After a 13-3 regular season, two home playoff games and a final bow from Brett Favre, the Green Bay Packers figured to have a pretty good year from a financial perspective.
|Brian Bahr / Getty Images|
|Lambeau Stadium continues to be a strong revenue source for the Green Bay Packers.|
And they did -- but it wasn't the moneymaking blockbuster some might have expected, a development that reinforced Packers executives' long-term concerns about the financial health of the NFL.
The Packers took in about $241 million in operating revenue for the 2007-08 fiscal year that ended March 31, about 10 percent more than the previous year. But thanks to a significant rise in player costs, the team's total operating profit fell more than 37 percent to $21.4 million.
"We had a good year," Packers president and CEO Mark Murphy said. "But not as strong as you might have anticipated."
Packers executives believe the team ranks just outside the league's top 10 most profitable franchises despite playing in its smallest media market. But they're worried about the future after watching the team's player costs skyrocket from $110 million in the 2006-07 fiscal year to $124 million last year.
Murphy said the increase was mainly because of bonus payments due to veteran players, but also was an example of a growing trend around the league. Teams are spending more money to remain competitive without seeing a corresponding increase in revenue.
That's why, Murphy said, NFL owners voted in May to opt out of their collective bargaining agreement with the players union. The current agreement remains in effect through the 2010 season, but owners hope to negotiate a new deal that would allow them to keep a bigger chunk of the money the league and teams take in.
NFL owners recently said they are paying $4.5 billion to players this year, just under 60 percent of their total revenues.
"Player expenses are increasing at a more rapid rate, and that concerns us," Packers treasurer Larry Weyers said.
As a public corporation, the Packers are the only NFL team that releases annual financial statements. But Murphy said other teams are in similar situations and have the same concerns.
"When you really look at it carefully, it shows why the owners have the concerns they do," Murphy said.
The Packers have their own concerns about any new CBA -- namely keeping revenue sharing and the salary cap in place.
"I think it's extremely important that we protect the mechanisms the league has in place," Weyers said.
Representatives of the owners and the players union have expressed optimism that a new agreement will be worked out before a potential work stoppage in 2011.
But just in case, the Packers socked away another $2 million into its savings account, the so-called "franchise preservation fund." It now stands at $127.5 million.
"We obviously want to solve the collective bargaining agreement and extend it," Murphy said. "But we also have to be prepared in the event of a work stoppage."
Despite signs of trouble, the Packers still had a pretty good year in the boardroom -- even if it wasn't quite as spectacular as it was on the field.
The team's local revenues surged from $93 to $105 million, thanks to a record year for the Packers' Pro Shop at Lambeau Field and fans spending more money at the stadium during two home playoff games.
Weyers said the Lambeau Field renovation is paying off as promised, generating money to help the team remain competitive and drawing tourists to the Green Bay area throughout the year -- not just during football season.
"In order to be successful in this league, you've got to depend more and more on local revenue," Weyers said.
Packers vice president of finance Vicki Vannieuwenhoven said the team ranked 11th among NFL teams in local revenue last season, and expects to remain in the same range when the league calculates new rankings later this year.
Under NFL rules, teams share equally any national revenue that comes into the league through television contracts and other sources, but can keep local revenue.
And by making a significant purchase of land near the stadium last year, the Packers are putting together long-term plans to draw more local revenue. The land could eventually be developed into retail stores or entertainment venues.
"We don't have any definite plans right now, but there are a number of options," Weyers said.
Then there's the Favre factor -- something the team can't really quantify, but certainly made a difference to its bottom line.
To be sure, Favre's decision to play last season contributed to the team's financial success. And while Favre has retired, Murphy and Weyers emphasized that the Packers are bigger than one player.
Besides, the Packers still plan to sell plenty of Favre jerseys and souvenirs this year. Not to mention the potential appeal of the player tabbed to replace him.
"We'll also sell a lot of Aaron Rodgers jerseys," Murphy said.
Copyright 2008 by The Associated Press