Throughout the current NFL labor dispute, the supposedly defunct NFLPA has responded to calls from the owners to accept a smaller share of the revenue pie with the rallying cry, “show us your books!”
This resonates easily with the public, which sees the logic of demanding the owners prove their claim the current CBA is untenable and that it actually discourages owners from making the necessary capital investments in their team.
Of course, I’ve asserted from the beginning that this is nothing more than a shrewd PR play by the NFLPA.
The NFLPA knows full well that the owners won’t open their books; they never have. The union command also knows there is no necessity for it. After all, former NFLPA head Gene Upshaw negotiated four CBAs without even the transparency given today, including the current CBA, which has proven so one-sided for the players that the owners are willing to stage a lockout rather than continue it.
The bigshots of the NFLPA also have correctly gaged the public’s mood regarding the rich, which is hardly prophetic considering we have a president set to run for reelection on a “tax the rich” platform.
The fact that the union has full audit rights to all team revenues and player costs, the two crucial numbers in this fight, are easily drowned out by an “open your books” refrain sung to a populace already prone to class warfare.
It’s a simple game of razzle dazzle.
As Billy Flynn famously asked, “Who can hear the truth above the roar?”
There are three weaknesses to this strategy. The first two are already full in play and therefore aren’t the focus of this article. The first being that most of the public sees the players as rich themselves, which makes them about as worthy of sympathy as the owners. Secondly, there’s the fact that the longer the dispute goes, the less the public is going to care whose actual fault it is.
The third, which I am going to discuss in detail as it directly concerns the Packers, is the fact that one team, of course, already HAS opened its books — the publicly-owned Green Bay Packers.
As usual, the Packers released their financials the second week of July.
As usual, the numbers were granted momentary attention in the media, but we’ve hardly heard a word about them since. Why? Well, because the vast majority of the media coverage during the league’s labor dispute has wavered between objective to decidedly pro-player.
The alpha dogs at ESPN, Fox Sports and CBS Sports have hardly been covert in pushing the union agenda. I’ve seen articles that I doubt would have been worded differently if written by the lawyers of the NFLPA themselves.
Of course, this would only be true if the financials released by the Packers support the owners’ argument, and that they do, very clearly. Though the Packers were 15th in revenue last year, they only saw a net profit of $5.2 million.
An quick review of the Packers’ financials for the last four years confirms that player costs have risen at twice the rate of team revenues. As such, it doesn’t take a CPA to figure out the team cannot remain profitable for much longer under the current circumstances.
In fact, as a direct consequence, the Packers raised ticket prices for 2011 by $9 per ticket in order to add about $4 million in revenue and protect against the threat of an unforeseen rise in costs. The Packers have little choice; it’s either that or risk digging into the $127.5 million nest egg the organization has put away for a rainy day, or a sustained lockout — whichever comes first.
Keep in mind this is the Packers we’re talking about here, not the Jacksonville Jaguars. These numbers coincide with an 11-5 team that went to the playoffs. If the Packers are in this situation, it defies reason other teams wouldn’t be in even worse shape.
Though the Packers are 15th in revenue, they’re 27th in operating profit at $9.8 million.
Largely because they can afford to be. Unlike the other 31 teams in the league, the Packers have no long-term debt, meaning zero debt service. As such, they can dedicate more money to operations rather than saving it for interest payments. So, though 26 teams would show a bigger operating profit on their books, once you took out taxes and debt payments, they could very well be showing a smaller net profit than the Packers’ paltry $5.2 million.
As for the five teams already showing less operating profit, well, let me just guarantee that some of them actually had net losses in 2010.
The argument isn’t that a couple of the 32 NFL franchises actually experienced losses last year. The argument is that if even healthy NFL franchises like the Packers are showing a 2 percent profit margin, then you can’t continue to grow player salaries at twice the rate of revenue and expect owners to have the money for the capital improvements necessary to maintain future revenues.
The NFLPA’s response to these numbers has been as meaningful as a DeMaurice Smith sound bite, whose Kim Jong II approach to negotiations can be summed up simply — talk loudly and carry a small stick.
One response has been to point out that the Packers are a non-profit, as if that means the organization is run any differently.
The only difference, besides the lack of long-term debt, is that the final net profit goes into the Packers’ nest egg rather than into an owner’s pocket. The second and main attempt to dismiss the Packers’ financials has been to point out that the Packers are only one team in 32, and that such an important decision should not be based on 1/32nd of the information requested.
Of course, that argument rather foolishly dismisses the fact the Packers’ financials are actually an excellent representative of the economic state of the league. The Packers are 15th in revenue and 7th in player costs.
As such, they represent a franchise in the top half of the league in revenue while spending enough to win without overspending like the punch drunk Redskins and Cowboys.
In fact, when you consider that the Packers, Jets, Bears and Patriots all spent in the $130-to-138 million range, you can pretty much determine that as the going rate for a championship-caliber team in 2010. The Steelers got there for an economical $123 million.
I would also like to point out that the numbers blatantly dispel the notion that Ted Thompson is a cheap GM.
Not only have the Packers steadily ranked in the top 10 for player salaries in the last couple years, but they’re also expected to rank even higher for 2011.
It doesn’t take the intellect of Andrew Brandt to figure out the Packers are at the end of their rope when it comes to handing out money in free agency, and empowered with that information, the likes of the Redskins and Bears are in a better position when it comes to pursuing free agents like Cullen Jenkins.
Still want a reason for teams to not release their financials?
You just got one.
The Packers, of course, will be releasing their 2011 financials in just over a month. If the labor dispute is still going on, perhaps more attention will be given to them this time around.
It certainly can’t hurt that the one team that’s opened their books happens to be the Super Bowl champion.