Here's a VERY interesting article for you guys to read before the NFL
playoffs
start in earnest. Tell me what you think about it.
Do NFL Teams Profit from the Playoffs?
The Greater a Team's Success in the NFL Post Season, the More Profits
They Lose
By Wayne Presnell
Published Jun 22, 2005
The NFL is one of the most profitable sports in the world. In 2004, the
average NFL team was worth $733 million, an increase of 17% from 2003.
In 1984, the average value of an NFL team was $80 million. The value of a
team is also a good indicator of the Super Bowl winner. According to
Forbes magazine, since 1999, of the two teams competing in the Super
Bowl, the one with greatest franchise value has won each time. The more
success an NFL team has during the season (making the playoffs, winning
a division, and winning the Super Bowl) the more profit the team makes,
right. Wrong. Teams usually lose money during their post season play.
However, a team's value usually increases in following years with current
season playoff success. During the 1980s, the Tampa Bay Buccaneers had
the worst regular season won-loss record of any NFL team, 45-106. On
the other hand, the San Francisco 49ers compiled the best record during
the 80s, 104-47, including 4 Super Bowl championships. Which of these
teams made the most money during the 80s? Tampa Bay made more
money and in fact, the 49ers lost the most money of any team during the
1980s. Since then, the NFL has implemented a salary cap (no team can
spend more than 65% of its gross revenue on player salaries) and this
helps keep spending in check but, "you might lose money on a playoff
run," admits David Carter of the Sports Business Group, a marketing
consulting company. Before his team's first playoff game in 2004, Atlanta
Falcons President and General Manager, Rich McKay, stated, "I would
expect to lose a little bit of money on the game. It is not a money-
maker." The Green Bay Packers, the NFL's only publicly owned franchise,
lost $1.5 million during their Super Bowl appearances in 1997 and 1998.
The St. Louis Rams also reported losing money during their Super Bowl
winning season in 2000. Why do teams lose money during the playoffs?
Many point the revenue sharing system employed by the NFL. Each team
receives and equal amount of league revenue, TV contract,
merchandising, and home game ticket revenue. During the regular
season, home teams get to keep two-thirds of the ticket revenue, the
remaining third goes into a pool shared by all other teams. The NFL keeps
all ticket revenue during the playoffs, but home teams can keep money
made off other stadium related sales, merchandise, concessions etc. etc.
The NFL pays division winning teams a flat fee of $580,000 and other
teams $500,000 in the first round. In the second round, each team gets
$580,000 and in the championship round $960,000. The Super Bowl
winner receives $3.5 million and runner up $2.59 million. That is usually
not enough to cover team expenses. John Jones, Executive Vice President
and Chief Operating Officer of the Green Bay Packers said, "Expenses
usually exceed whatever you get from the league." Other reasons for
teams losing money in the playoffs include paying bonuses to staff and
players for successful playoff runs, moving equipment to the games
(obviously, home teams do not have to worry about this), and hosting
VIPS and sponsors. Players do not profit from playoff games either. NFL
teams do not have to pay their players during the playoffs because the
league covers the playoff salary pool, which is beyond regular season pay.
A player's salary is divided among the 16 regular season games. A
marquee player may make nearly $800,000 per game in the regular
season but in the playoffs, he will make the same as a player who sits on
the bench most of the time, generally around $18,000 per game. Most
NFL players make more money than you and I can ever imagine so, I bet
your heart, like mine, is not bleeding at all for them. These puzzling
playoff finances conjure up three questions to the skeptic. Do some
owners intentionally keep their teams from making the playoffs in order
to have the greatest profit for a season? All teams, except the Arizona
Cardinals, make sizeable profits during the regular season. Do some
owners want their teams to make the playoffs, have some success, but
not total success (Super Bowl winner) so they can improve their team's
future long term value and minimize their playoff losses? Do some
players put forth less effort in the playoffs since they only get paid a
small fraction of their normal regular season salary? As a die-hard NFL
fan, I would like to believe greed does not exist in the NFL. Since money
plays such a large role in most people's lives, one would be naïve to think
that the scenarios mentioned above are not at least a possibility. The
answers may be disturbing. In the end of the movie, Planet of the Apes,
Dr. Zaius says to Taylor, as he is riding away to discover what happened
to the Earth he once knew, "Be careful what you look for Taylor, you may
not like what you find." Even though the NFL playoff finance system
seems puzzling, the NFL still has the best business operations of all
sports. In a perfect world, the NFL would have a system, which rewards
players and teams for their post-season efforts. Nevertheless, it is not a
perfect world and I still look forward to each NFL season and post-
season.
Edited by: PitBull
playoffs
start in earnest. Tell me what you think about it.
Do NFL Teams Profit from the Playoffs?
The Greater a Team's Success in the NFL Post Season, the More Profits
They Lose
By Wayne Presnell
Published Jun 22, 2005
The NFL is one of the most profitable sports in the world. In 2004, the
average NFL team was worth $733 million, an increase of 17% from 2003.
In 1984, the average value of an NFL team was $80 million. The value of a
team is also a good indicator of the Super Bowl winner. According to
Forbes magazine, since 1999, of the two teams competing in the Super
Bowl, the one with greatest franchise value has won each time. The more
success an NFL team has during the season (making the playoffs, winning
a division, and winning the Super Bowl) the more profit the team makes,
right. Wrong. Teams usually lose money during their post season play.
However, a team's value usually increases in following years with current
season playoff success. During the 1980s, the Tampa Bay Buccaneers had
the worst regular season won-loss record of any NFL team, 45-106. On
the other hand, the San Francisco 49ers compiled the best record during
the 80s, 104-47, including 4 Super Bowl championships. Which of these
teams made the most money during the 80s? Tampa Bay made more
money and in fact, the 49ers lost the most money of any team during the
1980s. Since then, the NFL has implemented a salary cap (no team can
spend more than 65% of its gross revenue on player salaries) and this
helps keep spending in check but, "you might lose money on a playoff
run," admits David Carter of the Sports Business Group, a marketing
consulting company. Before his team's first playoff game in 2004, Atlanta
Falcons President and General Manager, Rich McKay, stated, "I would
expect to lose a little bit of money on the game. It is not a money-
maker." The Green Bay Packers, the NFL's only publicly owned franchise,
lost $1.5 million during their Super Bowl appearances in 1997 and 1998.
The St. Louis Rams also reported losing money during their Super Bowl
winning season in 2000. Why do teams lose money during the playoffs?
Many point the revenue sharing system employed by the NFL. Each team
receives and equal amount of league revenue, TV contract,
merchandising, and home game ticket revenue. During the regular
season, home teams get to keep two-thirds of the ticket revenue, the
remaining third goes into a pool shared by all other teams. The NFL keeps
all ticket revenue during the playoffs, but home teams can keep money
made off other stadium related sales, merchandise, concessions etc. etc.
The NFL pays division winning teams a flat fee of $580,000 and other
teams $500,000 in the first round. In the second round, each team gets
$580,000 and in the championship round $960,000. The Super Bowl
winner receives $3.5 million and runner up $2.59 million. That is usually
not enough to cover team expenses. John Jones, Executive Vice President
and Chief Operating Officer of the Green Bay Packers said, "Expenses
usually exceed whatever you get from the league." Other reasons for
teams losing money in the playoffs include paying bonuses to staff and
players for successful playoff runs, moving equipment to the games
(obviously, home teams do not have to worry about this), and hosting
VIPS and sponsors. Players do not profit from playoff games either. NFL
teams do not have to pay their players during the playoffs because the
league covers the playoff salary pool, which is beyond regular season pay.
A player's salary is divided among the 16 regular season games. A
marquee player may make nearly $800,000 per game in the regular
season but in the playoffs, he will make the same as a player who sits on
the bench most of the time, generally around $18,000 per game. Most
NFL players make more money than you and I can ever imagine so, I bet
your heart, like mine, is not bleeding at all for them. These puzzling
playoff finances conjure up three questions to the skeptic. Do some
owners intentionally keep their teams from making the playoffs in order
to have the greatest profit for a season? All teams, except the Arizona
Cardinals, make sizeable profits during the regular season. Do some
owners want their teams to make the playoffs, have some success, but
not total success (Super Bowl winner) so they can improve their team's
future long term value and minimize their playoff losses? Do some
players put forth less effort in the playoffs since they only get paid a
small fraction of their normal regular season salary? As a die-hard NFL
fan, I would like to believe greed does not exist in the NFL. Since money
plays such a large role in most people's lives, one would be naïve to think
that the scenarios mentioned above are not at least a possibility. The
answers may be disturbing. In the end of the movie, Planet of the Apes,
Dr. Zaius says to Taylor, as he is riding away to discover what happened
to the Earth he once knew, "Be careful what you look for Taylor, you may
not like what you find." Even though the NFL playoff finance system
seems puzzling, the NFL still has the best business operations of all
sports. In a perfect world, the NFL would have a system, which rewards
players and teams for their post-season efforts. Nevertheless, it is not a
perfect world and I still look forward to each NFL season and post-
season.
Edited by: PitBull