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16 December 2008

Arena League drops 2009 season

Despite San Jose SaberCat owner John Fry's efforts, the AFL is canceling the 2009 season. League officials believe the AFL can return in 2010 with a new business model. AFL's minor league, af2, will continue play in 2009 in large part because it has a different business model.

Two things jump out with regard to the AFL's (temporary?) setback. Attendance growth has been rather flat, topping out at about 13,000 fans per game regardless of a team's relative success. Fry had been wrestling with this even though the SaberCats won three championships in the last six years. Instability among the expansion franchises has also hurt the league. Take a look at this chart to see how unstable it is. Although the league was not dependent on big markets to stabilize itself, it couldn't have helped that the best run, most resilient teams were in mid-sized markets (Tampa, Orlando, Phoenix, San Jose). Teams in other small and mid-markets such as New Orleans and Nashville came and went twice. Numerous franchises failed to last an entire decade.

Another factor may have been the demise of the AFL's relationship with NBC. The two embarked on a revenue sharing agreement in 2003, but a large slump in ratings pushed NBC to end it. AFL then went to ESPN, which bought a small stake in the league along with a five-year broadcasting deal, but even that couldn't save them. The league has turned to ever increasing expansion franchise fees ($20 million recently) as cash infusions, but that in general is a poor way to run a league as it only temporarily takes care of fundamentally poor cash flow situations.

It's time for AFL to cull the herd. Sixteen teams currently populate the league, it could easily be cut to twelve or fourteen depending on each franchise's financial stability. Some teams were brought in simply to fill open dates in new arenas. If they really wanted to be more bold, they'd encourage more play between the big AFL and the little af2. Rules in place now prevent a real farm system, but it wouldn't be bad if teams from the two leagues played each other. They could even go to a relegation format, in which the best team from af2 moved up for a year to play with the big boys. This goes against af2's mission of player development, but honestly things need to be shaken up. They'll have to trim travel costs and perhaps reformat the league to streamline operations further.

Hopefully, AFL will take the year to make the necessary changes and store cash reserves in order to emerge healthy for 2010. It will require a change of scope and a more conservative business model to be solid in the long run.

4 comments:

Jimmy Jam said...

Yeah, relegation would be COOL!

Anonymous said...

So, how does this affect SVSE and thus the Sharks? Any idea how much AFL was contributing to their income?

Marine Layer said...

The deal was supposed to be: SaberCats get ticket revenue, SVS+E gets concessions. It's 8 dates a year, dates that could be filled by additional concerts.

Anonymous said...

So, negligible. Good! I don't want anything upsetting the Sharks express.