Did The NFL's New Blackout Policy Work?

PORTLAND, Ore. ( TheStreet) -- We've made it to Week 7 of the National Football League season and every home game has been televised. That means the NFL's tweak to its blackout rule last year totally worked and nobody needs to change it any further, right?

Well, not quite.

There's no arguing with the results of that rule change thus far in 2013, but it hasn't exactly been flawless.

Under the NFL original television rule, which dates back to an act of Congress in 1961, home games couldn't be shown on TV stations that broadcast within a 75-mile radius of the stadium if non-premium tickets weren't completely sold out 72 hours before kickoff. Last year, the NFL allowed teams the option of calling games "sellouts" at 85% capacity and keeping them on local television.

The Minnesota Vikings, Oakland Raiders, Miami Dolphins and Tampa Bay Buccaneers -- the latter of which blacked out 25 of 29 home games between 2010 and 2012 even under the new rule -- all opted to lower the bar. The Cincinnati Bengals, San Diego Chargers and Buffalo Bills -- all of which struggled with ticket sales in recent years -- vociferously rejected the NFL's offer. The rule change didn't prevent its adherents or detractors from blacking out 15 games combined last year. That's down from 16 in 2011 and 26 in 2010, but even that number was too high for the NFL's critics.

Republican senator and former presidential nominee John McCain of Arizona introduced legislation in May that would prevent the NFL from blacking out home games played in stadiums built with public money -- and a full 30 of the NFL's 31 stadiums have had a portion of their costs paid for with tax dollars. It cost an average of $525 million to cover each of 20 NFL stadiums built since 1997, according to a Minnesota study looking into the likely costs of a new stadium for the Vikings. The total estimate is that 56% of those stadium costs -- or roughly $238 million per stadium -- were paid for with public funds. That's nearly $4.8 billion in tax dollars spent on NFL stadiums alone, but economists estimate that continued costs including maintenance, infrastructure and renovations dip into more tax money and force the public to pay upward of 70% of a stadium's cost.

That count isn't going down as stadiums go up, either. At least $115 million in public funds are going into the new San Francisco 49ers facility, Levi's Stadium, opening in Santa Clara next year. Minnesota is on the hook for about $500 million of the proposed $974 million Vikings stadium planned for 2016, though that's still being negotiated. In Atlanta, where the Falcons' Georgia Dome is a scant 21 years old, Atlanta has already pledged $200 million toward a proposed $1 billion stadium.

Meanwhile, the NFL earns money from images broadcast from those facilities whether or not the taxpayers who shelled out for them are blacked out.

NFL games accounted for 31 out of 32 of the most-watched TV broadcasts last fall and more than doubled the prime-time viewership of Fox, ABC, CBS and NBC. Fox> ( FOXA), CBS> ( CBS) and Comcast's> ( CMCSA) NBC agreed to pay the NFL $28 billion for broadcast rights through 2022. Walt Disney's ( DIS) ESPN has a separate $1.9 billion annual deal for Monday night football, while DirecTV ( DTV) has a $1 billion per season agreement for the NFL Sunday Ticket package that is set to become even more lucrative once the current contract expires in 2015.

The Glazer family of owners in Tampa, where taxes paid for 100% of the $194 million cost of building the Tampa Bay Buccaneers' Raymond James Stadium in 1998, seem to have taken McCain's threat to heart. Amid a season in which opening-day starting quarterback Josh Freeman was released from the team and head coach Greg Schiano drew scrutiny for potentially leaking sensitive information about Freeman, the Glazers vowed that all remaining Buccaneers home games will be televised this season. The owners plan to use a league loophole that allows them to buy back tickets for a third of their face value and distribute them to charitable organizations.

It's a strategy that's been used before by the Carolina Panthers, Miami Dolphins, Jacksonville Jaguars and their sponsors and is already gaining momentum this year. The Dolphins have been buying up unsold tickets over the past couple of years as season ticket purchases have dwindled from more than 61,000 in 2006 to little more than 40,000 last year. Ownership is looking for $350 million in stadium renovations and seems aware that keeping the Dolphins off television isn't a great way to get them. In San Diego, where the Spanos family that owns the Chargers is openly courting other cities as the city patently refuses to build the team a new stadium on its terms, local sponsors and ESPN itself had to pitch in to keep the Chargers' Monday Night Football matchup with the Indianapolis Colts on the air this week. The Chargers were on the brink of becoming the first team in more than a decade to have a Monday night game blacked out, but had four home games blacked out last year and avoided a fifth only after a similar arrangement was made to keep a game against the Kansas City Chiefs on the NFL Network.

In Buffalo, where television blackouts usually don't occur until the miserable, wintry end of the season, ownership stepped in and bought up remaining tickets to keep a home game against the Cincinnati Bengals on air. It was a favorable turn for Bills owners, who celebrated a $226 million deal made last year to upgrade Ralph Wilson Stadium by blacking out the final home game of the 2012 season.

The NFL's optional revision to the blackout rule may play some role in this year's good fortune, but an increased airing of the league's financial details amid a sputtering economy likely plays a role as well. Republican Sen. Tom Coburn of Oklahoma pointed out that the NFL exists as a tax-exempt organization under Section 501(c) of the Internal Revenue Code and is trying to strip that exemption and tax league revenue, which was reported as $9.5 billion last year. That exemption makes it possible to take a look at commissioner Roger Goodell's $30 million salary, but also makes it very clear just how difficult it is to keep tabs on the cash coming into the league and how it is being disbursed to teams. Coburn estimates that the government could take in $91 million annually from all sports that are currently tax-exempt.

In truth, however, that increased scrutiny helped bring about the blackout rule change in the first place. The average NFL ticket price has increased by nearly $20, to $81, since 2006, while the U.S. economy started slumping during that same span. By keeping games off the air in their hometowns under the old rule, the NFL brought all criticism and ire down on the league itself. If you're an owner whose team hasn't been blacked out in years and who generally has a good relationship with your home market, do you really want your lesser league siblings dragging you down?

Of course not. By making the blackout rule change optional, the focus shifts from "The League" to the individual owners themselves. Keep in mind, it isn't "The League" that goes around with its hand out to local governments and taxpayers every time it needs a new scoreboard, new turf, upgraded seats or even a new building -- it's the individual owners. Any decision those owners make on the blackout rule is directly linked to the public trust: Accept the new 85% threshold and you're just a friendly, neighborhood team trying to help out the community. Refuse and you're a craven little miser who's only rooting for the bottom line.

Savvy owners realize that by buying up the occasional unsold tickets, offering concessions such as free beer (the Jaguars actually did this for season ticket buyers) and keeping games on air, they're building up good will to keep fans in the seat through the bad years and to get their tax money to build luxurious new seats in better times. It worked in Charlotte, N.C., which approved $87.5 million in public funds for upgrades to Bank of America ( BAC) Stadium and a six-year commitment from Carolina Panthers after the team and its sponsors kept home games on air for the past few seasons. The Oakland Raiders and owner Marc Davis are hoping the team's embrace of the lower blackout threshold will help efforts to get a new stadium in Oakland and prevent a move to Los Angeles or elsewhere in California.

While good old-fashioned extortion is still a part of NFL owners' playbooks, the league's revised blackout rule prevents them from hiding behind the big, bad league while threatening their home market. With their red, white and blue shield is gone, cash-hungry owners are realizing that it pays to be nice every so often. If that means buying a few thousand tickets now to cash in a few million dollars later, why not?

-- Written by Jason Notte in Portland, Ore.

>To contact the writer of this article, click here: Jason Notte.

>To follow the writer on Twitter, go to http://twitter.com/notteham.

>To submit a news tip, send an email to: tips@thestreet.com.

-- Written by Jason Notte in Portland, Ore.

>To contact the writer of this article, click here: Jason Notte.

>To follow the writer on Twitter, go to http://twitter.com/notteham.

>To submit a news tip, send an email to: tips@thestreet.com.

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Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

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