"A terrific addition to the sports economics literature."—F. H. Smith, CHOICE
Run to Glory and Profits: The Economic Rise of the NFL during the 1950sby David George Surdam
The National Football League has long reigned as America’s favorite professional sports league. In its early days, however, it was anything but a dominant sports industry, barely surviving World War II. Its rise began after the war, and the 1950s was a pivotal decade for the league. Run to Glory and Profits tells the economic story of how in one decade/i>… See more details below
The National Football League has long reigned as America’s favorite professional sports league. In its early days, however, it was anything but a dominant sports industry, barely surviving World War II. Its rise began after the war, and the 1950s was a pivotal decade for the league. Run to Glory and Profits tells the economic story of how in one decade the NFL transformed from having a modest following in the Northeast to surpassing baseball as this country’s most popular sport.
To break from the margins of the sports landscape, pro football brought innovation, action, skill, and episodic suspense on “any given Sunday.” These factors in turn drove attendance and rising revenues. Team owners were quick to embrace television as a new medium to put the league in front of a national audience. Based on primary documents, David George Surdam provides an economic analysis in telling the business story behind the NFL’s rise to popularity. Did the league’s vaunted competitive balance in the decade result from its more generous revenue sharing and its reverse-order draft? How did the league combat rival leagues, such as the All-America Football Conference and the American Football League? Although strife between owners and players developed quickly, pro-football fans stayed loyal because the product itself remained so good.
"A terrific addition to the sports economics literature."—F. H. Smith, CHOICE
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Run to Glory and Profits: The Economic Rise of the NFL during the 1950's
By David George Surdam
UNIVERSITY OF NEBRASKA PRESSCopyright © 2013 David George Surdam
All rights reserved.
THE AAFC CHALLENGE
NFL owners could congratulate themselves for having survived World War II intact, if just barely so. The 1945 championship game garnered the top gross gate receipts in the history of the championship with 32,178 fans contributing $164,542. Although NFL owners claimed chronic losses, the pent-up wartime demand for entertainment induced hopes for better days. Economic profits or the anticipation of such profits inspire envy, and envy triggers entry. The incumbent owners, naturally, were not pleased with the prospect of fighting for fans and for players.
As the war wound down, entrepreneurs began speculating that postwar America would be hungry for professional sports entertainment. Many leagues and franchises were called; few were profitable. Several prospective owners petitioned the NFL for franchises even before the war ended. Major League Baseball and professional basketball owners also faced a clamor for more teams. The NFL owners found themselves battling a formidable challenger in the All-America Football Conference.
A rival league was nothing new for the NFL. The league had survived challenges from fledgling leagues throughout its existence, with "Cash and Carry" Pyle's American League being a typical example. Pyle and George Halas had engineered the lucrative professional debut of Red Grange after his spectacular college career. Pyle wanted part ownership of the Bears, but Halas refused. In retaliation, Pyle formed his American League, drenching all the owners in red ink and bankruptcy. Halas's team barely survived the upheaval.
Many writers have chronicled the inception and demise of the AAFC. Beyond a cursory description of the league's experience, we shall focus on how the NFL battled the new league. Successful companies often face competition, and much of antitrust law concerns the legitimate and illegitimate behavior displayed by incumbents.
The Postwar American Economy
The victorious Americans eagerly looked forward to the end of World War II. While some worried that the transition from a wartime to a peacetime economy might trigger a relapse into another recession or depression, the economy adjusted admirably.
Gross National Product (GNP) seemed to fall and then rebound between 1945 and 1947, but when it is adjusted for changes in the price level, the real GNP fell in both years. Thereafter, real GNP rose continually except for brief, shallow downturns in 1954 and 1958. The general price level rose quickly because of the postwar boom in consumer spending and because of the relaxation of price controls. By the early 1950s, though, the changes in the price level as reflected by the commonly used Consumer Price Index (CPI) stabilized. For the period 1952–56, the index was almost stagnant. The drop in real GNP in 1946, though, was a reversal of a "good news, bad news" joke. The "bad news" was that real GNP dropped (largely because of reduced spending on defense), but the good news was that consumers spent more. The pent-up demand for leisure and consumption began to be satisfied in 1946. Nominal and real spending on spectator recreation jumped in 1946. Motion pictures enjoyed prosperity in 1946 as well. Real spending on sports experienced a burst of enthusiasm in the late 1940s before lapsing into stagnation. Americans began switching from public to private forms of recreation expenditures. Instead of going out to movies and ballgames, Americans chose to remain at home watching television or watching their children play. The demographic changes wrought by the baby boom reduced the number of young single men and women. Reflecting this family emphasis, the only part of the movie industry that did well was the drive-in sector.
Americans purchased automobiles and houses in suburbs in greater numbers. The automobiles gave them mobility and made living in the suburbs more feasible. The growing distance between middle- and upper-middleclass homes and the downtown areas, where many ballparks were located, created a demand for easy freeway access and convenient parking once suburbanites reached the ballpark. The migration of African Americans to northern cities continued after the war, too, changing the racial makeup of many cities. Table 1 shows characteristics of the cities with National Football League teams in 1950, as well as some later NFL locations. These cities typically had SMSA (Standard Metropolitan Statistical Area) median incomes above the national average, so their residents should have been better able to afford tickets to professional sporting events.
The AAFC's Birth
When the NFL rebuffed several prospective owners' applications, Arch Ward, Chicago Tribune sportswriter (and later sports editor), encouraged the prospective owners to form a new league. Because of the wartime-imposed limits on many entertainment options, there was a great yearning for entertainment just waiting for the war to end before cascading throughout the industry. Because the war had disrupted the normal transition of players from college to pro careers, there was also a backlog of talent available. Many players, even former NFL players, had ambiguous contractual status. Bert Bell denied that these players were free agents. Owners could also hope that the hike in college attendance caused by the GI Bill would improve the quality and quantity of college talent graduating in the years to come. A visionary such as Paul Brown could quickly build a powerful team from the pool of available players. The new league, indeed, hoped to avoid a bidding war with the NFL over players. They also hoped to stage a game between the champions of the two leagues that would be akin to baseball's World Series. Sports historian Michael MacCambridge believes the NFL's decision to continue operations during the war proved a key element in its struggle against the AAFC, giving the older league the necessary continuity and tradition.
By early 1945 AAFC owners were hiring coaches and signing players in anticipation of debuting in the fall of 1946. They also sought stadium leases.
AAFC owners were, in many cases, wealthier than their NFL counterparts. Hollywood stalwarts Bing Crosby, Louis B. Mayer, and Don Ameche (no relation to the Colts' Alan Ameche) owned the Los Angeles Dons. They attempted to get Bert Bell to form a franchise, and Bell admitted he was tempted. George Halas convinced him that the NFL would make him commissioner, so Bell stayed with that league and became an implacable foe of the AAFC. AAFC commissioner James Crowley, a member of Notre Dame's famed "Four Horsemen," later released information about Bell's interest in owning an AAFC team.
As with their NFL peers, AAFC owners did not own stadiums. While most Major League Baseball teams owned stadiums and could legitimately deny the use of such facilities to potential rivals, NFL owners could not be certain their landlords wouldn't lease stadiums to new teams. The AAFC had access to several large stadiums, and Arch Ward later boasted that AAFC teams played in stadiums with a larger combined capacity than did the NFL teams.
The AAFC exposed some fissures in the NFL's structure. Cleveland Rams owner Dan Reeves was perturbed that his 1945 championship team lost money overall. He was eyeing the burgeoning Los Angeles market for his team. Dan Topping, owner of a dormant Brooklyn franchise that was temporarily merged with Ted Collins's Boston club, was chafing at his inability to field his team in his Yankee Stadium, as he was the sole NFL owner who owned a stadium.
The NFL owners' initial response to the AAFC's announcement of its intention to play in 1946 was ridicule. Outgoing NFL commissioner, Elmer Layden, another of Notre Dame's "Four Horsemen," perhaps viewing the AAFC as akin to the patsies that his Notre Dame team used to play, retorted, "New league? Why they haven't even got a football."
Unfortunately for Layden's prescience, the AAFC may not have had their footballs yet, but they scored a huge publicity coup when disgruntled Dan Topping dropped his team in the NFL to field a new one in the upstart league. Even though the Giants' owners, the Maras, had finally acquiesced to his playing in the Stadium, Topping claimed dissatisfaction with the playing dates assigned to him. Topping announced that his new team, the cleverly named Yankees, would play in Yankee Stadium. Because Topping owned the stadium with his baseball partners Larry MacPhail and Del Webb, the team would earn concessions revenue. Topping gladly paid the $50,000 AAFC membership fee, although some reporters thought that the other AAFC members enticed him with cash contributions. These owners knew that having a franchise in New York City gave their league credibility, as AAFC commissioner Jim Crowley stated: "We were ready to go, anyway, and I think we would have done very well, but getting New York in the league certainly has boosted our stock.... Several of our people right now could sell their franchises for considerably more than they paid for them." Topping ungraciously blasted the NFL upon his departure: "[The NFL] is no league at all, it is a racket. I ought to know, I was one of the 6 stooges for the big 4 until I got some brains and pulled out."
The remaining NFL owners derided Topping for being a poor owner who lost considerable money in operating the Brooklyn franchise. Topping's defection left NFL owners reeling. Some observers believed that Ted Collins, owner of the Boston Yanks, might join him in the new league. In the meantime, Topping's defection left the fate of the Brooklyn team in limbo; eventually the Boston and Brooklyn teams merged and remained in Boston for the time being. George Preston Marshall, owner of the Washington Redskins, actually thought it a good thing that Topping switched leagues, as it clarified the NFL's "New York problem." Marshall also sounded conciliatory about the AAFC: "If the other league proves itself, there is that possibility [of a championship between leagues]. If the All-American [sic] Conference is a sound success it will help professional football all around. If it is a failure, it will not hurt anybody but them."
Topping's defection solved a pressing problem for the AAFC, as his became the eighth team in the league, making scheduling easier. Baltimore had originally been granted a franchise but could not get organized in time for the 1946 season. The league set up a fourteen-game schedule, with each team playing a home-and-home set with every other rival, unlike the NFL and its lopsided schedule in which teams fought over the opportunity to play the Bears and the Giants. Because landing a New York franchise was imperative for the AAFC, Topping's new compatriots not only provided financial inducements but also allowed him the right to select one player from each team, exclusive of the top three men named by each club. In return Topping shared the hundreds of players on the reserve list of his old Brooklyn club.
AAFC owners immediately challenged NFL teams to exhibition games. NFL owners recognized the danger of playing even exhibition games with the upstarts. As John McGraw of baseball's New York Giants realized in 1904, playing a championship series with an American League team only served to strengthen the upstarts while possibly damaging the entrenched league. The NFL owners declined such invitations and passed a rule prohibiting their teams from playing exhibition games against any other circuits, aside from one of their own minor league allies, without the consent of four-fifths of the league membership. The AAFC made repeated invitations to the NFL for exhibition or championship games between the leagues, occasionally even trying to embarrass the older circuit into accepting. Later Commissioner Jonas Ingram wired Bell, while releasing the contents of the telegram to reporters before Bell received it: "Since no valid reason has been advanced for the refusal of the National Football League to accept our challenge of Aug. 25  to a world championship game between your champion and the All-America Football Conference champion, the only conclusion we can draw is that you feel your champion would be unable to defeat ours, or that you feel the All-America Conference is not well established as a major league. In answer to your first assumption, we hereby offer to play our second-place team against your champion."
With Layden's quips about "owning a football" ringing in their ears, the AAFC owners decided that they needed to raid NFL rosters for players. Commissioner Jim Crowley told reporters, "We originally resolved not to tamper with National League players, but since the NFL snubbed us we can see no reason why we can't hire their players." At the time, the AAFC had 150 players under contract but only 4 were former NFL players.
As the 1945 NFL season wound down, AAFC owners began their raiding in earnest. The Chicago Bears lost Edgar (Special Delivery) Jones to the Cleveland Browns. Jones signed a contract to play the 1946 season with the Browns, but he was under contract with the Bears for 1945. The Bears had surreptitiously signed Jones away from the Pacific Coast [Football] League's San Francisco Clippers, who had signed him to play for $500 a game. While the anonymous reporter called Jones a "surprise backfield star," he had only appeared in one game with the Bears before NFL commissioner Elmer Layden ruled that he was suspended for the 1945 season. Cleveland owner Arthur McBride mocked Layden, saying, "Mr. Layden knows now that if we haven't got a football we at least have a player the National League would very much like to have." AAFC owners attempted to entice long-time NFL quarterbacks Frank Filchock and Sid Luckman to defect, but without luck. Luckman admitted, "They [AAFC owners] have been hounding me for the last several weeks, and their offers have been fabulous." Sportswriter Arch Ward wrote that, "In the All-America, these skyscraper checks certainly weren't out of line. The conference teams had to make a big splash quickly, and signing fabulous players was the most effective means to establish a following."
NFL owners faced two disadvantages in battling interlopers. Major League Baseball had tight control over thousands of players, whom they could threaten with such reprisals as blacklisting. Because the NFL had few minor league affiliations, individual teams did not control hundreds of players. An upstart football league could also gain instant credibility by signing top college prospects. It was easier to induce these highly publicized football players to sign contracts with a new league, whereas established baseball owners didn't have to worry much about a new league reaping much publicity by signing college All-American baseball players.
The Fight for Players
Because player salaries stagnated during World War II in real terms (adjusted for changes in the price level), player salaries were very low. The Philadelphia Eagles and Cleveland Rams claimed that their payrolls were $123,500 and $128,000 respectively. The Rams claimed that the $128,000 payroll was 25 percent higher than any previous payroll, and they expected to pay $190,000 in salaries for 1946. Sportswriter Stanley Frank reported that team payrolls were remarkably similar across teams, quoting Elmer Layden's survey showing a spread of only $19,000 across teams in 1941. The last-place Chicago Cardinals allegedly paid their thirty-three players a combined $45,000 that season. Bert Bell told reporters that AAFC competition raised NFL team payrolls by an average of $100,000 per season. The AAFC owners could offer hefty percentage increases in the nominal salaries and still pay players less in purchasing power (real salaries) than they earned in 1941. Between 1941 and 1946, the Consumer Price Index rose by roughly 33 percent. The index rose another 23 percent by 1950. Although the salary increases seemed dramatic, they can easily be exaggerated unless adjusted in real terms.
AAFC teams quickly signed such NFL standouts as the Chicago Bears' Norm Standlee, Lee Artoe, Ace Parker, and Parker Hall. These signings helped bolster the new league in the public's opinion. The raiding even included a coach; Washington Redskins coach Dudley Sargent DeGroot signed with renegade owner Dan Topping. DeGroot had coached the Redskins to an Eastern Conference title. Historian Craig Coenen believes that the AAFC owners used their deep pockets to obtain their fair share of collegiate talent to go with the dozens of former NFL players they had signed.
Excerpted from Run to Glory and Profits: The Economic Rise of the NFL during the 1950's by David George Surdam. Copyright © 2013 David George Surdam. Excerpted by permission of UNIVERSITY OF NEBRASKA PRESS.
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