-year deal with CBS at $4.65 million in rights per year to be shared equally among the teams.

• 1:12:56Ben Gilbert?

  Over three X the AFL deal.

• 1:12:58David Rosenthal?

  A huge shot across the bow to the AFL. Fortunately and unfortunately, they immediately encounter political pressure in response to this. This triggers the Department of Justice to start an antitrust violation process against the NFL. This is like a clear use of monopoly power.

• 1:13:19Ben Gilbert?

  Well, this is the very first question where you say, well, what is a monopoly? And what is antitrust? And what is the NFL?

• 1:13:27David Rosenthal?

  Right.

• 1:13:27Ben Gilbert?

  And what are the teams? And in this situation?

• 1:13:31David Rosenthal?

  Is the NFL the business or are the teams the business?

• 1:13:34Ben Gilbert?

  Right.

• 1:13:35David Rosenthal?

  If the teams are the business, then yes, this is antitrust. If the NFL is the business.

• 1:13:39Ben Gilbert?

  No, this is one entity acting on behalf of itself. There's no collusion. There's no monopoly. Plus, you know, in this particular situation, they actually are in a competitive landscape against the AFL. So there's strong argument to be made that this is not antitrust. That argument does not carry the day.

• 1:13:59David Rosenthal?

  No. So pretty immediately, the courts strike down this deal. And there's about, I think, a one to two month period where it's all in limbo. And this is where the Kennedy relationships come in clutch for Rozelle and the NFL. So both the president and Bobby Kennedy in Congress whip up enough support to pass through new congressional legislation.

• 1:14:25Ben Gilbert?

  A new congressional act specifically to advantage the NFL.

• 1:14:29David Rosenthal?

  And to allow for national sports contracts on a league-wide basis. It's called the Sports Broadcasting Act. It ends up getting passed towards the end of 1961. The day after the bill is passed and signed by John F. Kennedy, he literally hosts a party at the White House for the NFL, which is like, this tells you everything you need to know right there. Pete Rozell, all the owners, they are invited to the White House to celebrate this new antitrust exemption that has been passed through Congress to allow them to negotiate this landmark deal because the president wants to watch his football.

• 1:15:09Ben Gilbert?

  It's that, but Rozell also makes the strong case that this is good for America. For a game that is growing in popularity and a game that unites communities. They're really starting to lean into this idea that this brings a lot of people together in a city. It is a shining example of teamwork and a shining example of hard work and celebrating sportsmanship. And this is a great thing that we should spread to more of America and make it easier for more people to consume. They're starting to make arguments about the economy around, you know, it's good for people to have gathering points, both at stadiums, but around stadiums with hotels for people to throw parties at their houses. All of this is goodness.

• 1:15:53Ben Gilbert?

  And if you like the American economy, you should let us have a national TV contract for the NFL.

• 1:15:58David Rosenthal?

  Yep. And at this point in time, I think a lot of those arguments hold water.

• 1:16:03Ben Gilbert?

  Yep.

• 1:16:04David Rosenthal?

  This actually was driving a lot of commerce for the nation.

• 1:16:10Ben Gilbert?

  Totally. A fun aside, I did the math on that $4.65 million per year deal. That value of that contract would grow 2,500x over the next 62 years.

• 1:16:26David Rosenthal?

  Wow. Did you look at what it would be inflation adjusted?

• 1:16:29Ben Gilbert?

  Yes, inflation adjusted, it's about 250x.

• 1:16:33David Rosenthal?

  Still pretty good. So on the back of this landmark TV deal, Rozelle does two other really brilliant things. First comes as kind of a, another accident. So the league every year sold the rights to the NFL championship game to make a movie out of it.

• 1:16:56Ben Gilbert?

  And they were always like, kind of bland.

• 1:16:58David Rosenthal?

  Yeah, they were kind of hokey, like a really rudimentary highlight reel type thing. In 1962, they get a bid for the rights, the bidding is a sealed auction. They get a bid that comes in from a guy named Ed Sable, who was a suburban dad in Philadelphia who liked to make home movies, particularly home movies of his son Steve's high school football games. This guy Ed bids on the rights to make the NFL championship movie for 1962. So the bids are unsealed and Ed had done a little homework. He found out that the company that had won the past few years only paid $2,500 for the rights. So he's like, well, I can bid $5,000.

• 1:17:41David Rosenthal?

  He wins the auction and Rozelle's like, uh, who is this guy? Like with no experience, what's happening? So Rozelle goes to visit him and Ed pitches Pete on doing something completely revolutionary for the 1962 championship. He wants to make it like an actual movie, not a hokey sports movie, a real movie with montages, with cuts, with professional Hollywood quality cinematography.

• 1:18:13Ben Gilbert?

  Slow motion, voiceover.

• 1:18:16David Rosenthal?

  Everything, sideline cameras, really a passion project to make this an incredible piece of content. Rozelle's kind of like. Well, I mean, that sounds great. I don't know if you can do it, but it's like, what have I got to lose? So he lets Sable go with it. And the movie he makes totally revolutionizes sports video content. I think this is another thing that we just take for granted today. It's like air and water, that sports content, sports video is not just like a fixed camera at the 50 yard line that pans back and forth.

• 1:18:56Ben Gilbert?

  Not only does this film get great acclaim, but it's a revolution to go and create recordings of sports not to be broadcast. The broadcasters weren't recording tapes of everything they ever broadcast. So there's a lot of like baseball games and stuff that have been lost to history because there was no recording of it made. Meanwhile, the NFL for this championship game and for other things that Ed Sable and his crew would film after this, it is high quality film, not videotape recording, not over the air broadcast, film stock, recording from a bunch of different angles and some at high frame rate cameras and some at 24 frames per second cameras.

• 1:19:38Ben Gilbert?

  So you get this smooth, beautiful, slow motion. It provides this unbelievable archive of the game for which other sports have no archive.

• 1:19:47David Rosenthal?

  Yeah. Well, and that's just the video aspect to it. But there's also something that Sable gets intuitively is the same thing that Rozelle gets. The narrative, it's not just about showing what happened. It's about telling a story. And it just completely meshes with Rozelle's philosophy and what's going to carry the NFL into what it becomes today. We can't just show these games. We have to tell a story. This has to be drama. This has to be made for TV content.

• 1:20:17Ben Gilbert?

  And it has to be super polished and it has to be super controlled. And Ed Sable's little outfit that would become NFL Films is the ultimate embodiment of Rozelle's mindset. I don't think Rozelle could have created this on his own, but when you watch anything from NFL Films, it has Pete Rozelle's personality oozing all over it in terms of what we are creating is entertainment and polish.

• 1:20:44David Rosenthal?

  So for two years, They do the championship game and then in 1965 Ed comes to Pete with the idea of like, "Hey, let's make this a core in-house division of the NFL and they start NFL Films."

• 1:21:00Ben Gilbert?

  Yeah. You should buy my little film company.

• 1:21:02David Rosenthal?

  What a radical idea. The NFL should become a movie producer. This is huge. Remember, there's no ESPN. There's not going to be any ESPN for 15 years. All of this content that we're just bombarded with today, it all starts here with the Sables and with NFL Films.

• 1:21:20Ben Gilbert?

  Yeah. There's a couple of interesting things to note, too. Once Rozell Greenlights NFL Films, he basically says, "Okay, there's a lot of people in my organization that might want to do something with this at some point, but we want to be hands off. I just don't want your P and L to ever go negative. So you can run as a break even business as long as you're fulfilling the mission of promoting the very best of the NFL and helping to create lore and story." And they build this completely full-fledged film studio that is actually the customer who buys the most film from Kodak other than the US Army in the entire country. Super high-volume film studio because they start sending full film crews to every

• 1:22:03Ben Gilbert?

  single NFL game every single week. And it's this unbelievable operation to then overnight mail or drive themselves back all this footage to start editing it right away so that they can use it for what we will talk about soon, but for many purposes.

• 1:22:20David Rosenthal?

  This is what's so amazing. They did all this as this investment, as a labor of love and passion on the Sables part. On Rozell's part, though, the motivation, as you're saying, it's not about making money. It's about raising the stature of the league.

• 1:22:36Ben Gilbert?

  Yes.

• 1:22:36David Rosenthal?

  About putting the most highest gloss sheen on the product that we are producing and the product is the game on the field. They couldn't even foresee how important this would become that we'll put a slight pin on and come back to in just a minute.

• 1:22:49Ben Gilbert?

  Yep.

• 1:22:50David Rosenthal?

  The other thing that Rozelle does in the next couple of years is the merch idea, the store that he was doing back with the Rams. He brings that in-house on a league-wide basis and starts NFL Enterprises. Again, totally radically, he goes to all the owners, all the teams and says, whatever you're doing on merch, whatever you're doing on branded opportunities, you are no longer doing that individually. We're going to bring it centrally, collectively, in-house under NFL Enterprises. We're going to standardize the merch, the jerseys, the hats.

• 1:23:21Ben Gilbert?

  We're going to set a quality bar.

• 1:23:23David Rosenthal?

  So that anytime a fan, because it's all about the relationship with the fans. It's like a funnel. Bring them in from TV, get them to the game, get them to buy merch. They're just deepening the relationship. They have to have a great experience. They can't get some shoddy pennant from the Giants that looks like X and somebody else gets something from the Cardinals that looks like Y. Like, it's got to all be the same.

• 1:23:46Ben Gilbert?

  And you got to remember, the way that the NFL is structured, Rozelle is not their boss. In fact, he works for the owners. So they're all making money and he's going to them saying, hey, just like TV, I want you to give up the rights to make money on your own, even though some of you are doing a pretty good job at it. And we're going to do this thing as a league and we're going to cut it equally. So I don't care if your team's bad and their team's good. We're going to, all the revenues can be equal, just like TV. And he's so good at playing the politician with the owners that they keep agreeing to give up revenue generating parts of their P and L for the league to take over on their behalf.

• 1:24:25David Rosenthal?

  Yeah, I mean, like, let's take the Browns and Packers. How many pennants do you think the Browns sold, you know, in the city of Cleveland with as big and storied as the Browns are versus the Packers in a town like Green Bay?

• 1:24:38Ben Gilbert?

  What is Green Bay? It's something like the 200th largest media market in the United States. And they've got this NFL team.

• 1:24:45David Rosenthal?

  And what Rozelle is saying is just like TV, I don't care how much merchandise you sell. The Packers are getting the same check from enterprises as the Browns are.

• 1:24:53Ben Gilbert?

  Yep. We should probably take a 60 second aside, but the unique structure of the Packers is totally amazing. They are owned by a publicly owned nonprofit corporation. And so what that means is rather than one individual who could just decide to uproot the team and leave them, the ownership of the team lies in this entity that is theoretically a publicly owned entity. Anytime they want to raise money, they go and sell more shares, more stock in the Green Bay Packers. And there's hundreds of thousands of people who have bought this stock. So there's this very distributed ownership group of the Packers.

• 1:25:28David Rosenthal?

  Not with any expectation of financial return, literally just so they can hold a piece of the Packers.

• 1:25:33Ben Gilbert?

  Or control, because nobody can own more than a certain number of shares. But this mechanism has kept the Packers in Green Bay even while capitalist forces and individual whims of billionaires have moved many other teams around.

• 1:25:48David Rosenthal?

  Yeah, it's such an amazing little quirk. Have you ever been to Lambeau Field?

• 1:25:52Ben Gilbert?

  I have not. I really want to.

• 1:25:54David Rosenthal?

  Oh, I went once, not for a game, but I was at a wedding in Green Bay. And I was like, oh, my gosh, I gotta go see the field. And so I took a run. Green Bay is this very quaint little, little town in Wisconsin. And there's this giant NFL stadium in the middle of it.

• 1:26:10Ben Gilbert?

  It's wild. And for a lot of the analysis we'll do later, the data comes from the Green Bay Packers annual report because no other team publishes their P and L, but the Packers do.

• 1:26:20David Rosenthal?

  Okay, so the last thing Rozell does in this miracle run in his first couple of years as commissioner is he creates the Pro Football Hall of Fame in Canton in 1963. So cool. I've never been. We gotta go. We should do an inquired field trip.

• 1:26:35Ben Gilbert?

  We should.

• 1:26:35David Rosenthal?

  That would be fun. So there's this amazing flywheel. Like, it really is like the Disney story that he gets the most important thing. Everything he's doing is through the lens of how do we raise the stature of the league? Not a team, but the league, the NFL as a league. How do we add higher gloss sheen to the product?

• 1:26:58Ben Gilbert?

  To the shield, one might say.

• 1:26:59David Rosenthal?

  Exactly, exactly. And his logic is doing that will attract more fan interest and deeper fan interest.

• 1:27:08David Rosenthal?

  And the more and deeper fan interest that you attract, the more TV dollars you're gonna make. And this is revolutionary, too. Back in the day, you were limited to the number of seats you had in your stadium. So if you're like a major league baseball team in a major market where you're selling out your stadium, there's not a strong incentive to keep adding sheen to the product. You're at maximum revenue capacity.

• 1:27:30Ben Gilbert?

  Right.

• 1:27:31David Rosenthal?

  But with the NFL and now with the new TV model, there is no ceiling to revenue capacity.

• 1:27:37Ben Gilbert?

  Yep.

• 1:27:37David Rosenthal?

  So more fan interest, more TV dollars, more TV dollars shared evenly amongst all the teams raises the level of play equally as the overall level of play goes up, as long as the competitive balance stays intact. Well, that improves the product.

• 1:27:57Ben Gilbert?

  Yep.

• 1:27:57David Rosenthal?

  Which then adds more sheen, which then drives more fan interest, and it becomes this amazing flywheel. And there's so much more to the story, but that's the core of it. That idea is what leads to, what's the current annual national revenue for the NFL? Like 10 billion, 11 billion?

• 1:28:14Ben Gilbert?

  That comes through shared agreements is 11 billion dollars. And then there's another six or so that comes from local revenue that teams individually generate.

• 1:28:23David Rosenthal?

  Yep. That's per year.

• 1:28:25Ben Gilbert?

  Right.

• 1:28:27David Rosenthal?

  Just to be clear, that is per year.

• 1:28:30Ben Gilbert?

  It is this flywheel that makes the NFL teams collectively worth something like 140 billion dollars today.

• 1:28:37David Rosenthal?

  So remember that initial landmark deal that they got the antitrust exemption from Congress for in 1961? For the 1962 season, that was two years. The AFL is locked up for five years. The NFL gets to renegotiate every two years. Rozelle opens up the bidding to all three networks, of course. CBS wins again. Another two-year, 28.2 million dollar bid, 14.1 million dollars per year, up from 4.6 two years earlier. So every single team in the league now gets 1 million dollars.

• 1:29:16David Rosenthal?

  Before the season even starts.

• 1:29:18Ben Gilbert?

  A cool 3X from the last deal he negotiated two years before.

• 1:29:21David Rosenthal?

  Pretty freaking incredible. And also just says so much about the commerce that the NFL was driving. Like, the TV networks were getting a great deal here. These were landmark contracts, but the attention, the viewership that the games got, and then the advertising units that were sold, and then the ultimate products that were moved as a result of those ad units, this was a steal.

• 1:29:45Ben Gilbert?

  And you could argue that the TV networks were getting a great deal for many, many, many more years. And I think at the end, I want to discuss, are they getting a good deal today? But everyone was getting a pretty good deal here because the fan base was growing so much more quickly and the number of viewers was growing so much more quickly than these deals could get renegotiated.

• 1:30:03David Rosenthal?

  Well, it just takes time for people to realize the power of a new medium. Okay, so Rozelle, unbelievable. First five years in office. Literally cannot imagine executing better. The NFL going from major crisis, death of its owner commissioner, Bert Bell, to the place it's in in the mid 60s. Incredible. What about the AFL? What happened to them? They're doing pretty great, too. They're thriving, and it's all because of television. Even though the NFL is doing great, there's still a lot of demand for football on TV.

• 1:30:43Ben Gilbert?

  And the AFL, to put a finer point on what you're saying, they had a shoot the moon strategy. They wanted to come out of the gate with a bang. They wanted to burn real hot and, under the right circumstances, have that go really well for them. And they had the exact right circumstances. It was the boom of TV in America. So they could do things like go sign Joe Namath for the Jets to a gigantic contract and just have New York and half of America fall in love with him and turn him into a superstar that benefited the league.

• 1:31:16David Rosenthal?

  The Jets in the AFL, formerly the Titans.

• 1:31:21David Rosenthal?

  They're owned by Sonny Werblin. He was one of the co-heads of MCA, the big agency.

• 1:31:28Ben Gilbert?

  As discussed on our interview with Michael Lovitz.

• 1:31:30David Rosenthal?

  Indeed, indeed. So just like Rozelle gets what's going on in the NFL side, Sonny, he's the media guy for the AFL and he totally gets it too. So Sonny sees the big second NFL deal come across in 1964. All the other AFL owners are like despairing. The NFL just got this huge deal. How are we ever going to compete? They're going to have so much more money. We'll never be able to sign any players. This is the end. Sonny's like, oh, no, no, no, no. We're going to be just fine. We're going to be great because the NFL did this deal with CBS. Well, there are two other networks out there. There's ABC, who the AFL has the current deal with.

• 1:32:14David Rosenthal?

  And then there's also NBC. And so there are two bidders out there who are going to be very, very, very sad that they just lost out on the most compelling content on television, professional football. And who's there to give it to them? The AFL.

• 1:32:31Ben Gilbert?

  Yep. We'll take second place when there's a bunch of sad people willing to throw money at second place.

• 1:32:36David Rosenthal?

  And throw a lot of money. So the very next week after Rozelle and CBS announced their deal, the AFL and NBC announced that they've just signed a new five-year, $37.5 million deal. So bigger overall dollar number for a longer number of years.

• 1:32:57Ben Gilbert?

  Even though it's like less than half the per year amount.

• 1:33:01David Rosenthal?

  Yeah, it's $7.5 million per year. But by this point in time, the NFL has 14 teams. The AFL still only has eight. So on a per-team basis, it's pretty close. For a five-year-old upstart league, this is a big success.

• 1:33:18David Rosenthal?

  So just like you were saying, right on the heels of that, Sonny and the Jets, they know what to do with that money. They turn around and they give a huge chunk of it to Broadway Joe Namath. And probably a lot of listeners are going to know the name Joe Namath.

• 1:33:33Ben Gilbert?

  I honestly, I only knew it because I saw him on a Brady Bunch episode. It's like this cultural touch point where Joe Namath was so big that he actually appeared on a Brady Bunch episode. And that's super unusual for a sports star in that day.

• 1:33:47David Rosenthal?

  Dude, I mean, he had his own talk show. It's not just that he was on the Brady Bunch. So everything we were talking about a minute ago with NFL Films and Rozelle and all the brilliance there and how it was so important and this realization that football and the NFL would be made for TV. Joe Namath was the first modern cultural celebrity athlete.

• 1:34:09Ben Gilbert?

  He's also a heartthrob. There's like millions of teenage women in America like throwing themselves.

• 1:34:14David Rosenthal?

  That's exactly what I was going to say. He was the first professional athlete that appealed equally to men, women, and children.

• 1:34:23Ben Gilbert?

  That's a great point.

• 1:34:25David Rosenthal?

  So he comes and he's playing in New York, right? In the biggest market, the brightest lights, right there with the TV industry, right there with the advertising industry. He knew exactly how to play it. He wore white cleats. Everybody else wore black high tops. Famously, he wore a mink coat on the sidelines. Just like amazing, amazing. Like he started movies in the off season. Broadway Joe was it.

• 1:34:49Ben Gilbert?

  Well, continuing that thread from earlier where I was talking about how CBS had this like hole in their schedule and everyone was skeptical that sports would fill it. Everyone thought sports were like a very male thing. And especially as sort of brutish of a sport as football, they didn't think it would do well, certainly not in prime time, but not even sort of in the Sunday afternoon slot, because you know, it's just going to attract the husbands to come and watch it. And it doesn't have a family appeal. And Joe Namath is the first big example where everyone realized, oh, football totally can be for everyone.

• 1:35:23David Rosenthal?

  Yep.

• 1:35:24Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is no longer the hard part.

• 1:35:38David Rosenthal?

  Yeah, the hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 1:35:52Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower.

• 1:36:02David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 1:36:20Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise: the workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 1:36:36David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually, and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 1:36:52Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 1:37:02David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. So the name of signing is the first big post-TV money contract signing in the AFL-NFL war. But it starts a whole wave now of competition between the two leagues to go sign all the college superstars coming out. So it gets pretty crazy. At one point, the NFL starts with a

• 1:37:34David Rosenthal?

  Refer to as a babysitting program. This is literally a kidnapping program where they will send agents to top college athletes who are seniors about to graduate and literally keep them out of the hands of AFL teams, not allow them to sign contracts and pressure them into signing with the NFL first.

• 1:37:56Ben Gilbert?

  They just put them up in hotel rooms and then they don't tell anyone where they took them. So nobody can tell the AFL team rep, this is where you can find the star. It's just like, you got him captive till you sign him. The interesting thing too, is that the leagues aren't respecting each other's drafts. So it doesn't matter if you draft someone in your league, I'm signing him to a contract in mine and that contract is valid in the United States. I don't care what your draft says.

• 1:38:19David Rosenthal?

  This is the battlefront. It's with rookies and the draft. What they don't do yet is start signing each other's players. That's like hitting the nuclear button option.

• 1:38:29Ben Gilbert?

  Right.

• 1:38:30David Rosenthal?

  So they're keeping this to rookies, but still like pretty quickly contracts for rookies get into the close to million dollar range, which is way more than the veterans are making. It starts causing all these problems. And by the beginning of 1966, the owners group in the NFL realizes that, hey, the AFL isn't going away and this is not going to be like last time. We're going to have to play ball with these guys, literally.

• 1:38:55Ben Gilbert?

  And it begins a super delicate dance of they're my sworn enemy, but there's some owners who see the writing on the wall very early and say, we're going to have to combine these and it's probably not actually legal for us to combine them, but we're going to kill each other if we both keep going. So what do we do? And so it begins this multi-tiered negotiation where certain people at the top don't know they're negotiating. Meanwhile, certain owners are forming side deals with other people who own teams in the other league. It's this fascinating spy game.

• 1:39:29David Rosenthal?

  Oh, this is so fun. What happens next is like a Godfather film. So. A few of the most influential owners come to Rozell in 1966 and they say, "The way things are going with the AFL, we're not going to beat them. This draft situation with the rookies is out of control. The contracts we're paying, we're losing too much money. This is going to kill the league. If we keep the war going, we've got to get to a truce, which that means we're going to have to merge. So we're going to direct you, Rozell, to go start merger negotiations with the AFL." Rozell doesn't want to do it. He thinks they can win. He wants to fight, but he's like, "Okay, I work for you." One of his superpowers, the way he's able to achieve all of this is he really is good

• 1:40:13David Rosenthal?

  at pleasing everybody, finding solutions that work for everyone. And so he says, "Okay, I'll move forward." So he drafts the Cowboys' GM in Dallas, a guy named Tex Schram, to secretly open negotiations with Lamar Hunt. Lamar, at this point, has moved the Texans to Kansas City, where they've become the Chiefs.

• 1:40:33Ben Gilbert?

  Also, how great is it that the first Cowboys owner is named Tex?

• 1:40:37David Rosenthal?

  I know, so great. He was the GM. I don't think he was the principal owner, but I think he had an ownership stake. So Tex approaches Lamar in early 1966, says, "Hey, I'm the emissary of the NFL. You know, Rozell sent me, I'm here to talk merger, but we got to keep this under wraps because if word gets out, then like all hell's going to break loose." So they start working, discussing, there are no notes. There's no written notes. It's just like them chatting with each other for a couple of months. As they start, the other owners don't know about it.

• 1:41:10Ben Gilbert?

  Which is hard because when you're not the designated representative, you can't say, "I'm coming to you with something I know will work." You're saying, "Hey, enemy, I know you can't know for sure that I can get this done, but you have to trust me enough that I'm pretty sure I know my fellow owners enough that they would agree to this. So if you and I can kind of get close to agreeing to something, then I can take it to them, but this is all subject to them blowing it up."

• 1:41:36David Rosenthal?

  Yes, very delicate situation. And especially as the war and the TV money start escalating between the leagues. The AFL owners, they decide, we need somebody who's going to kick some ass for us. They draft fellow owner, head coach, GM of the Oakland Raiders, Al Davis, to become the new commissioner of the AFL.

• 1:42:04Ben Gilbert?

  All right. So now we've got this cast of characters to pay attention to. On the NFL side, there's the commissioner, Pete Rozell, and Dallas Cowboys GM Tex Schram. And on the AFL side, there's new commissioner and Raiders owner Al Davis, and the Chiefs owner Lamar Hunt. And Lamar Hunt, of course, was the guy who started the whole AFL in the first place.

• 1:42:27David Rosenthal?

  And Al Davis, legendary. There's a quote about him in America's Game. "Outside of Oakland, it was not certain where Al Davis would finish in a popularity contest among Sharks, the Mumps, the income tax, and himself. If the voters were the other American League football coaches, Davis would probably be third, edging out the income tax in a thriller.

• 1:42:55David Rosenthal?

  You can't trust Al Davis any further than you can throw him. And he is the perfect new head of the AFL in this war.

• 1:43:05Ben Gilbert?

  And basically, the head, just to go beat him up in negotiation. I mean, at this point, it's like, hey, we understand we're in a negotiation. Just like, go get the best deal you can. And if you have to piss everyone off such that you have no working relationship with the rest of the owners, Al Davis is the kind of guy that's like, oh, I'm totally up for that. That's fine if for the next 30 years, everyone that I have to work with hates me.

• 1:43:26David Rosenthal?

  They don't let him know about the merger negotiations. They don't actually want him to negotiate. They just want him to start a war and improve their negotiating leverage.

• 1:43:37Ben Gilbert?

  I see.

• 1:43:38David Rosenthal?

  In literally one of the most incredible unforced errors of all time, the NFL fires the first shot in the new war as soon as Davis takes over. So in May 1966, the Giants in the NFL break the gentleman's agreement.

• 1:43:56David Rosenthal?

  They go over and they poach a veteran from the Bills in the AFL. A kicker, literally a kicker. They start a war over a kicker.

• 1:44:05Ben Gilbert?

  And it makes sense it's the Giants because they're the most harmed here. I mean, they have in their own city, the Jets with Joe Namath.

• 1:44:14David Rosenthal?

  Once this happens, though, the other NFL owners are just apoplectic. A Giants owner, Wellington Mara, they're like, you're throwing this all away over a kicker. So the owner of the Colts, the quote, "God damn it, Mara. If you wanted a kicker, why didn't you just ask me? I'd have given you one."

• 1:44:32David Rosenthal?

  So.

• 1:44:33Ben Gilbert?

  Any of the 30 million Americans who play fantasy football can relate to this situation.

• 1:44:38David Rosenthal?

  So Davis gets the news that the gentleman's agreement has been broken and the kicker has been signed. The kicker signing heard around the world while he happens to be literally in the middle of meeting with the Bills owner, supposedly Davis. He just sits there in his chair and he leans back and he smiles and he says, "Well, we just got our merger." And the Bills owner is like, "What are you talking about?" And Davis says, "Because now we're going to go out and sign all of their players and we will destroy them and they will come begging to the table."

• 1:45:12Ben Gilbert?

  Some Dr. Evil shit right there.

• 1:45:14David Rosenthal?

  Totally. That night, the New York Times asks Davis for his comment on all this, which, by the way, you couldn't design better drama, especially during the NFL offseason to like, keep America interested in football. Amazing. The New York Times asks Davis to comment and he responds, quote, "This is something I've been aware of and I anticipated the probability, but you don't make threats at a time like this. Our answer will be in action. This is not the time to speak."

• 1:45:41Ben Gilbert?

  Ooh, I want to steal that word for a word for something in the future.

• 1:45:46David Rosenthal?

  So his first reaction. He doesn't really want to go into all out war because he knows that's going to end badly for both sides. He wants to send a targeted message, like the equivalent of a fish wrapped, delivered on the doorstep.

• 1:46:00Ben Gilbert?

  Or a horse's head in your bed.

• 1:46:02David Rosenthal?

  Exactly. The horse's head that he decides to send is he is going to target Rozell's old team, the Rams, and he's going to sign their quarterback away.

• 1:46:12Ben Gilbert?

  We just went from a kicker to a quarterback. That escalated quickly.

• 1:46:16David Rosenthal?

  Well, you're going to send a message. You're going to come at the king. You'd best not miss.

• 1:46:20Ben Gilbert?

  Yes.

• 1:46:21David Rosenthal?

  So within three days, the Raiders have signed away veteran star quarterback for the Rams, Roman Gabriel. And the NFL makes another tactical error. They don't respond to that. They don't come to the table. So a few days after that, Davis does unleash all out war. Talk about antitrust violations. He directs the GMs of all the AFL teams to go out and sign all of the quarterbacks in the NFL.

• 1:46:50Ben Gilbert?

  Which to do this is an economically negative move.

• 1:46:55David Rosenthal?

  Of course, which is why he didn't want to do it.

• 1:46:57Ben Gilbert?

  They're already making the maximum amount you should be willing to pay them for what they're bringing to your team, or likely close to it.

• 1:47:03David Rosenthal?

  And you're going to have to pay them a lot more to switch leagues. So Lamar Hunt, of course, gets word of what's going on. And meanwhile, he's in secret negotiations with Tex and Rozell for a merger. And Hunt gets word from the Oilers, from their GM, that Davis just instructed him to go sign the 49ers quarterback. And Hunt is talking to the Oilers like, no, no, no, this is too far. Stand down. I'm canceling Davis's orders. Don't go do this. The Oilers GM gets off the phone with Hunt, calls up Al Davis and says, hey, Lamar just called me, heard about what we're doing. He told me to stop. Davis

• 1:47:45David Rosenthal?

  supposedly sits there for a second and asks, did you give Lamar your word that you wouldn't do it? The Oilers GM says, yes. Davis sits there again, thinks about it, and says, F it. Sign him anyway.

• 1:48:01David Rosenthal?

  So they do. The Oilers go sign the 49ers quarterback. And that is what makes it all work. So Davis hangs up with Oilers, calls Hunt and he's like, "You dumbass. Why on earth would you stop me from doing this? I know you're working on a merger. I am your best weapon that you have. I am giving you leverage. Of course I need to do this."

• 1:48:23Ben Gilbert?

  Right. I'm not being insidary against you. This is a weapon for you.

• 1:48:27David Rosenthal?

  Yes. I may be a thug, but I am your thug in this case. So within a couple of days, it's all over. On Wednesday, June 8th, 1966, the merger agreement gets announced in a press release. Unlike with the A A F C, this is a true merger. All of the A F L teams will join all of the N F L teams. Together, they promise to add at least four totally new teams and cities.

• 1:48:56Ben Gilbert?

  Right. So there's 24 combined teams and they promise to expand to 28 over the next three, four years.

• 1:49:02David Rosenthal?

  Yep. They announce that because of the separate TV contracts on the A F L and the N F L side, they will not begin a joint season immediately. They'll let the new A F L TV contract play out, which will go through the 1969 season. The first fully combined season will be in 1970. But in the interim, they will start hosting a new pro football world championship game between the winners of the two leagues, starting in the 1966 season. And boy, that would be a super event for television.

• 1:49:39Ben Gilbert?

  This officially called A F C N F C World Championship Game, sounds like a doozy. Sounds pretty cool to watch.

• 1:49:48David Rosenthal?

  Some other points to the deal. There will be a single common college draft, starting immediately. No more of these separate drafts, no more babysitting, no more ridiculous contracts, which the players hate this, of course. Rozell will remain the commissioner and Al Davis is going to go back to running the Raiders, which Davis is fine with. That's all he really wanted anyway. Not announced, but included, this, I believe, only came out much, much later. The AFL franchises did collectively pay the NFL owners $18 million to join the league.

• 1:50:25Ben Gilbert?

  Over a 20-year period.

• 1:50:26David Rosenthal?

  Yes. This, though, was an enormous victory for the AFL for two reasons. One, the NFL obviously had the larger TV contracts, so that's just like found money right there. B, they had all the apparatus. They had NFL Films, NFL Enterprises, et cetera, everything.

• 1:50:46Ben Gilbert?

  And by the way, immediately, even before they combined the leagues officially in 1970, they form AFL Films for that three-year gap.

• 1:50:55David Rosenthal?

  Oh, I didn't know that.

• 1:50:55Ben Gilbert?

  And NFL Films hires twice as many people and they go film every single AFL game too, starting immediately.

• 1:51:02David Rosenthal?

  So those are both in themselves huge reasons why paying only $18 million was a win for the AFL. The even bigger reason, when the negotiations started between Schramm and Lamar, the NFL's initial asking price was $50 million per team from the AFL as franchise fees. So to go from 50 million per team to 18 total, paid over 20 years, all thanks to Al Davis. The AFL owners owed Al Davis a big glass of champagne, shall we say.

• 1:51:38Ben Gilbert?

  That's an incredible leverage shift over the course of the negotiations.

• 1:51:42David Rosenthal?

  And it happened in like a couple of months.

• 1:51:44Ben Gilbert?

  Yeah. There are some other interesting deal points, too. One of them is that the 18 million actually didn't go to all the NFL teams. They went to the Giants and the 49ers because those were the two teams most affected by now having another NFL team in their city. Interesting. That makes a lot of sense. Because the existence of this merger now causes one of the league ownership rules to be in violation, which is no two teams can be in the same media market. Well, we now have a problem. We need to compensate you for that. And I think the Giants actually got more because Joe Namath was the other one in their city. And so what you also start to see because of

• 1:52:29Ben Gilbert?

  this deal is the real modernization of the NFL. They decided that anyone with less than a 50,000-seat stadium needs to change that. They said that for what football has become after this merger, modern NFL in America, that's not a suitable place to play football anymore. And so you either need to build a new stadium or expand your stadium. And then the other final thing that is a consolation prize for the AFL is that they actually got to bring their records over, whereas the AAFC, I don't think they did. I don't think those counted as NFL records. I did find, this is linked in the show notes in our sources, I kept reading about the NFL records and the NFL rulebook and I was like, does this

• 1:53:11Ben Gilbert?

  exist or is this like theoretical? Every year, the NFL publishes a 1,000-page PDF of all of the historical everything, all the scores, all the games. Oh, that's awesome. It being in PDF form makes it pretty useless, but I assume it's a PDF of a physical book that exists with all the records in it. So this announcement in June of 66, you would sort of think, okay, this now just clears the way. The next few decades are just laid out in front of us. There's one league. There's no real competitors. What could possibly challenge football? And the answer is yet again, the law of the land in the United States. So in October, Congress actually passed a law to allow this merger and grant

• 1:53:56Ben Gilbert?

  yet another antitrust exemption. This time Lyndon Johnson signed it into law. And you might say, well, why did they need another one? Well, the merger of two completely different organizations that were competitors, that's kind of a different thing than allowing one ownership group or one trade organization to negotiate on behalf of a bunch of sort of member teams. So this actually is a different antitrust issue.

• 1:54:24David Rosenthal?

  Right. It's actual monopoly versus collusion. The first one was collusion, right? This is creating a monopoly.

• 1:54:32Ben Gilbert?

  And so Rozell and the NFL are calling on all the favors they can get, but the bill that will allow them to do this is stuck in committee. And so here's the paragraph out of America's Game. Rozell, seeking a way to break the logjam, called his friend David Dixon to see if he knew a North Louisiana congressman on the committee. "For someone as sophisticated as Pete, he was rather naive when it came to politics," said Dixon. And so he eventually finds his way to the House Majority Leader Hale Boggs, who is an old fraternity brother of Dixon's at Tulane. And he said, "I can find the votes for this." I'm going to quote this again. "Walking up the stairs of the rotunda, when the vote looked like a sure thing, Rozell was ever his usual humble self.

• 1:55:16Ben Gilbert?

  Congressman Boggs, I don't know how I can ever thank you enough for this. This is a terrific thing you've done. What do you mean you don't know how to thank me?" He said, New Orleans gets an immediate franchise in the NFL. And Rozell says, "I'm going to do everything I can to make that happen." At that, Boggs stopped and turned on his heels, heading back into the committee room. "Well, we could always call off the vote while you..." Rozell took two giant strides after Boggs turned around him gently and said, "It's a deal, Congressman. You'll get your franchise."

• 1:55:45David Rosenthal?

  Amazing.

• 1:55:46Ben Gilbert?

  So it's like, how many presidents and how many congressmen? And how many, like, the NFL requires this perfect storm of post-war America, technology, the growth of television, all these innovations, all this flywheel, and also the repetitive cooperation of the US government.

• 1:56:06David Rosenthal?

  So, once this passes Congress and the merger is approved, remember, it won't actually happen until 1970. There's this little matter of the world championship game, this super matter. There'd never been anything like this before. This is the Wholesale invention of a new major sporting event for the first time within the TV era. Nothing like this had ever happened. The World Series was created way before the TV era.

• 1:56:37Ben Gilbert?

  Totally. And you mentioned before during the Johnny Unitas game, the greatest game ever played, that that drew 40 million people. And that was much earlier in the TV-ification of America. It wasn't really the NFL that we know. There's all these other teams. There's all these other markets. So if we can sort of tailor make a game for national television as this entertainment event, it can be much, much more significant.

• 1:57:02David Rosenthal?

  Not only that, these guys are smart. They're smart business people. They're smart media people. Even though the TV contracts are already in place on the NFL and the AFL side for their respective seasons, including their respective championship games, this is a new game. There's no contract in place yet for this. So they rebid it, the rights to this world championship game to all the networks. And CBS and NBC are living because they've already got the rights to the respective leagues.

• 1:57:35Ben Gilbert?

  They thought they both had a championship game, but it turns out they both had a semifinal.

• 1:57:39David Rosenthal?

  So what ends up happening? They both feel like they can't bear to not win the rights to broadcast this new game. They each end up paying $1 million for the rights to both broadcast it. So this game now is going to be broadcast to the nation on both CBS and NBC. And in addition to them each spending a million dollars for the rights to this one game, they also both pledge to spend $1 million each in promoting it in the lead up to the game.

• 1:58:11Ben Gilbert?

  Wow.

• 1:58:12David Rosenthal?

  This is unprecedented. There's never been anything like this in media history.

• 1:58:17Ben Gilbert?

  This ended up actually having a 79% share of American TV, whatever Nielsen measures. So it's the share of all the TVs that are turned on at this point because it was on two networks.

• 1:58:29David Rosenthal?

  Incredible. It ended up being watched live by over 65 million people. Super Bowl One at the LA Coliseum.

• 1:58:36Ben Gilbert?

  You can't call it that, David. This is the AFL NFL World Championship Game.

• 1:58:41David Rosenthal?

  I apologize. The World Championship Game at the LA Coliseum. And in like such a perfect symbol of the new world order, the new media landscape, largest television event in history, unprecedented, groundbreaking, live in the stadium. The LA Coliseum is pretty big. It seats about 95,000 people. Only 63,000 people showed up live. There was only two thirds attendance live at the game and it didn't matter at all.

• 1:59:14Ben Gilbert?

  When I tweeted about Super Bowl I, some like pictures from it the other day, and I didn't realize, you can see there's an area that stands where people aren't sitting. I assumed it was like too late or too early. That's like during the game, they didn't fill it.

• 1:59:26David Rosenthal?

  That's during the game.

• 1:59:27Ben Gilbert?

  Wow.

• 1:59:27David Rosenthal?

  They didn't fill the stadium and everybody got rich anyway. Okay. So a few things leading up to this, again, like, God, they're so good. Rozell, they're just architecting all of this live. So they know this is an incredible opportunity. Nothing has ever happened like this before during the age of TV. They're creating a television event, whole cloth. So they totally lean into it. Media week. That is a deliberate invention by Pete Rozell and the NFL leading up to the Super Bowl. All the crazy interviews, everything that happens that we take for granted right now, like that was intentional, it was designed, it was created that way.

• 2:00:06Ben Gilbert?

  The commissioner's press conference, the Friday before the Super Bowl, and it's about league business. So there's all this news that comes out about the NFL and how it will be changing for the next year, right before the Super Bowl, to draw this attention to the NFL right before the Super Bowl.

• 2:00:21David Rosenthal?

  And that's just the public facing stuff. During the week leading up to the Super Bowl, they host parties, they host events, they host concerts, they host experiences, not for the public, but for their partners, for the TV partners, for the advertisers, for the press. It's all about adding the gloss and the sheen to the people who are going to add the gloss and the sheen. Literally Rozell's directive to the NFL staff was, he wants every media person and partner leaving the Super Bowl to be saying, man, this is a lot better than the World Series.

• 2:00:54Ben Gilbert?

  That's great.

• 2:00:56David Rosenthal?

  So great. The game itself, the Packers end up destroying the Chiefs. The next year in Super Bowl II, the Packers again beat down the Raiders. This time.

• 2:01:05Ben Gilbert?

  It is worth saying, wow, the dominance of the Packers right around this time. Vince Lombardi winning the first two Super Bowls.

• 2:01:13David Rosenthal?

  There's a reason it's called the Lombardi Trophy now. It wasn't for Super Bowl I or II. And then the one game we will talk about here, Super Bowl III.

• 2:01:22Ben Gilbert?

  Yes, by this point, the game is formally called the Super Bowl. The press had been looking for something to call it. And Lamar Hunt, I think, had been the one who observed his kid playing with a whammo Super Bowl. And so when the league discussions were sort of going on about it, he proposed Super Bowl. But Pete Rozell hated it.

• 2:01:42David Rosenthal?

  I think Lamar was like, oh, it's just kind of a funny placeholder name.

• 2:01:46Ben Gilbert?

  Yeah.

• 2:01:46David Rosenthal?

  But then it just stuck.

• 2:01:47Ben Gilbert?

  But it came out in some press interview and then they just ran with it. And then it was out of the league's control.

• 2:01:52David Rosenthal?

  Yep. All right, so Super Bowl III. The narrative leading into the Super Bowl is the old NFL, soon to be NFC teams.

• 2:02:01Ben Gilbert?

  That's real football.

• 2:02:02David Rosenthal?

  That's real football. The AFL, you know, is fluff. And there's like real bad blood between the coaches and the players on the field. Super Bowl III, the Colts versus the Jets. The old Colts, Johnny Unitas, a different era, the 1950s against Broadway Joe Namath and the Jets.

• 2:02:21Ben Gilbert?

  And this is still Baltimore Colts, right?

• 2:02:23David Rosenthal?

  Baltimore Colts, yes. In the lead up to the game, the Colts are 19-point favorites. Nobody thinks the AFL can compete. They've been destroyed the last two years. And then during the media week, this is the reason we're talking about this sporting event here in the midst of this business podcast. It's just like, oh, my gosh, you can't design this any better. Broadway Joe guarantees an AFL victory during media week, during a press conference. Like, you can't make for better TV drama than that. There is this very famous photograph that we'll link to in the show notes of Broadway Joe at the pool during media week with the playbook in his lap.

• 2:03:08David Rosenthal?

  Where he said, like, you know, every, he's the sex symbol. He's like in his, you know, swim trunks. And there's just all these pressing cameras and all these women like gathered around him, like staring at him. And it was a moment like it was all over the news, all over television all week. Like, what a incredible media event. And then during the game. Joe delivers on his guarantee, huge upset, beats the Colts, the first AFL victory over the NFL. At the after-party, Carol Rosenbloom, the Colts owner, is like totally desolate. He comes up to Rozelle, he's sobbing, and Rozelle's like, "Don't worry, this is the best thing that has ever happened to the game and to us." And he's so right.

• 2:03:54Ben Gilbert?

  That seems like one of the obvious playbook themes here is every time you think you just got beat by some other football team, or entity, or personality, it ends up being so good to raise the profile for the game that everybody wins. It turns out, the answer is, most of the time, everybody just keeps winning.

• 2:04:12David Rosenthal?

  Yep. As long as there is drama, as long as there is competition, everybody wins.

• 2:04:17Ben Gilbert?

  Yep.

• 2:04:17David Rosenthal?

  I mean, this is the great paradox of the NFL. Everything is about the game on the field, and nothing is about the game on the field. What it is about is making sure the game on the field is compelling. Whoever wins, they all win.

• 2:04:30Ben Gilbert?

  Well, and this is kind of the debate today between the new group of owners and the old group of owners. The original owners are so steadfast in, this is about football, and we make a great entertainment product, but there's football at the core. And the thing that they're all a little bit nervous about with the new group of owners, who are so excited about building these unbelievable businesses, and taking on more and more sponsorships, and sponsoring team jerseys, and on-field sponsorships, and building the spectacle around every game, and what if we had a Super Bowl halftime show at every game? It's like, are we not a football product anymore? Are we some kind of entertainment franchise that has lost its way? And I think that's the interesting dichotomy between

• 2:05:15Ben Gilbert?

  owners these days.

• 2:05:16David Rosenthal?

  Yeah. How far is too far? But at this point in time, they are nowhere near too far.

• 2:05:21Ben Gilbert?

  Yes. Lean way into it.

• 2:05:24David Rosenthal?

  The next year, the Chiefs beat the Vikings, and the pre-merger Super Bowl series ends tied 2-2. Two victories for the NFL, two victories for the AFL.

• 2:05:37David Rosenthal?

  Again, could not be better for pro football and the newly combined NFL, because that leads right into the first joint, fully integrated TV negotiations for the 1970 season.

• 2:05:52Ben Gilbert?

  This feels like it's going to be a big package.

• 2:05:54David Rosenthal?

  Oh, boy, the network's going to have to pay up, and pay up they do. They decide to keep both CBS and NBC essentially with their same packages. CBS airing the NFC games and NBC airing the AFC games. The combined contract value, it is now a four-year contract of $156 million. That is $40 million per year. That's a lot of money.

• 2:06:24Ben Gilbert?

  And this is where the genius starts of the NFL realizing, we don't have to just sign one contract. And for anybody who's looked at the contracts today, there's a lot of contracts and there's pretty much not a TV distribution company that is not distributing some little shard of what the NFL has carved up, but them realizing here in 1970, we don't just have one deal to sign. We have an AFC package and an NFC package.

• 2:06:48David Rosenthal?

  And we might actually be able to invent some more here, too.

• 2:06:52Ben Gilbert?

  Yes. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 2:07:07David Rosenthal?

  Yep, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 2:07:23Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 2:07:38David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 2:08:02Ben Gilbert?

  And they recently launched Legora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 2:08:21David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 2:08:52Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at legora.com/acquired and just tell them that Ben and David sent you. So David, take us to Monday night.

• 2:09:18David Rosenthal?

  Oh, let's go to Monday night. So they got CPS, they've got NBC. Remember ABC? ABC's been out in the cold for several years now.

• 2:09:29Ben Gilbert?

  Which is a real shame because you've got Ruud Arledge there. He's a visionary. This is still before ESPN, right?

• 2:09:36David Rosenthal?

  Still before ESPN, well, well before ESPN, 10 years.

• 2:09:39Ben Gilbert?

  So yeah, that's still far off in the future, but ABC is clearly interested in sports.

• 2:09:43David Rosenthal?

  Yes, clearly interested in something. So Rozelle and Rooney start chatting.

• 2:09:50David Rosenthal?

  Rozelle has always had the inkling that football and the NFL would do really well in a primetime slot. But this is crazy. Like you were talking about a little while ago, Sundays were perfect for football, Sunday afternoons, because the networks didn't have anything else to air. The accepted thinking at the time was like, oh, sports are perfect for Sunday afternoons. But like, the core business of the television networks-

• 2:10:18Ben Gilbert?

  Right. Sports is not primetime.

• 2:10:19David Rosenthal?

  Is showing shows and news and entertainment, and that is not sports.

• 2:10:24Ben Gilbert?

  That appeals to the widest range of people. And that we still don't know for sure that the NFL is that.

• 2:10:30David Rosenthal?

  You know, it's very telling that all of these networks had separate sports divisions, and that ABC didn't even have one until they got the first AFL deal. It was a separate thing.

• 2:10:40Ben Gilbert?

  And just to keep tracking our baseball versus football comparison, this moment in 1970 is right around the time where the NFL is eclipsing baseball to become America's favorite sport. It's been slowly gaining ground over the last 30 years, and the merger plus the creation of the Super Bowl really puts the NFL here squarely in the lead, making it the perfect candidate for this sports primetime experiment.

• 2:11:03David Rosenthal?

  Indeed. So Rozelle and Ruin Arledge is like, yeah, I think this can work. So they brainstorm and together come up with the idea for one single game every week with incredibly high production values, broadcast in primetime, in the evening, on Monday nights after the full slate has concluded on Sunday. And, oh my gosh, so many advantages to this. On the Sunday games, there always have been so many games that happen on Sunday. You can't watch them all, all at once. They're all happening concurrently. You're seeing different games in different markets.

• 2:11:40Ben Gilbert?

  There's not a national event to watch, because the way the local affiliate works, it's still at this point in time where you can't watch a home game at home. So whatever is on TV in your city is wherever your team is playing, if they're playing an away game, and no NFL on Sunday if your team is playing a home game. Either you're going to the NFL game on Sunday- Or it's a non-event for you that week.

• 2:12:07David Rosenthal?

  Right. And that's on the viewer's side. From the production standpoint for CBS and NBC, they're sending each of them like five, six, seven TV crews out all across the country. Like their resources are getting totally diluted every Sunday. They can't put all their effort into one prime time game.

• 2:12:26Ben Gilbert?

  And the broadcasts, other than the Super Bowl, and honestly, like even kind of the Super Bowl at this point in time are pretty bad. We talked earlier about they got better and they learned. They didn't learn much. They were still referred to around this period of time, 1970, as football in a cathedral. You had no fun camera angles. You probably had three, maybe four cameras in the entire broadcast. And most of it really is just that 50 yard camera that sort of zooms in and out. And the announcers are kind of relying on the fact that you're watching the game. So they're not really commentating that much. They would just sort of help you know that there's audio associated with the broadcast you're watching.

• 2:13:07David Rosenthal?

  Yeah, I mean, step back and think about the last NFL game you watched. The transitions between the camera angles, the music, the sound effects, the microphones, the analysis, the sideline reporting.

• 2:13:20Ben Gilbert?

  The lower thirds.

• 2:13:22David Rosenthal?

  The graphics. None of this existed.

• 2:13:25Ben Gilbert?

  The notion that there's play by play in color. This idea that there should always be someone talking, saying something interesting while you're watching a game.

• 2:13:33David Rosenthal?

  Yes. So this whole vision for Monday Night Football that Ruin Arledge and ABC can make happen for the NFL and new meteorites for the NFL to sell more revenue. They've got it all ironed out, all the details. And right before they're about to sign a deal, Rozelle's like, oh yeah. By the way, we have these partnerships with CBS and NBC. We got to offer this to our partners first. Which, you know, Rozelle.

• 2:14:03Ben Gilbert?

  Brutal.

• 2:14:04David Rosenthal?

  He has this reputation and history treats him as like incredibly kind, incredibly accommodating. And I'm sure that's true, but he had a little bit of Al Davis in him too. He knew exactly what he was doing here. He knew that there was no way that NBC and CBS were going to take this package.

• 2:14:21Ben Gilbert?

  Yep. He just wanted a stalking horse. He's like, I don't want to leave any money on the table with this. Whatever we're signing here, they have to fear that we're going to walk.

• 2:14:28David Rosenthal?

  Totally. You know, Rune, of course, freaks out. This is his baby. This is his career within ABC.

• 2:14:33Ben Gilbert?

  He's been pre-selling this to his bosses, so he looks bad if they lose this now.

• 2:14:38David Rosenthal?

  So they come in with an over the top deal. ABC gets exclusive rights to Monday Night Football for a new deal, new product. Eight point five million dollars per season.

• 2:14:55Ben Gilbert?

  And the other deal was.

• 2:14:57David Rosenthal?

  The other deal was 40 per season for essentially 15x more content, I think.

• 2:15:04Ben Gilbert?

  Right. Each TV network is paying about 20 to have either the AFC package or the NFC package on Sundays and ABC is coming in and now spending eight and a half just for one game on Monday nights. And you might say, whoa, that's terrible. They're way overpaying for the amount of content, that is. But actually, what you want to be paying for is the smallest amount of content possible that gets distributed to the widest audience possible. So you actually should be willing to pay up to 20 million as long as the aggregate number of viewers that you get on that day is the same. Cause if I'm ABC, I'm like, wow, those guys, that really sucks for them having to produce four, five, six different games.

• 2:15:46Ben Gilbert?

  I only have to produce one and it's nationally broadcast across all my affiliates. This is amazing. We are going to go hard on costs on the production side to make it the most dazzling possible experience.

• 2:15:59David Rosenthal?

  And we're going to make it back. Boy, did they ever. The first Monday Night Football game that airs that season is watched by 60 million US households. That is like Super Bowl level. I mean, Super Bowl one was 65.

• 2:16:13Ben Gilbert?

  They invented a holiday out of nowhere and it's every week.

• 2:16:17David Rosenthal?

  They totally invented a weekly holiday.

• 2:16:20Ben Gilbert?

  It's amazing. CBS and NBC must have been pissed. Seriously, because it's also, you know, they signed the contract thinking we, between the two of us, we basically have a lock on all the football and then they invented more football. Exactly. And for the NFL, they invented more football. They invented revenue. Amazing. And by this point, the NFL is starting to wake up to this idea that, you know, they're still not willing to play with the blackouts at all, but maybe people watching on TV can be better than people coming into the stadiums. Maybe there's enough money in this that for us to be nationally broadcast on a Monday night, I still think it was blacked out in the home market, but they recognize the value of

• 2:17:02Ben Gilbert?

  everyone else watching and how that's even more important than the stadium itself. Okay, so I made a list of things that Monday Night Football invented that was not a part of your typical football NFL broadcast before Monday Night Football. And it is astonishing. This is everything that you expect in every NFL and frankly, every college game that you watch now. And it was brand new for Monday Night Football and in fact was Monday Night Football exclusive for 20 or 30 years in a lot of the cases. But the overriding idea that we are going to cover a football game like show business. This is not a sport we're broadcasting. This is showbiz and we will make you feel like that.

• 2:17:43Ben Gilbert?

  So what are we going to do? We're going to put cameras at field level. We're going to put cameras on people's shoulder. And they're actually going to get to sort of run around and get up close footage of people while they're celebrating touchdown dances or when they're running back in from the sideline. We're going to put cameras on the 20 yard lines in addition to the 50 yard line so that we can get a straight down view when they're in the red zone. It's not just sort of this weird sort of from the side angle on it on touchdowns. Like we're going to get great. Footage head on during touchdowns. Instead of two commentators, we're in a three man booth and there's going to be real action oriented commentary there. And of course, we can't talk about Monday Night Football without Howard Cosell and

• 2:18:25Ben Gilbert?

  his unbelievably unique style of narrating and really injecting himself into the story of the broadcast, rather than just being a sort of opinionless third party observer. He created a little bit of a foil to play off of for the other commentators where there was real relationship and you were tuning in, not just to watch whatever the football was, but to watch these announcers who you sort of got to know over time and really observe their charisma with each other about the game.

• 2:18:56David Rosenthal?

  That's exactly what I was going to say. It's the same dynamic with podcasts now. It's like they became your friends in the booth.

• 2:19:02Ben Gilbert?

  Right. It's not just that you're listening to business stories. It's that you're hanging out with David and I while we talk about business stories. It's one of the first examples ever of realizing the power of that. They went from the four cameras that typically would cover a Sunday broadcast to nine cameras, and then eventually up to 17 cameras. They invented the parabolic microphone coverage that you always see on the sideline, those sort of clear plastic microphones that are aimed at gathering the sound from on the field. They had 40 engineers, they had 20 production people. They invented these split screens. You could watch two cameras concurrently cover the game. They had on field interviews, shots of cheerleaders to add a little bit of a sex appeal to the game for the first time.

• 2:19:45Ben Gilbert?

  And they also used green screens, which is so funny to watch some of these early. I guess they didn't have room in the booth, according to the Patents Places ESPN video that we watched about this, where for the three man booth, they needed more space than they had in the press box. So they ended up putting them like out in the hallway and built a little custom room to do this in, but the background wasn't good. So they put in a green screen and then they would put another camera in the press box. And so they would superimpose that the field was right behind them, but it actually wasn't. And it's so obvious watching it today.

• 2:20:20David Rosenthal?

  They're like floating on the stadium. It's hilarious.

• 2:20:23Ben Gilbert?

  Yes.

• 2:20:23David Rosenthal?

  But this is revolutionary stuff.

• 2:20:25Ben Gilbert?

  Yes. And there was one other really, really big innovation. And this was a thing that would go on to be the predecessor for ESPN as a network, for SportsCenter as a program. And it would create billions and billions of dollars of enterprise value. And that is replays.

• 2:20:46David Rosenthal?

  Yeah, the highlights. Before we talk highlights, did you say the theme song too?

• 2:20:51Ben Gilbert?

  Hmm, no.

• 2:20:52David Rosenthal?

  Yeah, I thought actually that's where you were going with ESPN. I mean, the theme songs, like, there were no theme songs before this.

• 2:20:58Ben Gilbert?

  Right. This notion you're actually tuning into a program that has an associated pump up song that is built for that franchise is unique. Okay, so let's talk about highlights. So how could you have possibly watched highlights before Monday Night Football? Well, the games were on Sundays and that was really the only football that was on all week. You know, we didn't have the internet. There wasn't ESPN. There wasn't SportsCenter. So there really was no place to go and watch highlights. Now, football and all sports are unbelievably highlightable events that if you string together a bunch of the very best plays, it's really, really interesting and really entertaining, especially if they're covered by great cameras.

• 2:21:39Ben Gilbert?

  Now, compare this to baseball where not only was there no place to go watch them, but there was no one capturing the footage to even highlight it. But NFL has NFL Films and using high quality cameras and film stock, they are capturing great camera angles of every game. And so between Sunday and Monday, the NFL Films team would go and take all of the footage from the game the previous day, cut up a highlight reel and as soon as possible, get that to whatever city the Monday Night Football broadcast was happening in so that they could play it at halftime. And Howard Cosell could give his commentary, often having never seen the footage,

• 2:22:21Ben Gilbert?

  while the highlight reel is playing in the background and really invents this idea of, for the first time, we're going to watch highlights of yesterday's games.

• 2:22:30David Rosenthal?

  I got to imagine the highlight reel was literally being slid into the machine as they were getting ready to broadcast it, because think about the logistics in that. You get the film stock back from all the games all around the country, back to NFL Films. They produce the highlight reel. They get that finished reel back to the Monday Night Football location, which is another location somewhere around the country.

• 2:22:51Ben Gilbert?

  Totally.

• 2:22:52David Rosenthal?

  All within 24 hours.

• 2:22:54Ben Gilbert?

  It's really amazing. God, I can't believe we're only up to 1970.

• 2:22:57David Rosenthal?

  I know. Well, you can't get any better from this. I mean, this is now the fully formed entertainment product of the NFL. And they add stuff like Sunday Ticket and Thursday Night Football and everything else over the years. But the trajectory is set. There's some ups and downs in the 70s, but it's basically just like gonzo for the NFL.

• 2:23:17Ben Gilbert?

  There's one more presidential intervention. In 1973, Nixon really, really, really likes watching the Redskins, but he's sick of taking the helicopter to Camp David to watch their away games, which he actually was doing, which is unbelievable.

• 2:23:30David Rosenthal?

  He was a nut. Nixon literally phoned in a play for a Redskins playoff game from the White House.

• 2:23:39Ben Gilbert?

  Maybe should have been paying more attention to foreign policy and things like that. But Camp David is sufficiently 75 miles away. By the way, there was this whole cottage industry that sprouted up of hotels that were outside of the 75 mile radius. And there were buses. So people would go to these hotels and they would get rooms for the day to go watch the games.

• 2:23:58David Rosenthal?

  This dynamic formed like plot lines on sitcoms in the 70s and the 80s.

• 2:24:02Ben Gilbert?

  So Nixon calls Pete Rozell personally, the president, the sitting president of the United States, and says, hey, we're in the playoffs this year. You know, I think it would be a good idea for you to air playoff games, not every game, but playoff games locally. And Pete Rozell, even in 1973, is pretty dug in on this issue that it's a bad thing and it's cannibalizing to our most important thing, our gate revenue, if we do that. So he says no to the sitting president. And so then Nixon goes to Congress and says, will you please draft legislation, which got known as the blackout ban? And so because Rozell denied the president, there is actually legislation that was passed in order to force the NFL's

• 2:24:43Ben Gilbert?

  hand in broadcasting away games locally. And this is one of the things that Rozell got super wrong. The right thing was as soon as possible, the NFL to get as much distribution as possible, because the TV rights would become the most important revenue line, but also the thing that most fueled the flywheel. The more people watching the games is better for everything, for continued fandom. It's like how Disney wants you to consume the content so that you go to the parks and you buy the merch. So it was one of his few strategic flaws, I think, was gating the content for too long.

• 2:25:19David Rosenthal?

  Yep. And I don't know if this is directly related, but I think so much of the 70s and the 80s and the 90s were also about just like the continued growth trajectory of the incredible marriage of the NFL and television. And the money just keeps getting bigger and the stage keeps getting larger and the viewership goes up and you know, all the things.

• 2:25:39Ben Gilbert?

  Yeah. And this is probably worth saying that we aren't going to go blow by blow on the NFL timeline past 1970, the way we did during the Rozell era. There's a bunch of stuff to skip, like the USFL and all the teams moving cities and Deflategate to focus really on the strategic moments that created the conditions of the NFL's business today.

• 2:26:00David Rosenthal?

  Yep. So probably the biggest decision that happens during the time, the league first mentality kind of gets diluted with the stadiums that you referred to, because as all the teams start moving into the bigger stadiums, they start building amenities into the stadiums and the stadium experience totally changes, which it needed to as television became primacy. There had to be a reason to go to the stadium. Stadiums become all about the luxury boxes, the suites, the experiences, the corporate partners, the advertising, the drink sponsors, all of this stuff. And that becomes huge money for the NFL, but it's not shared money. It's local money.

• 2:26:44Ben Gilbert?

  Yes. This is my biggest criticism. The thing that got them here, this league first mentality is eroding because of the way that the revenue splits are happening. So you look at the local stadium sponsorships. You look at every stadium is dedicating more and more real estate to luxury suites. The local merchandise sold in the stadiums is local revenue. And so the teams are making more and more money locally. So a greater percentage is coming from things the teams are doing on their own. And you got to wonder if that individualistic, I'm Jerry Jones and the Cowboys deserve all the revenue mindset

• 2:27:28Ben Gilbert?

  will be the thing that eventually kind of causes them to get unseated in some way.

• 2:27:33David Rosenthal?

  And I think the thing that keeps the competitive balance in place, even as revenue diverges, is the salary cap.

• 2:27:40Ben Gilbert?

  Yeah, this is a great place to talk about that. Well, let's go to 1993 and talk about the first time free agency and the salary cap comes into the NFL, how that's computed and how that impacts the sort of leverage going forward. The league has been negotiating with the Players Association for a while, I think since the 60s, in various collective bargaining agreements. But the 1993 one is unique. The NFL didn't really have free agency for a while, and in 1993, players finally got it, at least as long as a player had been in the league for four years. In exchange, there was a salary cap put in, capped at some fixed percentage of the amount

• 2:28:23Ben Gilbert?

  of revenue that the league generates.

• 2:28:27David Rosenthal?

  Right.

• 2:28:28Ben Gilbert?

  So that today is actually a pretty high number. It's 48.8% or something like that. So players are effectively a partner in the league because the league's success ends up being their success, not necessarily evenly distributed among all players by any means, in fact, quite the opposite. But at least players are virtually guaranteed in whole to make close to half of the league's overall revenue. But how does that work with local and national revenue? Well, since it is based on the total revenue, if a team makes a whole bunch of local revenue, they're going to have no problem making the obligation that they have to pay the players.

• 2:29:09David Rosenthal?

  And you're saying that that fixed amount is a league-wide aggregate, including all the local revenue from all of the teams?

• 2:29:18Ben Gilbert?

  Yes.

• 2:29:19David Rosenthal?

  So this potentially could create a big imbalance.

• 2:29:21Ben Gilbert?

  Right. It's okay as long as the local revenue doesn't become too big of a part. But at some point, you have to imagine that what is 48.8% of league average could be 90% of what I make as a team in a small market with a crappy stadium. And then because I have to pay players so much, there's no way I can pay for other stuff. And so, you know, my coaching gets hurt, or the production for fans gets hurt, or something that makes me a less competitive team, even if the players on the field are paid just as much as the players on the field from other teams.

• 2:29:54David Rosenthal?

  Yep.

• 2:29:55Ben Gilbert?

  And it's interesting because I think in 93, when the salary cap first came out, it was just of the shared revenue. But now that in the more recent agreements, it includes all league revenue and local revenue is actually growing as a portion of the overall revenue for the top teams. Unshared revenue for teams grew from 12% in 1994 to 21% in 2003 and is over 30% today. So there's definitely a meaningful and ever-growing part of NFL team revenue that really does come from just the team itself and what it can do in its local market, not from that sort of locked brotherhood of we're all in it together league revenue.

• 2:30:37David Rosenthal?

  Yeah, it is a serious threat to this magical flywheel that has made the NFL succeed well beyond any other sport on a revenue basis in the world, even though football and the NFL is not the most popular sport in the world. It is by far the highest monetized and largest sport by revenue. I think, actually, I don't know if we said this upfront, I'm pretty sure the NFL is the largest single media business in the world. Not an aggregate diversified media business, but like if you consider the league as a single property, then I think it is the largest individual, single property in the world.

• 2:31:15Ben Gilbert?

  It's a good question. The comps would probably be like Marvel or Lucasfilm.

• 2:31:19David Rosenthal?

  Yep. I looked at that bigger than Marvel, bigger than Lucasfilm.

• 2:31:22Ben Gilbert?

  Really?

• 2:31:23David Rosenthal?

  Yep.

• 2:31:24Ben Gilbert?

  Because the NFL does 18 billion a year in revenue right now, which is expected to grow to 25 billion by 2027.

• 2:31:32David Rosenthal?

  Yep. I believe Marvel's not anywhere near that.

• 2:31:35Ben Gilbert?

  Wow. Yeah, that's wild.

• 2:31:36David Rosenthal?

  Because it's an annual basis. That's every year.

• 2:31:40Ben Gilbert?

  I mean, this TV contract that they just signed, the 10-year deal is for $112 billion across all these entities.

• 2:31:48David Rosenthal?

  Just wild.

• 2:31:49Ben Gilbert?

  And just to share what that specifically looks like, CBS broadcasts a Sunday afternoon package for 1.85 billion a year. Fox has a Sunday afternoon package for 2 billion a year. They invented a new SKU, the Sunday night. Package and they invented this a while ago, but NBC has that for 1.7 billion a year. Disney owns Monday Night Football, as we mentioned, for 2.55. It is a single game per week and it's the most expensive package. It's incredible. Amazon has Thursday Night Football for 1.3 billion a year. And of course, then we just got the news last month that DirecTV has lost NFL Sunday Ticket, and that is moving to YouTube TV.

• 2:32:34Ben Gilbert?

  NFL Sunday Ticket is also a genius move because

• 2:32:37David Rosenthal?

  You're reselling the same content you've already sold.

• 2:32:40Ben Gilbert?

  It's the same content. It's the content that is exclusive to CBS, Fox, NBC, that those networks produce. I'm pretty sure it's even like their cameras, their on air talent, all that. But the NFL, it has the exclusive right to bundle all that together and sell it as a package directly to a consumer if you want access to all the games. If you don't just want the ones that are on TV near you, if you want the ability to watch any game at any time. And it is incredible to me that that is worth $2 billion, given the NFL is actually not doing the work to produce it. The people who are doing the work to produce it are the people who are paying for the privilege to cover those games.

• 2:33:19David Rosenthal?

  Amazing. And then there's more now, and let's catch us up to the present day. There's revenue from the NFL Films division. I think it's probably a couple hundred million dollars I would expect at this point in time. There's other licensing rights, particularly video games and Madden. So I don't think it's public, but it was reported that the latest Madden licensing deal with EA was a total of $1.6 billion for a five year rights. Wow. Which, man, remember that episode we did with Trip on EA back in the day was so fun and talking about the origins of Madden.

• 2:33:55Ben Gilbert?

  That's a $300 million a year deal. So that's like a sixth of what one of these channels pays to broadcast the actual NFL. That's what EA pays to just license the use of the player names and team logos and all that.

• 2:34:10David Rosenthal?

  Yep. Then there's fantasy, both betting and non betting.

• 2:34:15Ben Gilbert?

  Yeah, and this is a good point to fully bring us to today. I think it is totally reasonable to say that the things that powered the rise of the NFL were national TV, post-war prosperity, the rise of the middle class, the Madison Avenue explosion, and the league-first mentality. But all of this is in the 50s, 60s, and 70s. The thing that powered the NFL to be such a dominant force in society today is fantasy football and sports betting. So let's talk about fantasy first.

• 2:34:43David Rosenthal?

  Great.

• 2:34:44Ben Gilbert?

  There's like 30 or 40 million people a year in the United States that play fantasy football, thus making it the way that the centerpiece of conversation with their closest friends and families and coworkers, which means you have to watch football in order to have those conversations with the people that are closest to you in your life.

• 2:35:04David Rosenthal?

  Fantasy is such a great example of driving and adding to the Roselle flywheel. Better products, deepened fan engagement, more viewership, more advertising, which really now translates to more revenue opportunities because there's revenue opportunities from fantasy. Sunday Ticket, that whole package basically was to cater to two audiences. One, bars and restaurants who want to be able to show multiple games within their establishment. But two, and even bigger, the fantasy crowd, they're going to be willing to pay a lot of money to see all the games live, and then that feeds back into the product and the flywheel spins.

• 2:35:42Ben Gilbert?

  And of course, then there's sports betting, which is now becoming legalized in lots of states, but has been a force for a long time. Of course, you could bet legally in Las Vegas, but obviously, tons of people have bookies that can just place bets for them no matter where they lived.

• 2:35:58David Rosenthal?

  And I'm shocked, shocked to find gambling going on in this establishment.

• 2:36:01Ben Gilbert?

  And when you've got money riding on a game, you are absolutely going to tune in. I looked it up, just to put a number on this, the current estimates are that 46 million Americans, or 18% of betting-age US adults, bet on the NFL this year, and that number continues to grow.

• 2:36:18David Rosenthal?

  That's just this year.

• 2:36:20Ben Gilbert?

  Yeah.

• 2:36:21David Rosenthal?

  Wow.

• 2:36:21Ben Gilbert?

  People bet on the NFL more than any other sport in the US. Variety reports 81% of sports bettors bet on NFL games versus just over 50% for the NBA and 44% for Major League Baseball. Interestingly, the NFL doesn't generate meaningful revenue from betting yet, though I am sure they will in the future.

• 2:36:43David Rosenthal?

  Yeah, you can probably bet on that.

• 2:36:46Ben Gilbert?

  Heyo.

• 2:36:47David Rosenthal?

  Heyo.

• 2:36:48Ben Gilbert?

  So I guess it's worth pausing to understand the shape of the NFL's business today and how the revenue breaks down. So on average, about 2/3 of any given team's revenue comes from shared national revenue that we talked about. The remaining 1/3 comes from the local revenue, but again, this is just on average. So some teams are very good at the local revenue, like the Dallas Cowboys, and some teams are very bad at this, like the Bills or the Lions. And I have some numbers to put that in perspective. This past year, each team got right around $350 million from the shared league revenue, but that extra local revenue obviously can cause a gigantic swing in the team's total revenue.

• 2:37:28Ben Gilbert?

  And Forbes has an estimate that the Cowboys made over $1 billion last year, whereas the Lions only made $450 million, so not really much on top of the shared revenue from the league.

• 2:37:41David Rosenthal?

  Wow. So much for the league-first mentality from Jerry Jones there.

• 2:37:46Ben Gilbert?

  Right? So it's also useful, I think, to slice it a different way, rather than just the shared versus local. Here is how the NFL team revenue breaks down purely by product. So this is essentially answering the question, how does the NFL make money? So 61% comes from media. Most of that is the TV from the shared league revenue. 10% comes from general seating, which is regular plastic seats. Another 10% comes from premium seating.

• 2:38:16David Rosenthal?

  That's for the proletariat.

• 2:38:17Ben Gilbert?

  Yes. The premium seating that we mentioned is the suites and all that stuff. That's a big growing revenue line for the people with nice stadiums.

• 2:38:25David Rosenthal?

  And most of that is corporate, right?

• 2:38:27Ben Gilbert?

  I think so. That's my best guess. It's super different city to city. This is probably the most variable.

• 2:38:33David Rosenthal?

  Yep.

• 2:38:33Ben Gilbert?

  10% comes from sponsorship and advertising, and then about 9% is other, which I'm guessing is where NFL Films and a lot of that stuff sort of lies.

• 2:38:44David Rosenthal?

  Maybe the Madden deal is in there. I don't know if it'd be there in media.

• 2:38:47Ben Gilbert?

  Yeah. So that's the shape of the NFL as a business today. So before we kind of finish that out and get into analyzing the business, I mentioned the complicated relationship that people have with football. In the 2000s, it became clear as day that CTE is very real and caused by playing football and causes shorter lifespans and immense physical harm to players. And CTE, as many of you know, is chronic traumatic encephalopathy, which is a terrible brain condition that develops from the many repeated subconcussive hits to the head. And the symptoms are devastating.

• 2:39:32David Rosenthal?

  Mental, emotional suicides, everything.

• 2:39:36Ben Gilbert?

  I mean, the NFL settled a billion dollar lawsuit to pay out victims and families of CTE.

• 2:39:42David Rosenthal?

  Yeah, you know, it's even worse than that. There's a bunch of dimensions here. Yeah, I played football all growing up, middle school, high school, college. You know, my feeling, and this was in the 90s and early 2000s. You know, my feeling on the matter was I'm for sure risking my body by playing. But the risk calculation on my mind was all short term. I could tear an ACL, sure. I could break my arm, sure. I could get a concussion, sure. But in my mind, those were all the same things. So like, there was no broader understanding among general population, or there's been a bunch of research on this, or the NFL players themselves, that there was real long-term mental risk to playing the game.

• 2:40:26David Rosenthal?

  And then here's what's really bad is the NFL knew it and they covered it up. So the NFL started doing research into long-term effects of concussions and other head trauma from playing football in the 90s. And then they sat on the data for a long time. And then when they did release it, they claimed that there was absolutely no provable link, no evidence at all, that head injuries from playing football led to long-term damage.

• 2:40:54Ben Gilbert?

  The NFL didn't acknowledge that until 2016.

• 2:40:58David Rosenthal?

  Super bad. I mean, there's the Will Smith movie Concussion about it. We don't need to go into a bunch of the specifics, but I think like from the acquired standpoint and the NFL audience standpoint, this was a major, major trust breaking moment.

• 2:41:12Ben Gilbert?

  Certainly it affected it enough for LeBron James to say, I don't want my son playing football. I mean, that was a huge cultural moment.

• 2:41:20David Rosenthal?

  The second order effects are pretty large from this. One is what you said about parents allowing and wanting their children to play football.

• 2:41:29Ben Gilbert?

  Interestingly, all youth sports are down. I don't think football is down much more than other youth sports, but video games, social media, phones.

• 2:41:37David Rosenthal?

  And the pandemic too.

• 2:41:39Ben Gilbert?

  Yes.

• 2:41:39David Rosenthal?

  But I think the real risk, and this is starting to be shown out in the data, is how our future generations are going to view the NFL and football. And if you look at the data, US adults as a whole, 33% say the NFL is their favorite professional sports league. But if you look at Gen Z, only 23% of Gen Z say that the NFL is their favorite professional sport. So 10 points less than the broader population. And basketball in Gen Z is 19%, right there, pretty close to football.

• 2:42:11Ben Gilbert?

  From a revenue perspective, the NFL today makes twice as much as basketball, but that's a pretty damning trend, looking at where is Gen Z's interests lie.

• 2:42:21David Rosenthal?

  Yep. This whole thing was just bad, period, for the NFL.

• 2:42:25Ben Gilbert?

  How do you deny the existence of these things when people in your organization have been hired to commission this research and then you're burying it for decades?

• 2:42:33David Rosenthal?

  And it's your players. It is your product on the field.

• 2:42:36Ben Gilbert?

  It's also interesting to note who wasn't producing content about concussions. I mean, this Will Smith movie came out that I don't think was through the media channels of any of the NFL's partners. I think the NFL wields a lot of influence and saying, oh, you may not be a part of the networks that get our broadcast in the next generation.

• 2:42:59David Rosenthal?

  That strategy would have worked really well 30 years ago, but in the social media era where individuals have Twitter accounts, a lot harder to control the narrative.

• 2:43:09Ben Gilbert?

  Yep. Speaking of hard to control the narrative, let's talk about blackballing Colin Kaepernick. And I think an interesting place to start is the job of the commissioner. So the commissioner is not the president or CEO of football. The owners are not their executives and the commissioner's obligation is not to the fans. The commissioner is hired to do one job and that job is speak for and do things that are in the best interests of the owners as a whole. And so if the most powerful owners want something, that is what the commissioner does. That is what the message is from the NFL.

• 2:43:49Ben Gilbert?

  The NFL itself is a very thin layer on top of a whole bunch of teams that are their own very large businesses. In fact, a lot of hay was made about the NFL switching in 2015 from a nonprofit to a for-profit. The NFL has like very little net income. Who cares what its tax filing status is?

• 2:44:09David Rosenthal?

  It all gets distributed out to the teams.

• 2:44:11Ben Gilbert?

  Right. The teams are their own taxpaying entities and their own businesses. And so, you know, Roger Goodell makes 40-plus million dollars a year to do what the owners want and they hire him to do that and they will fire him if he doesn't do that.

• 2:44:24David Rosenthal?

  Oh, man. There are these great quotes in America's game where the owners are talking about Pete Rozell with a representative of the players at the time they're negotiating contracts and the players are complaining that Pete Rozell isn't being neutral in these negotiations. The owners are like, of course he's neutral. We pay him damn well to be neutral. So yeah, the commissioner of the NFL is like the ultimate in shareholder responsibility. In fact, shareholder responsibility is his only responsibility.

• 2:44:54Ben Gilbert?

  Back to Colin Kaepernick. So in the good old days of football, it was a bunch of reasonably young enterprising owners who loved football and owned teams. It wasn't clear if they were going to be good businesses or not, but the league as itself and thus all the owners were cowboys trying to make it for themselves in the world. And Those people all got old and didn't want to change at all.

• 2:45:20David Rosenthal?

  Now, most of those people are dead and it's their descendants who are also old who own these teams.

• 2:45:25Ben Gilbert?

  Yes. And so now there's these very interesting artifacts of the league being grown up, old and stodgy, the incumbent, something like that, when they were once a startup, especially when it comes to just acknowledging that a guy can protest the national anthem.

• 2:45:39David Rosenthal?

  Yep. I do think when that happened in 2016, it was a lot more of a radical act than it might seem today. And there were a lot of people at the time who were deeply offended by it.

• 2:45:52Ben Gilbert?

  He was using the NFL's platform to sort of make a very personal argument.

• 2:45:56David Rosenthal?

  And there were a lot of people in the NFL who understood why he was doing it because 70% of the NFL is black. So there is a lot going on here.

• 2:46:05Ben Gilbert?

  Right. And we should say, what actually happened, Kaepernick in 2016 took a knee during the national anthem to protest police brutality and racial inequality in the US. After that season, he was a free agent, zero teams signed him. And of course, he had some disappointing seasons and injuries.

• 2:46:20David Rosenthal?

  But let's be real here, the NFL blackballed Colin Kaepernick after this.

• 2:46:25Ben Gilbert?

  Oh, Kaepernick filed a grievance and eventually reached a confidential settlement with the NFL. I mean, the whole macro thing here is very strange of the owners to let this seemingly minor thing turn into the gigantic media mess the way that they did.

• 2:46:38David Rosenthal?

  Yep. And I think the interesting thing for the purposes of our discussion here about this, I don't think this ever would have happened or happened in the same way in the NBA. The NBA embraced both social media and the strategy of letting players have their own platforms, be their own voices and promote the league through that. And the NFL was the opposite of that. Like they were the command and the control. We own the message. And like, there was no clearer example of this.

• 2:47:09Ben Gilbert?

  But bottom line, the NFL wildly mishandled this, let it get completely out of hand. This is the way that we know of Colin Kaepernick now. He's sort of like an icon for this thing. So, I mean, if what the NFL wanted to do was not amplify his protest by making him not able to play, it totally blew up in their face and he became a national headline for months and months and months.

• 2:47:32David Rosenthal?

  Right. Which is emblematic of the NFL not understanding the social media era.

• 2:47:38Ben Gilbert?

  Yep. So all this to say, it was very compelling for David, you and I to spend a bunch of time talking about the NFL up through 1980 and the Rozell era. But I mean, revenues have gone up, team values have gone up, games have gone from standard def to HD to 4K. But the end of the hero's journey sort of happened at the end of the Rozell era.

• 2:48:01David Rosenthal?

  Yeah.

• 2:48:02Ben Gilbert?

  And it won't hurt their business for a long time. That's the interesting thing.

• 2:48:06David Rosenthal?

  I think this is a good point to transition into analysis. And why don't we do playbook and then do power? One that just really strikes me through all this is the Lindy effect. Despite everything you just said, football is bigger than it ever has been.

• 2:48:19Ben Gilbert?

  $12 billion a year in revenue from the TV deals alone.

• 2:48:22David Rosenthal?

  A huge amount of revenue and now diversified those revenue sources. It's not just old line broadcast networks trying to hang on that are paying them this money. Like, no, it's Google and Amazon that are paying them this money.

• 2:48:35Ben Gilbert?

  They're paying what? Close to $4 billion a year from the biggest tech companies in the world.

• 2:48:40David Rosenthal?

  Yep. The NFL is going to be just fine and that revenue is almost assuredly going to grow at a very healthy clip. So even despite all this, people love their football. I still love watching football.

• 2:48:53Ben Gilbert?

  Totally. Me too. I feel like I'm a slight apologist for still loving football as much as I do.

• 2:48:59David Rosenthal?

  Two things. One, I mean, again, that just reinforces the power of the Lindy effect to me. The NFL is just fine and is going to be just fine for a very, very long time. Now, I do think the younger generation's thing is a real risk. And I think related to that is one, basketball definitely won the social media era in a way, not as to as big a degree as the NFL won the TV era, but basketball's on the rise. And related to that is number two, the NFL has never figured out international. Many fits and starts.

• 2:49:32Ben Gilbert?

  Have you read about these home marketing agreements?

• 2:49:35David Rosenthal?

  No.

• 2:49:35Ben Gilbert?

  It's really weird. The NFL now, because there's zero international interest in the NFL, like zero, like they go play these other games in other countries and the people who watch them are people from the US who fly to go watch their favorite team play in somewhere exotic.

• 2:49:49David Rosenthal?

  I mean, for God's sakes, baseball has a robust international presence.

• 2:49:54Ben Gilbert?

  Right. And as we talked about on our NBA episode, I mean, basketball's entire future growth and current sort of groundswell of popularity is young people and international. So the NFL has tried NFL Europe, kind of shut that down, couldn't get the owners to care about it. This home marketing agreement thing that they're doing is saying that teams have an exclusive right versus other NFL teams to market in certain countries.

• 2:50:22David Rosenthal?

  Oh, no way. I didn't see this.

• 2:50:24Ben Gilbert?

  I think it's like the Cowboys can advertise the Cowboys in Mexico. It's that sort of thing because they want to try to build affinity for teams where there's like some theoretical mapping to that country based on ethnic groups in the area or proximity.

• 2:50:41David Rosenthal?

  That does not seem like a sound international strategy to me.

• 2:50:44Ben Gilbert?

  No. And the question kind of becomes, how can the NFL continue to grow? Or can it? Because the average number of people who watch any given NFL game, pick your metric. Is it the average Monday night football game? Is it the average kickoff game of the season? Is it the average Super Bowl? It's like up and down over the last 20 years. It's amazing that it's as high as it is when people don't watch anything else on TV, but I honestly, I'm having a hard time understanding how they grow the fan base.

• 2:51:17David Rosenthal?

  Well, the core to growing the original NFL flywheel is increasing fan reach and engagement.

• 2:51:27Ben Gilbert?

  And that's no longer happening. Right. And then you have this interesting question of is college football starting to pay players competitive to the NFL or additive? Because college football has fueled the growth of the NFL. I mean, think about it this way. The NBA and Major League Baseball teams have to pay to operate farm teams that no one wants to watch or play in. And the NFL gets all the benefit of all the development of all of these players in their college years for free. Right. They benefit from the storylines around them, too. So when someone comes into Major League Baseball and gets promoted out of the minors, everyone's like, who cares? I have

• 2:52:09Ben Gilbert?

  no idea who that person is. Whereas the Heisman Trophy winner, who you know about what their childhood was like, comes out of NCAA football, out of the. Right. The storylines are fully baked and ready to go. Yeah. College football has been the best thing to ever happen to the NFL for basically its whole existence. Right. It was the worst thing for the first 20 years, and then it was the best thing. Good point. Yeah. I think the biggest players getting paid in the NCAA right now with the sort of weird way that the booster stuff works is like $2 million. They're not competing for talent, and I don't think the NFL will start trying to sign earlier college players. So I don't think they'll be competing directly or in the same order of magnitude.

• 2:52:49Ben Gilbert?

  The revenue that big colleges make and that these conferences make isn't NFL size, but these are huge deals. So the NFL, for comparison, has a $12 billion aggregate set of media rates that it sells. The Big Ten deal is $1 billion a year. They just signed a seven year deal at $1 billion a year, which is twice their previous deal from 2016. All this to say, the business of college football is still much, much smaller than the NFL, but it'll be really interesting to see sort of how it, as players start to get paid more, where it finds its footing in the landscape, and if it changes at all from where it is today.

• 2:53:23David Rosenthal?

  Yep.

• 2:53:24Ben Gilbert?

  A thing in playbook here that I think is interesting to talk about is the relationship that the NFL has with its players as a supplier and with the networks as a customer. So it got itself into this trap for a while where it was negotiating with the networks. And so it would sign a big deal to get a bunch of revenue and then would quickly have a negotiation coming up with the players. And they seem to have switched to this thing now where they sign a collective bargaining agreement for a decade with the players. I think they did that in 2020 that lasts through 2030. And then in 2022, that's when they renegotiated the 10-year rights for media.

• 2:54:09Ben Gilbert?

  So they seem to have switched to this, which is good business decision. Before anyone knows what the big new revenue contract looks like, they go and they lock in all the pricing on their suppliers. Now granted, it's a rev share.

• 2:54:24David Rosenthal?

  It's a percentage basis.

• 2:54:25Ben Gilbert?

  Yeah. Right. So in that respect, it's fair, but it is quite clever to have gotten off the TikTok cycle of, you know, having the players have a bunch of leverage after seeing what the media deal looks like and doing it in this order.

• 2:54:38David Rosenthal?

  Yep.

• 2:54:39Ben Gilbert?

  The other thing that I've been sort of charting is the media deals go up dramatically in value, but the average viewers kind of stays the same. Like in 2002, the kickoff game had about 20 million people watch and it rose and it was in the mid twenties and then it dipped back down below 20. And last year, about 20 million people watched the kickoff game.

• 2:54:59David Rosenthal?

  So we're in about two decades of audience stagnation.

• 2:55:02Ben Gilbert?

  Yeah. So why is it that the media rights are worth so much more when the number of audience impressions stays the same? I'm curious where your head is on that. I have some theories, but on a CPM basis, it seems like the advertisers are all just paying more money now, or at least the TV networks believe that they can make more money from something and so they're willing to pay more for the rights.

• 2:55:27David Rosenthal?

  That's a great question. My first instinct is to say, I think it's scarcity value in that I don't think there's in the modern media world, anywhere else except live football, where you can hit a huge amount of people all at once across demographics.

• 2:55:44Ben Gilbert?

  Yep. I think that's definitely part of it. Another argument would be, well, they're finding a way to put more ad slots into the same amount of media, but that's not true. They've actually held flat, or in some cases even decreased the number of commercials over the last 15 years in NFL broadcasts. So you're thinking, okay, the audience size is about the same, the number of ad slots is about the same. So what else could be going on here? I think part of it is, you're right, is that the networks are quickly getting into a place where they're like, we don't really have any other content that people want to watch, so we kind of need this no matter what. And that advantages the NFL in the negotiation

• 2:56:24Ben Gilbert?

  where they come in and they say, look, I know you used to be super profitable on buying these rights from us, and then your business on the back end was selling all these advertisements against it. We think you should just compete against each other until your margins are zero, and we're going to accrue all the profit pool now because there's basically nothing else that you'll put on that people want to watch.

• 2:56:49David Rosenthal?

  I think that's probably right. For those networks, for the last decade, run the counterfactual of the networks no longer had football. They don't exist anymore. This has been life support for them for a decade.

• 2:57:04Ben Gilbert?

  So here's the interesting thing is you might say like, well, if the margins are razor thin, they need a ton of volume because effectively what is happening here is the profit is getting reallocated to a different part of the supply chain. There's no more value in distribution, and all the value is accruing to the content creator. You could make an analogy to the airline industry where no one was willing to pay for a better experience on a flight. All the margin got competed away between all the airlines. So all the airlines had to merge because you had to have massive, massive scale. That's also what happened to these media companies that are distributing the content. I mean, AT&T slash DirecTV, NBC slash Universal, the companies

• 2:57:47Ben Gilbert?

  that are buying the rights are massive combinations that can actually afford to generate any margin. What are the unit economics of buying NFL rights and then selling a bunch of ads against them? But I have to imagine they're much worse than they used to be.

• 2:58:02David Rosenthal?

  They have to be.

• 2:58:03Ben Gilbert?

  And it's pretty genius that the NFL doesn't do this themselves, that they rely on broadcast partners, because they've basically observed that they can get all these people to do all this work and pay them all this guaranteed money, and the NFL still gets to keep all the profits.

• 2:58:22David Rosenthal?

  Right. And they can resell it like six times over.

• 2:58:24Ben Gilbert?

  Right. The NFL doesn't have to film the games, other than NFL Films. They don't have to, you know, have the broadcast trucks. They don't have to have the relationship with the consumer and do all the direct marketing to the consumer to onboard to their direct video platform. They don't have to sell the ads to the advertisers. They somehow have outsourced and commoditized all of that. And I think they get to keep the vast majority of the profits and will continue to shift that balance in their favor.

• 2:58:52David Rosenthal?

  This is probably a good time to bring up the Amazon deal that we've referred to with Thursday Night Football. And news is coming out, this is the first season that Amazon is the exclusive destination for Thursday Night Football, right?

• 2:59:02Ben Gilbert?

  Correct. Yeah, they used to air Thursday Night Football also on Fox and on the NFL Network, which is the NFL's own channel to do mostly non-game programming, but some experimental stuff themselves, like red zone and alternate game broadcasts. But Thursday Night is just Amazon now.

• 2:59:20David Rosenthal?

  And news is coming out now, right at the end of the season, that from an economics perspective for Amazon and an ad basis, it vastly underperformed expectations.

• 2:59:29Ben Gilbert?

  Yeah. So then Amazon is having to do make goods with the advertisers because Amazon wasn't able to get enough people to watch the streams. Because frankly, I think a lot of people want to watch the NFL on TV. And it's kind of complicated to figure out how to stream it and watch it through Amazon. And I know it can just happen on my little set top box and my Apple TV, install the app and this, that and the other thing. But you know, it's easier for most people, turning on Channel 3. So it's totally fascinating watching the balance of power in the value chain. You might think, huh, well, is the packaging component that the NFL does of the talent and the coaches and creating the storylines actually where all the value lies? It's interesting to me that the players,

• 3:00:13Ben Gilbert?

  the NFLPA, has managed to negotiate for half the revenue. Good on the Players Association for getting that big a piece of the pie because they've actually done a pretty good job of managing to shift some of the value from the NFL even further upstream to the NFL suppliers, rather than letting it all sort of collect in the packaging component that the NFL has.

• 3:00:35David Rosenthal?

  Yep. Doing this whole episode has made me really realize that there is a huge amount of value add that the NFL and their partners bring to the product beyond the players. Now, nobody should ever shed a tear for the NFL and the owners at the expense of the players, ever. But if you were to make an argument that the players are everything, they are the product, the game on the field that they play is the product, full stop, they should get much more. I don't think that's a fair argument. They play a football game, but the NFL's product is sports entertainment.

• 3:01:13Ben Gilbert?

  Yes. Completely agree with that. There is a very interesting one, which is, on a revenue basis, you know, it's an $18 billion a year revenue business. The NFL actually owns way more mind share than its revenue would illustrate. A strange statement to make is, the NFL is an oddly small business for how large a role it plays in our lives. And to contextualize, who else makes $18 billion in revenue? General Mills, Adobe, and Halliburton. The NFL's share of lips is way higher than any of those companies' products. I continue to think that networks are just on this treadmill where they're just going to keep

• 3:01:56Ben Gilbert?

  paying more and more and more for NFL rights until it's actually non-economic for them to do so, but then they'll be in so deep that it's pretty hard to recover from that.

• 3:02:06David Rosenthal?

  Yep. I've got one more playbook theme. Buying any professional sports franchise 10 to 15 years ago. Was an incredible trade for two reasons.

• 3:02:17Ben Gilbert?

  By the way, just to add some numbers to it, the average NFL team value, 1.2 billion in 2012. So that's a decade ago, average 1.2 billion. And today is about four and a half billion for the average NFL team. We're not talking Cowboys, we're not talking Giants if those were to change hands.

• 3:02:36David Rosenthal?

  Yep, those are based on Forbes valuations. You can't trust those valuations. I think any actual trade would have to be higher than that. Reason number one is just scarcity value. There are a finite number of these things and they're not making more. And there are a lot of people that want to own them for a lot of reasons, not all of which are economic.

• 3:02:57Ben Gilbert?

  Yep.

• 3:02:57David Rosenthal?

  So that's one, and that's never going to change.

• 3:02:59Ben Gilbert?

  The owning an NFL team, it's like a grown up NFT.

• 3:03:05David Rosenthal?

  It is the ultimate NFT.

• 3:03:07Ben Gilbert?

  If you are a gajillionaire and you want to flex on other gajillionaires, this is a way that at least is very likely to have a lot of durable value for you to get to keep doing that, regardless of its underlying cash flows.

• 3:03:20David Rosenthal?

  That is a net present happiness, value positive trade for a lot of billionaires.

• 3:03:24Ben Gilbert?

  But I will say, when you have something that increases in value because of social signaling and desirability, and not tied to underlying cash flows, that is a potential sign of a valuation bubble.

• 3:03:36David Rosenthal?

  No.

• 3:03:36Ben Gilbert?

  Not always, there's luxury watches that have kept their value for centuries, but it should make you wonder. I mean, team values have ballooned to the point where there are very, very few people who can buy one today.

• 3:03:48David Rosenthal?

  Yep, which means that a change in sentiment among that very narrow market will have a huge impact.

• 3:03:54Ben Gilbert?

  Totally.

• 3:03:54David Rosenthal?

  But for now, I think the valuations are probably safe.

• 3:03:58Ben Gilbert?

  Ooh, all right, well to see in a few years. I think they've reached a plateau. I don't think we're going anywhere north of eight, nine billion in the near future.

• 3:04:08David Rosenthal?

  Oh, I agree. I just don't think you're gonna see these things.

• 3:04:10Ben Gilbert?

  You don't think they're gonna deflate?

• 3:04:12David Rosenthal?

  No, they're not gonna trade at fire sale prices.

• 3:04:14Ben Gilbert?

  Yeah. The average revenue multiple in 2012 of a team went from about 4X to about 8X between 2012 and 2022.

• 3:04:23David Rosenthal?

  Wow. So yeah, multiple expansion, along with the rest of the market. But I think this is gonna be more durable.

• 3:04:28Ben Gilbert?

  Potentially justified by the fact that most people don't actually own these things for their cash generating characteristics anyway. It's a very fancy gem.

• 3:04:37David Rosenthal?

  Yep, totally. Okay, so that's one. But then point number two is I think there was a narrative around cord cutting 10 years ago. That was linear broadcast television is dead, live sports and especially football are the last bastion, but who knows how long this will last. And I think what I at least and a lot of people didn't see back then is that these leagues, the NFL especially, are going to be totally fine in a post-linear TV era. And no further proof is needed than Amazon and Google are the latest people to pay boatloads of money to the NFL.

• 3:05:15Ben Gilbert?

  Yep, the NFL will make the transition to digital distribution. And it's pretty amazing that they didn't need to build it themselves. MLB did the whole BAM tech thing. The NFL has built basically no technology, basically no distribution, and basically no direct relationship with the audience. And they'll still be fine.

• 3:05:34David Rosenthal?

  And they'll still be fine.

• 3:05:35Ben Gilbert?

  They outsourced all the hard parts.

• 3:05:37David Rosenthal?

  And they also completely whiffed on strategy for the social media era, but they're still fine.

• 3:05:42Ben Gilbert?

  Yeah, it is wild.

• 3:05:44David Rosenthal?

  We talked about this a lot on the NBA episode, but just to recap here, because the story hasn't really changed. LeBron has well over 100 million social media followers.

• 3:05:54Ben Gilbert?

  Instagram alone.

• 3:05:55David Rosenthal?

  And the two largest NFL players by social media following are OBJ and Tom Brady, both of which are in the low teens. So like a 10x difference.

• 3:06:08Ben Gilbert?

  Is that interesting that people don't want to follow NFL stars the way they want to follow NBA stars on social media?

• 3:06:15David Rosenthal?

  I think if I remember it, the core thesis of our NBA episode is what they got so right through the social media era was give the players the voice, give the players the platform, the individual person is the hero on social media. And that's so antithetical.

• 3:06:29Ben Gilbert?

  And the NFL is control the message.

• 3:06:32David Rosenthal?

  And that's also reflective of the sports themselves, right? Like NFL players wear helmets, basketball players don't wear helmets, you know, like it's that's little stuff, but it doesn't matter. As a business, NFL is fine. They're totally fine.

• 3:06:44Ben Gilbert?

  Yep. While we're contrasting leagues, there's this pretty interesting thing that I've been thinking about, which is this cooperative capitalist communism thing that the NFL did. It was really good at creating parity among teams to be the most competitive, but let's take it to the level of the players. Interestingly enough, the NFL has been the best of any of the leagues at creating the narrowest band of player compensation in the same philosophy that they applied to the league competition. Now, of course, it is nowhere near equal pay among players. And like, yes, it's a bummer that while Aaron Rodgers makes $50 million a year, there's a long tail of players that only play one to three years making league minimum and then churn out, which I think is mid-single-digit millions of lifetime compensation from football.

• 3:07:29David Rosenthal?

  So still, that's good money.

• 3:07:31Ben Gilbert?

  Yeah. Lifetime, though. So players are definitely variably rewarded based on their value to any given team. But the NBA and the MLB are way less equal than the NFL. The superstars in the NBA, like LeBron James, including sponsorships, makes $127 million a year. There is no one in the sport of football that comes close. There are three basketball and three soccer players at the top of the list before any football players. The NFL has managed to sort of smooth the curve more than other sports have.

• 3:08:01David Rosenthal?

  Well, I think this is also related to the social media thing. And really, this is like the big divergence between the players and the sports and the leagues. NFL is a league, great, they're fine. But the players, I think, other league players, and especially the NBA, have been able to build wealth and businesses and revenue streams much better than NFL players because they're the platform and the audience value accrues to them so much more.

• 3:08:31Ben Gilbert?

  Yep, I agree.

• 3:08:33David Rosenthal?

  LeBron, I think, is already a billionaire, and especially once his playing days are over, he will be a multi, multi, multi-billionaire because of the influence that he has.

• 3:08:42Ben Gilbert?

  Apparently LeBron James has signed some secret deal with Nike for the rest of his lifetime that's something crazy high that is just not even accounted for in these numbers.

• 3:08:53David Rosenthal?

  Wow.

• 3:08:54Ben Gilbert?

  This is actually a good place to flip to power.

• 3:08:56David Rosenthal?

  Awesome. For new listeners, this is the section we do an analysis based on the great book by Hamilton Helmer, where we run through each of his seven powers that a business could have to earn long-term differential profits versus its competitors. And the seven powers are counter positioning, scale economies, switching costs, network economies, process power, branding, and cornered resource. All right. I think they definitely have a cornered resource. If you want to watch professional football played by this set of athletes, they are the only game in town.

• 3:09:32Ben Gilbert?

  Yep, they absolutely have a cornered resource.

• 3:09:35David Rosenthal?

  Yeah, I think this is like maybe the most clear cornered resource that we've ever had on the show.

• 3:09:40Ben Gilbert?

  Yep, completely agree. And clearly, this is why the fight with the AFL is worth it. We need the greatest players on earth to play this game, and we can't have them spread across two leagues competing against each other. If we have all the best players, then we get to do all the incredible things that the NFL has gotten to do, like the media rights negotiations.

• 3:09:58David Rosenthal?

  Yep. I think.

• 3:10:01David Rosenthal?

  During the dawn of the TV era, I think they were counter positioned against Major League Baseball in that while decline in revenue from the gate by adding TV certainly was a hit to them, it wasn't as much of an existential hit in the way it was for Major League Baseball. And so the NFL was more able and willing to experiment with the new business model of TV as the primary revenue source than baseball.

• 3:10:30Ben Gilbert?

  Yeah, certainly. And I think generalizing from that, I agree with even more that this for the greater good mindset was easier to do when everyone's individual franchise was smaller. But when you've got these teams that have already been around for 100 years, like good luck talking them out of a machine that already works well.

• 3:10:49David Rosenthal?

  Right. There's no way, even in 1949, that the Yankees would have agreed to a league first mindset.

• 3:10:57Ben Gilbert?

  Yes.

• 3:10:58David Rosenthal?

  Let alone today.

• 3:11:00Ben Gilbert?

  Yep.

• 3:11:00David Rosenthal?

  When they have their own television network, et cetera.

• 3:11:03Ben Gilbert?

  Yep. You know, I've been thinking about branding. I actually don't think this one has branding power because the definition of branding power is if somebody offers you the same thing with a different brand on it, will you pay more? The thing about getting multiple congressional antitrust exemptions is that there isn't another game in town. I mean, there's sort of a rebooted XFL, there's sort of a rebooted USFL, but it's not that people don't care about those because the NFL brand isn't there. People don't care about them because it's not good football.

• 3:11:32David Rosenthal?

  It all comes back to cornered resource. They have the players.

• 3:11:36Ben Gilbert?

  Right. Exactly.

• 3:11:37David Rosenthal?

  You could maybe put the antitrust exemption, you could kind of shoehorn that into process power.

• 3:11:42Ben Gilbert?

  Or a cornered resource.

• 3:11:44David Rosenthal?

  Oh, yeah, or a cornered resource. And like you said, no new league is going to have that.

• 3:11:47Ben Gilbert?

  It's like totally fascinating that the government thinks it's good enough for the country to issue an antitrust exemption. It's like, well, having a big popular sports league is good for us. So let's enable that to be as big as possible.

• 3:11:59David Rosenthal?

  I think there's definitely scale economies here in the sports entertainment aspect of the product.

• 3:12:05Ben Gilbert?

  Yeah, there's no way you could spend the amount of money it takes to produce a good NFL game without the audience that they have to justify that level of cost.

• 3:12:13David Rosenthal?

  Even a single Sunday game would bankrupt any startup league to put those kind of production values in.

• 3:12:20Ben Gilbert?

  Right. I think it's about $44 million per game is effectively what the average broadcast partner is paying the NFL just for like one single game.

• 3:12:30David Rosenthal?

  Yeah, and just for the rights.

• 3:12:31Ben Gilbert?

  Right. If you're the NFL, if you can go make $44 million by making a game happen, and that doesn't include anything on the field, selling tickets, or that's revenue just from piping that game to a TV network, or they're not even doing the piping, allowing a TV network to come on the field.

• 3:12:48David Rosenthal?

  To show up and produce the game. Yeah.

• 3:12:50Ben Gilbert?

  Right. Then you can afford to have a whole bunch of costs to make that experience happen.

• 3:12:56David Rosenthal?

  Yep.

• 3:12:56Ben Gilbert?

  Value creation, value capture. And the way that I want to do value creation, value capture here is of the value created by the NFL in the world, how much of it do they capture? There's a thing we didn't talk about, which is taxpayer-funded stadiums. All the research you read about new stadiums that are funded by taxpayers, and not every stadium is funded by taxpayers, like the new Giants-Jets one in New York is funded by the team in the NFL, whereas like the Bills one is going to be funded by the state of New York largely. And every piece of research you read there is like, yeah, they're at best breakeven for communities unless it's part of some like larger economic redevelopment

• 3:13:36Ben Gilbert?

  thing. So I think the NFL has, they're now unbelievably extractive of the networks. They've historically been very extractive of players, but now the players seem to have a pretty good, or at least better, deal than they ever had before. And NFL teams are very extractive of communities in these stadium deals. And I think if you look at the $18 billion a year of revenue, the NFL, if you include the players, captures as much value as it possibly can. They are unbelievably good at value capture.

• 3:14:08David Rosenthal?

  I mean, they literally resell the same meteorites like multiple times over.

• 3:14:13Ben Gilbert?

  Yes. Value capture pioneers, I believe, is a phrase that we used on another episode.

• 3:14:18David Rosenthal?

  Okay, that's gotta be another acquired merch star t-shirt.

• 3:14:21Ben Gilbert?

  But it is amazing how much mindshare the NFL does own, in my opinion, on top of the actual revenue number. They don't leave a lot of consumer surplus in dollars, but given our earlier conversation that $18 billion isn't that much revenue compared to other companies we've covered on this show, maybe there is some kind of unquantifiable consumer mindshare that does exist on top of any of the revenue they generate. How can you put a price on the fun of a Super Bowl party, or texting about an amazing catch with your dad, or, you know, there's all sorts of things that are hard to value?

• 3:14:56David Rosenthal?

  Well, it's also a little bit similar to the trading value of NFL teams in like, what price would they actually trade at? Even as the NFL has become this incredible business, they don't trade irrational economic prices because the people buying them are doing their present happiness value equations, you know, not economic value.

• 3:15:17Ben Gilbert?

  Right. As we talked about, these NFL teams are valued more like scarce speech front property, more so than cash flowing businesses.

• 3:15:24David Rosenthal?

  Yep.

• 3:15:25Ben Gilbert?

  I'd be curious to hear anyone's thought on if the NFL generates more value than $18 billion a year.

• 3:15:34David Rosenthal?

  Hmm.

• 3:15:35Ben Gilbert?

  Interestingly, the NFL today is less about sort of what it was in the 40s, 50s, and 60s, this team of guys who really hates another team and wants to destroy them at all costs, and they're led by this fearless leader who's probably also their owner and maybe a player on the team. At this point, the players seem to recognize that they're all basically employees, and the players are more in it together as coworkers than they are against each other, even for players who were on opposite teams, the way that before and after a game, they'll come and hug each other or rekindle a relationship with another player. At the end of the day, they all work for the owners. And so it's probably a good thing for them to recognize that now, the real reality on the field.

• 3:16:20Ben Gilbert?

  And at least it means they're gonna be better at arguing what's fair for them from a business that demands an immense amount and maybe even Years off their lives for a lot of people. So let's not end on that note. Let's close with what's the bear case and what's the bull case for the NFL going forward? We've talked about a lot of the bears, the cooperative armor that has got them here begins to shatter. Youth not playing, player safety issues, the failure of international expansion. But I'm curious to hear your thoughts on a bull case for the NFL.

• 3:16:55David Rosenthal?

  My bull case is what I've been saying here for a while now on analysis is the Lindy effect. I kind of think all this is noise from a business standpoint for the NFL and a staying power standpoint. It's not going anywhere. It's one of the most incredible cornered resources in the world. It's going to be completely fine.

• 3:17:12Ben Gilbert?

  I completely agree with you. And it's funny, all the negative stuff we've talked about. The NFL will continue to be a ginormous, successful and growing business for a long time. This is my opinion. And of course, we haven't even talked about the sports betting, which is now legal in the United States.

• 3:17:28David Rosenthal?

  You know, I just want to say too, like doing this episode, it was really fun. And just like on a personal note, I've had a, I think probably similar relationship to football with you over the years. More complicated too, because I played for many years.

• 3:17:43Ben Gilbert?

  Yeah.

• 3:17:43David Rosenthal?

  I had, you know, certainly a lot of mixed emotions over the past decade, including many years where I just stopped watching football altogether. And it was really fun doing this, like re-engaging with the game, re-engaging with all the content around the game, all the entertainment content. Like it is great. So I think the game is going to be fine. Clearly the business is going to be fine. I'm glad we did this.

• 3:18:05Ben Gilbert?

  All this to say, can't wait to watch the playoffs.

• 3:18:07David Rosenthal?

  Me too. You ready for some football?

• 3:18:09Ben Gilbert?

  I am ready for some football. All right. 10 second carve out on my end. Go watch The Menu. It was a unbelievably fun movie, beautifully shot. That's all I have to recommend. David?

• 3:18:22David Rosenthal?

  My carve out was going to be Peyton's Places on ESPN plus.

• 3:18:25Ben Gilbert?

  Oh, so good.

• 3:18:25David Rosenthal?

  Which I know we talked about, but it's so good. Nostalgia, Lindy effect. It's right there. Go watch it.

• 3:18:31Ben Gilbert?

  It's true. All right, listeners. Hello again from January of 2026. David and I are back.

• 3:18:37David Rosenthal?

  Hello, Ben.

• 3:18:39Ben Gilbert?

  From the present in our time traveling NFL episode, we have some updates to where we left things here in our NFL episode. And I am staring at a lot of notes that I've taken from a bunch of conversations that I've had over the last week and a half with folks in and around the league, reading a bunch of news stories and press releases of the earth shattering things that have happened that have really changed the NFL's trajectory over the last three years.

• 3:19:07David Rosenthal?

  Me too. Can't wait to get into it.

• 3:19:10Ben Gilbert?

  So we talked a little bit about international and we were very sort of negative and poo pooing of the league's prospects internationally. I think when we recorded, there was just games in London and Germany, or maybe we were one year off from that. But there are now seven international games across five countries. And they have publicly stated that there is a goal to get to 16 international games per year.

• 3:19:36David Rosenthal?

  They're not backing away from this.

• 3:19:37Ben Gilbert?

  Yes, this is full steam ahead on this strategy. And as we've seen in the past, when the NFL decides that something is its strategy, they tend to see it through.

• 3:19:47David Rosenthal?

  And this past season, I think it was kickoff weekend, right? Was the Sao Paulo game in Brazil streamed by YouTube for free in front of the paywall globally?

• 3:19:58Ben Gilbert?

  Yes, exclusively on YouTube.

• 3:20:00David Rosenthal?

  Yeah, that was huge. If you had told us in 2023 that that would be happening a few short years later, even with all we talked about, about how streaming and the tech companies and digital being ahead for NFL, I don't think we would have believed it.

• 3:20:12Ben Gilbert?

  Yeah, they are starting to build some local fanbases there.

• 3:20:16David Rosenthal?

  Well, I think maybe next season, we got to do a boondoggle and go to one of these games.

• 3:20:22Ben Gilbert?

  For sure. Okay, my second one, viewership has hit an all time high. And we sort of talked about how it topped out and it flattened and the NFL is already saturated. It did grow. The regular season had its best TV ratings in 36 years. The league posted an average delivery of 18.7 million viewers per game. That is a 10% gain year over year. Year. But if you look back 15 years to 2011, the number was 17 and a half million compared to the record 18.7 this year. So if you look at it just over the last few years, it looks like this great growth rate. But if you look at it over the last 20, it kind of tells the

• 3:21:05Ben Gilbert?

  story of we've hit this saturation number.

• 3:21:08David Rosenthal?

  Yeah, actually it dipped for a while and now it's back.

• 3:21:11Ben Gilbert?

  Right. The Super Bowl, though, did legitimately hit an all time high 127 million viewers. And that is after the previous year was also an all time high. This is the ultimate appointment viewing thing to watch on TV. It is the premier TV flagship event and it only gets more and more and more premier each year.

• 3:21:34David Rosenthal?

  Well, we might have a little more to say on this, but certainly the Taylor Swift crossover helped with the Super Bowl viewership numbers over the last couple of years.

• 3:21:43Ben Gilbert?

  Yes. One other point that I did miss while we're in TV broadcast land on the episode. David, I don't know if you knew this, structurally, TV networks actually get paid in two ways. When we were sort of talking about, oh, the viewership has sort of stagnated. So why do they get to charge more and more and more for ads? The networks buy the rights, you know, Fox or NBC buys a rights package. They show the game. I assumed they were only getting compensated with ad revenue and then sort of indirectly for like retaining those viewers for whatever programming they also had on the network. There is a second, very large revenue stream called retransmission fees. Did you know about this?

• 3:22:25David Rosenthal?

  Ah, yes. Oh, man. Going back to my days as a media investment banker.

• 3:22:29Ben Gilbert?

  Yeah. So, starting in the mid, late 2000s, that's at least when they kind of got material. The networks started being able to charge cable companies for the right to retransmit stuff that they have the rights to.

• 3:22:44David Rosenthal?

  Yeah, this is NBC, ABC, Fox, charging the cable companies to.

• 3:22:51David Rosenthal?

  Bring those broadcast networks onto the cable companies, even though they are also available for free over the air to consumers.

• 3:22:56Ben Gilbert?

  Right. But if you have a cable package and in your cable package, you choose to go to the NBC station, then NBC gets paid by the cable company for bringing you as a viewer. I think that revenue stream was almost as large as the advertising revenue stream. So they have these two big pillars of their business, the direct subscription revenue that comes from retransmission fees and the advertising revenue. Obviously, retransmission is sort of dwindling as cable dwindles. But the belief is, well, hey, with Peacock or with Fox Sports or any of these apps, we have our own direct monetization. Or even, you know, if we're included in YouTube TV.

• 3:23:36David Rosenthal?

  One way or another, we're getting the equivalent of a subscriber fee for this, too. And obviously, that's a subscription that is paid for all of the network's programming. But as we talked about on the episode, basically, it's the NFL that matters here.

• 3:23:53Ben Gilbert?

  Yeah, sports and in particular, premium sports, and in particular, particular, the NFL is really where ad spend is sort of shifting on TV spend.

• 3:24:02David Rosenthal?

  It's the reason consumers reach into their wallet.

• 3:24:05Ben Gilbert?

  Yes, and sports are sort of eating a larger and larger percentage of the pie of TV ad revenue. And you could make an argument, they were sort of under earning for many years. But as the last thing that you actually watch on TV is these premium live sports, they are definitely commanding the revenues that they long deserved. So why has viewership increased so much? Or why have people been really wanting to pay attention to NFL games over the last couple of years? What could have possibly changed that would make people pay attention? Well, we said earlier in the episode that if you got money riding on a game, you are much more likely to care about it, even if you don't care about any of these teams gambling.

• 3:24:51Ben Gilbert?

  So the Supreme Court decision came down, I believe, made it a states' rights issue of what type of gambling, sports gambling, to allow.

• 3:25:00David Rosenthal?

  I think that's correct.

• 3:25:01Ben Gilbert?

  Many states made it legal. And so in the episode, we said 46 million Americans bet on the NFL three years ago. Estimates are that this year, that number has grown to 76 million Americans.

• 3:25:15David Rosenthal?

  Yeah. I mean, this is a huge new revenue stream for the NFL, and it drives the flywheel, too. It's not just directly participating through their relationships with the gambling companies, but also this drives Sunday ticket subscriptions. This drives engagement with the game.

• 3:25:32Ben Gilbert?

  Yes. It's a giant win for driving viewership.

• 3:25:35David Rosenthal?

  Yeah. I mean, that's like another incremental 30-ish million people that are now betting on the NFL versus a couple of years ago.

• 3:25:43Ben Gilbert?

  Versus the 46 from a couple of years ago. Yeah.

• 3:25:45David Rosenthal?

  That's a lot more people that now care a lot more about what's happening on Sundays and Mondays and Thursdays.

• 3:25:51Ben Gilbert?

  Isn't it funny that if something is illegal, but people really want to do it, they do it. But then if you make it legal, a lot more people do it. Sort of like a lot of people use Napster, but then when you let people buy songs on iTunes, Easy Beats Free, a hell of a lot more people started actually buying music than ever pirated it.

• 3:26:11David Rosenthal?

  Yep.

• 3:26:11Ben Gilbert?

  Let's actually quantify it. The estimates are that the NFL's gambling-related sponsorships are about $200 million a year between DraftKings, FanDuel, and Caesars. And then there's these companies that they don't have a partnership with, but obviously drive a ton of interest with Polymarket and Kalshi, these prediction markets that have popped up. So you might say like, oh, 200 million a year. That's nothing compared to the NFL's top line revenue. But Nielsen estimated the indirect impact, like we were talking about, on the league in every way that it helps the flywheel, to be about $2.3 billion per year that the league benefits from, from the legalization of sports betting.

• 3:26:52David Rosenthal?

  I mean, that's basically what, like, another Sunday ticket package-ish on top of the existing revenue streams.

• 3:27:00Ben Gilbert?

  Each of the packages is in the sort of $2 billion neighborhood. So that's exactly right. And then while we're talking about revenue, revenue, it just grew even more than they expected. So there's now, I think when we did the episode, we said something about 18 billion a year. The league now does over $23 billion per year across all teams. That's on track to surpass 25 billion, which was their goal by 2027. They're going to easily beat this number. I mean, I thought when we were recording, wow, by 27, they really think they're going to surpass 25 billion. But if they're already at 23 billion, yeah, they'll beat it easily. The wild thing is Roger Goodell made that estimate in 2010.

• 3:27:43David Rosenthal?

  Wow.

• 3:27:44Ben Gilbert?

  Revenue was only $8 billion then.

• 3:27:47David Rosenthal?

  Wow.

• 3:27:47Ben Gilbert?

  I think the takeaway is the league is extremely good at predicting what this revenue is going to look like. And because of the structure that we've talked about all episode with the way that the salary cap and the TV deals interplay and the length of the TV deals, it's just extremely knowable what the future of the league looks like.

• 3:28:06David Rosenthal?

  Also, we should say too, that is a superlative management performance to set a target like that and hit it.

• 3:28:13Ben Gilbert?

  Yep.

• 3:28:13David Rosenthal?

  Purely as a like business manager, management team, the owners collectively, and you know, Roger Goodell and the office of the NFL.

• 3:28:21Ben Gilbert?

  Yeah, they're good at their job.

• 3:28:22David Rosenthal?

  They're very good at their jobs. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 3:28:32Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 3:28:43David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 3:29:03Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system. So teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 3:29:16David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 3:29:27Ben Gilbert?

  Okay, so before I throw it over to you, I want to talk about streaming because we alluded to that. It has become much more prominent as a strategy for the NFL and as a way to consume games, and it has gone much better than we expected. So we were sort of poo-pooing the Amazon Prime partnership and saying, oh, they weren't hitting targets and they had to do make goods.

• 3:29:47David Rosenthal?

  No more of those.

• 3:29:49Ben Gilbert?

  That's not happening anymore. So in the 2025 season, Thursday Night Football on Prime averaged 15.33 million viewers in the highest ever average for Thursday night games across its 20-year history. So that's still slightly underperforming the average game viewership throughout the season, but it's Thursday night and it's only available streaming.

• 3:30:16David Rosenthal?

  Yeah, I mean, compared to the Thursday nights on the NFL Network days, which we will get into in a sec, it's a big increase.

• 3:30:22Ben Gilbert?

  And plus, we had a century of training people that you watch football on Sundays and you watch it on a broadcast network, and the fact that we're already close to parity with this completely different channel is wild. 122 million unique people watched Thursday Night Football. That's up 50 million people since 2022. And on the Black Friday game on Prime, that was up 21% year over year. And probably the biggest sign, either that it's working or part of the reason it's working is Thursday night actually has great games on now. I don't think I've missed a Thursday night all season.

• 3:30:57David Rosenthal?

  Yeah, same.

• 3:30:58Ben Gilbert?

  There was the YouTube exclusive game that we alluded to. This is just a very interesting prediction for the future. It was Week 1, it was their international game, and it was exclusively available on YouTube.

• 3:31:12David Rosenthal?

  Globally.

• 3:31:13Ben Gilbert?

  Yeah, so that's the sort of big thing here is YouTube is an expansion opportunity for the NFL. It's the way to reach a global audience, and that is the NFL's ability to expand. We sort of talked about how they've saturated America. So it's all these new eyeballs in exactly the markets where they're trying to expand to. It's different demographics, excuse younger, and again, David, your comment on the Big Ben. To put it free in front of the paywall. That's sort of a tenet of the NFL is if you are a fan of a team, then you should be able to watch all of their games for free the entire year. But this is even one step further, which is that everyone in any market can watch this game for free, which is very different than how they approach most of their media rights.

• 3:31:58David Rosenthal?

  Yeah, I mean, if the NFL can figure this out together with YouTube and then also Netflix. Now they have the Christmas games with Netflix. Netflix is also a global streaming platform. I'm going to make everything else look quaint. You know, Fox or CBS in America, how many households is that going to? Hundred, 120, 130? How many users does YouTube have? A couple billion? That is a massive unlock.

• 3:32:23Ben Gilbert?

  Yep. And Netflix just announced they have 325 million paying subscribers.

• 3:32:28David Rosenthal?

  Right. But yeah, I mean, if they can figure out YouTube and global and Netflix, of course, will be part of that, too. You can understand why they have been steadfast in investing internationally and investing in technology.

• 3:32:40Ben Gilbert?

  Yes. Isn't it crazy to think that the growth governor for the NFL was the reach of the national television networks?

• 3:32:50David Rosenthal?

  Yes.

• 3:32:50Ben Gilbert?

  That's the thing holding them back from having more of an addressable audience. And now with these tech platforms, you actually do have a globally addressable audience, one single platform that aggregates all these people from all these different places. And you can distribute your content wider. But I keep going back to the saturation point. It's nuts that CBS and NBC's reach was the problem with the NFL's growth targets.

• 3:33:13David Rosenthal?

  Right, right, right, right, right, right.

• 3:33:17David Rosenthal?

  Amazing.

• 3:33:18Ben Gilbert?

  So last ad on, you mentioned Netflix. The Netflix Christmas games averaged 30 million people.

• 3:33:25David Rosenthal?

  Oh, wow. Yeah, that's significantly larger than an average game on network TV.

• 3:33:29Ben Gilbert?

  Yeah, the 18 billion figure. But the NFL completely overtook the NBA to be the Christmas tradition.

• 3:33:36David Rosenthal?

  Right, right. Well, hey, NBA's got a new big meteorite steal. Nobody should shed a tear for them.

• 3:33:44Ben Gilbert?

  Yes.

• 3:33:45David Rosenthal?

  Well, speaking of networks and media rights, one thing that we touched on briefly in the episode was that the NFL owned and operated its own cable network.

• 3:33:56Ben Gilbert?

  Curiously, for a while, sort of counter to their strategy.

• 3:34:00David Rosenthal?

  Yeah, a little bit of strategy conflict there. Well, it looks like that strategy conflict is going to be resolved, I think, in a huge win way for the NFL. So August 2025, the NFL reached a deal with Disney and ESPN to essentially sell the NFL Network, the NFL's cable network and the NFL's official fantasy app to ESPN for a 10% equity stake in all of ESPN in return for this swap. This is awesome for all sides, assuming this deal goes through. It's in regulatory review right now.

• 3:34:38Ben Gilbert?

  And the strategy that they have with everything else is just so genius. Oh, we don't have to do the operational cost of producing the games, which I saw an estimate that over the course of a season, a broadcaster spends over $400 million rolling out cameras, paying cameramen and production trucks and everything. And it is funny that the NFL a little bit got into that business and built out a TV studio and had commentators and.

• 3:35:02David Rosenthal?

  I think this deal is awesome, assuming it goes through. The NFL, like we're saying, realized they don't really want to be in the business of operating a linear TV channel. This is just pure, like, non-strategic overhead costs that they're offloading. Similarly, though, it's not like Disney and ESPN are just taking this off their hands as a favor. They also know that they need to shift out of the linear cable TV business. And so the timing of this coincided right with launching the full ESPN. Direct-to-consumer, over-the-top streaming service ESPN Unlimited.

• 3:35:39Ben Gilbert?

  Which is, for people who don't know, there used to be, or there is a thing called ESPN+ which actually was basically ESPN minus.

• 3:35:46David Rosenthal?

  Yeah, it was like a neutered version of ESPN.

• 3:35:49Ben Gilbert?

  It's like, all the ESPN stuff, except the stuff you want to watch. Because you need to subscribe to a cable bundle for that, because we make so much freaking money on the cable bundle that we're not going to give it to you direct.

• 3:35:58David Rosenthal?

  Yeah. No SportsCenter, no live NFL games, blah, blah, blah, no Monday Night Football.

• 3:36:04Ben Gilbert?

  And now they have like, actual ESPN that you can get, over-the-top, in an app, streaming.

• 3:36:09David Rosenthal?

  Yep. So this is now like, a whole dumping all of the NFL media rights for some games, but also all of this ancillary content and NFL Films content, right as Disney is now going out and making the pitch to consumers, "Hey, in addition to Disney Plus and Hulu, also subscribe to ESPN Unlimited and your new digital streaming cable bundle, essentially."

• 3:36:34Ben Gilbert?

  Yep.

• 3:36:34David Rosenthal?

  Now here's where it gets really interesting for the NFL. Already, their rights partners were moving to much more of a tech company digital mix than cable networks and broadcast networks, with Google, Netflix, with Amazon, et cetera. In doing this deal, they're now essentially helping stand up another digital bidder for future media rights with this new ESPN standalone streaming service. Like, it is vastly in the NFL's interests for a standalone digital ESPN streaming service to be viable, to then also be a bidder on their future media rights. So they're helping make sure that that happens,

• 3:37:16David Rosenthal?

  and they're getting a 10% equity stake in the whole thing, too. So, this is a great deal.

• 3:37:21Ben Gilbert?

  It is a great deal. I mean, giving a 10% ownership stake of ESPN to one sports league. Really does establish how important the NFL is to ESPN.

• 3:37:32David Rosenthal?

  And to be clear, it's not like the NFL is just getting a 10% stake in the new ESPN streaming service. They're getting a 10% stake in ESPN, the whole thing.

• 3:37:42Ben Gilbert?

  Yeah, fascinating deal. So some other things I wanted to follow up on. We made some pretty hefty points around Gen Z and their love for the NBA and how the NFL doesn't really hold a candle. This is really messy data. I realize the only real way to do this is ask Amazon. They stream the NBA, they stream the NFL, they have logged in accounts where they know people's demographic informations.

• 3:38:13David Rosenthal?

  Right.

• 3:38:13Ben Gilbert?

  That would be the real way to answer this question, but I do kind of want to walk back some of my concerns about the NFL's future because Gen Z likes the NBA more. I think the data is just actually not that clear on that.

• 3:38:25David Rosenthal?

  Yep.

• 3:38:25Ben Gilbert?

  And we also talked a lot, even not with Gen Z, just about the rise of the NBA and popularity and fame and all this stuff. If you just look at the numbers, the Super Bowl draws 127 million viewers and that is growing. The NBA Finals per game draws just 10 million viewers, down from its peak in the 25 to 30 million during the Michael Jordan era in the 90s.

• 3:38:52David Rosenthal?

  Wow.

• 3:38:52Ben Gilbert?

  And if you look at viewership during the regular season, that tells a similar story. We threw out the 18 million number for the NFL per game. Even the NBA's national broadcasts, not just the regional sports networks, but the national ones on ESPN and TNT, those average 1 to 2 million fans.

• 3:39:08David Rosenthal?

  This is everything we talked about in the episode. The NFL is the most perfectly designed league, maybe with the exception of IPL now that we've done that.

• 3:39:16Ben Gilbert?

  That's right.

• 3:39:16David Rosenthal?

  The most perfectly designed American league for a media product.

• 3:39:20Ben Gilbert?

  Listeners, even if you don't care about cricket, if you like thinking about the design of sports leagues, that episode was very fun to do.

• 3:39:27David Rosenthal?

  Very, very fun. But that said, even now, a couple of years later, and even now after the Taylor Swift crossover, the social media gap between players in the NFL and players in the NBA absolutely still persists.

• 3:39:42Ben Gilbert?

  Hmm.

• 3:39:42David Rosenthal?

  So I believe Travis Kelsey is the active NFL player for now with the highest number of Instagram followers these days. He has just under 8 million followers on Instagram. Patrick Mahomes has six and a half. Tom Brady has 15. Obviously, he's retired. LeBron James has 157 million Instagram followers. And it's not just LeBron. Steph Curry has 60. There are a bunch of NBA players with 20 to 30. You know, you can debate the value of all this, but like, it's wild that number one in the NFL is under eight and one in the NBA is 157 and number two is 60.

• 3:40:23Ben Gilbert?

  Yes, the difference is staggering. I bet this is true when you look at follower counts, but if you think about it differently, which is how much social media stuff do I get about NFL versus about NBA? Most of the time when you follow LeBron, it's not like he's putting up game footage three times a day, so you're watching highlights. But I bet if you try to look at football content on social media versus basketball content on social media, it becomes clear that the follower counts are more due to like celebrity status versus engagement around the game.

• 3:40:58David Rosenthal?

  That's what I was gonna say. Back when we originally made this episode, I think these numbers and the difference mattered a lot more. These days, you know, whatever inning we're in in social media, like, we've shifted away from follower counts and more towards algorithm and more TikTok-ification of everything. So, yeah, I think pure follower counts is not a great measure. And I think also, you know, an unmeasurable thing is just cultural relevance. And to me, it feels undeniable that the NFL's cultural relevance has grown a lot in the last few years.

• 3:41:31Ben Gilbert?

  Well, yes, and a thing that's extremely measurable is how much money people make and using that as a proxy. So we were sort of ripping on the fact that LeBron makes 127 million a year in disclosed deals between his contract and all of his sponsorships. And no one in the NFL even comes close. That's just not true anymore. Pat Mahomes is making 90 annually and about half of that is his Chiefs deal and about half of that is other endorsements. State Farm, Adidas, Oakley, Head and Shoulders, equity ownership. And then it's not just him too. You got Josh Allen at 75 million, Lamar Jackson, Joe Burrow, Aaron Rodgers. There's real comparable dollar amounts for sponsorships with these guys.

• 3:42:16David Rosenthal?

  Even just to stick on Travis Kelsey here for a minute. I mean, the New Heights podcast reportedly signed a $100 million plus deal with Amazon. That's right there for, you know, one show, forget everything else that Travis and Jason are doing, et cetera.

• 3:42:28Ben Gilbert?

  That's putting a dollar amount on cultural relevance for sure.

• 3:42:31David Rosenthal?

  Yes, exactly. I also just feel it in my life too. I mean, like my wife Jenny couldn't care less about football, but especially since Taylor and Travis. She knows whether Taylor's going to the games or not. She knows that Kyle Juszczyk on the 49ers, that his wife designed the jacket that Taylor wore to the playoffs last year. All of this might not be directly monetizable for the NFL, but it is growing the status and cultural relevance of the game.

• 3:42:57Ben Gilbert?

  All right, so let's go to Taylor and Travis. So I spent a long time really trying to find longitudinal, directly causal studies, data, anything on this. The answer is very, very likely. There was a massive increase from Taylor on the NFL in viewership and engagement and attention and new fans. But what we do know for sure is there's heavy correlation on lots of little data points. So here are a few of them, just to throw around at your next cocktail party.

• 3:43:26David Rosenthal?

  I love that you did this, by the way. I was wondering how quantitative you would get with this.

• 3:43:31Ben Gilbert?

  So in the first year of the relationship, September of 23 to September of 24, the NFL added 4 million female fans. The Chiefs were 3.4 million of those.

• 3:43:45David Rosenthal?

  Wow. Okay. That is the Taylor effect right there.

• 3:43:49Ben Gilbert?

  Again, correlation, but.

• 3:43:51David Rosenthal?

  Yeah, yeah, yeah. I'm not a statistician, but I think that's significant.

• 3:43:55Ben Gilbert?

  The biggest demographic or sub demographic of those 4 million is women under 35, which is a traditionally very weak demographic for the NFL. It's one of the few areas of the US where they actually had room to expand. Another data point, Super Bowl 58 in February of 24 had a 24% increase in 18 to 24 year old women and a 9% increase across all women. And then lastly, Clark Hunt, the owner of the Kansas City Chiefs, went on the Pat McAfee Show and he said that before Taylor, the Chiefs fanbase was about 50 50 male, female, which in itself is amazing. I mean, the league.

• 3:44:35David Rosenthal?

  That's surprising. Yeah.

• 3:44:35Ben Gilbert?

  Has just done a lot of work to make it a sort of family sport, a household sport. But post-Taylor, the fanbase at the Chiefs is 57% women, 43% men.

• 3:44:46David Rosenthal?

  Oh, that's amazing. And obviously, this is all really fun and, you know, it's like the ultimate crossover for us because we did our Taylor Swift episode on the business of Taylor Swift a couple of years ago. But having done our IPL episode last year, obviously, we're not saying that the NFL strategy team designed this relationship.

• 3:45:04Ben Gilbert?

  Negotiated this relationship.

• 3:45:05David Rosenthal?

  Right, right. But if you look at IPL, this strategy was part of their plans from the very beginning and it's how they made it a huge global sport and the biggest sport in India was make Bollywood an integral part of the product.

• 3:45:23Ben Gilbert?

  Yep.

• 3:45:24David Rosenthal?

  I'm sure the NFL has been watching that and has leaned into this opportunity in a way that they might not have a decade ago.

• 3:45:32Ben Gilbert?

  I'm fascinated that the NFL tried to take kind of a hands off approach at first. And the first couple of broadcasts, there was a lot of heat for stop showing Taylor Swift in the box. And so they sort of leaned away, but then the NFL definitely made a decision at some point that, okay, we trust this now. We're in on this.

• 3:45:51David Rosenthal?

  I mean, to me, that's one of the huge lessons from IPL is the more culturally relevant you can make your sport and your league, the better it's going to be for everything, including and especially meteorites.

• 3:46:02Ben Gilbert?

  Yep. A thing that I paid zero attention to that was brought to my attention is the rise of flag football.

• 3:46:09David Rosenthal?

  Hmm, yeah.

• 3:46:10Ben Gilbert?

  Have you seen any stats on this?

• 3:46:12David Rosenthal?

  No, but I hear about it.

• 3:46:14Ben Gilbert?

  So it's the way that a lot of women get into the game because girls actually play flag football now as kids and they were never playing tackle football before. The NFL actually has leagues or sponsors leagues, like local flag football leagues, where they all are named after NFL teams. And it's getting a lot more kids into the game, especially as tackle football sort of wanes in popularity due to the concussion risk and injury risk. So from 2019 to 2023, tackle football decreased 5% for the youngest age group playing, but flag football increased by 16%. So this is, I believe, the fastest growing youth sport in America.

• 3:46:55Ben Gilbert?

  It's growing really fast internationally as well, which this is the 30-year win for the NFL, because if kids are playing flag football in other countries, it's only a short number of years before we see a meaningful presence of NFL stars who are not from America because they sort of grew up playing flag and then when they hit 13, 14, 15, started playing tackle football. And that's going to be huge for the international growth of the game.

• 3:47:23David Rosenthal?

  Yeah, I mean, that feels like one of the last, if not the last, remaining big needle-moving piece for the NFL. You know, if you look at the NBA, if you look at MLB, if you look at Formula One, if you look at IPL, the fact that so many of the stars came from other countries and bring that fan base along with them is huge, and that has never happened in the NFL.

• 3:47:46Ben Gilbert?

  Yep. But we're a short number of years away from, I think, seeing a giant breakout star who started in flag football because it was a part of their school or YMCA program from another country. Also, flag football is going to be in the Olympics.

• 3:48:02David Rosenthal?

  Yeah. And the Pro Bowl has been flag football for the last several years, right?

• 3:48:07Ben Gilbert?

  Yep.

• 3:48:07David Rosenthal?

  Well, speaking of, uh, lower levels of football.

• 3:48:12David Rosenthal?

  We made a big deal early in the episode about the origins of American football and being intertwined with this elite rite of passage, American collegiate experience. The NCAA is an absolute mess right now.

• 3:48:28Ben Gilbert?

  You could not have made it more disorganized and done more of a disservice to their sport, their game than how this has all played out. I mean, if your goal is pay the players, there are a thousand better ways to do it than the way it has actually played out.

• 3:48:48David Rosenthal?

  Seriously. So yeah, what actually happened?

• 3:48:50Ben Gilbert?

  Okay, so forever, college football, it was illegal to pay players because they're amateurs and they can't receive gifts or cars or endorsement deals or anything. And then there was a Supreme Court ruling a few years ago where name, image and likeness became legal to monetize. And what has sort of ended up happening is these booster groups popped up where groups of-

• 3:49:13David Rosenthal?

  Alumni or people with vested interests in the school?

• 3:49:16Ben Gilbert?

  Yes, would pool money, not through the school, completely different than the school. And they had funny sounding named organizations and LLCs and websites that looked a lot like the school's colors, but weren't actually affiliated. And they would do these weird deals where they would tell the AD, the athletic director, or the coach of a team, hey, we've raised X money. Go tell that high school recruit that if that recruit plays for you, then we will do a private side deal with them to pay them money while they come and play for your team. So you have this strange structure happening at the very same time that they created the transfer portal, which for a very long time, the college game had this role where if you're going to change schools, you have to sit out for a year. So it was a big penalty.

• 3:50:00Ben Gilbert?

  You actually had people who were sort of like loyal to their schools, who would play for their schools for three or four years before going to the NFL, who would sort of build a reputation with that alumni fan base. And with the transfer portal, every year, people just decide willy nilly to enter it. I'm going to go where I'm going to either make the most money or have the best shot at NFL draft prospects by getting more playing time. The interesting thing is, next year is when the schools actually will start being able to pay the players directly. And there's like a salary cap of sorts.

• 3:50:31David Rosenthal?

  The reality is, right now, I think it's all still too messy and influx to definitively say what the impact of all this will be on the NFL. But to me, it's just sort of like the final, formal nail in the coffin that football in America is the NFL these days, in a way that when the NFL was starting, football in America was the collegiate experience.

• 3:50:54Ben Gilbert?

  Hmm, that's interesting.

• 3:50:55David Rosenthal?

  So it's now like come full circle and fully flipped that like the legitimate football league is the NFL and the Wild West illegitimate, who knows what's going on, is the NCAA.

• 3:51:08Ben Gilbert?

  Uncoordinated, everybody just acting in their own short-term best interests, including the schools, the way that the super conference alignment happened and the Pac-12 completely blew up. And it's just so sad to watch as someone that was a, is a really big fan of college football. One interesting take you and I both heard from separate people is that it's actually been good for the NFL because now that players can make money in college, there's not as much of an incentive to get thrust into the NFL before they're ready. They can sort of develop longer mentally and physically before coming to the NFL. So we may have sort of better rookie classes out of the draft in future years as you sort of see more sort of mature players coming out.

• 3:51:52David Rosenthal?

  Yeah, our teams can be more analytically confident in the draft choices that they're making as a result of this. That said, it's all still too chaotic right now to tell.

• 3:52:04Ben Gilbert?

  Yes. All right. So our big ultimate thing here, team valuations have gone up way more than I would have predicted.

• 3:52:12David Rosenthal?

  Yeah, it's funny. You know, we spent the whole original episode and now this whole update section talking about all the business drivers of the NFL and all the trends and all the things that are going on that theoretically should increase the value of the league and its teams. And it's ironic that probably the one really big glaring area in the original episode that we didn't cover at all was the dynamics of team ownership and thus collectively in aggregate league ownership of the NFL. Now, this is actually probably good because this is also the single biggest thing that changed in the NFL since we made the original episode.

• 3:52:57Ben Gilbert?

  Right.

• 3:52:57David Rosenthal?

  Okay, so what has happened over the last couple of years? The NFL has long had a pretty strict code around team ownership. So other sports leagues have regulations too about who can own teams and what ownership groups can exist, et cetera. But the NFL has always had the strictest set of regulations around this. So with the one grandfathered exception of the Green Bay Packers, which are a publicly owned nonprofit corporation.

• 3:53:26Ben Gilbert?

  Sort of.

• 3:53:27David Rosenthal?

  Sort of. Except for them, every other team in the NFL must be controlled by a single principal owner who is a natural person and not a corporation. And that person and their family must have a minimum equity stake in their franchise of 30%. And that must be pure equity, like funded with cash or by appreciation of, you know, the value of your ownership of the team by one person, one family. You are allowed to have debt in your capital structure, but the league imposes a ceiling.

• 3:54:09David Rosenthal?

  That ceiling is currently $800 million with one exception.

• 3:54:14Ben Gilbert?

  Oh, they've denoted as a number.

• 3:54:16David Rosenthal?

  Yeah, yeah, yeah. It's not a percentage because it's debt. So in your capital structure, you can have a maximum of $800 million of debt that you carry. You can have about twice that if you are buying a team. So they let you go double it in the process of purchasing to have more debt to finance the deal. But obviously still, you know, double that to 1.5, 1.6 billion dollars. That's not going to buy you a lot of an NFL team these days.

• 3:54:40Ben Gilbert?

  No, and we'll get to the real numbers, but at most, that's probably what a quarter of what a team would cost.

• 3:54:45David Rosenthal?

  Maybe for like the Bengals or somebody, you know, not for a real team.

• 3:54:51David Rosenthal?

  Bengals are great. Okay, so that's the principal owner needs this 30% stake funded with cash. In addition to the principal owner, that person is allowed to have up to 24 other minority owners as part of their ownership group. But those 24 other people must be silent with no operational control. And the way they actually structure this is hilarious. They structure it like an investment fund. It's a GPLP entity. So the principal owner is the general partner. And then all the minority partners are limited partners.

• 3:55:23Ben Gilbert?

  Can they take fees and carry on their LPs? Or is it a?

• 3:55:27David Rosenthal?

  Well, we'll get back to that in a minute.

• 3:55:28Ben Gilbert?

  Okay.

• 3:55:29David Rosenthal?

  So, okay, for a long time, this ownership structure and ownership code was actually, I think, a key part to the NFL's strategy working. It might have actually been the single biggest driver of this whole architecture that we've talked about all episode working.

• 3:55:45Ben Gilbert?

  Permanent capital individually held by highly motivated, passionate individuals, not thinking like a pool of capital would.

• 3:55:53David Rosenthal?

  Exactly. These are real flesh and blood people, not corporations. They have enormous skin of the game. A huge portion of their family's wealth is invested in the clubs. They run them personally. They make the decisions. They are effectively the CEOs of these organizations. And you're able to get all 32 of these people, or 31 plus the Packers, into a room a couple times a year. And they can hash out and say like, hey, these are the things, collective capitalism, these are the things we're going to do that are going to be good for the league and putting teams second, like negotiating central national media rights, et cetera, et cetera, et cetera.

• 3:56:30Ben Gilbert?

  Yep.

• 3:56:31David Rosenthal?

  So all of this worked great until the summer of 2023, when the Washington Commanders, formerly until recently at that point known as the Washington Redskins, stumbled into a distressed situation.

• 3:56:48David Rosenthal?

  We don't need to get into all the details here, but most folks who are followers of the NFL probably know that then principal team owner Dan Snyder, who had owned the team for almost a quarter century, essentially got brought down by a whole series of scandals. There was sexual harassment, there was workplace harassment, there was financial improprieties, there was the fact that he steadfastly refused to change the name of the team for like a decade, even after it's kind of untenable what the name was.

• 3:57:19Ben Gilbert?

  Yeah, you needed an ownership change and suddenly you needed it fast.

• 3:57:24David Rosenthal?

  Yeah. If you go to Dan Snyder's Wikipedia page, it literally says on his Wikipedia page, Snyder is widely considered to be one of the worst owners in the history of North American professional sports and has a whole train of citations after that. This ultimately ends up in 2021, 23, in a US congressional investigation into the Redskins slash commanders and Dan Snyder's ownership of them. And at the end of 22, as these investigations are ongoing, the rest of the owners in the NFL finally decide like, enough, we need to kick this guy out of the league and force him to sell the team, which they can do by the NFL's

• 3:58:06David Rosenthal?

  bylaws. If there is a super majority vote of at least 24 of the other principal team owners, they can force one of the other owners to divest the team. Now, it doesn't actually come down to a vote, but just by virtue of having that leverage, in 2023 Snyder finally steps down, stops fighting and says, okay, I will bow to the pressure and initiate a sale process here. Well, the good news, bad news for the NFL is that because they've been so successful and the Washington Football Team is a great franchise, great stadium rights, et cetera.

• 3:58:43Ben Gilbert?

  Key market.

• 3:58:44David Rosenthal?

  This is an extremely valuable asset. And so, yes, on the one hand, that's great news. It's validation of the NFL's, you know, whole strategy for the past 100 years. On the other hand, they've kind of become hostages of their own success because of all those strict ownership rules that they have. They now need to come up with a new principal owner candidate who has enough liquid cash to cover an emergency purchase of 30% at least of the Washington Football Team.

• 3:59:16Ben Gilbert?

  And the most recent purchase was the year before?

• 3:59:19David Rosenthal?

  When the Walton family bought the Broncos, I think for 4.65 billion.

• 3:59:24Ben Gilbert?

  Yes. So you already have this new, very high watermark and you already found the family behind Walmart. So like, okay, you need to keep going down your list of where can we find liquid principal family-owned capital?

• 3:59:37David Rosenthal?

  So just to put some numbers on this, the commanders ultimately sell for just north of $6 billion. So the minimum required cash equity check here is at least $1.8 billion that you need somebody who just has that liquidity lying around that they could, in a fast process, invest in an NFL team. And oh yeah, they also have to fit the Venn diagram of want to own an NFL team based in Washington DC. This is not a large pool of buyers here.

• 4:00:11David Rosenthal?

  So ultimately, they do find a buyer, Josh Harris, who is the co-founder of the huge private equity firm Apollo and already owned the Philadelphia 76ers in the NBA and the New Jersey Devils in the NHL. He comes in as the principal owner, the new ownership group of the Washington Football franchise, along with 20 other limited partners. Because, oh yeah, that's the other problem here. You also need this person to have enough friends who are willing to throw in, that can cough up another like three to four billion dollars in cash here. Because like, yes, there's the 1.5 billion in debt, but that still means you need four and a half billion in cash. So it's kind of a miracle that this all happens.

• 4:00:56David Rosenthal?

  It started impacting the game, too. It's like, because this is all during the offseason that this is going down. What's going to happen to the commanders? Are they going to continue operations? It's crazy.

• 4:01:06Ben Gilbert?

  Uncertainty is not good for the league.

• 4:01:07David Rosenthal?

  No, definitely not.

• 4:01:09Ben Gilbert?

  They forecast revenue 15 years in advance.

• 4:01:11David Rosenthal?

  Yes. So once all the dust settles, the owners are like, all right, we can never have this happen again. We know we need to change something here. So the next offseason in summer of 2024, they vote to allow private equity into the NFL.

• 4:01:32Ben Gilbert?

  Ba na na.

• 4:01:33David Rosenthal?

  Basically, all the other major sports leagues around the world had already done this, and the NFL was the last holdout. And again, you can understand why, like having these strong principal owners that can all get in a room and negotiate, think long term, have a huge part of their family's net worth be the team.

• 4:01:52Ben Gilbert?

  Yeah.

• 4:01:52David Rosenthal?

  It all makes sense.

• 4:01:53Ben Gilbert?

  But private equity desperately wants to get in, and more than ever, you now need private equity's money. But the NFL still has leverage. It's still the cream of the crop thing to own, and they've watched private equity go wrong in all these other sports leagues.

• 4:02:07David Rosenthal?

  So this is where the NFL proves once again that they truly are N of one. So they meet with a bunch of private equity firms, talk amongst the ownership group, hammer out a new set of ownership regulations for NFL teams. And here are the four major rules that they drop. Number one, the NFL will approve a set list of private equity firms, large private equity firms, who have the opportunity, the option, the ability to invest in league franchises. That list is vetted by the NFL, subject to change.

• 4:02:49David Rosenthal?

  And if you are not on that list, you are not allowed in. And that set of firms right now is only four, four very large private equity firms that have the anointed ability to invest in NFL teams. Number two, those private equity firms. Are now allowed to own up to 10% of the equity in NFL franchises, but no more than 10% under any circumstances. That is the smallest cap of any major sports league out there, if they have caps at all, on private equity ownership. Three, these private equity firms will be fully silent,

• 4:03:30David Rosenthal?

  limited partners in the ownership group with no control and no rights. Perry pursue exactly the same effectively as all of the previous individual limited partners in the ownership groups.

• 4:03:43Ben Gilbert?

  If you're a random movie star who happens to own a little tiny bit of a team, you have the same rights as a PE firm who owns 10%.

• 4:03:49David Rosenthal?

  Yep, you have the same rights as Aries Management, or Sixth Street, or Carlyle, or, you know, the small set of firms. And then number four, this is the kicker. Upon any eventual sale or monetization of the ownership stake that private equity would have in an NFL franchise, a portion of the returns on that investment get skimmed off the top and go back to the NFL and then get distributed equally among all 32 NFL team ownership groups. This is wild.

• 4:04:26Ben Gilbert?

  So you texted me this, I couldn't believe it, but suddenly everything makes sense.

• 4:04:30David Rosenthal?

  Yes.

• 4:04:31Ben Gilbert?

  That's why there's an anointed set of four. It's not just there's only four PE firms we trust. It's there's four PE firms that we went and we did a deal with, where if they buy into our league, we effectively get carry on their investment, because when they sell, we get some of the profits.

• 4:04:50David Rosenthal?

  It's funny, you asked about carry and the ownership structures. And I don't know mechanically and legally how this actually works, but in practice, this is exactly what it is. The NFL invented a way to charge carry.

• 4:05:03David Rosenthal?

  On investor ownership on franchises in the league. It feels like the ultimate pinnacle of the collective capitalism mindset and ethos of the NFL.

• 4:05:13Ben Gilbert?

  Now, one interesting thing, a way to look at this is that it is the NFL pulling yet another lever at their disposal to achieve competitive parity. The league is using the fact that PE firms want desperately to be in as a way to redistribute the wealth from increases in these incredibly high value teams that private equity is buying into and distributing that out to all of the other 31 owners.

• 4:05:40David Rosenthal?

  Yes, exactly. That's what I was going to say, and I think this was one of the big sticking points that emerged in the owner meetings as they were contemplating how to do this, which is that only a subset of the teams are going to avail themselves of the private equity option, either through sales of the franchises or through minority stake investments that have been happening a lot.

• 4:06:02Ben Gilbert?

  Right. If you do that, we all get paid.

• 4:06:05David Rosenthal?

  Right. But it would have created an imbalance, right? Of like, you know, some subset of the teams have embraced private equity, gotten these big liquidity stakes, had their valuations get reset, and the other set of teams hadn't, for whatever reason, they decide, you know, the family wants to keep 100% or near 100% ownership, et cetera, et cetera. This is just brilliant.

• 4:06:25Ben Gilbert?

  Yeah. So, quick, interesting math. So, as of today, Forbes estimates the average team is worth $7.1 billion, up from $4.5 billion when we did the episode. Team valuations now are $228 billion in total, up from $140 billion when we recorded the episode. That's up 62%. And again, these are estimates because these are not, mostly not, liquid assets, but interesting to know that.

• 4:06:52David Rosenthal?

  Well, it's funny you say mostly not liquid assets. A large number of them have become liquid assets.

• 4:06:57Ben Gilbert?

  Have opened up sales to minority owners.

• 4:07:00David Rosenthal?

  Yeah. Because what's basically happened, there have been no full team sales since the Commander's transaction that precipitated all of this. But a large number of teams have used this as a way either with private equity or interestingly, more often without private equity, usually with family offices, to sell minority stakes in the franchises and get liquidity for the ownership group.

• 4:07:24Ben Gilbert?

  But private equity being able to buy in, since they're a bidder, drives up the valuation. So even though they're opening up sales to all these individual people.

• 4:07:33David Rosenthal?

  The prices are set, yeah, by institutional capital. So the Dolphins, Bills, Chargers, Giants, Eagles, 49ers, Raiders, Browns and Patriots have all sold minority stakes over the last, call it, two years and all at extremely higher valuations than they would have had this not happened.

• 4:07:52Ben Gilbert?

  I also heard from some wealth managers that advise people who are buying into teams that they are allocating this to people's fixed income portfolio.

• 4:08:02David Rosenthal?

  Wow.

• 4:08:03Ben Gilbert?

  That buying into an NFL team, you almost treat it like.

• 4:08:07David Rosenthal?

  Like an annuity.

• 4:08:07Ben Gilbert?

  An annuity, yeah. I just know that it's going to spit off this much cash each year and it's like buying a bond.

• 4:08:14David Rosenthal?

  I mean, everything we've talked about in this update have basically all been extremely positive developments for the NFL and its business, but nothing we talked about until now would have caused 60% asset value appreciation in three years, except for this.

• 4:08:30Ben Gilbert?

  Oh, multiple expansion is crazy. Forbes now estimates the annual revenue multiple in the NFL is 10.7X, which is up from 9X in 2024 and 6.4X five years ago. So in five years, it went from 6.4X to 10.7.

• 4:08:50David Rosenthal?

  It's funny how supply and demand will do that.

• 4:08:52Ben Gilbert?

  Yeah, investors either think there's much more durability and growth in these franchises than they did before, or they just don't care and they want to own a scarce asset.

• 4:09:01David Rosenthal?

  Well, the NFL ownership group had so constrained the buyer investor market before to like such a tiny, tiny, narrow window that. Buyers and investors actually had a lot of leverage. And this has opened that window much, much, much wider.

• 4:09:17Ben Gilbert?

  It is funny to just do the quick math on what the sort of carry is on the carry type thing. So at 10% stake of a team that's worth eight-ish billion dollars. So you're putting up 800 million as a private equity firm. Let's say that goes up 30% before you exit your position. That's a gain of 240 million. I have no idea what the spiff is or the carry. Let's assume it's 10%. I don't know if that's conservative or not, but it's less than 20%. That 10% would be $24 million that the rest of the owners just get for free. As a little thank you for letting private equity participate in our league here.

• 4:09:54David Rosenthal?

  Which, hey, in the context of the revenue of the NFL, that's not a lot. But that's just for a transaction around an individual team. Collectively, the transaction potential is 32 of those.

• 4:10:06Ben Gilbert?

  Right. So my last comment on valuations and how each of these teams are doing as businesses. Give you a couple of other data points here. Forbes now estimates the Cowboys are worth $13 billion. The Cowboys are the high watermark because the Cowboys have an exceptional amount of local revenue that they produce, as we mentioned earlier on the episode. The estimated 2024 revenue of the Cowboys was $1.2 billion, while posting an operating income of $630 million.

• 4:10:37David Rosenthal?

  That's actually a reasonable valuation. You're talking about 10x revenue and 20x operating income?

• 4:10:44Ben Gilbert?

  But to my point on the disparity here between the most thriving team and the least thriving, sure, the Cowboys can spit off 630 million in profit. The average team spits off 127 million in profit, and the least profitable team only generates 21 million in profit. So a couple of points here. One, NFL teams are now just always reliably profitable businesses. That's not true in most sports, and it wasn't true in the NFL's history. But if you own an NFL team, you are going to get, I believe, get a dividend check every year, since they're cash generative. But two, This league-first mentality is going to be really tested in the coming years with these enormously profitable teams at the top and these teams at the bottom, I mean,

• 4:11:29Ben Gilbert?

  $21 million, that really illustrates why a $24 million payday coming from private equity, every individual million that you stack on top of that 21 is very impactful to your profitability as a business overall. So even though valuations have become stratospheric and the NFL is a better business than ever, the team disparity, especially on the bottom line thing, I continue to be concerned about that.

• 4:11:57David Rosenthal?

  That remains the bare case for the NFL going forward.

• 4:12:00Ben Gilbert?

  Yep.

• 4:12:00David Rosenthal?

  All that said, for the moment at least, communist capitalism is alive and well in the NFL.

• 4:12:08Ben Gilbert?

  Yes.

• 4:12:09David Rosenthal?

  And the answer to the question we had three years ago of could the NFL grow from here is resoundingly, abso-freaking-lutely.

• 4:12:18Ben Gilbert?

  Yeah.

• 4:12:19David Rosenthal?

  If by asset value, if nothing else.

• 4:12:22Ben Gilbert?

  Yep. And that is a great place to leave it. Well, we have some thank yous, especially to folks that helped us with the follow-up research. My biggest one goes to Jeff Dunn, the chief strategy officer of the Seattle Seahawks, who I spent a good amount of time with prepping for this, especially while we are here on our playoff run. We are recording this right ahead of the NFC Championship. So sorry, David.

• 4:12:44David Rosenthal?

  Oh, he's driving the navel. Well, my thank yous are to all of our many friends in the 49ers organization who sadly I felt less bad about emailing this week after your Seahawks.

• 4:12:58Ben Gilbert?

  Yeah, they had some free time.

• 4:12:59David Rosenthal?

  Yeah, yeah, yeah. Knocked us out of the playoffs last week.

• 4:13:02Ben Gilbert?

  They're great. Every single person we've worked with the 49ers and talked to to help prep and just gotten to know over the last few years has been great.

• 4:13:08David Rosenthal?

  They've been immensely helpful, become good friends. And we also have them to thank for helping bring Super Bowl 60 back to the Bay Area and launching the Innovation Summit and having us be part of it.

• 4:13:19Ben Gilbert?

  I know. It's funny that we talked about the whole creation of Super Bowl Media Week as this big innovation and all the gloss and sheen that it adds to the game. And now we get to be part of the gloss and sheen.

• 4:13:30David Rosenthal?

  Acquired as part of the gloss and sheen. If you had told us that three years ago, I don't know what we would have said.

• 4:13:37Ben Gilbert?

  Absolutely not. As always, all of our sources for this episode, including updated sources, are linked in the show notes. And for any of our partners, you can click the link in the show notes to learn more about any of them. For the Super Bowl Innovation Summit, you will, after the Super Bowl, be able to watch everything that we did onstage at the Innovation Summit. Links to more information on that are in the show notes as well. If you want to discuss this, please come to the Acquired Slack, that is acquired.fm/Slack. We have a thriving, thoughtful community going there, discussing this in every past episode. If you liked this episode, check out our episodes on the NBA, IPL Cricket,

• 4:14:21Ben Gilbert?

  and recent ones on Coca-Cola and Trader Joe's that were super, super fun. And if you want to join our massively upgraded email list, where you get interesting behind-the-scenes photos from our research that we find, or our big takeaways from the episode, or the key numbers that when you're trying to convince your friend you should listen to Acquired, the baffling stats that you learned, and things like help us pick future episodes by weighing in in the polls that we do each season, you can join that at acquired.fm/email. So thank you so much, everyone who is on that list. And with that, listeners, we'll see you next time.

• 4:15:02David Rosenthal?

  See you next time.