Packers aren't doing NFL any favors with their financial strategy
 
The upper management that runs the publicly-owned Green Bay Packers may have some explaining to do the next time it attends meetings with the owners of the NFL's 31 privately held franchises. That's because recent news of the Packers' operating profit of over $20 million last year appears to hurt the owners' argument that opting out of the latest Collective Bargaining Agreement with the players was necessary. If a franchise in a miniscule market can turn a profit during a historically down economy, what does that say about big money owners like Dan Snyder and Robert Kraft?

Think about this. Many teams over the past 18 months have laid off dozens of low payroll employees. Those moves look heartless if it turns out those teams are still bringing in millions in profit, even if it is less than it had been in recent years. Telling an employee with three kids they no longer have health benefits because the owner still wants to rake in $30 million is just bad karma, even if it can be justified as good business.

The Packers have elected to be exceptionally frugal in recent years when it comes to player compensation. Ted Thompson and company have been non-existent in the free agent market the past three years. Instead, they have just given extensions to players already under contract like Aaron Rodgers and Greg Jennings in order to reach the mandated salary floor. That strategy is good for business and arguably a sound football decision, but it doesn't do the other owners any favors when the end of the fiscal year financial information is released by the Packers.

A better strategy, knowing the CBA negotiations were looming, would have been to spend closer to the cap in 2008 and thus negate a lot of the revenue that was being generated. It may not have been ideal in the short term for the Packers but it sure could have strengthened the position and argument of the league going forward. In light of the Packers finances, the supposed plight of the owners' is much less convincing. I'm sure the NFL Players Association is taking notes.

Just for clarification, Ross Tucker is a former player. He is rubbing his hands with glee at the consternation he believes other NFL owners must feel to know the Packers, the team from the smallest media market in any professional sport, turned a profit last year. He believes the NFLPA can use this fact as evidence against the owners' argument that the percentage of league revenues devoted to player compensation must decrease. He isn't that the Packers should have reduced their profits -- only that other owners may feel that way.

For the record, I disagree with his premise. I think the Packers' financials actually support the owners' contentions. As has been posted in another thread, the Packers organization netted one of its lowest profits in many years last season. Is this because of the recession? Only partly. It's also because, according to a recent study that was conducted by my own university, operational expenses for teams across the league have skyrocketed in recent years -- far out of proportion to increases in revenue. Thus profit margins are steadily declining across the league. The Cowboys last year posted barely a $10 million profit, which on an investment as gigantic as a) looming debt service on a $1 billion stadium; b) an annual $120 million payroll (not counting coaching, maintenance and administrative staff!); and c) sundry operational expenses, is simply not tenable for long.

Of course you never hear a word about this from the NFLPA. They dismiss it cavalierly as the owners' problem. Well, if changes aren't made, it's swiftly going to become their problem too.

The owners argue that player compensation as a percentage of gross revenues should decline to account for the changing (escalating) costs of doing business in the NFL. I think they're absolutely right. The NFLPA needs to take care that they stay mindful of the broad financial situation besetting their league, or they may find themselves killing the golden goose. All the sentimental blather about "tradition" and "rivalry" and "honor" aside, the NFL is first and foremost a business. No person in his right mind will continue to shoulder the risk of owning a team franchise if he can't have a reasonable expectation of profit.

I side squarely with the owners on this issue.

"Nonstopdrivel" wrote: