I’ve already mentioned my disdain for using my iPhone 3G with iOS4. Yesterday was my breaking point. I either was going to order a new phone or pull out my backup flip phone and shut down my data plan for 6 months until I could upgrade. After some talking with ATT, they actually seemed empathetic toward my situation but expressed their limited ability to act due to Apple’s strict pricing agreement. So they offered to credit my bill to make up for not getting the full discount on the phone (since I’m 6 months from upgrading, I get a price in-between the 2 year price and full MSRP). So I’m now on the waiting list at the Apple Store.
I feel suckered… this is exactly what Apple wants. You get teased with the great features of the new product, realize your current one can’t come close to handling those features, feel compelled to upgrade your hardware. But what are my real alternatives? I live a very plugged-in lifestyle and would really not want to go an extended period of time without a mobile internet device. Despite the improvements, the Droids are still not at the point where you can do everything you do with your iPhone (but they are getting quite close) and let’s face it, Blackberry is falling way behind. I like the Apple phone, I like the OS. Despite having a fairly high aptitude for technology, I do enjoy not having to exert too much energy thinking of how to accomplish tasks and simply being able to do what I want with ease (productivity and usability are the signatures of almost any Apple product). By all accounts, performance on the iPhone 4 is not an issue, so if I get the same functionality I have now, minus the performance issues, with additional desirable features (better camera, better display, some sort of multi-task, etc) I should be content with the outcome. I still feel a bit suckered. A bit used.
PS – for any of my 12 or so readers: If you don’t like ATT, just know this; I don’t like any mobile provider. However, I get a way better than average price through ATT and live in an area with great coverage. So the dropped call, no coverage issue has been a non-factor for me. The good price makes it foolish to switch. Just wanted to throw that in before some Verizon or Sprint fanboy chimed in.
I have a 3G and 6 months left on my contract. I upgraded to IOS4 and now my phone is unusable. Maps? Takes forever to load, crashes frequently. SMS? Same. iCal? Ditto. Not even going to get into 3rd party apps. Now I have a choice between paying double for a new phone during the contract period or spending 6 months with a crap phone. I had the same problem 10 year back when Apple shoved OSX out earlier than they should’ve. The difference then? I could go back to OS9. Today? I’m pretty much stuck. Thank, Apple.
With NJ getting a Super Bowl in their new roof-less stadium, a lot of the media folks have been talking about the possibility of Green Bay getting to host a game. Jason Wilde has a recent article about the very concept. It’s a neat idea to pay respect to the history of the game by holding a Super Bowl in a city like Green Bay, but from a practical/marketing standpoint it’s likely a disaster.
First, there are the logistics. There aren’t enough hotels in Green Bay to accommodate the fans for a regular season game. There isn’t an airport that would allow fans from all over the country/world to fly in without making multiple connections. There is no infrastructure that would allow relatively easy transport around town (big enough roads, taxis, public transit, etc). If you’ve been on Lombardi Ave after a game lets out, you know that it’s absolute gridlock for up to two hours. Imagine that for an entire week… The city just can’t support that kind of an audience.
Next, there is the entertainment conundrum. The Super Bowl is so much bigger than the game. It’s a week long party and media event. Players have expressed the lack of things to do in Green Bay (Ray Rice famously commented on the issue last year after the Ravens visited town). It’s a great town to roll into on Sunday morning, check out the Packer Hall of Fame, tailgate and see a game. Spending a week there as someone paying potentially thousands of dollars to see a game NOT featuring the Packers? Probably not where you want to be. The Top 10 nightlife options on Yelp include a make-your-own steak joint and a nationwide chicken chain. Yelp lists no restaurants receiving the “$$$$” rating, meaning your fine dining options are extremely limited. So really, for the hotshots who go to every Super Bowl for the status that comes with it, their only serious entertainment options involve driving two hours south to Milwaukee. For the diehard fans of whatever team is playing, let’s hope the local Applebees has some extra staff on hand.
Finally, there’s the game itself. Any football fan in the northern US knows what it’s like to attend an outdoor game in February. It’s miserable. I’d estimate up to 30% of your attention is diverted away from the game because you’re suffering frostbite or sweating profusely because you have double-digit layers of clothing. And the performance on the field generally suffers as well. Football players don’t enjoy playing in sub-zero weather and/or snow. The games slow down, and if precipitation happens, it gets really sloppy. Just watch some late season Pittsburgh games when that field starts falling apart in the rain. Want to see a 10-3 Super Bowl NOT involving elite defenses with upwards of 7 fumbles per team? I don’t.
So while rewarding NJ for building an expensive new stadium is a nice experiment in cold weather championship games… let’s not get carried away. Most of the fans of the teams competing are watching from home, so let’s give them a good game to see. For those spending obscene dollar amounts to attend the festivities, let’s give them a good time as well.
No, not talkin bout Dokken… I’m talking about restaurant chains. The big ones. Have a discussion with 5 random people about their favorite restaurants and probably 3 of them will mention some watered down national chain. Oh sure, it makes sense… They’re (generally) cheap, they’re safe, they allow white middle-class families to eat out without leaving the safety of the suburbs. And of course, like top-40 radio, they appeal to the middle 80% of the population. While I’m not a culinary expert, I tend to avert myself from these places in favor of local flavors. Here’s what comes to mind when people mention some of the big name restaurants…
Applebee’s – Ubiquitous as syphilis in a 1500′s Roman bathhouse and just about as desirable. Nothing on their menu is too inspiring and it really is the poster child for bland dining.
Benihana – The teppanyaki cooking experience has been really bastardized over the years, and there’s no telling anymore if one place is better than another. I will say this, I cannot recall the last time I saw an actual Japanese person taking on chef duties at a Benihana.
Denny’s – Denny’s may be the first of many themed restaurants where the staff acts a very specific role. Ed Debevic’s in Chicago later perfected the experience. The staff at Denny’s will “act” as though they are rude, apathetic, or going through the initial stages of heroin withdrawal. The food isn’t great, but it is a fine place to buy low-grade drugs.
Pizza Hut – Are you eager to lose weight but diet and exercise isn’t for you? I suggest the Pepperoni-Lovers pizza from Pizza Hut. Your bowels will burst like the Hoover Dam in Superman I. Good way to drop 5 lbs overnight.
Texas Roadhouse – As a resident of the state of Texas, I can assure you that if you’re chomping on Rattlesnake Bites in Grand Forks, ND, you’re just insulting my home.
Chipotle - South Park referenced the burrito chain, saying it caused bloody stool. Need I say more?
Outback Steakhouse – Kind of an identity crisis with this one. It tries to float between being a semi-respectable steakhouse and just another obnoxious place to fatten up your kids. Don’t take that description too seriously, the steaks are terrible and even if they used a decent cut of meat, the $7/hr guys in the kitchen wouldn’t know how to prepare them anyway. It’s kind of fine dining for folks who think Culver’s is a family restaurant. I lovingly refer to it as “Outhouse Steakhouse.”
California Pizza Kitchen – Any time your entire entree list can be purchased in the same aisle as Hot Pockets, you’re missing the mark.
Ruth’s Chris – Hi, we’re going to charge you $50 for a steak and then throw it in a pan full of butter and toss it in the oven long enough for any remnants of meat flavor to disappear.
Olive Garden, Macaroni Grill, Bravo, Carabas, Bucca di Beppo, Maggiano’s, etc, etc. - Ran out of steam with those names, but you get the idea. The BMT at Subway is more authentic Italian than anything served at these dumps. The Soup/Salad lunch deal at Olive Garden is nice. However, if you decide to stay for dinner, I’m sure they’ll offer you a glass of their signature white zinfandel with your NY Strip D’Italiano. Good grief.
PF Changs – Another place for white people to feel cultured without the inconvenience of interacting with different cultures of people. Not sure what their aim is with the cuisine. It’s kind of like they grabbed the worst cook they could find in each east-Asian country and had them whip up a menu. Not a good place for diabetics either; no matter the dish, the secret ingredient is sugar.
Cynical Packers fans likely went into Thursday night expecting to not see anyone added to the team. Many probably thought GM Ted Thompson would simply trade out of the first round and draft the best player available a few picks later. Maybe we’d end up with another try-hard wide receiver or linebacker. Instead, Thompson showed signs that he feels the team might be done simply turning over the roster and ready to build for something. While there are little arguments that Bryan Bulaga was the best player at pick 23, he also fit a glaring need for the team. It doesn’t matter if he isn’t ready to be an NFL left tackle this season. He can play on the right side or at left guard, and the Packers need help in both spots. We now have a legitimate offensive line prospect to develop for the future, but who can also help the team immediately. In the 2nd round, Thompson addressed a position of concern with the defensive line. Jolly and Jenkins are potentially gone after this season (and Jolly’s legal situation is an ongoing concern), so getting another big body who can play the 5-technique is a very smart move. Neal can find his way into the rotation immediately but is under no pressure to start this season. Finally, Thompson surprised people a bit by trading up in the 3rd round for Georgia Tech safety Morgan Burnett. Burnett is a prototypical Thompson player, with more athleticism than football acumen, but he definitely addresses a need. Hopefully he can start alongside Nick Collins and offer a bit more security in the deep secondary and against the run than the team got from Atari Bigby over the past few seasons.
While there aren’t a lot of quality corners left, I would expect that to be one of the next positions Thompson targets. Dominique Franks could be a good pickup for that position. Another concern might be running back, where there is no quality depth behind Ryan Grant. Joe McKnight and Jonathan Dwyer are still on the board and either one would make a quality back. McKnight would likely be the better fit as he’s a speedy guy who can catch passes.
The search engine Google, paying homage to the city Topeka, which changed its name to Google, is now called Topeka (at least for today). The Official Google Topeka Blog has an amusing write-up about everything. Not sure it was their intention, but it kind of mocks the move made by the city Topeka. Funny stuff regardless. They claim this has no bearing on their broadband decision, but I’m sure people living in Google are very hopeful.
For an econ class I wrote a paper regarding the NFL and various topics discussed during our coursework. Since it seems incredibly relevant for this site, I figured I’d post it here.
The NFL as an Oligopoly
Jay Ratkowski
March 26, 2010
Introduction
Like so many Americans, I am a fan of professional football. However, on a personal level, I am fascinated with so much more than the action that takes place during games. My interest level extends to the inner-workings of the league, which makes it natural to explore the economic factors at play in the NFL. In this paper, I’ll be exploring the idea of the NFL within the oligopoly model. This exploration will involve looking at ways the league is financially structured and the various regulations imposed by the NFL that prevent one team from becoming too successful.
About the NFL
The National Football League (NFL) is among the most popular sports in the world. From meager beginnings 90 years ago, the NFL grew into a multi-billion dollar industry that captures a major share of an increasingly fragmented entertainment industry. For the purpose of this paper, I will avoid explaining the fundamentals of how the game is played and instead examine the sport from a financial perspective.
The league today consists of 32 teams spread across 23 states. Each team can have a maximum of 53 players making up their offense, defense and special teams units. With a minimum salary of $230,000 (for players in their first season, the minimum goes up with veteran status), the absolute minimum total salary for NFL players is a staggering $390 million. What’s more astounding is the actual number is just under $3.4 billion in salary. It is no wonder this league requires the leadership of people with strong financial and legal backgrounds.
So how does the NFL bring in enough revenue to cover salary expenses and remain extremely profitable? Essentially, they have a very popular and in-demand product and have found numerous ways to monetize the sport. A majority of revenue comes from television broadcasts. Most NFL games are broadcast on a regional or national basis through major television networks (Specifically Fox, CBS, NBC and ESPN). The networks negotiate contracts with the NFL, paying the league for the right to televise games. The incentive for the networks is that they will have fixed costs for the life of the contract and can rely on the NFL to bring a large viewing audience and thus high ad revenue. Through all of their television agreements, the National Football League currently earns close to $4 billion per season (Futterman, 2009).
The remainder of the league’s $7.6 billion in revenue comes from luxury suite sales, tickets, merchandise and sponsorships. The luxury suite sales are a huge revenue boost for most teams. For example, in 2009 the Dallas Cowboys earned about $80 million from luxury suite sales alone (Badenhausen et al, 2009). Ticket revenue, the package (season tickets) and individual sales of seats for games, accounted for close to $1.3 billion in revenue last year (the average ticket price is $73.99 [Greenberg, 2009], a stadium typically has about 70,000 seats and there are 256 total regular season games). Finally, sales of jerseys, hats, mugs and just about anything else that can be associated with the NFL brand, is a major source of revenue.
Despite a deep recession and struggles of other major sports, the NFL continues to strive and grow. The most recent Super Bowl (the league championship game) was the most watched television program ever (Flint, 2010). The league has recently expanded internationally, playing regular-season games in Canada and the UK. The NFL continues to increase its hold on people through licensed products like video games and fantasy football. Seemingly, the league can do no wrong.
However, there is a major concern on the horizon. Like any organization of this size, the NFL has a very complex economical structure. A powerful union, anti-trust laws, extensive labor agreements, revenue sharing and the basic reality of 32 businesses competing within the same governing body creates potential financial chaos. To help manage many of these issues, the league structures many of their operating philosophies around the oligopoly model.
What is an oligopoly?
An oligopoly market structure is a system where an industry is dominated by a fairly minimal number of firms. With an oligopoly, each firm must take into account the actions of its competitors when making strategic decisions. For example, until recently, television was completely dominated by four major networks (NBC, ABC, FOX, CBS). If you look at the programming of each network, they all follow a similar pattern (generally news at the same time each night, similar programming based on time of day, similar advertising models, etc). One network typically does not want to make a dramatic change, because if the competition does not follow they could be left out in the cold. Instead, each firm would rather slowly fight for more market share within a stable environment. To ensure stability, firms often practice collusion, meaning they work together in setting prices or with other strategic initiatives.
How Does the NFL Fit?
In this case, the industry is professional football and each team represents a separate firm. Each team has individual ownership and management structure. Teams compete both for sports-related accolades and financial and market gains. More successful and popular teams can leverage this power in the form of higher ticket prices, merchandise sales, and ability to attract the most talented players. However, the teams must operate as a group. They compete within the same league that has its own governing body and uniform set of rules. Each team employs players that are members of a single labor union. Two of the most important systems that help keep the league operating in a stable environment are the concept of revenue sharing as well as the Collective Bargaining Agreement.
Revenue Sharing
Part of the agreement between the league and teams, much of the revenue earned through the league is shared by the teams. Television contracts, ticket sales and merchandise revenue make up the majority of shared revenue throughout the league (again, television money is the dominant revenue stream). This practice is essential for balancing league-wide power and keeping the NFL a successful league.
Not all revenue is shared, however, and this presents a possibility for a competitive advantage. Teams are constantly trying to find ways to expand unshared revenue. Some examples of unshared revenue include concessions, luxury suites, local advertising/sponsorship agreements and non-football stadium use (concerts, other sporting events, etc). While many would argue that aggressively pursuing unshared revenue deteriorates the league-first motto, team owners like Jerry Jones of Dallas say these revenue streams create incentive for bettering the league. When referring to expensive new stadiums, Jones said, “If you don’t have some unshared revenues, those stadiums never get built because of all the debt. You think people are going to build those stadiums if they were sharing the revenue 32 ways? No. Why did they get built? Because of the incentive.” (Moorhead, 2006)
The NFL Collective Bargaining Agreement
Most recently adopted in 2006, the Collective Bargaining Agreement (CBA) is an agreement defining bargaining practices between the NFL Players Association (NFLPA) and the NFL. The agreement applies to all football players who either currently play professionally for an NFL team or who are seeking employment with an NFL team. The agreement covers eligibility requirements for players, minimum salaries, contract terms, anti-collusion measures, the salary cap and countless other labor issues. Some of the most relevant issues are covered below.
The Salary Cap
The salary cap is the maximum amount that teams may pay to its players in a given league year. Implementing a salary cap is one way the league attempts to create a level playing field and theoretically allow all teams to remain competitive. The amount of the salary cap is generally calculated as a percentage of total league revenue divided by the number of teams. In the most recent season, that number was 57.5% of revenue, which worked out to $128 million per team (Associated Press, 2009).
Part of the salary cap and the initiative to keep teams financially equal involves a minimum salary. To encourage spending and increase competition, the CBA defines a minimum salary amount for player contracts. The amount is determined as a percentage of the salary cap amount, and increases each year of the CBA. In 2006, the amount was 84% of the salary cap ($85.68 million). The agreement calls for that number to increase by 1.2% each season, but never to exceed 90% of the salary cap (NFL CBA, 102).
Bending the Rules
As with most sets of rules, NFL teams have found ways to gain competitive advantages by using the system in ways it may not have been intended. The most prominent way of doing so is with the signing bonus. For many years now, teams have put more and more emphasis on larger signing bonuses in order to reduce salary cap impact. For example, if a player is signed to a 5 year contract and receives a signing bonus of $20 million, the amount can be prorated over the life of the contract at a salary cap cost of $4 million per season. This way, teams can give players huge incentives to sign a contract with them while somewhat minimizing the impact on their salary cap. The drawback to this method is that signing bonuses cannot be forfeited through contract termination. Meaning, if a team cuts a player, their signing bonus must still be paid and in most cases the costs will be accelerated and charged in the year the player is released.
Anti-Collusion
Collusion is always a prevalent risk with oligopolies, and the NFL takes specific actions to avoid such behavior in the case of their most prominent employees, the players. The CBA has in it anti-collusion measures that bar teams and representatives (agents, etc) from engaging in actives that impact decision-making regarding:
(a) whether to negotiate or not to negotiate with any player;
(b) whether to submit or not to submit an Offer Sheet to any Re- stricted Free Agent;
(c) whether to offer or not to offer a Player Contract to any Unre- stricted Free Agent or Undrafted Rookie;
(d) whether to exercise or not to exercise a Right of First Refusal; or
(e) concerning the terms or conditions of employment offered to any player for inclusion, or included, in a Player Contract. (NFL CBA, 155)
If it were proven a team engaged in collusive activities, that team could lose draft rights, face monetary penalties and/or have impacted player contracts terminated.
Other Items in the Agreement
The CBA covers other items that preserve the oligopoly model for the NFL. One such section involves league expansion. Not only is the NFL a difficult market for other teams to enter, but such entry must meet league approval.
Not to diminish the importance of the topic, free agency is actually an essential issue within the CBA. In order to promote competition, increase salaries and allow players different employment options; free agency occurs when a player contract either expires or is terminated. The player is free to seek employment with another team.
Antitrust, the League Opinion and the Future
Recent history shows the NFL might disagree with the oligopoly assessment. An ongoing case that is currently awaiting review in the US Supreme Court may determine whether the NFL is a collection of 32 competing businesses or a single entity (American Needle v. NFL). With items such as revenue sharing and the CBA, the NFL is acting as a single entity. In the American Needle case, the NFL created an exclusive apparel licensing agreement with Reebok. American Needle argues that the NFL is a collection of teams and the agreement with Reebok is anti-competitive. The NFL argues that the move was made as a single organization. In the lower courts, the NFL’s side has been upheld. Now the NFL is actually encouraging Supreme Court review of the case, hoping to gain comprehensive anti-trust exemption. Gaining such status would allow the league to make decisions as a single entity without facing punishment under anti-trust or monopoly regulations (Schuck & Flinn, 2010)
This case will be just part of a very big year upcoming for the league. The CBA is currently in its final year and all accounts have both sides far apart on negotiations. The NFLPA executive director DeMaurice Smith has been outspoken against the owners (Brandt, 2010). Smith has used tactics typical of a lawyer to portray the owners as greedy and attempting to take money away from the players. Surely this public campaign can only hurt the negotiation process. Failure to decide on a new CBA could result in a lockout for the 2011 season (basically, no football).
Conclusion
Without extensive legal background, it’s tough to say how the courts will eventually define the NFL. Before exploring the concepts outlined in this paper, I probably would’ve gone along with the idea that the NFL is one league and thus one entity. However, it’s hard to argue for that concept when you consider the league is made up of 32 different teams all with unique ownership and competitive strategies. If I had to guess, I’d say the Supreme Court will probably side with the NFL as a singular entity for marketing/licensing purposes, but little else.
Sources:
Futterman, Matthew. (2009, March 24). NFL, DirecTV Extend Pact in $4 Billion Dea. The Wall Street Journal. Retreived March 18, 2010 from:
http://online.wsj.com/article/SB123786503490122053.html
Badenhausen, Kurt, Ozanian, Michael K., Settimi, Christina. (2009, September 9). Recession Tackles NFL Team Values. Forbes. Retrieved March 12, 2010 from:
http://www.forbes.com/2009/09/02/nfl-pro-football-business-sportsmoney-football-values-09-values.html
Greenburg, Jon. (2009, September 9). NFL FCI 2009. Team Marketing Report. Retrieved March 18, 2010 from:
http://www.teammarketing.com/blog/index.html?article_id=96
Flint, Joe. (2010, February 9). Super Bowl XLIV game a ratings winner. The Los Angeles Times. Retrieved March 23, 2010 from:
http://articles.latimes.com/2010/feb/09/entertainment/la-et-bowlratings9-2010feb09
The Associated Press. (2009, May 15). Final adjustment increases salary cap. ESPN. Retrieved March 23, 2010 from:
http://sports.espn.go.com/nfl/news/story?id=4169590
Mororhead, Clay. (n.d.). Revenue Sharing and the Salary Cap in the NFL: Perfecting the Balance Between NFL Socialism and Unrestrained Free-Trade. Vanderbilt Law School. Retrieved March 18, 2010 from:
http://law.vanderbilt.edu/publications
Schuck, James P., & Flinn, Victoria A. (2010, March 12). Supreme Court to weigh in on American Needle v. NFL. Lexology. Retrieved March 23, 2010 from:
http://www.lexology.com/library/detail.aspx?g=035c2570-3b75-4927-a73f-1c7e75e5c6ed
Brandt, Andrew. (2010, February 6). Union head fires first public shot. The National Football Post. Retrieved March 23, 2010 from:
http://www.nationalfootballpost.com/Union-head-fires-first-public-shot.html
No Author. (2006, March 8). NFL Collective Bargaining Agreement 2006-2012. NFL Players Association. Retrieved March 14, 2010 from:
http://www.nflplayers.com/
The Packers are expected to begin speaking with free agents Sunday April 24th after the conclusion of the draft.
Here’s my problem as clearly as I can break it down, looking for any advice.
I have a mid-2009 20″ iMac (2.66 Core 2 Duo) which I regularly run both Snow Leopard and Windows XP Professional(SP3). I am using the Apple extended 10-key aluminum keyboard, which is relevant for my question.
When I’m booted into OSX, I can use the built-in hub on the keyboard to power essentially any USB device, like charging an iPhone. OSX reports it is seeing 500 mA of power going to the hub. However, when I boot into XP, suddenly the current drops to 100 mA, which is not enough for high powered USB devices. So the issue clearly relates to XP. I’m up to date on all drivers and other software. The problem exists both with the extended and mini keyboards (the one that comes with the iMac).
I know I can get a powered USB hub, and I have one. However, for the way I normally work, it would be a lot more convenient to use the keyboard hub for high powered devices. Anyone know a solution?
