The NFL's new broadcasting deals -- more than 50% richer than the current TV contracts -- are likely to have a major effect on the league, driving up players' salaries and the cost of a franchise in Los Angeles.
Experts say the TV contracts, which begin in 2006 and are highlighted by the move of "Monday Night Football" from ABC to ESPN, have pushed the value of some teams in excess of $1 billion. That is sure to make returning to the L.A. area more expensive, whether the league charges either an expansion or relocation fee.
"These franchises arguably went up $150 million overnight," said John Moag, the Maryland sports investment banker spearheading the drive to bring an NFL team to the Rose Bowl. "You're adding at least $15 million in revenue each year. ... If there was any question before that this was a billionaires' club, that question has been answered loud and clear."
The new contracts will pay the league an annual average of $3.7 billion, which is 54% more than the current average of $2.4 billion, and is more than the combined total revenue of the TV deals for the NBA, NHL, Major League Baseball, NASCAR, NCAA basketball, the PGA Tour and the Summer Olympics.
The last owner to pay an expansion fee was Houston oilman Robert McNair, who in 1999 paid $700 million for the 32nd franchise -- not counting the cost of Reliant Stadium -- to outbid competing L.A. groups. There had been speculation the cost of an L.A. franchise could top $1 billion -- and that was before the new TV deals.
Moag said the potential increased value of a franchise would have no effect on site selection.
"Yes, they'll cost more," he said, "but they should cost more because you're buying more revenue than was there yesterday."
Monday's announcement undermined the argument that the NFL needed to have a team in the nation's second-largest market to complete blockbuster TV deals.
"That whole conversation was crazy to begin with," said Pat Lynch, general manager of the Coliseum, competing with the Rose Bowl, Carson and Anaheim to lure a team. "How can we ever count their money? How can we ever assume how they do business? They are very successful the last 10 years without us. How could anybody ever argue that they need us more than we need them? That's just crazy."
Because the salary cap is tied in part to TV money, it will increase in conjunction with climbing broadcasting revenue, which is likely to result in a substantial bump in players' salaries within the next three years.
That could widen the growing financial chasm between teams that have and don't have recently built stadiums.
With larger salaries come bigger signing bonuses, and owners usually pay for those with unshared revenue from club seats, luxury boxes and the like. The difference in cash flow between teams that have new stadiums and those that don't -- among them New Orleans, San Diego, San Francisco and Minnesota -- can be as much as $100 million a year. The more cash teams have to offer, of course, the more attractive teams are to top-shelf free agents.
The promise of better salaries could have an effect even before the new TV deals kick in.
"There may be a reticence by certain players to sign long-term contracts now, given the uncertainty of the future," agent Leigh Steinberg said. "Or [players] will try to find contractual methods to ensure against under-compensation. Virtually all contracts will become very rapidly outmoded."
With new TV deals in place, the NFL can turn its full attention to renewing its collective bargaining agreement with the players' union beyond 2007. Sources within the NFL have indicated that the squabbling is not between the NFL Players Assn. and the league but instead is between owners who are at odds about which revenue streams should be shared.
The likelihood of continued labor peace was an essential component to the TV deal makers, NFLPA Executive Director Gene Upshaw said.
"There's no way you would ever agree to extend out to 2011 unless you were given some assurances you'd get all this worked out, and we will," he said.
However, Upshaw cautions that not every NFL owner is on the same page when it comes to sharing the windfall with players.
"A rising tide will lift all boats, but high-revenue clubs don't want us to get off the shore," he said. "But [NFL Commissioner] Paul [Tagliabue] understands that. We will be compensated for this rising tide. It's going to happen."
Pittsburgh running back Jerome Bettis, who is nearing the end of his career, said the promise of significantly increased salaries could prompt many players to push off retirement even longer than they already do.
"You know there's going to be a little more disposable cash out there," he said. "It's definitely more enticing for an older guy."
Better salaries aside, Bettis said, the "Monday Night Football" move to ESPN was not necessarily good news for players.
"From a player's perspective, it's not as enticing," he said. "It's not as national as an ABC game because it's cable. Potentially, everybody in the country won't be able to see it. So there is a difference. ... It's definitely the end of an era. It was free TV."
Television Contracts by Sport
How the NFL's TV revenue under its new contract compares with other sports:
$23.9 BILLION ($3.735 BILLION PER SEASON)
* 8 years (2006-2013): ESPN ($8.8 billion).
* 6 years (2006-2011): NBC ($3.6 billion), Fox ($4.27 billion), CBS ($3.73 billion).
* 5 years (2006-2010): DirecTV ($3.5 billion).
$4.6 BILLION ($767 MILLION PER SEASON)
* 6 years (2002-03 season to 2007-08): ABC-ESPN and TNT.
MAJOR LEAGUE BASEBALL
$3.35 BILLION ($558 MILLION PER SEASON)
* 6 years, 2001-2006: Fox and ESPN.
$2.8 BILLION ($400 MILLION PER SEASON)
* 8 years, 2001-2008: Fox.
* 6 years, 2001-2006: NBC-TNT.