It must be the biggest secret since we cracked the Nazi code in WWII. NFL owners and administrators were aghast when their profit and loss statements were made public, a product of Al Davis’ suit against the league. “We’re not making that kind of money,” they collectively screamed from offices mostly paid for by the cities they’re in and the fans who support them. “It’s a complicated accounting process,” they yelled.
Of course it is.
When you have money being thrown at you from so many different directions, you need a fleet of full-time accountants to keep track of it. From club seats to concession, parking, sky suites and television money, not to speak of the average ticket going above $50 dollars, the accounting takes a while.
Actually, there’s nothing the matter with making money. The NFL is not a charitable endeavor. The owners didn’t get involved as owners to lose money, and they shouldn’t. They should make money. They’re taking the risk, they’re running the operation, they’re coming up with the short and long range plans, so making money is part of the equation.
When the Jaguars were just a twinkle in Wayne Weaver’s eye, he knew they wouldn’t turn an actual profit until eight years of operation. Certainly they started in debt, as any $140 million outlay will do to most people, but they’ve been recouping the initial cost at a breakneck pace and will move into the black.
The difference between owners who have a profit and owners who are losing money could be creative accounting, or it could be good business acumen vs. bad. In most cases it’s a better stadium deal, more club seats and more sky boxes. The way the NFL counts their money, the club seats and sky boxes only count for the owner who operates in that stadium. They don’t count in the overall picture. The more club seats and sky suites, the more money directly to the bottom line. The better the stadium deal, the better opportunity to make money.
Paying players less money is not part of the deal. A little know byproduct of the salary cap is the salary floor. The percentage of revenue that’s allocated to the players has a maximum, this year totaling just under $64 million. The owners have to pay a minimum to their 53 players on the roster, about 3 percentage points less than the maximum. This keeps some rogue owner from stripping his team to the bare bones and hoarding the money. It’s supposed to keep some parity in the league and keep it competitive.
The television money guarantees that every team can make money. Before even one seat is sold, one beer poured, one T-shirt sold or one car parked, each team gets over $70 million from the television contract. Take the players salaries out of that and factor in an operating cost, and you can see where the league is set up to make money. Sweetheart stadium deals, higher concession prices and lucrative parking contracts will have an effect on every owners bottom line.
The fans are willing to pay for a quality product, if they believe the owner is trying to win. In fact, in it’s current cycle, the NFL almost ensures that if a team is just slightly better than .500, they look competitive. Doubling the cost of a sky suite in 5 years puts a burden on corporations, but they can make a decision on their client entertainment budget and their tax write off status. The owners are pushing the envelope with the everyday fan though.
As the seat prices go up, and the concession prices squeeze their last disposable dollar, fans will only ask; How much is enough?