Are You Ready for Some Football?

Sunday’s Super Bowl was viewed by about 111 million people—a record. Almost half of all US households tuned in. And viewership actually went up during the game: almost 118 million people watched Tom Brady try to connect down the field in the last seconds, and about 114 million viewers saw Madonna’s half-time show.

The National Football League’s brand is tops. In 2010 18 of the top 20 highest rated telecasts were NFL games. In 2011 17 of the top 20 were. The names of Eli Manning and Tom Brady are part of the national conversation. But it wasn’t always so. 40 years ago people were far more interested in Roger Maris, Willie Mays, and Mickey Mantle than they were in Bart Star and Johnny Unitas. Hank Aaron was as big a draw then as Aaron Rodgers is today. What did the NFL do right?

They founded their league on competition. Pete Rozelle recognized that people love a close contest. They want to see hard-fought games with razor-thin margins decided at the last second. So he convinced the Mara family in New York and the other owners to evenly split their television revenues. So today, the NFL’s almost $5 billion in TV contracts goes equally to big market teams like the Giants as well as tiny market teams like the Green Bay Packers.

Equalizing revenues means that every year the games seem to get closer. This year is unprecedented in that a competitive team like the Giants that lost a number of squeakers during the regular season still went on to take the championship trophy. And expansion franchises like the Tennessee Titans or the Carolina Panthers can be competitive fairly quickly.

This competition makes the games and the seasons more interesting. It propels these athletes to seemingly superhuman feats. It encourages coaches and trainers to innovate. It’s pushed the NFL to improve itself every year. Close competition challenges people to bring out their best. It’s the reason why competitive industries are often the best places to invest. And it’s a big reason why capitalism works.

Douglas R. Tengdin, CFA
Chief Investment Officer
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