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Revenue Sharing and North America's Major Pro Sports Leagues

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Revenue Sharing in the National Football League
Nick Collins celebrates his

Nick Collins #36 of the Green Bay Packers celebrates with teammate Clay Matthews #52 after Collins returned an interception for a touchdown against the Pittsburgh Steelers during Super Bowl XLV at Cowboys Stadium

Getty Images / Mike Ehrmann
The NFL's revenue-sharing model is universally lauded as the reason pro football continues to thrive in tiny markets like Green Bay, Wisconsin.

The bulk of the league's revenue - approximately $4 billion in 2011 - comes from broadcast deals with NBC, CBS, Fox, ESPN and DirecTV. That income is shared equally among all teams. Income from licensing deals - everything from jerseys to posters to team-logo beer coolers - is also shared evenly.

Ticket revenue is split using a slightly different formula: the home team keeps 60 percent of "the gate" for each game, while the visiting team gets 40 percent.

Other sources of revenue - things like the sale of luxury boxes, stadium concessions and the like - are not shared, which does give teams in bigger markets or with state-of-the-art arenas a significant edge in profitability. The new CBA attempts to remedy that in two ways. First, the league will set aside a percentage of revenue in a stadium fund, which will be used to match teams' investments in their facilities. Second, there will be an additional "luxury tax" levied on high-revenue teams, with the receipts set to be distributed to the lower-revenue clubs.

While this system is very effective for the NFL, there are a number of reasons why it might not work for the NBA, where the bulk of each team's revenue comes from local sources - ticket sales, local and regional television contracts and the like.

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