Today, both Dave Naylor and Farhan Lalji talked about the CFL, potentially changing its model to team revenue sharing. Something the league has talked about the need to do for years.
“The conversation around revenue sharing has certainly heated up during the pandemic, and it’s one of those things that philosophically everybody agrees with. But the devil is in the details, really. The CFL compared to a lot of leagues, shares a very small percentage of its revenue. Basically, television revenue, national sponsorships, and some Grey Cup revenue. And that’s it.”
The problem is asking teams who are doing well financially to share the revenue is tricky, especially if they are the community-owned teams and not the big market ones.
“So one of the things that makes it tricky is the healthiest teams in terms of revenue are the community-owned teams. I mean, Saskatchewan, Winnipeg, Edmonton, and asking community owned teams in smaller markets to share their revenue with privately owned teams in larger markets like Toronto, Montreal and Vancouver. I think everyone can understand why that’s a tricky dynamic to manage.”
The issue for teams with money is they don’t want to hand franchises capital and hope they do the right thing with it.
“nobody wants to see this take place in the form of a direct subsidy. I think those teams that are making money that are potentially going to be giving into the pie want to make sure that those teams that are receiving money are doing things with it and not just subsidizing profits or losses.
They want to make sure that that money goes back into finding ways to promote your product, finding new strategies to sell tickets, finding new ways to engage your fan base.
There are a number of metrics around that in those teams that have the money currently and are ultimately willing to give it, want to make sure it goes back into improving those products. And on the surface, you have to believe that is not an unreasonable ask. “
This type of drastic change won’t happen in 2021. The league is just trying to get through this season. But it does bring up an interesting point with its talks with the XFL.
The XFL’s business model is shared revenue between its 8 teams. There was only one owner of all XFL teams, Vince McMahon. The teams shared revenue as a way to help build the league up since it was a start-up.
When the XFL 2.0 era began current XFL Co-Owner Dany Garcia had asked Vince McMahon if Garcia and Dwyane ‘The Rock’ Johnson could buy an XFL franchise and Vince said no. That was not part of the XFL 2.0 business model.
No one is suggesting the CFL would have one central owner. However, the idea of adopting a more XFL-like business model could help the CFL down the road.
Could this ‘business model’ be what CFL Commissioner Randy Ambroise talked about in their press release in regards to talks with the XFL? Is the CFL trying to use the XFL’s business model as a blueprint to a new version of the CFL?
Before COVID hit, the XFL was in the green and profitable. This was done without a TV contract that paid them anything. The CFL has struggled to be profitable for years with a TV contract. This is why both leagues are talking.
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