Thursday, July 24, 2014

Green Bay Packers' financial data shows how an NFL team can make money in any market

Mike McGinnis

Because the Green Bay Packers are publicly owned, they make financial information available to the public in a more detailed way than most other American sports teams. And their data makes it clear that owning an NFL team is a really good business to be in. The Packers received $187.7 million as their automatic share of the league's national television revenue, while spending $171 million on player compensation.

Of course a team has expenses beyond the cost of players.

But many of those expenses directly related to the raising of local revenue. The Packers reaped a further $136.4 million from their local fan base through ticket sales, stadium advertising, merch sales, etc. Teams located in larger markets almost certainly sustain more local revenue than this, and that larger local revenue base sustains a larger and better-paid workforce. If you're in New York City, than the commissions you end up paying out to the guys who sell the luxury suites or the corporate sponsorships are going to be giant compared to what the Packers pay.

But fielding a full team of NFL players does not require any more money than what every team receives by default. That gigantic pool of national television revenue is what makes the NFL such an economic juggernaut, and it's also what makes it possible for the league to sustain a team in Green Bay or really anyplace else it likes.

Other major sports leagues are lucrative, too, but none of them have that firehose of national revenue. The NBA brings in a bit less than $1 billion a yearMajor League Baseball gets $1.55 billion,  and the NHL gets a paltry $200 million. The NFL has just over $6 billion a year.

And because life isn't fair, the firehose makes it possible for the rich NFL owners to get even richer. The fact that teams can be profitably located in arbitrary cities means that threats to relocate elsewhere are always credible — meaning you can extract more subsidies. The NFL manages to rake in this financial bonanza even while snubbing the gigantic Los Angeles media market, simply because LA hasn't been willing to pony up the subsidies the league wants. Basically no other league could pull that off.

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