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CNN IN THE MONEY
Interview with CEO Howard Lutnick; NFL is Most Profitable Sports League
Aired September 11, 2004 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial center, this is IN THE MONEY.
SUSAN LISCOVICZ, GUEST HOST: Welcome to IN THE MONEY.
I'm Susan Lisovicz, sitting in for Jack Cafferty.
Coming up on today's program, lessons learned. There's been a lot of money spent on security since 9/11, is America really safer now than it was three-years-ago. We'll hear from one man who says we aren't.
Plus the polls toll. The latest surveys make John Kerry the underdog in the November election. Is it too late for a turn around. We'll look at the latest data.
And hitting pay dirt as the NFL season begins its new season. We'll find out why it's the world most profitable professional sports league.
Joining me today, a couple of IN THE MONEY veterans, "Fortune" magazine editor at large Andy Serwer and money.com managing editor Alan Wastler.
Gentleman, I think you're aware of the fact we have a presidential election under way. There is a lot of issues out there. Paying for social security, controlling healthcare costs, the war against terrorism.
Why is it that we're always see advertisements about Vietnam, a war that ended 30-years-ago.
ANDY SERWER, "FORTUNE" MAGAZINE: It amazing to me. We haven't gotten over it. It was this deep wound, and you think about what has happened over the ensuing three decades, the war on poverty, the economy. All these things that we went through and we keep going back to that. You know, it is funny for me, I thought we all realized the war was a big mistake, it was a tragedy, can we please just get on with it now?
ALLEN WASTLER, MONEY.COM: They need to move on. Part of the problem is they're harping on Vietnam and comparing resumes and what not. Today's questions, you listed them all, Susan, they're tough questions. I don't think either side has a -- this is the answer. Rather get mired down there, they're pull out the old photos and show each other.
SERWER: I think also some of the other issues are so difficult and/or there is so much agreement between the two candidates, it may sound strange but let me explain, no. 1, the economy is, it is not so terrible that it is a good issue for Kerry, it is not so good that it is a good issue for bush. The war in Iraq, how different are their takes on that issue. So you got to grab on to something here.
LISOVICZ: Right. And it seems that -- well, now, I mean, for several weeks, John Kerry didn't respond and now you have, what is it, the Texans For Truth." And Americans say -- in our own polls, CNN, it was an unscientific survey, but showing that Americans don't want to hear any more of it.
WASTLER: No, they want to hear about the economy and the things that are hitting them here and now and who is going to fix some of the problems we have. So move on, gentlemen. Move along.
SERWER: Truth from Texas, now that's a concept, right?
LISOVICZ: And swiftboat veterans, we've had enough.
OK, let's talk about another certainly big issue. It has been three years now since the attacks of September 11th, and there have been plenty of changes designed to make us safer. Airplane cockpit doors are now bolted. Armed guards keep watch over national landmarks and there is even a government agency dedicated to preventing future attacks.
But is this all enough? In his new book "Fortress America: On the Front Lines of Homeland Security, an Inside Look at the Coming Surveillance State," Matthew Brzezinski, examines this very question. Matthew also contributing writer with "The New York Times" magazine. Welcome.
MATTHEW BRZEZINSKI, AUTHOR: Thanks.
LISOVICZ: The simple answer to your question is really no, we're not safer. But then I would have to ask you a question, why haven't there been any attacks in the United States since September 11th, no suicide bombs, no big al Qaeda campaigns why not?
BRZEZINSKI: Well, you to remember the genesis for 9/11 was an operation that started in Manila in 1995. That's where the blueprints were laid for this September 11th attack. That's when they first started training, sending people to the United States to train as pilots. So, you know, it took almost six years for the September 11th attacks to go from the blueprint stage to, you know, to completion. It took -- these things don't -- you cannot plan these major operations in weeks, months or certainly not over a weekend, they take years.
The fact that we haven't had an attack in three years and very dangerously we're starting to sort of pat ourselves on the back and say, look at the great job we're doing, that's meaningless. I mean, they could be halfway through the planning an operation as we speak right now. Most likely they are. That's the consensus of all the security experts I've talked to.
SERWER: Of course, Matthew, we're always looking what happened in the past. Right now we have seen very intent on finding the next airline passengers with some box cutters. Probably not the plan of attack that al Qaeda is going to do next.
Where do you think we should be focusing our efforts?
BRZEZINSKI: Well, you mentioned box cutters. We do -- we make a big show of patting down little old ladies, the former vice president and kids and meanwhile we could be sitting on a bomb. Because we have virtually nothing to screen the baggage that goes into the cargo holds of these planes. Because, again, that's not visible to the general public and unfortunately, you know, it is very symptomatic of the larger issues that plague the Department of Homeland Security so much of this is just about giving people the perception of security and in fact has very, very little to do with reality.
WASTLER: So, Matthew, are you saying that when we have an orange alert and they say we're hearing a lot of chatter, this, that and the other is going on, everybody be prepared, that's all just showmanship and they're purposely trying to make people scared?
BRZEZINSKI: Not saying they're doing this purposefully. A lot of cynics will say that clearly the administration has exploited the fear factor, so to speak, for political ends. You have to remember that right after 9/11, our leaders signed off, sight unseen on the Patriot Act because we were all so scared, giving tremendous and sweeping new powers to the government.
No government on earth in history has shown this repeatedly in countries, especially in the Middle East, where almost all the countries had a state of emergency for the last 20, 30 years, giving extraordinary powers to the state. No government wants to relinquish these once it gets them. So, of course, there is a bit -- there is a bit of an incentive for them keep people a little bit on edge, so that we don't, you know, we don't make a big push for the supreme court to start saying, well, Mr. President, you can't declare anybody a warrant on any enemy combatant. Or no, Mr. Ashcroft, you cannot have your sneaking peek laws in the Patriot Act extended beyond next year and so on and so forth.
LISOVICZ: Matthew, being on edge is one thing. The coming surveillance state is quite another. One of the things we enjoy here is a lot of freedom, we cherish that. And it seems to me that you would be decidedly against some of the very things that would make this nation safer. For instance if all the cargoes were checked coming into our ports, if chemical plants, thousands of them in the United States, had stricter regulations.
How do you balance those two things?
BRZEZINSKI: Well, look, I mean, you mention the chemical plants. The greatest vulnerability, perhaps the greatest danger we face in this country is a chemical Chernobyl. There are 50,000 of these plants, 100 of them are located within one mile of a million plus population. And they're virtually unprotected. Right after 9/11, again, there was a big push, bipartisan push to push forth the chemical security act, which would mandate certain things like perimeter security fencing, lights, more guards, et cetera, securing the transport of these things.
You know, a single cargo container or railcar with chlorine can kill up to 100,000 people. But corporate interests have trumped security and the oil companies in a very concerted lobbying push have had all this legislation quashed. Three years later our plants are as vulnerable as they've always been and. You know, the terrorists aren't going to probably try to hijack another plane. Why would they, it is much more difficult. They're going to look for targets of opportunity. We're giving them a very wide array of targets of opportunity.
SERWER: Matthew, very quickly here, you're critical of the Department of Homeland Security. Tick off a couple of things that should be done there.
BRZEZINSKI: Well, should be a lot less about bureaucratic reshuffles and press conferences and they should be giving real money. They have no money whatsoever. I was shocked when I visited it. I mean, their headquarters this is the largest government agency in America and its head office literally, I don't want to be uncharitable, looks like the janitor's office in a junior college. Give them some real authority. Give them some money. Let the people in the front lines, give them the tools to do the job. And right now they have no political support and virtually no funding from Washington.
LISOVICZ: Matthew Brzezinski, we'll leave it at that, the author of "Fortress America: On the Front Lines of Homeland Security, an Inside Look at the Coming Surveillance State."
Thanks for joining us.
LISOVICZ: More to come here on IN THE MONEY. The final leg, the candidates are picking up the pace in the race for the White House. Find out if they're winning the votes they need.
And it is up and it is good! The new NFL season kicked off earlier this week. We'll tell you why fans aren't the only ones cheering.
Plus, a cybermilestone. The net is celebrating a birthday and it is older than you might think. Find out how well it is hiding its age.
LISOVICZ: The nation honored the memory of the nearly 3,400 victims of 9/11 this weekend on the third anniversary of the terrorist attacks. Our next guest became a household name in those dark days of September as a high profile CEO on Wall Street, Howard Lutnick, narrowly avoided death himself, because he took his son to his first day of kindergarten.
But when dust settled, he realized he lost his brother, his life- long best friend and 656 other employees of the company he led, Cantor Fitzgerald. We're honored to have him with us today to talk about how he and the company are doing three years later, welcome.
HOWARD LUTNICK, CEO, CANTOR FITZGERALD: Thanks, Susan.
LISOVICZ: I don't even know where to start. Anybody who went to work that day at Cantor Fitzgerald died. Two-thirds of your workforce. You didn't really have time to grieve because two days later the company was back in business, and today it is profitable.
Can you take us through quickly how you were able to put aside your grieving and restart your company?
LUTNICK: Well, I think the employees of the company, much like all of America, what was inside of them is they just wanted to help. They wanted -- and for them they wanted to help their friends' families who they lost. And the best way that they could help was to rebuild the company. So we decided to dedicate ourselves -- because you have to remember, for us, going back to work on September 11th was not sort of what, we were thinking about. We were thinking of going home, hugging our kids and wives and just holding them close.
But we decided if we dedicated ourselves to the families of those we lost, and we would have to work harder than we ever did before, then we could help them. It was that rallying cry that was much the same that was probably inside of you and you guys as well, we just want to help that was that huge outpouring of philanthropy across America. And it is really the driving force of what got us through. We had people in our data center eight days that didn't go home. We had cots along the wall. People would take four hour nap, someone tapped you, you got up and someone else went to sleep. If you wanted to see your kids, you played with them in parking lot for an hour and back you went.
In exchange for that, we've really been able to take care of our friends families, be there for them. And that was the driving force what of what was important to us.
SERWER: Howard this is the third anniversary of that horrible day, how have you commemorated each 9/11 and how are you going to do it this year?
LUTNICK: We, from the beginning, had a memorial in Central Park. The first year we had 5,000, 6,000 people, and last year we had, you know, again, 3,500 people. And this weekend as big as always. I mean, we are 658 families, getting together and that's the way we want to be. We want to be together. We want to be with each other because...
SERWER: Do you pray or do you have a picnic?
Is there some light moments or what do you do? LUTNICK: We have clergy of all denominations. Family members speak. We have singers who come and last year Carol King came. The cast of "Friends" came and sang. I mean, there are just warm uplifting moments and we're all together. We're all want to be happy, want to find happiness, don't want to leave our loved one's memories behind, carry them together. And then we end the service with the current employees of Cantor Fitzgerald reading the name of each person who is lost with their pictures up so we can all remember them. And it is both brutal in the fact that when you're reading A's, there are 25 A's. And -- but it is also tremendously uplifting when you see the love and affection around you. So it is just the place I want to be. And...
WASTLER: Tell us about the relief efforts that you started back then and are still going on now right now.
You raised quite a bit of money for the families affected by this right?
LUTNICK: We set out that rallying cry for us was we're going to give 25 percent of what we make to the families of those we lost, and that's monetary. We do that for five years. We'll take care of their health care because, we certainly don't want these young women with young children worrying about what kind of doctors or things like that, so they're just on the company's health plan without cost. And then we set out -- we hired them all lawyers.
Got them all lawyers so they would go through the Victims Compensation Fund, which was very bureaucratic and difficult. Hired economists to do a report for each and every family because imagine one family who didn't really get it right, if they didn't get the right amount of money who would feel bad?
I knew they got the wrong amount of money, so I would feel bad. So Cantor Fitzgerald Went and got economists to do each and every individual family. And then so we raised $147 million for these families so far. That's cash we sent out. And that's where we are so far. And we have five year commitment. And where he no less committed today than we were on September 19th when we announced it.
So we wanted to be a part of their families. We want them feel a part of ours. I think the thing by far that we are most proud of is that it doesn't matter which family you talk to.
LISOVICZ: Right, and they all have your home number. They have your work number and you know these people and their cousins and their brothers and sisters by name. You know, it is refreshing for all of us. We have covered so much of the excesses on Wall Street. Some of the nasty things that people on Wall Street have been accused of doing. In some ways it seems that how Cantor Fitzgerald has survived is really a shining moment on Wall Street.
Could we ask you something about -- something filed just this month, Cantor Fitzgerald filing suit against the government of Saudi Arabia.
What are you realistic expect that to go?
LUTNICK: I think there's been enormous number of companies, insurance companies, all of our families individually have filed similar suits. So it is really -- if there is a recovery, then Cantor Fitzgerald was devastated by these events. And if there is a recovery, and if it can be proven, then Cantor Fitzgerald hopefully will participate in that recovery. But we'll have to wait and see.
SERWER: All right, Howard Lutnick, the CEO of Cantor Fitzgerald, thank you very much for joining us on weekend like this one. We wish you the best of luck.
LUTNICK: Thanks for having me. I appreciate it. Thanks.
LISOVICZ: Let's take a look at this week's top stories in our "Money Minute."
Michael Eisner is finally ready to leave Disney. After more than a year of intense scrutiny, Eisner announced Friday that he would step down by 2006. Eisner, of course, survived an ouster attempt, led by Roy Disney earlier this year. But he did lose his chairman title in that battle. Eisner has been the target of criticism connected to Disney's weaker box office numbers towards animated films and consistently low ratings for its ABC TV network.
A federal judge slapped former Wall Street star Frank Quattrone with an 18 month sentence for obstructing justice. Quattrone was found guilty of destroying e-mails that government investigators could have used as evidence in a probe of initial public offering kickbacks. Quattrone once ran Credit Suisse First Boston's Technology Banking Division.
And Fed Chairman Alan Greenspan delivered a mixed view of the economy this week. Greenspan told a Congressional committee that the recovery has resumed after a weak period this spring. But he also had dire warnings about the future if something is not done to reduce the record deficit.
Sad to say another week, another round of layoffs for a major U.S. Airline. Delta Airlines announced Tuesday that its turn around plan includes cutting 7, 000 jobs over the next year and a half. Delta will also reduce pay and benefits from many of the employees it keeps, and says it will eliminate Dallas/Ft. Worth as one of it's major hubs.
Delta shares are trading near their 52 week low, and they're off more than 90 percent from where they were five years ago, unbelievable. That makes Delta our stock of the week. And you know what is interesting to me is that it sounds like Delta is moving more and more to the low cost carrier model. Less hubs, fewer kinds of aircraft, they're reducing the numbers of kinds aircraft they fly. And the whole notion of having one airline being the answer to all problems, being the commuter airline and going city to city and overseas, that whole model may be disappearing. LISOVICZ: It is a little confusing, right?
Because it is revamping Delta, right?
For instance, it is drastically eliminating its flights from Dallas, really handing it over almost to American, something like 21 flights where there were hundreds of flights coming from -- coming from Dallas. But not only that, it started a discount carrier, Song. And none of the changes are happening at Song. So, it is a little confusing.
WASTLER: What's interesting at Song, and oddly enough they're putting more money in it, Song, hasn't worked that well for them. I mean, they're -- you know, they're still big honking airline doing things the big old honking airline way. They haven't done any of the innovations really or grabbed that market share like Jet Blue, some of the other carriers that are out there right now. I think it is a case you can't teach a dinosaur to dance. You know, you just can't do it.
SERWER: And U.S. Air is on the brink too, you guys. We've been seeing that. These businesses, they're at the mercy of three things that are very difficult to control. Labor prices, very strong unions, fuel prices, you got to buy a lot of fuel, and, of course, interest rates because you to borrow a lot of money to buy airplanes. The answer is not necessarily nationalizing airlines, because if you look at Europe, same problems there with nationalized airlines. What is working in Europe, discount carriers like Orion Air. So we're going to watch this whole thing unfold. We have been talking about this, the future of U.S. Air in doubt, in jeopardy.
LISOVICZ: A Second bankruptcy, very possible.
SERWER: It would be very dire. And very hard for them to come out of that, I think. And I really think some of these names will disappear. They're either going to go kaputski (ph) or they're going to be merged together.
LISTOVICZ: And we didn't mention Alaska Airlines which is letting go of hundreds of people at that airline. It seems safe to say that there will be at least one fewer airline, which one we don't know. So many of them are on the ropes.
SERWER: Make it tougher to fly to Nome.
SERWER: All right. If you need a bathroom, break or snack, now is the time to go. We have got to step out for a second. But when we come back, no holds barred in the presidential campaign. Find out whether George Bush or John Kerry will come out on top in November.
Plus, the big game. We'll tell you where the NFL has become a cash machine. We look at the league's game plan.
And point, click and celebrate as the Internet hits a major milestone. We'll check the best and worst of the Web. First this edition of "Money and Family."
LISOVICZ: This year American families expect to spend about $73 shopping for school supplies. Here is some tips that will help you and your family make the most of your back to school dollars. The smartest way to shop this year is online. You'll save money and avoid those spontaneous purchases at the mall. But before you logon, be sure you make a detailed shopping list with your child. Check out some of the best bargains online at wholesaledirectschoolsupply.com. And remember, it's usually cheaper to buy in bulk. If you can split your order with another family it will cut expenses even more. And finally, buy generic office supply store brands when ever you can. Those number two pencils are no better if they're designer or not.
I'm Susan Lisovicz, from "Money and Family."
KELLY WALLACE, CNN ANCHOR: I'm Kelly Wallace in Washington. More IN THE MONEY in just a moment. But first here's what's making news now.
Remembering the victims of September 11th on this the third anniversary of the attacks. Relatives of those killed in the hijackings read the names of the victims at ground zero today. Other solemn ceremonies were held in Washington and Pennsylvania, scenes of the other two attacks.
Hurricane Ivan is currently bashing Jamaica with maximum sustained winds of 150 miles per hour. Forecasters say it is slightly weaker but still strong and dangerous. It could dump as much as 12 inches of rain in its wake. Forecasters say Ivan is moving to the Cayman Islands next.
A U.S. army specialist will spend eight months in confinement for his role in the abuse at Iraq's Abu Ghraib Prison. Specialist Armen Cruz, the first military intelligence operative charged in the scandal pleaded guilty to charges of conspiracy and maltreatment of prisoners. He will also be demoted and given a bad conduct discharge.
I'll have all the days' news at the top of the hour. Now back to IN THE MONEY.
SERWER: Any way you slice the political pie, President Bush comes out the winner this week. The most recent national poll showed the president leading John Kerry by anywhere from 2 to 8 points. And he's managed to close the gap in some states where Kerry once had a significant lead.
Joining us to talk about how the Kerry campaign is reacting to this is Ron Brownstein; he is the CNN political analyst and a journalist for the "L.A. Times." Ron welcome. RON BROWNSTEIN, CNN POLITICAL ANALYST: Hi, thanks for having me.
SERWER: Hey so is Bush really pulling ahead? And why is that the case?
BROWNSTEIN: Well, I think clearly the margin may vary in the poll but there is no question about the trajectory. President Bush has pulled ahead. And I think that if we look at it in sort of a context of the last five or six weeks, what he's done is shift the focus from why voters may be reluctant to re-elect him, to why voters may be reluctant tone trust power to John Kerry.
Beginning with the questions about Kerry's service in Vietnam and in August. I think it has been culminating in a very effective Republican convention that emphasized and really underscored the risks of change. Bush has both raised doubts about Kerry and perhaps more importantly tamped down some of the doubts about his own performance.
And all of these numbers, the most important one to keep an on eye I think is the president's approval rating and that is inching up steadily to a rarity where he would move toward a safety zone for an incumbent seeking re-election.
WASTLER: So Ron how is Kerry reacting to this? Is he trying to -- how is he trying to reposition himself and overcome this gap?
BROWNSTEIN: Well, I think Kerry is finally accepting what I think is sort of a really inescapable reality. The job of a challenger is to challenge the record of the incumbent it really doesn't seem that complicated when you frame it that way. But from the spring on, and what we really saw the Democratic Convention was a Kerry strategy based on the assumption that there was a narrow majority of the country ready to change direction and his job was more to reassure people that he would be an acceptable alternative than to persuade them to fire John Kerry.
I think we talked about this the weekend after the Democratic Convention. They did a lot of things well there. But one thing they didn't even try to do was frame a case for change. Now that, itself, has changed. Starting last Thursday night when he went out and held the rally in Ohio at midnight after President Bush's speech, Kerry is now aggressively making the case, trying to make an argument that President Bush's choices led the country in the wrong direction and we have to change direction.
That is really the argument that many Democrats I felt that wanted to hear more of all along. The question, of course is it too late. Has President Bush established a to strong a lead and to find the race even more importantly in too solid of terms.
LISOVICZ: The argument has changed, Ron, for Kerry, and also some of the personnel has changed as well. Some very well known names from the Clinton camp have -- are aiding right now camp Kerry. The Clinton campaign was well known for its war room, not only responding very quickly to an opponent's attacks, but anticipating the attacks. Do you see that happening? Is it a better-run machine right now? BROWNSTEIN: Well if nothing else, there are going to be fewer Democratic consultants to provide off the record quotes to reporters like us criticizing John Kerry because they're all working for him now. I mean they have -- I mean this is like Noah's ark, they have two of everything. They now have multiple layers. What they decided to do was addition, not subtraction.
They really didn't get rid of anybody significant but they brought in a whole bunch of new people. Yes I do think the message is sharper. I mean the way I phrase it is they didn't fire the campaign manager they fired the message. And they have fundamentally reversed their theory of how you win this election. Now they are making a very aggressive case for change, they are going out there every day trying to focus on the news of the day.
For example this week with when the report came out from Kaiser, the annual survey of health insurance costs finding that once again premiums rose by more than double digits last year, leaving more companies to stop offering insurance to their workers, the Kerry campaign was right on that, they are going to be supposedly on Monday when the assault weapon ban expires be right on that.
So they are I think going to have a sharper more focused case for change, but, again they have allowed President Bush to build a construct in this race over the last five weeks or so that is very adventurous to him. Once again he has enormous leads over Kerry on issues like who would be a strong leader, who can protect the country against terrorism and before Kerry can shift back to the domestic issues of where President Bush may be more vulnerable, he has to re- establish some credibility on that security front.
SERWER: Hey Ron just quickly I don't know about you, but I'm looking forward to these debates coming up. Can you talk a little bit about that, when they're going to be on and how many and where they're going to be and what the impact will be?
BROWNSTEIN: Well, first of all, the two sides are still negotiating. The commission -- the Independent Commission that runs the debates wants to start them on October -- I'm sorry on September 30th in Miami and continue them over about the next two weeks including Missouri, Arizona, and Ohio if memory serves me right. The other place they want to do them. High powered negotiators on both sides. There have been some hints the White House only wants two debates, although others have shot down that idea.
The debates can be important in 2000 they were the turning point in the race. At this point in 2000, Al Gore was ahead of George Bush by about the same margin as George Bush is now ahead of John Kerry. But in those debates some of the doubts that people had about Gore resurfaced, the sighing, and the rolling the eyes. Bush campaign effectively sort of fanned some minor questions into major ones about whether Bush misrepresented himself.
So clearly they are an opportunity, the most important opportunity for Kerry to reverse the way things are going. I would say that he does, I think, need to show some signs of re-establishing some initiative before then, regaining some momentum before then. Finding a way to shift focus to the areas where people are still hesitant about Bush's performance on the economy, health care and the way things are going in Iraq primarily.
WASTLER: Hey Ron real quick, the Nader factor, can he blow some swing states for Kerry or is he out of the picture now?
BROWNSTEIN: I think he still can. If Kerry can get close. If this does revert to where we started this summer, kind of a 50/50 election and a 50/50 country, it doesn't take much to tip places. And although Nader has been kept off the ballot in some states, he is going to be on in a number of states like Ohio and New Hampshire that look to be very close.
LISOVICZ: Hey Ron have you covered a more exciting presidential election than this?
BROWNSTEIN: Well, I think 2000 was a high point because it was so close for so long and so many states, this one will have to see whether Kerry can regain the -- re-establish a close race the way Bush did in 2000 when he was in a similar position. But when you think about the emotional intensity that I see out there among voters and donors and activists on both sides, to me it is unprecedented. This is an election people care about a lot and that is really striking to see.
LISOVICZ: Ron Brownstein, CNN political analyst and journalist at the "Los Angeles Times." Thanks for joining us Ron.
BROWNSTEIN: Thank you.
LISOVICZ: Lots more to come here on IN THE MONEY. Up next, pigskins and greenbacks. We'll tell you why the NFL is at the top of the heap when it comes to raking in the cash.
Also, Birthday.com as the Internet turns 35. We'll look back at some of the Web's hits and misses. Don't go away.
LISOVICZ: The 2004 Pro football season is underway. And even before the first kick off the NFL had a lot to celebrate. It is the only major professional sports league in great financial shape. In fact every NFL team is expected to make a profit this season.
Joining us now to talk about why the league is so strong is Kurt Badenhausen, senior editor of "Forbes" he joins us from "Forbes" offices in New York City. Are you ready for some football?
KURT BADENHAUSEN, SENIOR EDITOR, "FORBES:" We're ready.
LISOVICZ: That wasn't that enthusiastic. But let's talk about finances. It is not just the high-ticket prices. NFL ticket prices are by far the most expensive of the big four professional sports, basketball, hockey and baseball. BADENHAUSEN: Yes. They're about $55 on average. The next highest are basketball prices and hockey prices which are both around $45. But the NFL stands out clearly because of the national television contract. Where each team gets about $80 million a year. You add that with cost certainty in the form of a salary cap, that caps player costs at 65 percent and that's why the NFL is by far the most superior sports league.
SERWER: All right Kurt, I'm going to take a little bit of the issue with you. First of all I'm ready for some football. I'll be really enthusiastic about it. The great sportswriter Frank Deforbes has written about this a little bit and he says the reason why football is king in America, and I'm going to have to whisper this, so listen, is gambling. Gambling. It is all about gambling. This is the sport that America loves to gamble on and that is why this sport does so well. Isn't that true?
BADENHAUSEN: There is no denying that gambling is a huge part of the success of the NFL. Gambling and fantasy leagues have really generated a lot of interests in the NFL over the last 10, 15 years. And without a doubt that's a big part of it. But, you know, who is getting rich on this the owners are the ones who are profiting from it.
WASTLER: Kurt in my day when you went to a football game it was cold it was stony, you got maybe a hot dog, maybe a brew and that's it. Now you go, you get luxury suites, you got -- we can cater your food to you, you can get sushi, you can get chips, you can get wine. Wine at a football game that is a bad thing. Tell me how much the stadium role is playing in football economics.
BADENHAUSEN: Yes, the stadium is a huge part of the NFL right now. That's what is differentiating the teams at the upper echelon to the teams down at the bottom. New stadiums in places like Washington. Their luxury seating in terms of luxury boxes and club seating generate $70 million dollars a year in revenue for Daniel Snyder. You know that is really separating the teams at the top.
In New England you got club seats, you know cushions, a little wider, you get access to a private club, costs you $750 a ticket. And you got to lock into a ten-year lease.
SERWER: Susan you buying?
LISOVICZ: No, I'm not. But I'm going to channel Jack Cafferty now. Because you know when you start talking about the Redskins and the Redskins are by far the most profitable, the most valuable NFL franchise. It is because, not only because of Joe Gibbs is back, right, it is because of the whole stadium arrangement?
BADENHAUSEN: Yes, Joe Gibbs is really generated a lot of interest down in Washington. That was one of the reasons they were able to add 5,000 seats this year to the stadium. FedEx Field, the capacity is about 92,000 people, which is more than 10,000 bigger than any other stadium. But the Redskins are far superior to any other franchise when it comes to revenues and profits. The team earned a profit of about $70 million last year.
LISOVICZ: Stop gloating Andy.
BADENHAUSEN: Three times the league average.
SERWER: Yes well as a Redskin fan, I'm delighted that we have devoted an entire segment to the Redskins in this program. Anyway, even though Daniel Snyder is kind of a difficult character if you ask me, can you explain just quickly, though, how the economics of football are different from the other league? Why does it work so well?
BADENHAUSEN: Well, there are two reasons, really, why the economics of the NFL are far superior to any other league. One, the national TV deals. Last year each team got $81 million from the national TV deal. And the other thing really comes down to cost certainty. The salary cap in the NFL is much stricter than in any of the other sports and limits revenues to 65 percent of revenues.
WASTLER: It is not always a success story for the teams, is it? I mean the Cardinals I think lost money pretty much in the previous season, right? Why is that? And what is the economic problem for them?
BADENHAUSEN: Well, the Cardinals are a rare case. They're the only...
SERWER: A rare bird.
BADENHAUSEN: They are a rare bird, yes.
WASTLER: That rarely wins.
BADENHAUSEN: That rarely wins, yes, which is part of the problem. But usually wins and losses don't really determine your success in the NFL, financially at least. The Cardinals are a rare case where they have won one playoff game in 50 years; attendance last year for the Cardinals was 290,000 people for the eight game seasons. That's 140,000 people less than the next lowest team.
Ticket prices are the lowest in the league. They've got a terrible stadium situation. They share it with Arizona State. But yet the Cardinals, because of the national TV deal, and because of the NFL's economic structure, are worth $550 million, which is more than any other franchise in basketball, hockey or baseball besides the New York Yankees.
WASTLER: So real quick Matthew, which is more important to the Cardinals then, get a stadium or start winning games?
Which gives them more economic payoff?
BADENHAUSEN: The stadium is going to really pay off for the Cardinals. They're getting a new stadium in 2006 and assuming the fans show up which they tend to do in new stadiums, the Cardinals will certainly move up the list off the bottom of the list.
LISOVICZ: You know I hate to say this, but the New York teams came in very low on the "Forbes" list, number 20 for the Giants and 22 for the Jets so we'll just leave it at that and hope for the best with the new season. Kurt Badenhausen, senior editor at "Forbes" magazine. Thanks so much for joining us.
BADENHAUSEN: Thanks for having me on.
LISOVICZ: Lots more to come here on IN THE MONEY. Coming up give a jaw muscles a workout with a test of tricky tongue twisters. Try saying that three times fast. Our fun site of the week is next.
And put our producers to the test with your e-mail insights. Drop us a line, the address is firstname.lastname@example.org.
LISOVICZ: In case you missed it, the Internet just celebrated its 35th birthday. It is middle aged. Like all things, the Web has its good and bad points. Joining us with his list of pros and cons is Web master Alan Wastler; he also has our fun site of the week.
WASTLER: Oh yes the -- who would have thunk it, it is so old. Back in 1969, some college professors and students, hey, let's connect the two computers and get them to talk. Look at that. And there it was. And then decades after that, protocols, domain names, and now it is all big and honking. And I decided in honor of it's birthday just to review what I think is good and bad about it.
First let's start with the good.
SERWER: The good.
WASTLER: The good, all right, shopping. You can shop so well on the Internet, right? Think about it, I can just kiss Jeff Bezos (ph) every Christmas. Because I don't have to go to the mall and all the stuff in there and everything.
SERWER: Right on top of his baldhead huh?
WASTLER: Yes. Now on top of that, banking. And investing. I stay so much more on top of my 401k these days and just watching what is going on in my bank account, somebody says we never got your check. Really? Click, click, click, I see right here you cashed it. So that is wonderful as well. Moving along, we also got humor. Think about it. Think about the jokes --
LISOVICZ: Too much humor and a lot of porn.
WASTLER: You can never have too much humor.
SERWER: How do you know?
WASTLER: I mean think about jokes that go over the Turkish stud, the dancing hamsters, jib jab which we aired on this program. I'll bring back the Turkish stud. You never did the Turkish stud?
WASTLER: I could kiss you.
LISOVICZ: I'm staying out of it.
WASTLER: Of course all bar bets now can be settled like that. You just go to the Internet and...
LISOVICZ: And Google.
WASTLER: Google it, you figure out the answer. Now there are bad things, too.
LISOVICZ: Tell us.
WASTLER: The obvious are you know the scams, fishing and porn and those are obvious ills of society. They've gone on there. But the Internet has brought its own form of evil, pop-ups. Pop-ups. Think about it. You never used to have that aggravation like a few decades ago, did you? Now they're here.
LISOVICZ: You can't get rid of them.
WASTLER: They're all over the place. I could show you some tricks.
LISOVICZ: Please do, right after the show.
WASTLER: You can kill them but it is still quite an effort. Web cams, now some people argue with me on this. And they say Web cams, I can find out what the traffic is doing. No, it is usually pointed at ugly people. I don't care how...
LISOVICZ: What about blogs?
WASTLER: Blogs, that is my final. I hate blogs. Keep your diary to yourself.
LISOVICZ: If it is Hemingway, that's one thing.
SERWER: Which part did Al Gore have to do with?
WASTLER: He was -- he sort of was taking credit of all things. Now, back to humor, and trivia and things like that. All right, we all are involved in speaking from time to time. The tongue twister database. This is a nice little -- it is a fun little site, lots and lots of tongue twisters. We selected three. Who would like to read number one?
SERWER: There you go Susan.
LISOVICZ: OK, all right. One-one was a racehorse. Two-two was a one, too. When one-one won one race, two-two won one too.
WASTLER: Very good.
LISOVICZ: Go ahead, Andy. Pressure is on.
SERWER: I'll read the same one. This one is easy. The swan swam over the sea. Swim, swan, and swim. Swan swam back again. Will swum, swan.
SERWER: Swam the poor swan.
SERWER: Sounds like Chris Berman. Never mind.
WASTLER: OK, and I'll take number three. Ready. Ruby Rugby's brother bought and brought her back some rubber baby-buggy bumpers. That wasn't so hard, was it?
SERWER: You must have practiced.
LISOVICZ: Get a life. That's what I say.
SERWER: He practiced.
LISOVICZ: I think you had an unfair advantage.
WASTLER: Maybe. Maybe.
LISOVICZ: OK, I think in terms of your list on Internet, sounded like a Clint Eastwood movie title. The good, the bad and the ugly, right?
WASTLER: There you go Susan.
LISOVICZ: All right thanks Alan. Coming up next on IN THE MONEY. It is time to hear from you as we read some of your e-mails from the past week. And you can send us an e-mail right now too; we are at email@example.com.
LISOVICZ: Now it is time to read your answers to the question we asked just before the Republican National Convention about what you want to hear from President Bush. A few dozen of you wise guys said you wanted to hear that he was resigning. But there were some more realistic answers. And we'll read them now. That's right. It is not going to happen.
Roger in Florida wrote, " I want to know what the president plans to do so our 401ks will grow so we can retire. And I want to know what he is going to do to make health care more affordable." Good answer.
Kathy in Texas wrote, "I want the president to announce that Osama bin Laden and all his cohorts have been captured."
WASTLER: Here, here.
LISOVICZ: And Red in Arizona wants the president to keep it simple. "I want the president to say: I accept your nomination for president, now back to your regularly scheduled TV programs." If only.
Now for next weeks e-mail question of the week. Do you think all the votes will be counted in this year's election? Hanging Chads, all that. Send your answers to firstname.lastname@example.org and you should also visit our show page at money.com/inthemoney. That's where you'll find the address for our fun site of the week.
Thanks for joining us for this edition of IN THE MONEY. Thanks to "Fortune" magazine editor at large Andy Serwer. And money.com managing editor Alan Wastler. Join us next week on Saturday at 1:00 p.m. Eastern and Sunday at 3:00 p.m. Or catch Andy and Jack, he will be back all week on "AMERICAN MORNING" starting at 7:00 a.m. Eastern. Enjoy the rest of your weekend.
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