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Roger Goodell At The 50-50 Yard Line

Bloomberg Business Week, September 18, 2014

By Felix Gillette and Ira Boudway

The playbooks dreamed up by offensive co-ordinators in the NFL can be absurdly complex, stretching over hundreds of pages, elucidating the myriad baroque combinations of different players, running in different patterns from different formations, that can be used to attack an opponent’s defense. The playbook for an NFL commissioner, on the other hand, is relatively simple: (1) Help the owners of the league’s teams make lots of money. (2) Serve as the steady, reassuring public face of the sport. (3) Give manly bro hugs to the beaming new prospects onstage during draft night. (4) Don’t do anything to embarrass the league.

Since becoming commissioner of the NFL eight years ago, Roger Goodell has mastered the protocol. Under his leadership, America’s most-watched sport has grown even more popular. The league’s already lucrative television rights have grown even more so. The valuations of its 32 franchises have continued to escalate. Even the Buffalo Bills, a struggling franchise with a recent history of ineptitude in a city with only 260,000 residents, sold in September for an NFL record $1.4 billion. For his services, Goodell was paid $44 million at last report in 2012—more than the highest salary ever paid to an actual NFL player.

As the 2014 regular season opened, Goodell was poised to celebrate another triumphant autumn. Then, on Sept. 8, TMZ released a video showing Baltimore Ravens running back Ray Rice punching his then-fiancée, Janay, in the face in the elevator of an Atlantic City casino. The punch sends her head into the railing, knocking her unconscious. A clip TMZ posted in February had already shown the aftermath of the assault, for which Rice was arrested and charged with third-degree aggravated assault. He later entered a pretrial intervention program; the criminal charges will be dropped pending completion. In July, Goodell announced that following a review, the league had decided to suspend Rice for the first two games of the 2014 season.

The new video triggered a much larger wave of outrage. Within hours, the Ravens cut Rice from the team, and Goodell suspended him from the league indefinitely. In a Sept. 9 interview with CBS News anchor Norah O’Donnell, Goodell claimed that before TMZ’s scoop, he had not seen the second video, despite requesting a copy from law enforcement officials—an assertion that was immediately cast into doubt by reports that NFL officials had access to the footage of Rice’s assault long before it came to light. “The NFL is so used to being able to shape a narrative,” says sports agent Leigh Steinberg, “that Goodell forgot for a moment that people actually pay attention to the facts, and that there’s a public record.”

The Rice scandal has been followed by a cascade of PR debacles from the league, including more examples of leniency in cases of domestic abuse committed by players; the disclosure that 1 in 3 of its players is likely to suffer long-term brain damage; and child-abuse charges against Minnesota Vikings star Adrian Peterson. Sixteen female U.S. senators sent a letter to the NFL, criticizing the league’s policies under Goodell. Through an NFL spokesperson, he declined to be interviewed for this article. “It goes way beyond Ray Rice,” says powerhouse women’s rights attorney Gloria Allred. “It goes to the heart of what they’ve been failing to do over many years. I know they pay a lot of attention to their brand and to marketing, and to profit. But what, if anything, have they done to be supportive of victims?”

Surveying the mess, voices ranging from the National Organization for Women to ESPN pundits Keith Olbermann and Bill Simmons have called for Goodell to resign or be fired. “This is the NFL’s most significant crisis since the week that John F. Kennedy was shot and the NFL incorrectly decided to play the games the following Sunday,” says Richard Levick, a crisis-management expert in Washington. “This is the most intense criticism they’ve been subject to since that time, 50 years ago.”

Whether it will lead to change at the top, however, is a more complicated question. The role of the sports commissioner is unusual in American business and frequently misunderstood, says Fay Vincent, the commissioner of Major League Baseball from 1989 to 1992. “The great myth that you have to deal with is that the commissioner is a public servant.”

He—it’s always been a he—is not a public servant. The NFL, with the exception of the Green Bay Packers, is a collection of private businesses, not a public trust. It has no shareholders or elected officials. It’s a legal cartel of sorts, run by a cadre of risk-averse billionaires. Goodell answers to them.

Goodell grew up an avid football fan in the tony suburb of Bronxville, outside New York. His father was a Republican U.S. senator. As a child, according to legend, Goodell slept curled up in bed, cuddling a football. In high school, he played the game well but chose not to pursue it in college, a decision he would later bemoan to reporters.

In 1981, after graduating from Washington & Jefferson College in Pennsylvania, Goodell wrote a letter to then-NFL Commissioner Pete Rozelle, asking for a job. The following year, the NFL hired Goodell as an intern. At one point he served as Rozelle’s chauffeur. He climbed his way up through the organization, ascending to the commissioner’s suite of the NFL’s Park Avenue headquarters in 2006. The owners of the league’s 32 franchises voted for him unanimously (on the fifth ballot). They told reporters at the time that they knew what they were getting and admired his loyalty. In his adult life, Goodell has never worked for any other organization.

The league office is technically a tax-exempt, not-for-profit “trade association promoting [the] interests of its 32 member clubs.” At last report in 2012, it brought in nearly $326 million in revenue, almost all of it in membership dues from teams. It spent more than a quarter of that on the top five of its 1,858 employees.

Goodell learned long ago that the most important thing the commissioner does for owners is to protect public confidence in the game. “If that is lost, the values and the revenues and the interest plummet,” says Marc Ganis, president of the Chicago consulting firm SportsCorp. The “integrity of the game,” as Ganis calls it, requires fans to trust that the players on the field are trying to win. What players do off the field is a secondary concern.

For owners, according to Ganis, cracking down on player misconduct is less important than keeping revenue generation high and labor costs stable. Owners want to know the commissioner treats them fairly, brings in as much money as possible from broadcasters and sponsors, and drives a hard bargain with players. Ganis says none of the owners he’s spoken with has lost confidence in Goodell over his handling of Rice.

Steinberg, who served as the basis for Tom Cruise’s character in Jerry Maguire, agrees that despite the current self-inflicted crisis, NFL owners have every reason to think highly of Goodell—and to want to keep him on as commissioner. Steinberg points out that under Goodell’s stewardship, the value of NFL franchises has soared. Teams have been able to construct brand-new stadiums with bankable luxury seating and lucrative naming rights. “The owners have known him since he was a young kid,” Steinberg says. “They have great personal affection for him.”

Goodell has also proven his willingness to protect the owners’ interests despite the outcry of the public. Last year, in the face of an increasing body of scientific evidence linking football to degenerative brain disease, Goodell reached a settlement with attorneys representing thousands of former players for $950 million. The settlement did not require the NFL to admit any liability.

More recently, with a growing chorus of American Indian groups and politicians calling on the Washington Redskins to change their name, Goodell has stood by owner Dan Snyder. Insisting that the term “Redskins” is one of admiration, not derision, he’s done his part to protect Snyder’s sizable investment in the club. (Although Goodell did tell talk radio in D.C. last fall that “if we are offending one person, we need to be listening.”) On Sept. 13, at the peak of the Rice backlash, Snyder came to Goodell’s defense. “Roger Goodell has always had the best interests of football at heart, both on and off the field,” he said in a statement.

In 2011, Goodell announced that the league had agreed to contract extensions with CBS (CBS), Fox (FOX), ESPN (DIS), and NBC (CMCSA) that will carry it through 2021. The networks and satellite provider DirecTV (DTV) pay the NFL about $5.5 billion a year for the rights to air games—up 22 percent from last year, according to MoffettNathanson. The money is distributed evenly among the 32 franchises. John Vrooman, a sports economist at Vanderbilt University, points out that many of the league’s costs are fixed as well. In 2012, Goodell announced the NFL had reached a collective bargaining agreement with the players’ union capping the players’ share of revenue at roughly 50 percent through 2020. Not only is the labor agreement favorable to the owners, but Goodell got it done while avoiding a much dreaded stoppage of play.

The NFL, Vrooman writes in an e-mail, “is economically bulletproof from political scandal and misconduct, from players to owners. NFL owners remain untouched and almost untouchable.” As long as fans keep attending the games every Sunday, watching the sport religiously on TV, and snapping up merchandise, the owners have little to worry about—and, presumably, little reason to consider switching commissioners.

To date, many of the NFL’s deep-pocketed sponsors are standing by the league. Several, including McDonald’s (MCD), Marriott International (MAR), Verizon Communications (VZ), FedEx (FDX), PepsiCo (PEP), and Campbell Soup (CPB), have issued statements of the “we-are-keeping-an-eye-on-the-situation” variety. “We’re very supportive of Roger and very supportive of the NFL,” Verizon Communications Chief Executive Officer Lowell McAdam told investors on a conference call on Sept. 11. “We’re going to wait and see how the facts play out here, but I’m at this point satisfied with the actions that they’ve taken.” Five days later, Anheuser-Busch (BUD) issued the strongest sponsor warning yet. “We are disappointed and increasingly concerned by the recent incidents that have overshadowed this NFL season,” the company said. “We are not yet satisfied with the league’s handling of behaviors that so clearly go against our own company culture and moral code.”

Jim Andrews, senior vice president for content strategy at sponsorship consultant IEG, says some brands spend upwards of $100 million a year to be associated with the league. “The NFL is one of the few mass-advertising vehicles left,” he says. “Sponsors are going to follow the fans.”

And even in the middle of the current crisis, fans can’t get enough. On Sept. 11, a few days after the video of Rice knocking out his fiancée first surfaced, scores of female Ravens fans showed up at the stadium in Baltimore wearing his jersey. That night, 20.8 million people watched the Ravens defeat the Steelers on CBS and the NFL Network. It was the highest-rated programming on all of television that night—and CBS’s largest audience in that time slot since 2007.

If Goodell’s job is safe for the moment, it may not stay that way. The league has hired former FBI Director Robert Mueller to conduct an investigation into its handling of the Rice incident. Should the probe uncover evidence that Goodell lied about what he knew about the assault, public pressure on him may become overwhelming. “The canary in the cave, as it were, would be if sponsors started to withdraw or if teams started to lose revenue,” Steinberg says. “If we’re still talking about this crisis in the NFL six weeks from now, it might be different. But so far, I haven’t seen that happen.”

The league has hired former White House Counsel Cynthia Hogan as senior vice president for public policy and government affairs to help quell the furor. It might also jettison lower-level executives. Horace Balmer, a former security chief for the National Basketball Association, has said that the head of the NFL’s security department, Jeff Miller, should be fired for his handling of evidence in the Rice case. Miller wasn’t available for comment.

For Goodell to be tossed, a supermajority of the league’s owners—25 out of 32—have to vote for his dismissal. (His current contract expires in 2019.) If he does go, it will make for a rare instance of early turnover in a job like his. Running a sports league is one of the most stable executive gigs around, particularly compared with being CEO at a large company. According to the Conference Board, CEO tenure at America’s largest companies currently averages 9.7 years; the average tenure of a commissioner in the big four sports leagues is well into double digits. It’s safe to assume Goodell has little interest in walking away. If he loses his job, it will be because he’s lost the faith of the owners.

On occasion, that has happened in American sports. “I lost it because the owners got mad at me for arguing with them that it was fruitless on their part to try to break the players’ union,” says Vincent, who resigned from MLB under pressure. “My mistake was not having the talent or ability to persuade the owners of my point of view.”

In a scandal as socially charged as this one, it might be difficult to accept that public opinion will have only limited influence on Goodell’s fate. Nate Jackson, the former tight end who played six seasons for the Denver Broncos, recently wrote a critically praised memoir about his time in the NFL. Jackson says people would have to be crazy to expect worthwhile moral guidance from anyone in the league.

“We’re looking at Goodell to reflect our own societal views, but also to maintain the game that we love, and to sustain this dichotomy in a way that keeps everyone comfortable,” he says. “I think it’s dangerous when people put so much faith and trust in the NFL to be the moral compass of the culture.”