How much does it really cost to run an NFL franchise?
The 2011 season is in jeopardy and partly because there is no real answer for one fundamental question.
How much does it really cost to run a National Football League franchise?
The NFL and Players Association are locked in a labour dispute that revolves around that question. The owners argue that the current financial model isn’t viable and the players union counters, ‘says who?’ The financials records
of NFL franchises are not made public or made available to the players union. The owners want a bigger piece of the revenue pie because they insist that they aren’t making enough money. It isn’t easy to digest the notion that billionaires aren’t making enough
money, so the players union has been asking that the NFL release its financial records to the union.
Owners say that they are putting more of their money into stadiums and are shouldering the ever-increasing costs of their maintenance. “We have a healthy business,” NFL’s executive vice-president of business operations Eric Grubman
said. “We're not losing money. But we don't have a healthy business model.” Whatever that means.
Stadiums are expensive and the players don’t have to pay for them. In the past decade, the NFL has spent $4.4 billion on new stadiums. They are trying to build four more new stadiums, including one in Los Angeles for a new NFL
franchise and a replacement for the Metrodome. NFL’s lead negotiator, Jeff Pash said that the NFL has been unable to make progress on new stadiums since the current collective bargaining agreement was signed. Not that no new stadiums were built. Construction
finished on the New Meadowlands Stadium and it debuted this season but the deal for the construction of the stadium, which doubles as home for both the Jets and the Giants, was signed before the Collective Bargaining Agreement was signed in 2006.
“We've said that we don't have anyone to blame but ourselves,” said Pash. “But it's not an agreement that has worked out in a satisfactory way. So rather than kick the can down the road another four or five years, let's figure
out how to get a system in place that will be positive for the players and positive for the clubs.”
The NFL has been generating billions of dollars in revenue each year. Almost every game was sold out and the playoffs decimated viewership records. A record 59.4 million viewers watched this week’s American Football Conference
Championship game. More fan interest means more revenue in the NFL. So what happens to all that money?
The closest we can get to an answer is in Green Bay. Current NFL policy dictates that there should not be more than 32 owners for teams that make up the league and that an owner must have 30% stake in the franchise. The only exceptions
are the Green Bay Packers. The Packers are based in the smallest of any NFL teams. Green Bay is home to just a 100,000 people. The Packers were privately owned like every other franchise but when they ran into financial troubles they went public. As of 2005,
112,015 shareholders owned the Packers.
All the other NFL franchises are based in massive cities. It is reasonable to assume that the each one of them generates more revenue than the non-profit Green Bay Football Corporation.
In the four years since the current CBA was signed, the Packers operating profit fell from $34.2 million to just $9.8 million this year. Their operating expense has skyrocketed from $166.2 before 2006 to $248.2 in 2010. During
the same period, their revenue has increased by only $50 million.
“There’s a strong sense that the current agreement went too far to the players and that it was one-sided,” Packers president Mark Murphy said. He said that player costs were growing twice as fast as revenue. Maybe the owners really
do have a case.
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