NFL franchise still in the black after a 6-10 season and the loss of an icon

The Green Bay Packers withstood recession, Brett Favres dramatic departure and return to the NFL, and a 6-10 record to post a net profit last year.

At $4 million, it wasnt a big profit only one-third of Favres former contract but in the current economic climate, Packers leaders will take it.

It was a challenging year, said Mark Murphy, president and chief executive officer. It is a tribute to our fans and sponsors that weve really weathered difficult economic times as well as could be expected.

Net income was 83 percent less than for 2007-2008, and profit from operations, which does not include investment income or provisions for taxes, fell for the third straight year, to $20.1 million. Profit from operations was $34 million in 2006-07 and $22 million last year, reductions the team blames, in part, on rising player costs.

Player costs are growing at a much faster rate than our revenue, Murphy said.

Murphy, treasurer Larry Weyers, and Jason Wied, vice president of administration and general counsel, discussed the Packers financial results on Wednesday, an annual overview given in advance of the teams shareholders meeting, which will be July 30.

The Packers are the only NFL team whose finances are made public. The publicly owned teams stock is not traded and does not increase in value or pay dividends. The 112,015 shareholders elect the organizations board of directors.

Packers leaders pointed to a confluence of events, including the losing record after making the playoffs the previous year and the monumentally bad economy, for the teams diminished financial results.

Net revenue was up 3 percent, to $247.9 million, the result of a 9 percent increase in national revenue, which made up 57 percent of the Packers income. National revenue was $147.7 million. Local revenue was down 5 percent, to $100.8 million.

Rising player costs continue to be the Packers biggest concern. Murphy said the team generated $82 million in new revenue in the past seven years, but 80 percent of that $65 million went to players, much of the increase being required by the existing collective bargaining agreement.

Our overall operating income is up, but our overall operating expenses are up more, Wied said. We maintained our levels on the expense side that we have direct control over, but player costs were up $14 million.

Collective bargaining

[ul]In May 2008, NFL owners voided the final two years of the collective bargaining agreement, making 2009 the final year with a player salary cap and 2010 the final season of the agreement. NFL owners said the agreement is giving players a disproportionate share of team revenue. Negotiations on a new agreement began two weeks ago, Murphy said.

The existing agreement gives players 60 percent of total NFL revenue, Wied said.

Murphy said the agreement bases player shares on gross revenue rather than net revenue, which discourages teams from making revenue-generating but low margin investments.

Thats one of the things that really needs to be addressed in negotiations, Murphy said.

Player expenses, which include salaries and benefits, were up $14 million, to $138.7 million. They were $96 million in 2003-2004, the first year after the renovation of Lambeau Field.

The decline in local revenue was largely the result of selling less merchandise jerseys, hats and the like. As do many businesses, the Packers identify October 2008 as the beginning of a sudden decline in sales.

Things really came to a halt in terms of (merchandise) sales, Murphy said. And having a losing record hurt sales.

Sales and marketing revenue, which includes Pro Shop sales, fell from $50.2 million to $43.7 million. The team does not break out Pro Shop sales individually, but Murphy said the reduction in sales and market revenue was due mainly to falling merchandise sales. Sales and marketing net income was $20.4 million, down from $34.2 million the year before.[/ul]

Sales & marketing

[ul]Sales and marketing revenue accounts for 50 percent of local revenue, which the organization does not have to share with other teams in the league. But unlike the relatively stable national revenue, local revenue is susceptible to rising and falling fan interest.

As always, the Packers are looking for ways to increase and stabilize local income. The team purchased a software package designed to refine and increase its marketing to fans and customers, and it acquired the former Schauer & Schumacher building on Ashland Avenue, part of which will serve as its merchandising warehouse.

We are looking at ways we can grow revenue through online sales, Murphy said.

The NFL this year authorized teams to put advertising patches on their practice uniforms and market in partnership with state lotteries. The Packers have not announced plans for either, but are looking at them as revenue sources.

Murphy said Lambeau Field Atrium income remained steady. The atrium was booked for more than 500 events last year, with 62 percent of the bookings from outside of Brown County, he said. Hall of Fame and stadium tours were down slightly.

Season ticket renewals remained the leagues strongest at 99.4 percent. Thats slightly less than 99.8 percent last year, but it still means only 192 people will have an opportunity to come off the 81,000-name waiting list.

Corporate suite renewals were down some from last year, too, but Murphy said hes confident all suites will be leased by the start of the season. About 10 of the 166 suites were not renewed.

The Packers are going to lease three suites on a game-by-game basis. They charge more for per-game rentals than on a seasonal basis, Murphy said.[/ul]

Preservation fund

[ul]The teams investments fared worst of all, finishing the year with a $16 million loss, which reflects the declining fortunes of stocks over the past year. The Packers made $8 million on their investments the previous year.

The organization did not dip into its team preservation fund though it also did not add to it for the first time since it was created. The fund stands at $127.5 million. The fund is for any emergencies that might arise, but its primary purpose is to provide the Packers with operating cash should a new player agreement fail to materialize and a lockout occurs.

Next year will be the first year without a salary cap since 1992 if a new agreement is not reached. Murphy said he does not expect a spending spree by teams, and, in fact, they may see expenses decrease because they also wont be providing money for some benefits. In addition to losing benefits, players will need six years instead of four to qualify for free agency; all of which is designed to encourage each side to negotiate a new deal.

Weyers said the organization remains financially strong.
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Additional Facts
[ul]Green Bay Packers annual meeting

When: 10 a.m. July 30
Where: Lambeau Field, rain or shine. The Lambeau Field Atrium will be open to only shareholders and guests from 8 a.m. to 1 p.m. The parking lot opens at 7 a.m.
Who may attend: Green Bay Packers shareholders and guests
Tours: Shareholders can tour the new Ray Nitschke Field and the Don Hutson Center after the meeting.
New director nominee: Johnnie Gray
Directors standing for re-election: Daniel Ariens, Virgis Colbert, Casey Cuene, Susan Finco, William Kress, John MacDonough, Michael McClone, John Meng, Thomas Olson, Michael Reese, Gary Rotherham, Michael Simmer, Mike Weller, Michael Wier, Judge Donald Zuidmulder.
Directors to emeritus status: John Fabry
Board of directors: The Green Bay Packers board of directors has consisted of 45 members, though that is not a requirement. Retirement is mandatory on the first annual meeting after the directors 70th birthday.

The boards Executive Committee includes President and Chief Executive Officer Mark Murphy, Vice President Peter Platten III, Secretary Carl Kuehne, Treasurer Larry Weyers, Daniel Ariens, John Bergstrom and Edward Martin.
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