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Monday, September 17, 2007

Arena Football - Lessons for Twenty20?

Southern-hemisphere nations and other rugby lovers are probably familiar with American, sometimes called "Gridiron," football. The National Football League (NFL) is a dominant entity in professional sports in the USA, and the league is a money-making behemoth for the cartel of team owners, the players, and even for a number of peripheral merchants and entrepreneurs who benefit from the league activities.

The NFL was formed in 1920 by eleven teams, and currently has 32 teams on its log. Most will agree that the modern era of the league began in 1966 when the rival American Football League merged with the NFL. This year also saw the inaugural Super Bowl, which subsequently has become to represent the pinnacle of sports marketing. Ratings are so high for this one match, that reportedly during the 2006 match a 30 second ad spot cost $2.5 million!

Particularly from the birth of the Super Bowl, the game has continued to grow and rake in more and more revenue. In spite of this, a former league executive sparked an idea that he thought would make money, and in 1987 Jim Foster launched the Arena Football League. The similarities between the NFL and the AFL are comparable to those between Test cricket and Twenty20, and therefore it is interesting for us to examine where Arena football has gone in its first twenty years.

Since its inception in 1987, Arena football has grown to 19 teams. The style of play is meant to be faster and more exciting, and there are some differences in the rules that help to promote this type of play. However most of the equipment and rules are very similar to the NFL and it is rather the smaller field that encourages faster and more explosive plays. For rugby fans, there is even a drop kick option worth two points!

The AFL has made great strides in the last twenty years. Just surviving in the American sports market would have been enough, but AFL has grown its fan base over the years and added more and more teams. Going into is 22nd season, gate receipts are healthy and the league continues to show growth---over two million fans attended games last season.

So does the success of the AFL bode well for Twenty20? That, my friends, is the one million dollar question, although information on the AFL is scarce (we could not find much about its revenue growth over the years). Over its life the AFL has had a total of 47 different franchises, but currently has 19 active ones. That means that teams have come and gone, some staying around for only 2-3 years before folding. This suggests that the league employs a business model that allows self-preservation in spite of losing teams occasionally.

We know that Major League Soccer (MLS) adopted and still employs a conservative management plan. It dictates that the league owns the teams and therefore distributes the wealth more evenly among its teams. Player contracts are also negotiated by the league, and not the individual teams. A massive disparity in wealth distribution and over expansion saw the downfall of the old North American Soccer League (NASL) (1968-1984) as the poorer teams could not keep up with the richer teams. The conservative approach of MLS has seen it survive for 12 years, and that bodes well for its future in the tough (and saturated) American market. However, MLS reportedly has lost $350 million since its inception, and although profitability is said to be near, MLS is still a break even or money losing operation.

So Twenty20, if it is to survive and grow, must adopt a business model that takes into account the obstacles that it will face in its infant years. the excitement is high now around the inaugural World Cup, but then again the world champs of most sports always draw more interest. The challenge now will be how Twenty20 manages and promotes regular play between countries. With cricket's bad record of seemingly inept management, perhaps the challenge is greater than normal?

Good luck Twenty20!


Anonymous said...

Just an FYI, the NFL allows drop-kicks as well, and treats them like field goals. 3 points. It's almost unheard of, but it is legal.