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.
It always makes me think of Thanksgiving.
It makes me think of, I think it was a Jock Jams tape that I bought.
Who got the truth? Is it? Is it? Is it you? Who got the truth? Now, is it you? Is it you? Is it sitting on the way?
Welcome to this special remastered edition of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.
And we are your hosts. 3 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.
Totally agree. We took so much from that episode.
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.
Yes. It was kind of bad timing when we made this originally because it was right before that happened.
Yes. 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.
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.
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.
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 onto 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.
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.
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 lives at risk and the modern fan's relationship with the sport is complicated. I personally love watching football. It has been finely tuned over the years to be 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. But we do have some sports thank-yous to Michael MacCambridge, 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. Well, after you finish this episode, come discuss it with the other smart, curious, kind members of the Acquired Slack at acquired.fm/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?
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? This is not someone dropping back in the pocket and throwing a 70-yard bomb.
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.
I mean, keep in mind this is four years after the end of the Civil War.
Yes. So now, why were these two groups of Princeton and Rutgers students so interested in playing this game, this terribly violent game? 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 ball through the opponent's goal, for which he received one point.
Okay. So, soccer with 25 people on a team.
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 5 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 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 the 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. 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.
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 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.
Oh, I didn't realize that.
Yeah. It was to regulate and codify and make the game of collegiate American football safer.
Huh. 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.
And a lot of this predates even leather helmets. People are just playing this in regular clothes.
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 in 1905.
And that becomes obviously a defining characteristic of football.
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 and 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.
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 and still is to this day. Like it is a huge part of the American sports landscape and it was even more so then.
All right, so the NCAA has formed. We've now got the forward pass. So, modern football, does that lead to the NFL?
No. Again, very specifically, we're spending a lot of time on the origins of football and college here, but it's so important for understanding the NFL. This is a college thing. This is an American collegiate experience that these elite young men go through, this dangerous kind of warlike activity. There's this sacred element to it. So much so that while in the early 1900s some professional teams do start to pop up around the country, and these are teams, not leagues. So these are barnstorming teams that would go around, like there's no organized schedule of play, but they're viewed not only just as second-rate to the college game. They're like dirty. Why are you taking this esteemed thing that our best and brightest participate in and turning it into this entertainment act?
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.
Oh, I see. Like, it's supposed to be amateur. It's supposed to be amateur. This should not be a professional activity. This is a rite of passage for young men. So through the teens and 20s, like that was very much the attitude. And for professional sports, there was one game in town and that was baseball. Michael MacCambridge 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. 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.
Yep. So it's not like professional sports were all looked down upon.
Not at all. It was that football was this very special thing.
Yes. 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. The founding of the NFL.
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,
which of course is called the Staleys.
The sponsorship is so deeply rooted in the NFL that the very first team was actually named the sponsor.
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 happen 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, 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. 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 after the junior year of your graduating class from college. You can go one year early. In a hundred years, that's the one concession that's been made.
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.
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 were sort of slightly different rule books 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.
Yep. Standardize what the game is.
Yes. 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.
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.
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 Sac and 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,
who of course is the person that all of the youth football leagues are named after today, Pop Warner League. 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 in 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.
The first time that he competed in the decathlon was in the 1912 Summer Olympics and he won the gold medal.
Wild. Wasn't he also an outfielder with the New York Giants?
Yeah, and basketball, and won gold medals. Wild. 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.
And they consolidated the smaller leagues to create this in the Midwest.
Yes. But that said, the 20s and really the 30s too, it's an uphill battle, shall we say?
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.
The Decatur Staleys would become the Bears. Chicago Bears.
The Bears. Yes. Actually named after the Cubs.
That's right. Because they played in Wrigley Field and Bears are bigger than Cubs.
Yep.
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 20s. 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.' Now, of course, he's partisan because he's a college football coach, but this really was still the prevailing sentiment. Yeah. The other problems the NFL faced are most of these teams are based in kind of small towns. They're not in big cities. 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.
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. And they're massively loss-making. I mean, these teams last 2 to 5 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. 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.
Yeah. And most of these don't even end up moving. They just end up closing their doors.
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.
Wait, he's the star player and the head coach? I love that.
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, D.C. 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. 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 an exclusively white team.
So all this would continue kind of status quo, the league barely 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. They increasingly have radios and soon to be television sets. They want entertainment.
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 is 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.
Yeah, and all these American GIs coming home from the war and their families, they don't have the same hang-ups 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. 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,
right? And those eight teams, the Cardinals, of course, they're in Arizona today. You got the Chicago Bears, you 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.
Yes. The Cleveland Rams, owned by the forward-thinking Dan Reeves.
Yes. And this is the first Cleveland team that did not shut down, but instead moved.
So, the other potential ownership groups in other cities across America that wanted football leagues, at a certain point, come 1944, they were just like, 'Well, the hell with you, NFL. We'll go start our own league.' Yep.
So, a new professional league gets founded, the All-America Football Conference in 1944,
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-powered ownership groups including the famous Hollywood actor Don Ameche 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.
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.
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.
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.
So now the war's ending. The AAFC and the Browns are coming in and then the dagger comes right before the 1946 NFL annual meetings in January. Dan Topping, who owns 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 AAFC. 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 outside. We need to draft one of our own from the ownership group here on 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 AAFC.
And they decided it needs to be three things. One, they need to go meet the AAFC where they are, being nationwide in the West Coast and going to California. Two, the NFL, if they're going to win, they need to put out a superior product, a better game on the field than the AAFC. And then three, for the first time, they need to do a better job than the AAFC, or at least as good a job at actually telling America about it. They have to go pro. 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 draw 60,000 fans, which is more than the Rams did for the entire season the year before.
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 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. 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. Paul Brown was the first modern, not just football coach, but I think sports coach period in America. 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 going to 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.
And on the racial integration front, the AAFC was going to be an integrated league from the beginning.
That's counter-positioning right there.
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.
The Rams were so good at PR. 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 Rozelle, who helps craft a lot of this strategy.
But put a pin in Pete Rozelle for the moment. So, for a quick review of where we are right now, you've got the NFL. It's an eight-team league. The Rams have just moved from Cleveland to LA. And then you've got this AAFC that's starting to play. What year do they actually start?
1946. Same year that the Rams moved to California. 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,
which defected from the NFL.
Yes. The Buffalo Bisons, the Miami Seahawks, which is interesting. That has nothing to do with the Seattle Seahawks. They just reuse 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 an 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.
Yes. Because this is something that would not be obvious, I think, but 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, if 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, 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.
Well, the current Browns are not the same Browns as the old Browns.
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.
That's some serious rewriting of history there by the NFL.
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 counterexample 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.
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 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.
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. 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.
I didn't realize it was that long. Yeah, because television's 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 AAFC. 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.
Yep. All right. Well, listeners, this is a great time to thank our longtime friend of the show, Vanta, the leading agentic trust platform that helps you automate compliance and manage risk. And David, I caught up with Christina and the Vanta team to get the latest on this one.
Yes. So, listeners, you probably know that Vanta started by focusing on compliance automation. You know, helping companies get SOC 2 and ISO 27001 and GDPR and HIPAA. Their big insight was they could build a system that would monitor all your compliance and risk continuously, not just once a year for your audit, so you can feel confident in your security posture all of the time. But they've realized that the business they're really in is making it easier for you to earn the trust of your customers.
So when you start scaling, you end up with more compliance and more security requirements and more tools which can get very chaotic. And Vanta has become the always-on AI-powered security expert that scales with you. And as they like to put it, they are the best security hire you will never have to make.
Which makes total sense. I mean, Vanta has really evolved beyond compliance automation to actually building trust with your customers better than you could on your own. And that trust is what closes deals.
Yeah. Which is why the fastest-growing companies in the world like Cursor and Snowflake and Replit and Linear and Ramp and Writer use Vanta to build trust with their customers and spend 82% less time on audits.
That is a lot of time back for their engineers to focus on growth.
Yes. So, if your company is ready to join Vanta's now more than 14,000 customers around the globe, just head on over to vanta.com/acquired and tell them that Ben and David sent you here in 2026 and you will get $1,000 of free credit. That's vanta.com/acquired. 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 to make that happen?
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 going to have statistically a relatively even 50/50 record going into the midway point in the season. And 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.
Yeah. 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.
And the NFL still does this to this day.
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?
Well, there's no free agency at this point.
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.
I know. Which is ridiculous.
And so the NFL and Bert 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. 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.
And it's incredible the artifice that grows up around this.
Oh, 50 million people watch this thing today.
I mean, we were watching YouTube videos and 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.
So these two elements, stacking the schedule and then the reverse order amateur draft, form 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.
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.
So as we said, the AAFC only operates for four years. The Browns are too dominant. The AAFC folds after four years. Only three teams of the AAFC's eight come over to the NFL: the Browns, the 49ers, and the Baltimore Colts,
who are of course now the Indianapolis Colts.
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, were 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.
Oh, I love that you looked this up. 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 the AAFC 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.
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,
The gate, the ticket sales were so important to baseball that with the advent of television, the baseball owners thought television was bad and they end up fighting it.
Well, so did the football owners for a while.
Well, so did the football owners, but they had a lot less to lose. 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. 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. 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 black out all the home games cuz they would say, 'Uh, we need to fill this stadium.' Cuz 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.
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 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.
Which is crazy, like for how bad the broadcasts were. The fact that that is a suitable replacement to go into 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.
Oh, and it was in black and white on a tiny screen and 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 whets the appetite, television satiates it.
It's a new revenue stream, but it's hurting the golden goose of ticket sales. 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. 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 broadcast of the NFL is just showing away games. But there's like a lot of demand for that.
And it's funny cuz 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 antenna's reach that was broadcasting that game when it was at home. 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 in TV revenue annually, whereas at the beginning of the decade, it was less than $100,000. And it also becomes clear that certain football games 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
viewers across the country, including President Eisenhower.
So, was this a national broadcast?
National broadcast of the NFL championship game that year.
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,
right? But 45 million viewers, this was unprecedented. There is a huge opportunity for professional football and television.
Which once again, the NFL was not the one to totally recognize.
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.
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, 'Uh, 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.
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 lossmaking. 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 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.
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. And David, I am excited we are finally here. The birth of the American Football League.
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.
Let's go. So, the story goes that one of the potential new professional football team investors, a gentleman named Lamar Hunt, who was 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.
Yep. 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?'
Yes. And thus begins the most successful attempt to challenge the NFL 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.
Yes, this one ended very differently than the AAFC did.
Very, very differently. So, at first, Bell and the NFL, they're sort of trying to be pretend supportive until it's legit threatening.
Yep. But then in 1959, right after the new AFL announces that they're going to 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 going to be a little different this time because of the television aspect.
Yes. And this is all being led by, you mentioned Lamar Hunt, who was the Dallas Texans owner.
People might know them better as the Kansas City Chiefs today.
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.
Independent baseball league.
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.
So Lamar Hunt and the new American Football League, the AFL, 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.
And in some ways, it's easy for the upstart to do this in counterposition cuz 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 gonna 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.'
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 Roone Arledge.
This is probably the fourth episode we've talked about Roone Arledge on.
What a legend. So Roone 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 Roone'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.
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.
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,
This was the first nationwide network-wide contract. 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.
Yeah. So ABC signs a league-wide 5-year TV rights deal with the American Football League for $8.5 million over five years. It was by far the single biggest sports rights TV deal in history at the time.
$1.3 million to the league per year.
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, they have a multi-million dollar contract,
an $8.5 million 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.
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. Indeed, by the end of the process, none of the original candidates are still in it,
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.
But fortunately for the NFL, they were very, very, very wrong about that.
Lucky. Better to be lucky than good.
Yes. They choose as the compromised dark-horse candidate, 33-year-old general manager of the Los Angeles Rams, former public relations intern, Compton College graduate Pete Rozelle to be the new young commissioner of this league in crisis and create the NFL that we know today.
And it was totally brilliant. I mean, Rozelle 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 owners' intention. They had to go to this compromised candidate and this young person who most people hadn't heard of. 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.
Yes. Coming out of the PR background was the perfect positioning for him cuz 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' mouths. 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. 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 cuz 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 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, etc. That becomes a huge revenue line for the Rams that nobody else has. 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 AAFC, now they realize they got to go meet the enemy on the field where they are. So, the plan is to expand to both Dallas and Houston immediately to meet the AFL there in Texas.
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, 'Hey, we're going to give away the franchise to a new owner of the Cowboys right here in your backyard.'
Yep. Right down the street. Speaking of proximity, and right down the street, the next move that Rozelle 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. Cuz 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.'
And Bert ran in 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.
Oh, yeah. Famously, the stacked scheduling. He would do it with dominoes on his kitchen table. So Rozelle'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.'
Yes, these are relationships we got to cultivate with Madison Avenue.
After he moves the headquarters to New York, Rozelle 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.
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. Speaking of writing about the NFL and publishing, the other thing that Rozelle 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 Rozelle 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.
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 Rozelle 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 cuz 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.
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 Rozelle. 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.
Yes. So this is a perfect lead into what happens in 1961 right after Rozelle is on the job that would change the face of football forever. So, it's obvious to Rozelle once the AFL signs their big deal with ABC that that's the path forward.
Their $1.3 million a year deal,
the league-wide revenue-sharing national deal with the national network. Now, this is not how the NFL operates at this point.
Rozelle 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.
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, '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. Uh, 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.
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 2-year deal with CBS at $4.65 million in rights per year to be shared equally among the teams.
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.
Well, this is the very first question where you say, well, what is a monopoly and what is antitrust and what is the NFL and what are the teams?
is the NFL the business or are the teams the business? Right?
If the teams are the business, then yes, this is antitrust. If the NFL is the business,
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.
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, a new congressional act specifically to advantage the NFL 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 just tells you everything you need to know right there. Pete Rozelle, 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.
It's that. But Rozelle 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. And if you like the American economy, you should let us have a national TV contract for the NFL.
Yep. And at this point in time, I think a lot of those arguments hold water.
This actually was driving a lot of commerce for the nation. Totally. A fun aside, I did the math on that $4.65 million per year deal. That value of that contract would grow 2500x over the next 62 years.
Wow. Did you look at what it would be inflation-adjusted?
Yes, inflation-adjusted, it's about 250x.
Still pretty good. So, on the back of this landmark TV deal, Rozelle does two other really brilliant things. First comes as kind of another accident. So the league every year sold the rights to the NFL championship game to make a movie out of it.
And they were always like kind of bland.
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 Sabol 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.' 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,
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 Sabol 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. 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 Sabol 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. So, you get this smooth, beautiful slow motion. It provides this unbelievable archive of the game for which other sports have no archive.
Yeah. Well, and that's just the video aspect to it, but there's also something that Sabol 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
and it has to be super polished and it has to be super controlled. And Ed Sabol'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. 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.
Yeah, you should buy my little film company.
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 an ESPN for 15 years. All of this content that we're just bombarded with today, it all starts here with the Sabols and with NFL Films.
Yeah. There's a couple interesting things to note, too. Once Rozelle 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&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 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.
This is what's so amazing. They did all this as this investment, as a labor of love and passion on the Sabols' part. On Rozelle's part though, the motivation as you were saying, it's not about making money. It's about raising the stature of the league. Yes. 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.
The other thing that Rozelle does in the next couple 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.'
We're going to set a quality bar
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. 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 revenue is going to 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&L for the league to take over on their behalf.
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?
What is Green Bay? Something like the 200th largest media market in the United States and they've got this NFL team.
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.
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,
not with any expectation of financial return, literally just so they can hold a piece of the Packers
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.
Yeah, it's such an amazing little quirk. Have you ever been to Lambeau Field?
I have not. I really want to.
Uh, I went once, not for a game, but I was at a wedding in Green Bay, and I was like, 'Oh my gosh, I got to go see the field.' And so I took a run. Green Bay is this very quaint little town in Wisconsin. And uh there's this giant NFL stadium in the middle of it.
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&L, but the Packers do. Okay, so the last thing Rozelle does on this miracle run in his first couple years as commissioner is he creates the Pro Football Hall of Fame in Canton in 1963.
Ah, so cool. I've never been.
We got to go. We should do an Acquired field trip.
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
to the shield, one might say?
Exactly. Exactly. And his logic is doing that will attract more fan interest and deeper fan interest. And the more and deeper fan interest that you attract, the more TV dollars you're going to 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,
But with the NFL and now with the new TV
Model, there is no ceiling to revenue capacity.
Yep. 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. Yep.
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?
That comes through shared agreements is 11 billion. And then there's another six or so that comes from local revenue that teams individually generate.
Yep. That's per year, right?
Just to be clear, that is per year. It is this flywheel that makes the NFL teams collectively worth something like $140 billion today.
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 5 years. The NFL gets to renegotiate every two years. Rozelle opens up the bidding to all three networks. Of course, CBS wins again, another 2-year, $28.2 million bid, $14.1 million per year, up from $4.6 two years earlier. So, every single team in the league now gets $1 million before the season even starts.
A cool 3x from the last deal he negotiated two years before.
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.
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.
Well, it just takes time for people to realize the power of a new medium. Okay, so Rozelle, unbelievable first 5 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. 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.
The Jets in the AFL, formerly the Titans, they're owned by Sonny Werblin. He was one of the co-heads of MCA, the big agency,
as discussed on our interview with Michael Ovitz.
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. We're gonna be just fine. We're gonna 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 their current deal with, 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.
Yep. We'll take second place when there's a bunch of sad people willing to throw money at second place.
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 5-year, $37.5 million deal. So, bigger overall dollar number for a longer number of years. Even though it's like less than half the per year amount.
Yeah, it's seven and a half million dollars 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 5-year-old upstart league, this is a big success. 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.
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.
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.
He's also a heartthrob. There's like millions of teenage women in America like throwing themselves.
That's exactly what I was going to say. He was the first professional athlete that appealed equally to men, women, and children.
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 starred in movies in the off season. Broadway Joe was it.
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.
Yep.
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So the Namath 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 what they 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. 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.
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, right?
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. 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.
Oh, this is so fun. What happens next is like a Godfather film. So, a few of the most influential owners come to Rozelle 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 got to get to a truce, which that means we're going to have to merge. So, we're going to direct you, Rozelle, to go start merger negotiations with the AFL.' Rozelle 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 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 Schramm, to secretly open negotiations with Lamar Hunt. Lamar at this point has moved the Texans to Kansas City where they become the Chiefs.
Also, how great is it that the first Cowboys owner is named Tex?
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, Rozelle 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. No notes. There's no written notes. It's just like them chatting with each other for a couple months. As they start, the other owners don't know about it.
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.' 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.
All right. So, now we've got this cast of characters to pay attention to. On the NFL side, there's the commissioner, Pete Rozelle, and Dallas Cowboys GM, Tex Schramm. 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.
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. 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.
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.'
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.
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. 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.
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.
Once this happens though, the other NFL owners are just apoplectic at 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.'
So any of the 30 million Americans who play fantasy football can relate to this situation.
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.'
Some Dr. Evil right there.
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 off season 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 an action. This is not the time to speak.' Ooh, I want to steal that word for word for something in the future.
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, you know, a fish wrapped delivered on the doorstep or a horse's head in your bed.
Exactly. The horse's head that he decides to send is he is going to target Rozelle's old team, the Rams, and he's going to sign their quarterback away.
We just went from a kicker to a quarterback. That escalated quickly.
Well, you're going to send a message. You're going to come at the King. You best not miss.
So, within 3 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, which to do this is an economically negative move,
of course, which is why he didn't want to do it. 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, 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 Rozelle 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 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.'
So they do. The Oilers go sign the 49ers quarterback. And that is what makes it all work. So Davis hangs up with the 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.'
Right? I'm not being insidious against you. This is a weapon for you.
Yes, I may be a thug, but I am your thug in this case. So within a couple days, it's all over. On Wednesday, June 8th, 1966, the merger agreement gets announced in a press release. Unlike with the AFC, this is a true merger. All of the AFL teams will join all of the NFL teams. Together, they promise to add at least four totally new teams and cities.
Right. So, there's 24 combined teams and they promise to expand to 28 over the next three, four years.
Yep. They announced that because of the separate TV contracts on the AFL and the NFL side, they will not begin a joint season immediately. They'll let the new AFL 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.
This officially called AFL-NFL World Championship game sounds like a doozy. Sounds pretty cool to watch.
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. Rozelle 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 over a 20-year period.
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, etc. Everything.
And by the way, immediately, even before they combined the leagues officially in 1970, they form AFL Films for that three-year. I didn't know that. And NFL Films hires twice as many people and they go film every single AFL game too starting immediately.
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 negotiation 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.
That's an incredible leverage shift over the course of the negotiations.
And it happened in like a couple months.
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 and 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 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 AFL, 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 and our sources. I kept reading about the NFL records and the NFL rule book and I was like, does this 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.
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 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,
right? It's actual monopoly versus collusion. The first one was collusion, right? This is creating a monopoly.
And so Rozelle 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. 'Rozelle, 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 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, Rozelle was ever his usual humble self. 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 Rozelle 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...' Rozelle took two giant strides after Boggs, turned around him gently and said, 'It's a deal, Congressman. You'll get your franchise.'
Amazing. 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.
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 had 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.
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 TVification 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.
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 the rights to this world championship game to all the networks. And CBS and NBC are livid because they've already got the rights to the respective leagues. They thought they both had a championship game, but it turns out they both had a semifinal.
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.
This is unprecedented. There's never been anything like this in media history.
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.
Incredible. It ended up being watched live by over 65 million people. Super Bowl I at the LA Coliseum.
You can't call it that, David. This is the AFL-NFL World Championship game.
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.
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 of the 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.
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. Rozelle, 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 Rozelle 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.
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 all this attention to the NFL right before the Super Bowl.
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 Rozelle'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.'
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, it is worth saying, wow, the dominance of the Packers right around this time. Vince Lombardi winning the first two Super Bowls.
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.
Yes. By this point, the game is formally called the Super Bowl. The press had been looking for something to call it. And you know, Lamar Hunt, I think, had been the one who observed his kid playing with a Wham-O Super Ball. And so when the league discussions were sort of going on about it, he proposed Super Bowl, but Pete Rozelle hated it.
I think Lamar was like, 'Oh, it's just kind of a funny placeholder name.' But then it just stuck.
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.
Yep. All right. So, Super Bowl III, the narrative leading into the Super Bowl is the old NFL soon to be NFC teams, that's real football. That's real football. The AFL, you know, it's 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, different era, the 1950s against Broadway Joe Namath and the Jets.
And this is still Baltimore Colts, right?
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 a playbook in his lap. He's in like, you know, 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 an 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 afterparty, Carol Rosenbloom, the Colts owner, is like totally desolate, and he comes up to Rozelle. He's sobbing. And Rozelle's like, 'Oh, no, no, don't worry. This is the best thing that has ever happened to the game and to us.' And he's so right.
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.
Yep. As long as there is drama, as long as there is competition, everybody wins.
Yep. 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.
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 owners these days.
Yeah. How far is too far? But at this point in time, they are nowhere near too far.
The next year the Chiefs beat the Vikings and the pre-merger Super Bowl series ends tied 2 to 2. Two victories for the NFL, two victories for the AFL. 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.
This feels like it's going to be a big package.
Oh boy, are the networks 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 4-year contract of $156 million. That is $40 million per year. That's a lot of money.
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.
And we might actually be able to invent some more here, too.
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Oh, let's go to Monday night. So they got CBS, they've got NBC. Remember ABC? ABC's been out in the cold for several years now,
which is a real shame because you've got Roone Arledge there. He's a visionary. This is still before ESPN, right?
Still before ESPN. Well, well before ESPN. 10 years. So yeah, that's still far off in the future, but ABC is clearly interested in sports.
Yes, clearly interested in something. So Rozelle and Rooney start chatting. Rozelle has always had the inkling that football and the NFL would do really well in a prime time 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,
right? Sports is not prime time.
Is showing shows and news and entertainment and that is not sports.
That appeals to the widest range of people and that we still don't know for sure that the NFL is that. 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.
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 prime time experiment.
Indeed. So Rozelle and Modell are 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 prime time 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.
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.
Right, and that's on the viewer 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. 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.
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, the lower thirds, the graphics — none of this existed. The notion that there's play-by-play and color, this idea that there should always be someone talking, saying something interesting while you're watching a game. Yes. So this whole vision for Monday Night Football that Roone Arledge at ABC can make happen for the NFL and new media rights 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 — brutal. He has this reputation and history treats him as like an 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.
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.
Totally. You know, Roone, of course, freaks out. This is his baby. This is his career within ABC. He's been pre-selling this to his bosses, so he looks bad if they lose this now. So they come in with an over-the-top deal. ABC gets exclusive rights to Monday Night Football for a new deal, new product, 8.5 million per season.
And the other deal was — the other deal was 40 per season for essentially 15x more content, I think.
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. Because if I'm ABC, I'm like, 'Wow, those guys, that really sucks for them having to produce four, five, six different games. 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.
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 I was 65.
They invented a holiday out of nowhere and it's every week.
They totally invented a weekly holiday. 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's 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 everyone else watching and how that's even more important than the stadium itself.
