Seahawks barely made profit, papers reveal
Published 9:00 pm Sunday, May 13, 2001
Herald News Services
Confidential NFL financial documents, never before seen in full detail even by the 31 teams in the league, reveal a robust enterprise that gets more so each year as team after team moves into new stadiums, many paid for by taxpayers.
Interestingly, the Seattle Seahawks, poised to move into a new stadium in 2002, were among the league’s least profitable teams in the figures revealed by the Los Angeles Times.
The Seahawks ranked 28th out of 31 teams with a 1999 profit of $544,000. The Cleveland Browns were No. 1 with a profit of more than $36 million.
Analyzing the numbers in total, the league is not as profitable as many American industries. But 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 New Orleans Saints, for example, actually lost $849,000 in 1999, but owner Tom Benson would probably be in for a windfall if he put the team on the open market, where the latest franchise to change hands sold for $700 million.
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 across the nation.
The figures are likely to spark further debate about whether public funds ought to be used for such 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, an expansion team that – though horrible on the field, as most fledgling teams are – made a $36.5-million profit in its first year of NFL play. (A previous Cleveland Browns franchise moved to Baltimore in 1996.) Such performance underscores the value of a team playing in a stadium paid for primarily by taxpayers, where luxury boxes and club seats generate big revenue for the team. Cleveland was the third-highest generator of local revenues, money a team does not share with its NFL business partners and on-field competitors.
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 in 2002, 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 – Baltimore, 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 posted the poorest performance in generating local revenue, only three made the playoffs in 1999. “The disparity is real,” Kansas City Chiefs President Carl Peterson said. And, he said, “It is widening.”
The Saints and the Minnesota Vikings are clearly the two most likely candidates for a possible move to Los Angeles, which has been without NFL football since 1995. Unlike the Saints, the Vikings made money, 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 NFL has long guarded its revenue and expense numbers.
It generates such figures on an annual basis, demanding that each team supply a variety of revenue and expense calculations. Then the league ranks each team and teams learn their own rankings.
But, as former NFL President Neil Austrian testified in the Raiders’ Superior Court lawsuit against the league, “No club gets the other club’s financials.”
Until now. The financial data, complete with rankings of each of the 31 teams in a variety of revenue and expense categories, became Exhibit 681 in the Raiders vs. NFL case.
The Raiders claim that the league sabotaged its plan to move into a proposed new stadium at Hollywood Park, forcing the Raiders – who played in Los Angeles from 1982 through 1994 – back to Oakland, the team’s original home. The league has denied any wrongdoing. The team is asking for more than $1 billion in actual damages, plus punitive damages.
The NFL financial documents were kept under seal before the trial started. During the trial, various league ledgers and memos were shown to the jury and then entered into evidence. Even so, the NFL objected to the release of Exhibit 681. Superior Court Judge Richard C. Hubbell agreed not to release the 100-page exhibit while jury deliberations continued. The jury finished its second week of deliberations on Friday. The Los Angeles Times had earlier obtained a copy of the document.
When asked about the league’s objection, league spokesman Joe Browne said “I just think the less read about dollar signs, the better. This case involves potential damages.”
The 100-page memo contains myriad details, breaking out ticket sales, parking and advertising income, player costs, and team expenses.
Figures for the 2000 season, which concluded in January with Super Bowl XXXV in Tampa, are not yet available.
