And Bryan Curtis on Schumpeterian competition.
Millen: I’ll never forget the quote he gave me. I said, “John, how it’s going?” He said, “Matt, let me tell you one thing. If you got one person who wants you, you get a job. If you got two people who want you, you get a great deal. And if you have three or more, you get a bonanza.”
This is from a LONG article: Bryan Curtis, “The Great NFL Heist: How Fox Paid for and Changed Football Forever,” theringer.com, December 13, 2018.
Millen, who said this, is Matt Millen, former NFL player, former president and CEO of the hapless Detroit Lions, and former NFL announcer. John, who is quoted, is, of course, the late John Madden, who died yesterday.
The quote from Madden reminded me of the famous Reuben Kessel study of competition among bond underwriters, a study that George Stigler references in “Monopoly,” in David R. Henderson, ed., The Concise Encyclopedia of Economics. With one underwriter bidding for the business, the spread was $15.74. With two underwriters bidding, it fell to $12.64. With three, it fell a little more, to $12.36. So it wasn’t exactly analogous to the Madden situation. He needed three bidders. The state of California, which issued the bonds, needed only two to get real competition and six to get something close to perfect competition.
Although I note above that the article referenced is long, it’s fascinating throughout. It tells with great detail how Rupert Murdoch bid a previously unheard of number to get the NFL’s NFC games away from CBS. Without that, Fox probably would not have been nearly as successful.
Here’s the ending quote:
Dolgin: If [Murdoch] didn’t make that bet on the NFL and change the character of that weblet to a major, revolutionary network, I’m sure of one thing: Things like Fox News, FX, Nat Geo — the cable empire wouldn’t have been there. I’m not sure that this whole empire wouldn’t have been there. … All of that is traced back to this bet-the-farm, multibillion-dollar Hail Mary to get NFL rights. Because NFL rights were the only thing that was going to get him new stations. … Look, he just sold [the studio] for $70 billion. I guess it was the best $400 million he ever spent.
Dolgin is Tracy Dolgin, Fox Sports executive vice president.
Once Fox won that bid, it wasn’t that hard a lift to get John Madden:
Jerry Jones, Dallas Cowboys owner: If you make that kind of commitment [for the NFC rights], you’ll go after and get the best. That’s [the huge amount paid to hire John Madden] peanuts. That’s arguing about the price of the seasoning after you’ve paid a fortune for the steak.
I’m not enough of an NFL follower (although my wife would say I’m too much of an NFL follower) to follow all the ins and outs of NFL television over those almost 30 years. But here’s the thing I like best about what Fox did:
“Fox-izing” football meant the pregame show would be about laughs and relationships as much as it would be about sports. It meant the score and clock would be on the screen at all times.
It’s the second sentence here. In football, the clock is huge, especially for the last few minutes of each half. When I watch, I want to understand the plays and strategies. Seeing the clock, just as the play planners do, is important for that.
Above all, the article about Fox and the NFL is about Schumpeterian competition.
Here’s the biography of Joseph Alois Schumpeter in David R. Henderson, ed., The Concise Encyclopedia of Economics:
[What counts is] competition from the new commodity, the new technology, the new source of supply, the new type of organization … competition which … strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.
Fox introduced more cameras, different commentary, and clocks, among other things.