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The Economics Behind The Shanahan Change

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Jan 6, 2009 7:59 am US/Mountain

The Economics Behind The Shanahan Change

Good Question: What Is Winning Worth?

Written By Alan Gionet

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Reporting
Alan Gionet
DENVER (CBS4) ― It was the last day for Indigo Joe's Sports Pub in Centennial. It was going out of business. Hard times hung over the crowd as they watched the news conference broadcast from Broncos' headquarters down the road at Dove Valley.

"Well you kind of wonder about the future," said one woman.

"I think it's hard for fans," said another. "Just because Shanahan is the Broncos."

They used words like, "depressing" and "scary."

Change is hard. Just ask Pat Bowlen. He dreaded standing before reporters and answering questions.

When I asked how much winning was worth he said, "As far as the business of football, winning is everything. It doesn't matter what it's worth. I mean if you're worried about what it's worth, get in some other business."

But remember, pro football is a business, run by business people. Financial reality creeps into a lot of decisions and sports owners are looking at fans with fewer disposable dollars. In Minnesota and Arizona two teams are having trouble filling stadiums for the playoffs.

The University of Denver's director of sports marketing, Dr. Gordon Von Stroh, notes the difference.

"From the fans, it's a personal perspective, our coach, our team, but from Pat Bowlen's perspective it's a financial one, it's an economic one."

Forbes.com valued the Broncos in 2005 at $907 million and ranked that value at fifth in the league. Even with three years of sub-par records for the team, the value increased to $1.1 billion in 2008 according to Forbes. But NFL franchises generally increased in value. The publication now ranks the team at 11th in the league in value.

University of Colorado at Denver sports economist Kyle Hurst says in rough times, teams have to think about filling luxury boxes, which are huge revenue generators.
The Broncos want and maybe need to get back to the days of waiting lists. A coaching change holds that potential.

Then there's the Shanahan money. There's the possibility the Broncos will have to pay Mike Shanahan a reported $20 million if he doesn't get another job.

"That is a difficult thing to wrap your mind around, especially with our economic crisis right now," said one woman at Indigo Joe's. "People struggling yet we're still paying $20 million to somebody who is no longer working."

But the value of a winning team over a losing one may far exceed $20 million - should the Broncos be on the hook for that.

Von Stroh says when it comes down to it, a coaching change is business, like it or not.

"More than 50 percent is economic, less than 50 percent is the pride."

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