Jan. 28, 2020

From Super Bowls to Streaming: Michael Lombardi on the NFL’s Financial Future

From Super Bowls to Streaming: Michael Lombardi on the NFL’s Financial Future

In five short days on Super Bowl Sunday, Americans will split into two distinct categories: those of us watching for the commercials and liars.

In five short days on Super Bowl Sunday, Americans will split into two distinct categories: those of us watching for the commercials and liars.

 

Half kidding. But whatever your reason for tuning in, you’re supporting a massive revenue generating business when you watch the Super Bowl—ads during this year’s game sold out in November for prices up to $5.6 million per 30-second spot. And the Patriots aren’t even playing.

 

This week on Morning Brew’s weekly Business Casual podcast, we tackle the massive business beast that is the National Football League. Famed NFL analyst and exec Michael Lombardi explains the ins and outs of the NFL as a business, including…

  • Super Bowl hype sustainability
  • International expansion
  • Legalized sports betting
  • And the biggest threats to profitability

 

Even if you didn’t play Pop Warner, you went to a D3 school, or you’re really only watching the Super Bowl so you can eat 13 wings without being judged, you’ll learn something from Lombardi’s episode.


Transcript

Note: Business Casual transcripts are generated using speech recognition software and human transcription. They may contain errors, although we do our best to avoid them. Please check the corresponding audio before quoting a transcript in print. Questions? Errors found in a transcript? Email businesscasual@morningbrew.com 



[00:00:01] [sound of coffee being poured]

 

[00:00:04] [intro music plays]

 

Kinsey Grant, Morning Brew business editor and podcast host [00:00:08] Hey there and welcome to Business Casual, the weekly podcast for Morning Brew, answering your biggest business question. I'm Kinsey Grant, your host and Brew business editor. 

 

Kinsey [00:00:18] Let's get into it. Every year around this time, it kind of feels like something changes in the air. Things start to smell like Buffalo sauce. Budweiser begins looking more and more enticing. We find ourselves inexplicably saying “wazzup,” and all that is because it's almost Super Bowl time. But beyond giving us endless office chatter for Monday morning, the Super Bowl is a massive business moment. So the NFL claims it can bring a host city between $300 and $500 million per Super Bowl. The game generated nearly $1.4 billion in sponsorship deals during the 2018 season. Super Bowl ads are the most expensive commercials on TV by a long shot. 

 

Kinsey [00:00:58] They cost over $5 million for a 30-second slot most years, which is, if you're doing the math, $175,000 per second. So for a little context, [chuckles] 30-second ads during the regular season cost a little closer to about $625.000. So today, Business Casual is bringing in an expert to help answer a really big question: How will professional sports continue to operate as a money-making machine? Without further ado, I am happy to welcome Michael Lombardi. Thank you for coming on Business Casual. 

 

Michael Lombardi [00:01:29] Thank you for being—thank you for having me. I appreciate it. It's good to be here. 

 

Kinsey [00:01:33] Yeah, I’m really excited to chat. We were introduced by our mutual friend, Downtown Josh Brown [indistinct] a guest earlier last year on Business Casual. And he's a great friend to have.

 

Michael [00:01:42] [indistinct] Ritz. Holt's company is—they've been great to me. And really—Josh is a power player. There's no doubt about it. 

 

Kinsey [00:01:50] Yeah, one of our more colorful [indistinct] [laughter]. 

 

Michael [00:01:52] There's no doubt. 

 

Kinsey [00:01:54] So you've had a really incredible career when it comes to working in and around professional football. You had a three-decade-long NFL career assistant to the Patriots coaching staff, an exec with the 49ers, the Browns, the Eagles, the Raiders, and really an outspoken analyst and writer when it comes to everything else. 

 

Michael [00:02:13] Outspoken. So is that bad or? 

 

Kinsey [00:02:14] No, it’s good.

 

Michael [00:02:15] You know, I think it's interesting. In your business, when you go on and talk about companies, everybody just tells the truth. But in sports, you're supposed to hold back because you don't want to burn friendships. Like it doesn't make any sense that they're both businesses, right? At some point, the people need to hear the truth of what you think that will only help their business. And I think because the NFL is such a close-knit group and because they really don't—the won/loss record doesn't generate their profits, that they are tone-deaf. 

 

Kinsey [00:02:47] Right. And it feels pretty political. 

 

Michael [00:02:48] Oh, it's very political. 

 

Kinsey [00:02:49] Do you feel like you have to hold back on your opinions? 

 

Michael [00:02:52] Not—well, I have two sons in the league, so sometimes, maybe, my wife tells me all the time I should bite my lip. But I think the NFL is very—it's classically like the political system in America. You have to get elected, not selected. When I first started in the business, the teams were getting about 60 million from the TV revenues, and now it's ridiculously over 200 million per club. And those jobs back then, you were selected. 

 

Michael [00:03:20] It wasn't—you had to carry the southern primaries. Today, you have to be elected. You have to be able to go the press conference, fresh, clean, you know, the political candidate. You've got to say the all things, because if you have any mistakes in your resume, how could you possibly be elected? Much like the politicians who refuse to admit mistakes, and they pretend they play it right down the middle. And then everybody is one of like, what are we doing? Well, the NFL is the same way. 

 

Kinsey [00:03:44] Do any of the leaders in the NFL remind you of any politicians [Michael laughs], [indistinct] like a President Trump of the NFL? 

 

Michael [00:03:51] Yeah, there could be a lot of those. Yeah. I mean, we can go through “The Wire” on HBO. There's a lot that remind me of some of those. Some of “The Sopranos,” “The Godfather.” We go through them all.

 

Kinsey [00:04:01] Who’s the Tony Soprano of the NFL?

 

Michael [00:04:02] I think the Patriots, are “The Sopranos.” Yeah, I would say that I had them as Vito Corleone and one of my podcasts says, they're like the godfather of the NFL. Truly, they are. 

 

Michael [00:04:14] I mean, they've won so much. The Patriots over the last 20 years have been remarkable as a franchise. I mean, when Robert Kraft—this is just from a business standpoint—Robert Kraft bought that team. Let's say he spent $160 million to buy the Patriots back in 1996 or ’95. Today, it's probably worth over $5 billion.

 

Kinsey [00:04:32] The return on that investment is insane. 

 

Michael [00:04:33] Insane. Right. And Tom Brady, Bill Belichick—all go into that—help in that investment. I mean, because he made a smart decision. 

 

Kinsey [00:04:41] Right. I want to talk more about the Patriots in just a second. You know, this is obviously something that is top of mind for everybody right now. Love him or hate him. But let's kind of start this conversation talking broadly about the Super Bowl as a business itself. It's one game, but it does a lot more than just that. So when we think about Super Bowl ads, it's kind of the pinnacle of the year for the advertising world. You want that spot really badly, like I mentioned the top of the episode. Super valuable. They pay a lot of money for these ads [laughs]. Do you think that's going to continue? 

 

Michael [00:05:14] Oh, without a doubt. I think the best way that people can understand the NFL and what it does to advertising and what it does for advertisers is when Larry Tisch of the Tisch family owns CBS, and CBS said we're not interested in paying any more money for this NFL stuff. 

 

Michael [00:05:34] It's ridiculously—we're not bringing back any return. So CBS got out of the NFL business and Fox swooped in. Nobody knew who Fox was, was an Australian company, right? Nobody knew Fox Sports Net. Nobody knew any of that. Rupert Murdoch took that opportunity that Tisch saw as a financial disaster and he made it into a company. 

 

Michael [00:05:54] And what happened was, after that, CBS became the most-watched network in America. But the problem was, the people that were watching it were grandparents—weren't buying any more dishwashers, weren't buying any more appliances, weren't buying any cars. They were at the later—so their shows were “Murder, She Wrote,” and “Diagnosis: Murder.” There were all these older—that appealed to a great—and they had great viewership. But the demographics weren't there. And the NFL combines the greatest advertising platform: demographics and viewership. And it gets all—and it grows across—it spans the globe from the little lady in the Des Moines to the young kid in Santa Cruz surfing. I mean, it goes from everywhere. And I think that's why the ads are so expensive and that's why it's such an incredible platform to advertise on. 

 

Kinsey [00:06:43] Is there a core demographic for NFL viewership? 

 

Michael [00:06:47] Well, obviously, it's the younger crowd. And now, I think what has we have seen the perfect storm in the NFL, which they couldn't have planned this any better, is betting—legalized betting, gambling. Because, look, what's the number one thing? You know, we're in an office complex here today in Manhattan. And when March Madness comes around, how everybody fills out a pool—nobody knows anything about the teams. Nobody's watched St. Joe Hawks play Villanova. They have no idea. They just write it out, right? Well, that's 17 weeks in the NFL. The $5 bet on I'm going to bet the Bucks this week or the [indistinct]. Now it's become popular. And so people want to see, even though they pay $5 or $10, some people pay $100,000 on a bet. They want to watch their investment. And that's created an incredible amount of viewership back into the NFL. And that's why the ratings have gone up. 

 

Kinsey [00:07:38] Right. And I have to imagine, especially with a game like the Super Bowl, there are even more bets [laughs] [indistinct]

 

Michael [00:07:45] Who wins the coin toss, all that. And it's a really engaging way. And if you look at soccer in England, where people literally sit in their seats and can bet the game as they're watching it, we're headed for that direction. 

 

Kinsey [00:07:57] If you had to put a number on it, how long or how many years do you think we have until we are—American football games look more like soccer games in the U.K.? 

 

Michael [00:08:06] Oh, I think in five years. I mean, first of all, the value of these franchises are going way up. And it's—they’re a business. It's what the business wants. We said there's no way there'll be stuff on the jerseys. We're seeing the advertising on the jerseys. I mean, Europe's ahead of us. There's no denying it. And they know how to market themselves and how to make money in different avenues. And that's really what the NFL will continue to do. 

 

Kinsey [00:08:31] So we recently heard the NFL viewership was up 5% last season, which is pretty good considering —

 

Michael [00:08:37] It was already high. 

 

Kinsey [00:08:38] Yeah, exactly. It's still—the Super Bowl is consistently the most watched hours of television in any given year. People even who aren't interested in football, like you're talking about, watch it. Even if it's because we want to eat dip and chicken wings. [laughs] And take part in something. People are still doing that. Do you think that the pricing of these ads is going to be correlated to the increase in viewership or is there any sort of relationship between the two? 

 

Michael [00:09:02] No, I think—would we even know what GoDaddy was until they started doing the [indistinct]? I think that there's just—you can't put a price on the amount of exposure and amount of interest that you're going to gain from being there. And frankly, I've been to a lot of Super Bowls. I've been in four of them. The disappointing thing about going to the Super Bowl is they don't run the ads at the Super Bowl because of the rights of the stadium. 

 

Michael [00:09:30] They can't show you the ads that people are watching at home, which you feel like—and you feel cheated by it, actually. 

 

Kinsey [00:09:35] Do you go home and watch them like [indistinct]? [Kinsey laughs]

 

Michael [00:09:38] [indistinct] You know, you want to know what the ads were like, what were the best ads? Who did a good job? Because it's kind of part of the landscape of the Super Bowl. But the arena that they're playing the game in this year, they'll be in Miami. They have—people own the rights that say you can't show a Miller Lite commercial in a stadium that's sponsored by Bud Light. So you feel cheated. [indistinct] 

 

Kinsey [00:09:58] It's an integral part of the football. 

 

Michael [00:10:02] It's the fabric of the game. I mean, the halftime show has created this enormous—I mean, they don't have to pay you to do it. The exposure is greater than anything, right? 

 

Kinsey [00:10:14] Yeah. And secure. It doesn't need the money anyway. [Kinsey and Michael laugh] So, you know, we talk about how valuable this experience is, not only from an ads perspective, but just from getting that many, sheer number of eyeballs on a game. I have to imagine that the landscape will change eventually away from just these three networks that share the rights for what—I think it's 27 years. They pay something like three billion a year to broadcast the game. Do you see a future in which it's not just these big networks fighting for rights to air the Super Bowl? It's something like an ESPN plus a streamer, you know, maybe even an Amazon or a Netflix and Apple TV. 

 

Michael [00:10:51] I think there's no doubt. They're a power player. And I do think that we're going to—that the NFL and the way people can get it when 5G comes in, which when that happens, I think it's going to change the landscape of all of this. 

 

Kinsey [00:11:05] Right. Because that will make the streaming so much faster. 

 

Michael [00:11:07] So much faster And you're going to be able to be in touch with everything. And then, these devices that we have are going to be even more valuable to us because of the speed and the clarity of the game. 

 

Kinsey [00:11:20] OK. Because that's one of the chief complaints right now, is that if you want to stream the Super Bowl, even if it's on something like CBS All Access, there likely is a delay. 

 

Michael [00:11:28] Yeah, there's always a little bit of a hedge. And if you don't have the right—and if you're in a stadium that doesn't have really good Wi-Fi, you can't get Wi-Fi, it's overloaded. And I think once they work through those issues—look, the NFL is going to be on the cutting-edge of all of this. And you don't have to just be ESPN FOX, and I think that's where the networks have to kind of keep up with the times. 

 

Kinsey [00:11:49] So when we talk about these ads reaching a lot of people, it kind of brings to mind this sort of transformation that we've experienced in digital media in recent years toward more targeted ads. Do you think that the NFL is in any way kind of behind the curve with that if they're kind of casting this hugely wide net to appeal to everybody? That's not exactly what we're seeing when it comes to highly targeted, highly specific ads on Google, Facebook, Amazon, etc. 

 

Michael [00:12:14] I think they're an anomaly. I really do. I think that they have a huge audience. This isn't Fox, where they’re only are going to appeal to certain people, and then CNBC is going to appeal to the other group of people. I think they have a wide net that they can cast because the game is so popular, whether you'rea grandfather or whether you're some kid, young kid. I think the most important thing the NFL can do to regenerate interest and to make these ads continue to be valuable. They have to get into European countries. 

 

Michael [00:12:42] So I think they're going to have to be. The NFL was really popular in Germany. Extremely popular in Germany.When the World League was in play—it was extremely popular. It could have been four teams in Germany. All would have had 60,000 people there. I think we're going to get to that. We'll get an expansion team in London, I think, in the next five years. I think we're going to have a European-type game. 

 

Kinsey [00:13:02] Interesting. So what are the logistics of something like that? [laughs]

 

Michael [00:13:05] Well, if you fly to L.A. from New York, it's what's, 5½, six hours, from New York to London, it's what, seven? So you're talking about an extra hour and a half. I think what they would do is base a team in America, have it there, and then play two weeks over in London. Keep the families here, and just go back and forth and make it a very travel-heavy, eccentric team. But I don't think you can ignore it. I don't think you can ignore it, just like the NBA can't ignore their globalization of their sport. 

 

Kinsey [00:13:34] OK. But here's the question. Is it football or American football? 

 

Michael [00:13:37] It's American football. 

 

Kinsey [00:13:38] Is it the national American [indistinct]? [Kinsey and Michael laugh] 

 

Michael [00:13:41] Exactly. Yeah, I think so. I think it will be. And the beautiful thing about when you watch those games over there, that even though the Bengals might be playing the Jaguars, which we might turn our nose up to that game on TV. 

 

Kinsey [00:13:52] Hey, I'm from Florida. 

 

Michael [00:13:53] I understand North Florida, by the way. [Kinsey laughs] Yeah. So they still come out and watch it. And they also wear jerseys of all different teams. I think they enjoy the sport. I really do. 

 

Kinsey [00:14:05] So when we think about, as we were talking before, Super Bowl ads. If we had a Super Bowl that, as a team from, say, London, was playing a team from the United States, or based solely in the United States, what would the ads look like for that? Would it be different based on where you're viewing the game? 

 

Michael [00:14:21] I would think they would be able to do that, yeah, to target that. Yeah. 

 

Kinsey [00:14:25] Yeah. They have it in entirely different companies that, I would imagine, would try to buy ad spots. 

 

Michael [00:14:31] And look, I was in Australia this summer, which is winter for Australia, and I went down there to consult with their American—with their Australian football team, which is a little bit of a combination of soccer and our football together. And our American football is extremely popular down there as well. So, I'm sure they would have different ads for the Australian people as much as German and all that. I think they could figure that out. 

 

Kinsey [00:14:54] You'd have to imagine with today's technology. [laughs]

 

Michael [00:14:56] No doubt. And just imagine the audience power that you can get to. 

 

Kinsey [00:15:00] Yeah. OK. So we will talk more in just a second about the league and its leadership and all of that. But, quickly, let's take a break to hear from our partner. —

 

Kinsey [00:15:11] And now back to the conversation on the business of professional sports with Michael Lombardi. So, we try to keep the business here in Business Casual [laughs] and talk about the financials and the economy, etc. The NFL doesn't release its full financials, which is frustrating, but one team does. The Packers of Green Bay do. They are fan-owned. So they recently said that in the 2017 fiscal year, revenue was $454.9 million. They had 255.9 million in national revenue, including TV rights from the NFL itself. So the NFL and makes her have this right. The NFL—and make sure I have this right [laughs]—doles out a certain amount of money that it gets from selling rights to games to the networks. Yes?

 

Michael [00:15:57] Yes. Yes, that's right. 

 

Kinsey [00:15:57] OK. So that that was about a billion dollars to teams last year, assuming that all 32 teams in the league got the same amount. 

 

Michael [00:16:05] They all do get the same amount. And I think the league office takes a slice of that too. And what the owners also do is they—it used to be that they would just deal with the league's own negotiations. But now the owners deal with Madison Avenue. So they kind of know what Madison Avenue is willing to pay for ads before they even go to the networks. So there's nobody getting undercut here. 

 

Kinsey [00:16:27] OK. Nobody getting undercut. Feels a little too good to be true. [laughs] Do you think that's a viable model? 

 

Michael [00:16:34] You know, it keeps working. I think that you can't measure. I think what you can't measure in this is what Larry Tisch couldn't measure—was the viability of what it does for the programing at that network. 

 

Kinsey [00:16:47] OK.

 

Michael [00:16:48] So how does it help other shows grow? How does it help “60 Minutes” audience, which after, you know, New England plays Kansas City at 4:25 and it's 7 o'clock, the game's over. And this ginormous audience gets dumped in the “60 Minutes” and watches it. You can't really measure that. I think that's a big part of this too. There's some—and I think that's where Larry Tisch probably said, You know what? I don't really—I don't really care. I think we could do it ourselves. And I think it cost them. 

 

Kinsey [00:17:21] OK. So we think about this a lot in terms of viewership and ads. When we think about sheer numbers, the financials here. The Packers were using it as an example. They are, you know, one of the smallest market teams, I believe, if not the smallest market in the NFL. [laughs] What do you think that the NFL doesn't share more of its financials in that way? [laughs] This is this is all you can find in a club.

 

Michael [00:17:40] It's an exclusive club to get into, and I think that—I think that they obviously—we talk about small markets. There really is no small markets. But the market value is really related to—ever since everybody shares in the revenues, even in the preseason games, they all share in the revenues. So the small markets don't matter. It's really what you can get for your luxury seats and all that stuff. And I think some of that becomes very private information. 

 

Kinsey [00:18:15] Yeah, I would imagine, unfortunately, for [laughs] inquiring minds like mine. So you have done a lot of work on kind of dissecting leadership within the NFL. If you had to say in a sentence what the impact of NFL leadership is on profitability, what would you say? 

 

Michael [00:18:33] I think it makes all the difference in the world. I think that, as I talked about earlier, the value of the franchise has gone up based on the leadership of the team. 

 

Kinsey [00:18:42] Who would you say are the best leaders in the league right now? 

 

Michael [00:18:45] Well, you know, it's funny. In 1984, when I first got started in the league, Bill Walsh, then the head coach of the 49ers, told me, he said, Michael, we're only competing against eight teams here. And I thought it was just—and that was when we had 28 teams in the league. And I thought it was the eight quarterbacks. And what he was telling me was there's really only eight owners that allow their culture to really to excel on a consistent basis. So that there's really only eight teams with a culture that can have sustainable success. And I think that's pretty much been the case. I think whether it's New England, Pittsburgh, Kansas City, you know, people would say Dallas, but Dallas never has sustainable success. I mean, Dallas in this deck, in this century since 2000, are only 11 games over 500. That's not sustainable success. They've won those Super Bowls in those 19 years. 

 

Michael [00:19:33] That's not sustainable success because their culture is not really good. Now, the value of the franchise has gone through the roof, right? It's gone through the roof. People don’t realize this. When Jerry Jones bought the Cowboys and he moved into the facility, he leveraged himself so far that he couldn’t heat half the building, that he moved people's offices from one side of the building into the other side, so he could close down and cut his help. And now he's got this enormous—he's got an airplane, he's got all this stuff. So —

 

Kinsey [00:20:01] Is that what it takes? 

 

Michael [00: 20:02] I think what it takes is—is Jerry marketed the team. I mean, Jerry marketed the league. I think Jerry's probably one of the greatest marketers of all time, and that's the value of his franchise. That's why he's been able to do it. But I do think the leadership has been the owners determine the leadership. And when the owners decide to run their NFL teams, like they run their businesses, where they've made all their great wealth, I think that's why you have only eight teams competing. 

 

Kinsey [00:20:27] Interesting. So there's a difference between a sustainable, successful culture and the sort of franchise notoriety. 

 

Michael [00:20:36] Correct. Yeah. And because we are in the entertainment industry. So you have to understand that we are in the entertainment industry. People say all the time, how does Tom Brady, or how does Jared Goff, make $35 million a year? He's not worth it. Well, you know, we don't know what Bruce Springsteen makes either, but nobody complains about what he makes because none of us really think we can play the guitar. But everyone thinks we can throw a football. How could that guy make that, right? Everybody's played football. How could he make that, right? He's not a football player, he’s an entertainer. 

 

Michael [00:21:05] And the value that he's getting paid is a tribute to what the audience was—the people are willing to pay to be entertained. And I think that, since we're in the entertainment business [indistinct]—just like on this podcast, the number one cancer in business is the number one cancer in sports—is ego. When egos get involved, and who gets credit for things, destroys franchises, destroys businesses. 

 

Kinsey [00:21:29] So it kind of brings to mind this idea of players and even coaches, in some instances, as celebrities. You know, they are entertainers. They are hired as more than just football players. I imagine ego kind of goes hand-in-hand with that. So is that the expectation or, you know, anybody who can break that expectation?

 

Michael [00:21:48] I mean, like Belichick, you don't see him doing one commercial. You never see him. 

 

Kinsey [00:21:52] He's got—he's got the shtick. You know, everybody knows the sleeves and the course attitude. 

 

Michael [00:21:58] You say shtick. I think it's who he is. But I also think it's part of what he's preaching. You know, one of the greatest soccer coaches over in Europe, Klopp. Jürgen Klopp. One of the things he talks about is being authentic to what you really are. I think leaders that listen to this podcast—if you don't have authenticity to who you are—I tell a story all the time when Sinatra, in the ’70s, because he had lost touch with a generation of music, he started wearing a leisure suit—like Sinatra in a leisure suit doesn't go. Sinatra's a tuxedo and cufflink guy. So he tried to be something he wasn't. And then people didn’t pay attention to him. And he retired and came back to the Garden. And all of a sudden, he—and so you have to be authentic in who you are. And I think that, because if you let your ego become something different than you are, people see right through that. They stop listening to you and then your culture gets bad.

 

Kinsey [00:22:49] So if authenticity is such an important part of being a good entertainer and doing your job and creating a culture of success, how come we see examples like someone like Colin Kaepernick, who, from at least where we're sitting today, was authentic to his beliefs, stuck to what he thought he needed to do, and was punished for it. 

 

Michael [00:23:08] Right. And look, Colin Kaepernick has every right to wonder why he's—because there's some really bad quarterbacks played in the league, Luke Falk for the Jets for three games. I mean, that's a complete argument. But I think Kaepernick’s path that he chose to go down, and I think that Kaepernick is playing—play on the field. If you really do an analysis of his play on the field from the time he almost threw a touchdown pass up in Seattle to get the 49ers to the Super Bowl, or when he didn't win the Super Bowl to where he ended up with Chip Kelly in his last game playing against San Francisco. It was really a different player, and he stopped running the ball as much as he did in the past. So there's the football player and the social activist. And I think what happens to—I'm not saying this is fair or not—but I think what happens is there's risk-reward. If I take a risk with Colin and what's my reward? If he's a great player, I'll take the risk. If he's just an OK player, why would I? I think that's really where the conversation is. 

 

Kinsey [00:24:07] Yeah, I have to say, though, the optics don't look great. [laughs]

 

Michael [00:24:10] There's no doubt. There's no doubt they don't look good because when you watch some really bad quarterbacks play, you know, you say, why isn't he playing? And I think that that's all about. I can manage this bad guy. I can't manage this—now, only do I get a bad quarterback, I also get a bunch of [indistinct] trucks parked in front of my building, and I'm on CNN every single day. And whatever he says is gonna go viral. And we're about a team. Remember, the name on the front in any industry is more important than the name on the back. And when you bring somebody in who's name on the back is going to generate a lot of interest, you better make sure that's really what you want. 

 

Kinsey [00:24:50] Okay. I want to talk more in just a second about some of these thornier issues the NFL is facing. But real quick, let's take a short break to hear from our partner. —

 

Kinsey [00:25:01] And now back to the conversation on the business of professional sports with Michael Lombardi. So before the break, we were talking about one of the stickier issues in, at least recent memory, with the NFL with taking a knee and then Colin Kaepernick, etc. There are other issues, I would argue, that are kind of pervasive in the NFL. One of them being diversity

 

Michael [00:25:21] No doubt. 

 

Kinsey [00:25:22] So in the NFL, 70% of players are black, but never have more than 25% of head coaches been black. If that were happening in any industry in business, I imagine there would be outrage. 

 

Michael [00:25:35] Yeah, and there should be. But I think it's really the fault of—I write this daily coach every single day. It's the fault of the NFL. We, the NFL, spent too much time trying to teach coaches or potential coaches about the scheme of the game. And we don't spend enough time talking about how to become a leader, how to how to build a program, how to install a program, how to become a leader. And I think the diversity issue is really about our lack of training than it is about the color or the content of someone's skin. I think it's really that—I think we need to spend more time with ex-players and teaching them about what it is about leadership. And it's not about yelling and it's not about scheme. It's about how do I drive? How do I focus? How do I get this? What's the four pillars of leadership that I must adhere to? How do I build a culture? I think we're missing it completely. And I think we get too caught up in a scheme as opposed to teaching. And I think that's why we see these completely imbalanced numbers. 

 

Kinsey [00:26:43] So we have something like the Rooney Rule, that you have to interview a person of color for a head coaching position, correct? 

 

Michael [00:26:51] Correct. 

 

Kinsey [00:26:52] It's been around for 16, almost 17 years now. Why isn't that working? 

 

Michael [00:26:57] Again, it goes back to training, goes back to — 

 

Kinsey [00:27:00] So even the rules put in place for these people — 

 

Michael [00:27:03] You can put a rule in. You could put a rule in. But if you haven’t trained, it doesn't do you any good if you don't train people how to become really good leaders. How do you become really—how do you get organized? I mean, you're talking about hiring somebody to run a $5 billion operation. That guy has to be trained. And it isn't about we're gonna run cover to this play. We're going to run cover 3 next play. It's about how do I lead men? How do I handle a culture? How do I build this football team around? How do I do that? You know, and if you don't find a way to do that with people—like let's take Todd Bowles, the former head coach of the New York Jets, really an outstanding leader, a good coach. 

 

Michael [00:27:42] He failed as the head coach with the Jets, but probably for the wrong reasons. He failed because he didn't have enough support within the building. But we need more Todd Bowles in the NFL. Smart coach, understands how to lead. We should use that as a model, because that's really what's lacking. You could put all the rules and interview people—if they don't interview very well, what good is having the interview? And look, there's—everybody knows this. There's not a lot of great leaders out there. So you've got to train people how to be leaders. 

 

Kinsey [00:28:11] Right. And I guess it's maybe just my instinct to think about these things in terms of the business world. But grooming a CEO of a company—for a $5 billion company or any company—you have to find the right person. And that's incredibly difficult. But to be able to find someone with all of those leadership skills plus football skills feels next to impossible. 

 

Michael [00:28:31] Right. But what do they do in the business world? I mean, there's—you can go to school. There's Harvard Business School. You go to Yale. What school do you go to learn to become an NFL head coach? 

 

Kinsey [00:28:39] I don’t know. I wish I knew. I’d make a lot of money. [laughs]

 

Michael [00:28:41] There's no—there's not one out there. It's through—it's through hard knocks. The organization needs to help the coach with his intellectual power [indistinct] there. He should be spending time at business schools. He should be spending time understanding how Jack Welch does things or how the greatest companies do things or how it's all set up, because that's ultimately going to help make him a better leader. But we focus too much on the skill of we should play cover 3 here. We should run three buzz. We should really get an overfront, not an underfront, and that's that doesn't work. 

 

Kinsey [00:29:15] Right. All right. So onto one more of these thorny issues. One of my favorite pieces I've ever written in all of my writing career—I had the opportunity to interview Brett Favre for a drug he had invested in to help treat concussions. Concussions are an enormous problem in all parts of football, from Little League Peewee to [indistinct] to everything. Brett, in our conversation, said he didn't want his grandsons to play football. And that's coming from one, I would argue, of the best players in a generation. What is the NFL doing about this problem? Because it is a problem. People are getting hurt and there are effects beyond just a concussion. One way, you know, where one day it's CTE. It's trouble 20, 40 years later. 

 

Michael [00:30:03] Yeah, I think certainly—I think it's an issue and it's getting it handled. I am a proponent of—I don't think any kid should play football until he's in high school. I think youth football should be flying football. I think—because what happens with young kids is, if you're a fat kid in fifth grade, if you got to play guard, well, maybe by the time you get the 10th grade, you're a skinny, tall kid. But you don't want to play guard. So you've lost your interest in football. So I don't like contact of young players. I think we have to do a better job of helmet safety, educating the players on where to hit, how to hit, making sure that they wear their pads. 

 

Michael [00:30:42] A lot of guys don’t even wear some of their pads. Not that they have improved in that, that the pads stop concussions, but they only get slowed down. They want to play the game with a fast level. The NMA—I don't know if there's a more violent sport than that. And they have to deal with their concussion issues too; the NFL is just on a broader landscape. We've got to deal with it, do a better job when it comes to education, comes to equipment. 

 

Kinsey [00:31:06] I just have to imagine the NFL is in a position of leadership in terms of education. And I think that part of my questioning around this is just that I feel like there's been a lack of leadership in terms of making sure everybody knows it. You think about telling a player to wear the right pads right now. They don't want to slow down. They want to score another touchdown, because that's their livelihood. That's how they get a better contract when they're up again. So is there a way of ensuring that everybody grabs hands and says, hey, we're gonna do this? All of us together? And it's just hard to imagine that happening.

 

Michael [00:31:42] You've got to teach it, right? So if you don't want to lead with your head, you got to teach tackling. We gotta spend more time on tackling. We gotta spend more time on teaching tackling. I think it goes back to the fundamentals. I think you have to do that. And I think that the league has to be very clear on what they are going to call a penalty and what they're not going to call a penalty, and how to teach it. There has to be harmony between the club and the officials and understanding what it is. And the college games trying to do that with this helmet to helmet, suspending kids for a half. You know, I think that certainly has its merit. 

 

Kinsey [00:32:13] OK. We talk about someone retiring at 42. [laughs] You know that in any other line of work would be ridiculous. They would write about you on CNBC. But that, you know, that's old for a football player is interesting. Do you think that the fact that there's only 20 good years of a career in the NFL and, obviously, there are other factors to that. [laughs] Do you think that has any impact on the viability of the league in the long term, that the health of the players might be an issue? 

 

Michael [00:32:43] I think we're seeing players play longer. I mean, Tom Brady at 42, it's not the avocado ice cream. It's really because he's taking better care of his body. The science of football is way better. Way better. I mean, the medicine is remarkable. And the technology and understanding of what they have to do to help themselves and their bodies and prepare is so far different than it was 10 years ago. And it's gonna be even different 10 years from now. So that's why players are playing longer. Conversely, the negative of that is their way faster than they ever been. There's guys out there—they're doing things that just are not humanly possible. 

 

Michael [00:33:20] And it's not through any supplements. It's through just training and understanding that. So that presents another player safety issue, because they're just way faster than they were in 1960. They're way more explosive than they were in 1960. And so the concussions that we're getting in the ’60s are way different than they are now because the speed of the game is so different. I think if you truly watch an NFL game from the sideline, standing on the field and watching the violence between an offensive and a defensive lineman, you would understand how big and fast these guys are. And that presents another problem. 

 

Kinsey [00:33:53] Remarkable. So if you had to think about what the biggest risk to profitability of the NFL is in the next, say, 10, 15 years —

 

Michael [00:34:01] It's solving the concussion problem. I think they have to definitely do that. I think that's going to be the biggest risk. But I think, with that being said, this—I think we are—today in 2020. I think with gambling and with betting, I think this thing is going to go completely through the roof, even though these numbers look ridiculously unbelievable. I think they're going way further. I think we saw 5% viewership go up. I think it's going to go even more. And I think because more states get legalized betting, it's the perfect sport to bet on. It's once a week. It's four quarters. People think they know what they're talking about. They want to do it. And, there’s a lot of options for it. 

 

Kinsey [00:34:41]Yeah, well, I'm excited. [laughs]

 

Michael [00:34:42] Me too. 

 

Kinsey [00:34:44] Awesome. So I am going to now bring out our notorious wheel here. I'm opening it now. Here we are. Spinning the wheel. All right. Hit the middle button and take it for a spin. [sound of wheel spinning] Time to have some fun. 

 

Kinsey [00:35:00] [ding sound] All right. Rapid fire. So one rapid fire question. It's the most important question I think I've ever asked on this podcast. Which NFL team should Jeff Bezos buy? 

 

Michael [00:35:11] He should buy the Seattle team. 

 

Kinsey [00:35:13] OK. Do you think he will? 

 

Michael [00:35:14] Yeah, I do. I do think he will, because I think Amazon's going to be king of all. And I think that we’ll have a jersey with Amazon on it and there’ll be a plane that flies the team says Amazon. I think Bezos gets it. 

 

Kinsey [00:35:24] All right. 

 

Michael [00:35:27] I think he should buy Seattle only because Paul Allen was the owner. And I think that's one of the teams you can buy. 

 

Kinsey [00:35:29] Cool. OK. Take another spin on the wheel [sound of wheel spinning] And —

 

Kinsey [00:35:35] [ding sound] In or out? So, are you in or out, bullish or bearish, on live tweeting the Super Bowl? 

 

Michael [00:35:41] Mm. I'm in on it, I think. I think because of the way Twitter works, it's almost taken the sideline reporter out of the game because you don't need that because you have to go to her or him to get who's injured. Twitter, we know it right away. So it's gotta be in. 

 

Kinsey [00:35:58] All right. And one more spin to close out the episode. [sound of wheel spinning] It is [ding sound] the one thing. So, what is one read, a conversation, movie, or quote, anything that has had the most outsized impact on your life? 

 

Michael [00:36:13] It's attributed to Marcus Aurelius, but it's really not a Marcus Aurelius quote. And I would say the secret to all victory lies in the organization of the non-obvious. I think those who can figure out the non-obvious in business sports are the ones that succeed. And that's what I hope to write my new book about. 

 

Kinsey [00:36:31] Awesome. Well, I can't think of a better place to [laughs] finish the conversation than waiting for your new book. 

 

Michael [00:36:35] Thank you. 

 

Kinsey [00:36:36] So thank you so much, Michael, for coming on Business Casual. It was the blast to talk with you. 

 

Michael [00:36:41] Thank you so much. I appreciate you having me. 

 

[00:36:43] [sound of coffee being poured]

 

[00:36:45] [outro music starts]


Kinsey [00:36:46] Thank you so much for listening to this week's episode of Business Casual. I hope everybody enjoys the Super Bowl this weekend. After all, it is the last sacred American holiday. And look out for more business news angles on the game in the Morning Brew newsletter this week. Sign up at Morningbrew.com. Next week on Business Casual, after eating all of those nachos, I know exactly what you're gonna want to do. Talk about working out. So I'm bringing in the CEO and founder of Mirror, Brynn Putnam. And we're going to find out if her connected fitness system for your in-home workout is actually just the next Peloton. I'll see you on Tuesday!