“The New York Jets beat the Baltimore Colts in Super Bowl III, 1969. Besides being perhaps the most stunning upset in the history of sports…Joe Namath's "guaranteed" victory over the mighty Colts paved the way for the American Football League-National Football League merger”
Wayne M. Barrett—USA Today Magazine, Nov. 1999
Barrett’s line is a commonly held belief but it's clearly not true. The AFL and NFL announced their merger plans on June 8, 1966, over two years before Super Bowl III so that game couldn’t have had anything to do with the merger. The two leagues agreed in 1966 to have their champions play in a Super Bowl for the next four years, they instituted a common draft starting in 1967, and a complete merger with interleague play was set for 1970.
Now Super Bowl III nearly did play a huge role in the NFL-AFL merger, but probably not in the way you might think. The merger plan looked especially good to the AFL owners after the Green Bay Packers crushed the Chiefs and Raiders respectively in the first two Super Bowls. The AFL might indeed have been the inferior league their detractors had claimed them to be, but regardless they'd still get to suit up with the big boys permanently and bask in the NFL’s cache. However, when the AFL champion Jets and Chiefs each pulled off shocking upsets in the next two Super Bowls some AFL owners started to have second thoughts. Riding high on their new-found respect and thinking themselves to now be every bit the equal of the NFL, the AFL suddenly considered remaining an autonomous league that would play the NFL in the Super Bowl only. And some NFL owners had second thoughts too. Their 16 teams were in the country’s biggest markets and with the common draft established there would be no more pesky bidding wars for players between the leagues to empty the owners pockets. Just one problem--Paul Brown couldn't have hated that idea more. Until 1963 Brown had been the only coach the Cleveland Browns had ever known. One of the game's great innovators, from 1946 to 1955 the legendary Brown led his team to the championship game every single year, winning 7 championships in all (including 4 in the All-American Football Conference). Brown led his team to two more playoff appearances and only once had a losing record (the year after Otto Graham retired). Yet after becoming the team's new majority owner, Art Modell, foreshadowing his later and greater betrayal of Cleveland, fired Paul Brown after the 1962 season. Ever since, Brown bided his time waiting for a chance to get back in the game. In 1968, the AFL gave Brown their newly created expansion team the Cincinnati Bengals to own and coach. What Brown really wanted was an NFL club but he took the AFL one with the understanding the leagues planned to merge in 1970. With the merger now in jeopardy, Brown’s dream of NFL ownership was about to go up in smoke. PO’d, he threatened to sue if the merger didn't go through as scheduled. Also, with the two separate leagues colluding in that common draft, other legal challenges of an anti-trust nature probably loomed as well. So Pete Rozelle locked all 26 NFL and AFL owners in a room until they all figured out a plan. Al Davis, general managing partner of the AFL’s Oakland Raiders, came up with the winning compromise. The NFL would move three teams to the 10-team AFL to create two 13-team conferences of three divisions each and the three teams that ended up moving (Colts, Steelers, and Browns as it turned out) would get three million bucks apiece. Showing his true jackass self early in his career, Davis then vetoed his own plan, demanding he get veto power over the realignment first! But Oakland's majority owner nicely undercut Davis, overruled him, and voted with the other owners to ratify the new deal. They wound up having Rozelle's secretary draw slips of paper with various combinations of teams out of a hat to determine the lineups of the six divisions.
So rather than “paving the way” for the AFL-NFL merger, the Jets’ win actually helped to endanger the already existing merger agreement. Now the win, especially combined with the Chiefs’ win the following year, did help the public previously skeptical of the merger to see the AFL as equal in quality to the NFL. But the merger would have happened regardless of the outcome of Super Bowl III.
Source: Total Football II.