http://mmqb.si.com/mmqb/2015/07/29/tom-brady-appeal-packers-financial-report-nfl-prosperity
NFL Business is Booming
The Packers' annual financial report is the only public peek into the NFL's books, and this year's summary revealed some eye-popping numbers for a league battling crises at every turn.
by Andrew Brandt
Business is booming
The Green Bay Packers Annual Report, released earlier this month, represents not only the financial statement on the condition of the Packers but also presents a much more impactful financial statement about the NFL as a whole. Based on a single line item in the statement, the NFL has never been more prosperous and the brand only seems to be getting stronger.
Despite a year of crises in integrity, domestic violence scandals, questions of leadership at the highest levels, the interminable Deflategate saga and even musings about whether the game can/will survive, business is booming. All of the above were just fender-benders at the side of the road in the NFL’s highway to opulence. Move along, nothing to see here.
Packer Report
Having managed player costs at the Packers for nine years, I vividly remember “Annual Report Day” every year. The public, fans and media could all peer inside the league’s only publicly held franchise and have a glimpse at our revenues, expenses and (inevitable) profit. As the NFL’s only “open book,” that day of the year left us feeling, well, a bit violated.
As to those numbers, total revenue has skyrocketed in the past three years from $300 million to $375 million, a 25% increase. And in the past year, team revenue took a 16% jump alone, up from $324 million. As to this year’s profit number of $39.4 million, that is another 16% jump from the prior year. The Packers are in good shape on and off the field.
Photo by Morry Gash/AP
It was amusing to me that each year on Annual Report Day I would hear from my agent friends with suggestions as to how I could spend some of that profit (on their clients, of course). There were a couple of times where I politely chuckled at that comment and didn’t hear laughter on the other end; the light-hearted conversation turned a bit more conflicted. I would tell them that we certainly had plans for that profit—usually plowing it back into our football operation—but that I appreciated their offer to take that money off our hands.
The conversation about Packer profit and our players was on a micro level. On a more macro level, there is always a deeper conversation between the NFL and the NFLPA about the only team-reported numbers available.
The Books
In 2011, NFL owners came to the collective bargaining negotiations requesting (demanding) a new revenue split due to a changed economic environment since the last CBA in 2006. Thus, the NFLPA’s response—“
OK, just to verify: show us your books!”—was a reasonable one, although denied by the owners. Thus, in debating league revenues and profitability, the NFL and NFLPA have often been left to debate the only books available for public viewing—those of the Packers.
Of course, the union and the league have different views on the Packers’ success off the field. From the NFLPA’s view, if the smallest market in all of professional sports can show healthy profits, it is not a stretch to project greater profit margins in larger markets. From the NFL’s point of view, the Packers and their fan base are unique and not representative of all teams. Thus, the negotiation as to “what the Packer books mean” stalemates, with the truth a mystery due to the owners’ unwillingness to show additional data points.
League Distribution
Although the vast majority of the information in the Annual Report is Packer-specific, the key line item indicative of NFL health is the “League Distribution.” This is the amount each of the 32 teams receives annually from the NFL from shared revenue, primarily broadcast and national licensing.
The amount of that check this year was staggering: $226.4 million, an eye-popping 17% increase from last year’s distribution of $187.7 million. In other words, before any team in the NFL turns the lights on, it knows it has $226 million to work with. Putting that number in perspective, the team Salary Cap for 2014 was $133 million meaning that, if teams on average spent to the Cap they have almost $100 million leftover after player costs to use for operations and, of course, profit. And, most importantly, that number is only going up.
As to the Cap, it rose 7% while the League Distribution was rising 17%. And, as for the commensurate rise in team asset values, well, those are skyrocketing. (The Bills, valued at $700 million to $800 million, recently sold for $1.4 billion). In case you haven’t been paying attention, these NFL owners are some diabolical negotiators.
Human Shield
As written often in this space, an unofficial and unsung part of Goodell’s job description is to act as human shield for criticism for the NFL owners. That was no better illustrated than over this past year, when he received loads more criticism about levels of discipline for players involved in domestic violence than the owners of the teams, who applied
no discipline.
Owners are thankful to have Goodell as their piñata when necessary. Conversely, when they receive their $226 million check this year from the league, he will get the credit. This is yet another reason why the debate about Goodell losing his job was more an academic discussion than a practical one.
These are truly salad days for NFL owners. The league distribution virtually ensures a profit even from the most mismanaged of teams. Record level broadcast contracts are now kicking in, amplified by the recent manifold increase in the DirecTV deal. The threat of billions of dollars in exposure in a concussion lawsuit has been largely quelled with final approval of a settlement, pending some lingering appeals. A team-friendly CBA is in place another half-decade, ensuring labor costs at a reasonable level. And they are led by a stone-faced commissioner willing to take the hits for them at all turns.
As we open training camps in the NFL, already a time for each team’s fans to look at their squad with rose-colored glasses, the view from an NFL owner’s chair is plenty rosy even without those glasses.
Getty Images
