Team profits climbed to average of $11.6M in '99, a rise of 68%

Confidential NFL figures raise more questions on spending of public money

Pro Football

May 13, 2001|By LOS ANGELES TIMES

Confidential NFL financial documents, never before seen in detail, even by management of the 31 teams in the league, reveal a robust enterprise that gets more so each year as team after team moves into new or renovated stadiums, many paid for by taxpayers.

The documents, entered into evidence in the Oakland Raiders' lawsuit against the NFL, itemize each team's revenue and expenses from 1995 through 1999. The documents also trace certain financial data as far back as 1989, making plain the import of a wave of stadium construction and renovation over the past decade.

Figures for the 2000 season are not yet available.

Though the league is not as profitable as many American industries, prospective owners keep bidding up the value of franchises, attracted by the allure of joining the select group that runs the country's most popular spectator sport.

The figures are likely to spark further debate about whether public funds ought to be used for team facilities. They reveal:

The average per-team operating profit, arrived at by deducting expenses from revenues, jumped to $11.6 million in 1999, up 68 percent from 1994. In 1999, the teams generated an average of $45.3 million in local revenue, meaning primarily the dollars that can be wrung out of a stadium, an increase of 80 percent from 1994. Each team's share of common revenues, mostly from merchandising and national television, was about $65 million in 1999, up about two-thirds from 1994.

First in the financial ledgers in 1999 was the Cleveland Browns, a first-year team that was horrible on the field, but made a $36.5 million profit.

Such performance underscores the value of playing in a stadium paid for primarily by taxpayers, where luxury boxes and club seats generate big revenue. Cleveland was the third-highest generator of local revenue, money a team does not share with other NFL teams.

On the other hand, owning an NFL franchise has to be viewed as a capital investment, not a short-term profit-maker. Cleveland's initiation fee in 1998 was $476 million; an annual profit of $36.5 million is not even a 10 percent return. Then again, the league was able to entice businessman Robert McNair to pay $700 million in 1999 for a new Houston franchise to begin play next year, representing a 47 percent increase in asset value for the Cleveland franchise in one year.

There is a loose correlation between financial success and success on the field. Three of the four teams in the past two Super Bowls - the Ravens, St. Louis and Tennessee - have moved into new stadiums in the past few years, in the process abandoning longtime fan bases in Cleveland, Los Angeles and Houston. They now rank in the top half of the league in local revenues. But of the 11 franchises that were weakest in generating local revenue, only three made the playoffs in 1999.

The Saints and the Minnesota Vikings are clearly the two most likely candidates for a possible move to Los Angeles, which has been without an NFL team since 1995. The Saints lost $849,000 in 1999. The Vikings made about $9.8 million, but that was below average. And, like the Saints, the Vikings rank near the bottom of the league in local revenue.

The impact of new stadiums has dramatically reshaped the NFL.

Art Modell, the longtime owner of the Cleveland Browns, announced on Nov. 6, 1995, that he was moving to Baltimore - setting in motion a long and complex process that ultimately put the Cleveland franchise in Baltimore, renamed the Ravens, and prompted the NFL to award an expansion team to Cleveland, again to be called the Browns.

The new Browns ranked third in the league in local revenue in 1999, with $67.2 million. The Ravens were fifth, at $56.4 million, in their second season at PSINet Stadium.

The Washington Redskins ranked 17th in the league in locally generated revenue in 1996, the team's final year at aging RFK Stadium. In 1997, the team moved to a new stadium in Landover, Md., a privately funded facility now called FedEx Field.

That year, the Redskins soared to No. 2 in the league in local revenue. In 1998, they were No. 2 again. In 1999, they led the league, with $83.9 million.

The Redskins ranked second in 1999 in the league in operating profit, clearing about $32.4 million.

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