Do NFL Teams Profit from the Playoffs?

[PitBull]

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

 

[Don Wassall]

I'd like to see the link and know a little bit about the writer.I also wonder whyhe made the entire article one paragraph, which no journalist should do.


Winning in the playoffs increases the value of the team, which is more important than losing a relatively small amount of money in individual playoff games. Ego gratification, the competitive urge, etc., should drive players to play harder and owners to want to win playoff games. That being said, I've always been open to the possibility that games might be tinkered with to change the final point spread, or be thrown, or seasons scripted to some degree. Football, like all TV spectacles, is based on illusion. Throw inthe NFL'sracial agenda, the many criminals playing the games, the ever more base and corrupt nature of U.S. society in general, and the potential is there for all kinds of fraud to be taking place. What'slacking so faris solid evidence.

 

[James]

Here's a link to an updated article from 2006 in Forbes magazine on the profitability of the NFL. It includes the ability to see thevaluations for each team. The Washington Redskins are the league's most profitable team followed by the New England Patriots.


[url]http://www.forbes.com/2006/08/31/paul-tagliabue-nfl_cz_mo_06 nfl_0831nflintro.html[/url]

 

[PitBull]

The article I posted above was referencing this article by Forbes
magazine:

<a href="http://www.forbes.com/2003/08/28/cz_bn_0828superbowl.html" target="_blank">
http://www.forbes.com/2003/08/28/cz_bn_0828superbowl.html</a>

It may be true that winning increases the value of the team. But for most
of the teams, that issue is totally irrelevant, since the owners aren't
selling the franchise every few years. Just look at the Green Bay, or the
Chicago Bears, who have been owned by the same family since the
beginning.

Its like owning your house. Sure, you like it when the price goes up, but
what does it matter if you never sell? If that's the case, you just look at
the expenses for owning it from year to year.

I wonder how it works out really. Do the owners get togther at the start
of the year, draw straws, and whoever loses gets to go to the Super Bowl?
If you're not selling the franchise, how does winning make you any
money? The players and coaches will all want bigger conracts next year.

The article above also talks about ticket price increases. If you research
that, you'll find out that mediocre teams jack up prices very high also--its
not just related to having a playoff team. Most NFL teams sell out just
about every game too. So its not as if having a mediocre team costs you
in attendance. And the team only keeps 2/3 of the gate anyway, with the
rest going into the league kitty.

At least to me, it seems that something is very wrong with this picture.Edited by: PitBull

 

[foreverfree]

Pit Bull, you also didn't bother with paragraphs. Shorter paragraphs are easier on the eyes, y'know.

Edit: My bad and my apologies, PB, I just read Don's response. You're off the hook there.

But not off the hook for not providing a link to the article by Mr. Presnell.

Here's the link.
http://www.associatedcontent.com/article/4020/do_nfl_teams_p rofit_from_the_playoffs.html

And if you click on Print Mode once you get there, the printer-friendly version does have paragraphs. I did my best to copy and paste them hereon.

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

Takeaways
1. The San Francisco 49ers won four Super Bowls during the 1980s but lost the most money.
2. The NFL revenue sharing system may be the reason for teams losing money during the playoffs.
3. NFL players do not profit from playoff games either.

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.


More resources
Forbes Magazine, www.forbes.com
National Football League www.nfl.com
Atlanta Journal-Constitution www.ajc.com

I read it before clicking Update Post. Very interesting article.

JohnEdited by: foreverfree

 

[jaxvid]

You have to think of the NFL as a business, NFL Corp. Inc. Each team is like a seperate branch, a factory if you will, located in different areas of the country. It's not important if any individual branch is especially profitable just that each branch does OK. It all goes into the same kitty.

Sure the individual "plant managers" want to make a profit to make themselves look good, but no matter what they all will be part of a profitable company so the important thing is the name brand. As long as the namebrand NFL Football Inc. is a money maker they all will be. It's also like a McDonalds franchise, they are certain to make money unless they are poorly run, in which case the headquarters comes in and takes it over.

With a virtual monopoly in each market, all the free advertising the media can provide, and the support of the government, the formula for success is certain. Any attempt to rock the boat (like bringing up uncomfortable questions about racial fairness towards white athletes)will be met with the full opposition of all interested parties, groups that are the most powerful in the country.

 

[James]

You have to think of the NFL as a business, NFL Corp. Inc. Each team is like a seperate branch, a factory if you will, located in different areas of the country. It's not important if any individual branch is especially profitable just that each branch does OK. It all goes into the same kitty.

Sure the individual "plant managers" want to make a profit to make themselves look good, but no matter what they all will be part of a profitable company so the important thing is the name brand. As long as the namebrand NFL Football Inc. is a money maker they all will be. It's also like a McDonalds franchise, they are certain to make money unless they are poorly run, in which case the headquarters comes in and takes it over.

With a virtual monopoly in each market, all the free advertising the media can provide, and the support of the government, the formula for success is certain. Any attempt to rock the boat (like bringing up uncomfortable questions about racial fairness towards white athletes)will be met with the full opposition of all interested parties, groups that are the most powerful in the country.

Team owners tend to be among the most successful capitalists in America. They are usually highly competitive people in all aspects of their lives and many, though not all, absolutely HATE losing anything to anyone. For many owners, its not as much about profit and loss as it is about winning. A bonus to winning is that you make more money as well.


There are owners who hate losing more than the players and coaches do. That is why they go through so many general managers and head coaches.

 

[James]

The article I posted above was referencing this article by Forbes
magazine:

<A href="http://www.forbes.com/2003/08/28/cz_bn_0828superbowl.html" target="_blank">
http://www.forbes.com/2003/08/28/cz_bn_0828superbowl.html</A>

It may be true that winning increases the value of the team. But for most
of the teams, that issue is totally irrelevant, since the owners aren't
selling the franchise every few years. Just look at the Green Bay, or the
Chicago Bears, who have been owned by the same family since the
beginning.

Its like owning your house. Sure, you like it when the price goes up, but
what does it matter if you never sell? If that's the case, you just look at
the expenses for owning it from year to year.

I wonder how it works out really. Do the owners get togther at the start
of the year, draw straws, and whoever loses gets to go to the Super Bowl?
If you're not selling the franchise, how does winning make you any
money? The players and coaches will all want bigger conracts next year.

The article above also talks about ticket price increases. If you research
that, you'll find out that mediocre teams jack up prices very high also--its
not just related to having a playoff team. Most NFL teams sell out just
about every game too. So its not as if having a mediocre team costs you
in attendance. And the team only keeps 2/3 of the gate anyway, with the
rest going into the league kitty.

At least to me, it seems that something is very wrong with this picture.

The Green Bay Packers is an exception to your examples. They are the only publically owned franchise in major professional sports. The 112,000 stockholders own the Packers and they vote for a Board of Directors which runs the corporation.


From the Wikipedia entry on the Packers' Board: The Green Bay Packers Board of Directors is the organization that serves as the owner for the Green Bay Packers football club. The Packers have been a publicly owned, non-profit corporation since August 18, 1923. The corporation currently has 111,921 stockholders, who collectively own 4,749,925 shares of stock. There have been four stock sales, in 1923, 1935, 1950 and 1997. Shares in 1923 sold for $5 apiece, which in 1997 the shares were issued at $200 each.


The corporation is governed by a seven-member Executive Committee, elected from a board of directors. The committee directs corporate management, approves major capital expenditures, establishes broad policy and monitors management's performance in conducting the business and affairs of the corporation. The president is the only officer who receives compensation. The balance of the committee is sitting gratis

 

[White Shogun]

Team owners tend to be among the most successful capitalists in America. They are usually highly competitive people in all aspects of their lives and many, though not all, absolutely HATE losing anything to anyone. For many owners, its not as much about profit and loss as it is about winning. A bonus to winning is that you make more money as well.

There are owners who hate losing more than the players and coaches do. That is why they go through so many general managers and head coaches.

They like money more than winning.

 

[PitBull]

If its all about winning, then the way the whole league is set up negates
that idea. If all of these guys were rabid egoists who wanted to win
hardware and create dynasties, why would they share ANY revenue with
the smaller markets in the league? Why wouldn't they be like MLB, where
George Steinbrenner routinely tries to buy championships, and by some
accounts loses money in the process? See, he's willing to lose money on
the hope he can win a championship. In the NFL, you're guaranteed
to lose money if you win too much, especially if you go to the playoffs
and don't win the Super Bowl.

Also, if you are a big market team, why in the hell would you ever vote for
expansion? Your big TV audience revenue is simply going to be
transferred to a smaller market team. Their TV audience won't be
anywhere near yours, so you lose on the revenue sharing deal. If its
about the number of games, you could simply play more games with the
existing teams in the league.

So why would the NFL owners, who are the ones who own the league and
call the shots (not the commissioner who works for them), all start out
with the same amount of money every year? Because they value parity
over team dynasties. Why, if team owners are so competitive?
Obviously, there are more owners who are interested in parity over
dynasties, or the revenue sharing wouldn't be in effect.

With parity, you get more unpredictable outcomes, teams
rising and falling year to year, players and coaching staffs shuffling
around, etc. It is much harder to predict how a game will turn out
from week to week, or how a team will fare from year to year.
What a great way to ensure surprises, more fan interest, and keep people
guessing what will happen next.

Perfect for gambling. Of course, that's just my take.Edited by: PitBull

 

[White Shogun]

I think the point has been proven many times over in multiple threads across this board that there is more to the NFL than just winning football games. Player contracts, demographics, locker room chemistry, pride, etc, etc. There is way more to it than winning, and money is almost always #1.

I don't know why people expect corruption in regular business and government, so much so that we have specific laws to prevent it, i.e. affirmative action, EEO, anti-trust, etc, but we think that sports are somehow exempt from the human behaviors that are the root of the need for such laws in the first place, simply because they are playing a game. Edited by: White Shogun

 

[James]

Team owners tend to be among the most successful capitalists in America. They are usually highly competitive people in all aspects of their lives and many, though not all, absolutely HATE losing anything to anyone. For many owners, its not as much about profit and loss as it is about winning. A bonus to winning is that you make more money as well.

There are owners who hate losing more than the players and coaches do. That is why they go through so many general managers and head coaches.

They like money more than winning.

Many team owners are so independentlywealthy that they make most of their money from their other primary businesses. For many owners, the football team they own is their hobby and people tend tolike to winat their hobbies.


Some teams make money whether they win or lose. Other teams MUST win in order to make money. It all depends on how big your market is, how many seats and particularly luxurysuites are in your stadium and how loyal your fanbase is win or lose.


The exception again is the Green Bay Packers who are owned by stockholders who tend tobe fans over many generations who pass Packers' stock down to their children and grandchildren.

 

[White Shogun]

Making money is their hobby.