The NFL

Introduction

0:00So in my headphones, I have, are you ready for some football? Yeah, I was listening to that too. Yes. Dude, it gets you so pumped up. It totally does. I feel like I grew up on the Fox Sports theme.

0:13It always makes me think of Thanksgiving. It makes me think of, I think it was a Jock Jams tape that I bought.

Welcome to Acquired

0:30Welcome to this special remastered edition of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Three years ago, in January of 2023, we released an episode on the National Football League, which, David, I think is absolutely an essential part of Acquired Canon.

1:00Totally agree. We took so much from that episode. But listeners, a few things have happened since then. One, the NFL has become even more of a juggernaut. Two, Acquired's audience grew a lot, so many of you never heard that episode. And three, the ultimate Acquired universe crossover happened between the NFL and Taylor Swift. Yes. It was kind of bad timing when we made this originally.

1:30Because it was right before that happened. But Ben, you forgot the most important thing, which is that this year, in 2026, we are hosting the Super Bowl's Innovation Summit at the Super Bowl in San Francisco this year. Yes, we are. Listeners' details on how and when you can watch that are in the show notes. So to help us come up to speed and prepare for that, and to help you get pumped for the Super Bowl, we decided to remaster our NFL episode to today's Acquired Production Quality Standards.

2:02We also decided to update the episode with everything that has changed about the league, from streaming on YouTube and Netflix and Amazon and all those deals, to our updated thinking on the international strategy for the NFL, and of course how the influx of gambling being legalized has affected the league. And at the very end, we have the wild story of how private equity has entered the league too. So make sure you stay tuned for that because it is nuts. Yes. We're going to put all of these updates in a special new section

2:34right at the end of the episode. So listeners, it is time to throw it over to myself from 2023 and on to our remastered episode of the National Football League.

Football Popularity

2:46Football is America's favorite sport. By far. In fact, football is more than three times as popular as the next highest sport, basketball. The Super Bowl is watched by over 100 million viewers every year in approximately two-thirds of American households. My favorite Super Bowl stat is that it's the weekend with the fewest weddings planned of the year. It is the NFL's world and Americans are just living in it, especially the TV networks,

3:16which have been reduced from pillars of our nation in their heyday to largely distribution channels for the NFL today, plus some other lesser programming sprinkled in. Of the top 100 TV broadcasts aired last year, 82 of them were NFL games. Wow, that is wild. Totally wild. But how did we get here? How did this game become the most valuable media property in America? The story is one of incredible cooperation, of belief in growing the pie over a century,

3:48and just like our benchmark episode, of communist capitalism at its finest. The NFL owners have made bold long-term bets in choosing to divide their revenues equally in a way that no other sports league has. Of course, the NFL hasn't been free of controversy. From the horrible recent on-field collapse of Damar Hamlin to the epidemic of CTE among former football players, players are clearly putting their lives at risk. And the modern fans' relationship with the sport is complicated.

4:21I personally love watching football. It has been finely tuned over the years to be maximally, maximally entertaining. But it comes with cognitive dissonance for me every time I tune in, and I know many others feel the same. Whether pro football is your favorite pastime or you think it's a societal ill, there is no denying the incredible role that it plays in all of our lives today. Now, listeners, just like our NBA episode a couple of years ago, this is an episode on the business of football. It's not specifically about

4:51things I learned reviewing game film or the merits of the I-formation. Today, we're talking about the business. But we do have some sports thank yous to Michael McCambridge, author of America's Game, which provided much of the research for this episode. And it's just like the definitive biography-style history of the NFL. Well, after you finish this episode, come discuss it with the other smart, curious, kind members of the Acquired Slack at acquired.fm slash slack.

5:22And listeners, this is not investment advice. David and I may have investments in the companies we discuss. All right, David, take us in. Where are we starting? All right.

Football Origins

5:31We start on November 6th, 1869, on the campus of Rutgers University in New Brunswick, New Jersey. Just a very short train ride up from Princeton, New Jersey. As I know well from my time there. Where, indeed, a group of about 25 or so Princeton students were up at Rutgers to visit a similarly sized group of Rutgers students. And they were there to play a game of football.

6:04Now, what was football in 1869? This is not someone dropping back in the pocket and throwing a 70-yard bomb. No, no, no, no. It was essentially what today is classified as mob football, quote-unquote, or medieval football. This had been played for centuries in England. And basically, the only goal of the game was for one side to get a ball to a certain spot on the other side.

6:36And that was it. There were no rules. Any number of people could participate on either side. You could do anything up to and including maiming and killing people on the other side or your own, which happened quite frequently. I mean, keep in mind, this is four years after the end of the Civil War. Yes. So now, why were these two groups of Princeton and Rutgers students so interested in playing this game? This terribly violent game. Well, back in England,

7:06it was quite popular among public school students. Now, public schools in England are like private schools in America. And they were starting to adapt it into an actual sport. And so like any sort of stepchild nation, these American college kids were kind of trying to keep up with the social elite back in the mother country and do the same thing. bring football in a codified way to schools in America. There were 25 players per team. So 50 people on the field,

7:38a round ball that could not be picked up and carried, couldn't be thrown. And the object was to kick the ball through the opponent's goal for which you received one point. Okay, so a soccer with 25 people on a team. Yes, but that was the start of what would become intercollegiate American football. And this becomes, just like back in England, wildly popular. And over the next five to 10 years, it gets more and more codified and formalized amongst the Ivy League. It kind of comes to be seen

8:09as this integral part of the college experience, this character building experience. It's also still wildly dangerous. There are like deaths, serious injuries, very, very common through this period. Finally, 1905, there are 19 fatalities in intercollegiate football in the U.S. and a serious injury at Harvard to one Theodore Roosevelt Jr., son of sitting president,

8:42Theodore Roosevelt. So this is a major event. After that happens, Teddy Roosevelt calls the summit of all the major colleges and universities in New York City and says he's going to outlaw the game in the U.S. unless they adopt major changes to make the game safer. And you also have to imagine, of course, it hits close to home for him with his son, but he's sort of viewing this as, hey, the people that are best and brightest are playing this game that is actually hurting the nation. We are cutting down people

9:13in their prime, and we kind of have to do something about that. Yeah. And it's a fine line, right? Like, I think the violence is a critical part of this sort of rite of passage, and Teddy Roosevelt probably kind of likes it because this is a training ground for future... Military. ...governmental and military leaders of America. So I had no idea until doing the research. This summit that Teddy Roosevelt calls, and then he basically tells all the presidents of the universities, like, hey, you guys got to figure this out

9:44or I'm going to outlaw this. In response, they create the NCAA. Like, that is the beginning of the NCAA. Oh, I didn't realize that. Yeah. It was to regulate and codify and make the game of collegiate American football safer. Huh. Yeah, crazy, right? So following that, this new institution that becomes the NCAA, they institute the creation of a neutral zone, they abolish the use of wedge formations, so they do make the sport safer. I mean, there's still, like, a lot of injuries. There's not a lot of protective padding

10:15being worn here. And a lot of this predates even leather helmets. People are just playing this in regular clothes. Yes. But they also make a change to the rules after this summit that would become the defining element of American football and fully differentiate it from soccer and rugby, which rugby itself came from soccer. Rugby is the set of soccer rules that the English public school rugby used, hence why it's called rugby. And this rule

10:45that the NCAA institutes is legalizing the forward pass. In 1905. And that becomes, obviously, a defining characteristic of football. And to underscore how much this changed things, football was exclusively a violent game to this point in history, American football. But when we think about American football today, you're watching Monday Night Football

11:15and the beautiful popping color and all the lights and all the slow-mo. There's a beauty to the game. There's a romanticism. There's a moment where you hold your breath. The world seems to move slowly. It's a ballet. This introduced what would become the counterbalancing force to the incredible violence of football, which is the true beauty of watching it. Yeah. The beauty and the strategic element, too. The offensive playbook, the defensive coverages, the audibles.

11:45There's no way a casual fan can understand all of it. And yet, the ballet, as you say, is mesmerizing to watch. Collegiate American football just becomes wildly, wildly popular. It still is to this day. Like, it is a huge part of the American sports landscape. And it was even more so then. All right. So, the NCAA is formed. We've now got the forward pass. So, modern football. Does that lead to the NFL? No. Again, very specifically, we're spending a lot of time on the origins

12:16of football and college here, but it's so important for understanding the NFL. This is a college thing. This is a American collegiate experience that these elite young men go through, this dangerous kind of war-like activity. There's the sacred element to it. So much so that while in the early 1900s, some professional teams do start to pop up around the country, these are teams, not leagues.

12:46So, these are barnstorming teams that would go around like there's no organized schedule of play. But they're viewed not only just as second rate to the college game, they're, like, dirty. Why are you taking this esteemed thing that our best and brightest participate in and turning it into this entertainment act? Yeah, it's even more than that. Many people, especially the elite, viewed professional football as actually immoral because it was profaning this thing with money.

13:17The gripe that they had against it was the money. It wasn't the game. It wasn't how the game was played. It was the same game, often the same people who played in college. Oh, I see. Like, it's supposed to be amateur. It's supposed to be amateur. This should not be a professional activity. This is a rite of passage for young men. So to the teens and twenties, that was very much the attitude. And for professional sports, there was one game in town, and that was baseball. Michael McCambridge has a great quote in the beginning of America's game where he says, to say that baseball was

13:48the number one sport in America is to imply a hierarchy where none existed. Baseball towered above the sporting landscape like a colossus, the unquestioned national pastime, the only game that mattered. most fans had come to accept baseball's primacy as something immutable, as much a part of the natural order of things as air and water. Of course, this is the era of the New York Yankees and Babe Ruth and Lou Gehrig and all these storied parts of American history. Baseball is very much a professional sport played for

14:18money where the goal of teams is to make money and the business model is they sell admission to the games. Yep. So it's not like professional sports were all looked down upon. Not at all. It was that football was this very special thing. Yes. So into this dynamic environment, in 1920 enters the American Professional Football Conference, soon in a few years to be renamed the

14:49National Football League. The founding of the NFL. and started on August 20th, 1920, when the heads of several of these barnstorming quasi-professional football teams meet at the Jordan and Hupmobile Auto Showroom in Canton, Ohio. Now, the driving force behind this meeting being called is one George Hallis, and he is currently in Decatur, Illinois, where he is an employee of the A.E. Staley Starch Company.

15:20And his main duty is to organize and coach and be the star player for the company football team. Which, of course, is called the Staley's. Yes. The sponsorship is so deeply rooted in the NFL that the very first team was actually named the sponsor. They weren't even sponsors. It was the employees of the company who played for the team. Now, Hallis sort of had a mandate to go out and recruit employees who happen to be good football players.

15:51So, these folks that come together at George Hallis' instigation, they have a goal. They want to legitimize professional football in the eyes of Americans, and they develop a plan for doing so. They think they can really separate the pro game from the college game, make it a legitimate thing, and they have three parts to the plan. One, they're not going to sign any current college players. There's going to be a strict, strict demarcation

16:21between the college game and the pro game. They will not try and get any current college players to come play for a pro team, which would happen under assumed names. You could imagine these college kids, they want to make money. This is so ingrained in the NFL that it is basically still true 103 years later. Here we are in 2023. You still can't go to the NFL out of high school. You can only go with the junior year of your graduating class from college. You can go one year early

16:51in 100 years. That's the one concession that's been made. So, point one, they're not going to raid the college game. Point two, they're going to endeavor to play the game at a high ethical and rules-based standard. Yeah, these teams that are coming together, some were independent, some were part of the Ohio League, some were part of the New York Pro Football League, so they're sort of slightly different rule books and slightly different customs that are going on, and this is the idea that, no, we need to unify these things to

17:23set an expectation for fans. Yep, standardize what the game is. Yes. And then number three, perhaps the most of the important, they're going to make Jim Thorpe the president of the league. These guys are smart. Now, many of you probably know who Jim Thorpe was, but Jim was, at that point in time, the leader of the Canton Bulldogs, one of the teams that was strategically included in this discussion, and the meeting happened at that Canton auto showroom, probably because of this.

17:53Jim Thorpe was the GOAT. He was the greatest athlete that had ever lived to that point in time. which is not to say, like, if you put him through the NFL combine today, he would win. It's sort of handicapped with all of what we knew about modern sports science of his day. The distance between Jim Thorpe as an athlete and any other athlete in the world at that point in time was greater than I think that distance has ever been since. So, Jim Thorpe was a Native American who was

18:24part of the Sac and Fox Nation and ended up playing college football at a small school called the Carlisle Indian Industrial School, which happened to be coached by a guy named Pop Warner, who of course is the person that all of the youth football leagues are named after today, Pop Warner League. He and Pop led this small tiny Carlisle Indian Industrial School to a national championship while he was playing there against all these big Ivy League powerhouses and Ohio State and

18:54others and the deep, deep irony given what was about to happen with professional sports and the NFL becoming completely white. The first star player, the whole basis of the league, the first president of the league was a person of color. In addition to playing professional football, the thing that is just unbelievable about Jim Thorpe, he won two gold medals in the 1912 Summer Olympics in Sweden in the pentathlon and the decathlon. He had never competed in the decathlon before. Oh my god.

19:25The first time that he competed in the decathlon was in the 1912 Summer Olympics and he won the gold medal. Wild. Wasn't he also an outfielder with the New York Giants? Yeah, and basketball and won gold medals. Wild. So this new league,

NFL Formation

19:42proto-NFL, formed in 1920 with 14 teams and about as much instant legitimacy as you could get from Jim Thorpe. they pretty quickly become the biggest professional football league in America. There's not a lot of stiff competition. And they consolidated the smaller leagues to create this in the Midwest. Yes. But that said, the 20s and really the 30s too, it's an uphill battle, shall we say. Oh yeah. If you look at the,

20:12what is it, 15 teams or so that existed in 1920, there are three franchises that endured out of all of those. The rest of them, the Columbus Panhandles, the Akron Pros, the Chicago Tigers, all went under and the only ones that stayed the test of time are the Decatur Stalys, the Racine Cardinals, and one we have not talked about yet, the Green Bay Packers. The Decatur Stalys would become the Bears, Chicago Bears.

20:42The Bears. Yes. Actually named after the Cubs. That's right, because they played in Wrigley Field and Bears are bigger than Cubs. Yep. So, it was an uphill battle for a couple reasons. One, even despite all their efforts, the stigma of professional football really does not wear off, especially in the 20s. So, after the NFL is formed and starts getting publicity, in 1922, then Michigan, sorry Ben, Michigan, then Michigan head

21:13football coach Fielding Yost gives a very widely reported speech in New York City, where he's talking about the New League, and he says that, quote, pro football robs the great American game of many of its greatest character-building qualities. The ideals of generous service, loyalty, sacrifice, and wholehearted devotion to a cause are all taken away. Now, of course, he's partisan because he's a college football coach, but this really was still the prevailing sentiment. Yep. The other problems the NFL face are most

21:45of these teams are based in kind of small towns. They're not in big cities. 100% of these teams either fold or move to larger cities, except for the Packers. They're the only small market team that stood the test of time. Yeah. There was no TV. There was no internet. Like, the market size was not unconstrained for these teams. The market size was quite constrained. They were filling a niche and a demand for football in these towns, but they weren't going to make that much money. And they're massively loss-making. I mean, these teams last two to five years and there's another 15

22:16teams that are formed between the Chicago Bears and eventually the New York Giants are formed around 1925 that stand the test of time. So it's amazing all these teams that spin up and spin down within five years of each other in this decade. It just became completely non-viable economically for small-town teams to survive, except for Green Bay, and they all end up moving to the big city where they're very much playing second fiddle to the baseball teams. Yeah, and most of these don't even end up moving. They just end up closing their doors. The other important thing, though, to say

22:47about the NFL during this time before World War II is that in the beginning, there was Jim Thorpe, who was the first president of the league. He's a figurehead. He's only president for a year, and then they bring on a real administrator. But, you know, obviously he was Native American. He wasn't a white person. There were several black players in the league at that point in time, and it was not a big deal. In fact, the first NFL champions in that first season, the Akron Pros, the star player and the head coach was a man named

23:18Fritz Pollard, who was black. Wait, he's the star player and the head coach? I love that. But, unfortunately, in the mid-30s, supposedly after George Preston Marshall comes into the league as owner of the Boston Braves that became the Boston Redskins and then moved to Washington, D.C., at his behest, they adopt the same policy as Major League Baseball and completely kick blacks out of the league. And it wouldn't be until after World War II, and for the Redskins, not

23:48until 1961. The Redskins, commensurate with keeping that name for as long as they did, they were very, very, very late to integrate the team. I think they had some really big fan base in the South, and there weren't a lot of NFL teams at that point in the South. And so it was both because he was racist and also because he realized he would probably lose a lot of his fan base who were also racist by integrating his team, which is, like, a horrible thing that it

24:18was a strategic advantage for him to get that fan base by having a exclusively white team. So all this would continue, kind of, status quo, the league barely's creeping along until after World War II, when both America and the NFL would change forever and pretty radically. So after the war, when all the troops come home, and there's the GI Bill, there's this new middle class in

24:50America that didn't go to these elite private school, Ivy League institutions, or even the Ohio states of the world, or the Carlisle Indian colleges, and they're coming home from the war, they don't have college educations, they may be now getting them through the GI Bill, but they have jobs, they have disposable income, they increasingly have radios and soon-to-be television sets, they want entertainment. You sort of have this opportunity to be a new

25:20thing in America that people do with their time and dollars. And keep in mind, every owner's experience to this point is subsidizing losses. If you're bringing on other people to try and be co-owners of a team with you, or you're deciding that your family is going to sort of carry the weight the whole time, or that your company is going to carry the weight of the team, you're just subsidizing losses. So every single person involved in pro football ownership at this point is not even lip service for the love of the game, like purely just for the love of the game. But now, interestingly, there's a business opportunity.

25:51Yeah. And all these American GIs coming home from the war and their families, they don't have the same hang-ups and preoccupations about the college football game that the elite did before the war, because they didn't go to college during their younger formative years. So there is this big opportunity now, after the war, for professional football and the NFL to become a much bigger thing. And they probably would not have realized it, except their hand was forced. In 1944, right before the

26:23end of the war, a lot of people could see this opportunity. Football was a very compelling game. The NFL was only in, what, I think, eight cities at that point in time? To really realize it, you had to expand. You had to be in a lot more cities. And there were wealthy business people in cities all across America, East Coast, Midwest, the South, Florida, who wanted to add teams and come into the NFL, but the NFL owners weren't interested in expansion. Right. And those eight teams, the

26:53Cardinals, of course, they're in Arizona today.