Did The Nfl Owners Gain Yardage?Harris Collingwood
With the gorillas of the grid-iron about to start pulling down paychecks closer in heft to the fat cats of the baseball diamond, one question looms large: Should we now pity the poor NFL owner?
The answer, after you do the math, is a resounding "No way!"
Last September, when the jury hearing McNeil et al. vs. the National Football League declared some 20 players free agents, it became clear that after five years of haggling, the league would have to accept greater player movement. On Jan. 6, it did just that, unveiling a deal with the NFL Players Assn. that grants footballers free agency after six years of service. The trade-off: a cap that will ultimately limit players' pay to 62% of most league revenues.
According to exhibits in McNeil, the average team in 1991 spent $27.1 million on player costs, took in revenues mf $48 million, and turned an operating profit of $6 million. And a close look at operating costs suggests even those profits may be understated.
The agreement calls for a salary cap to kick in once NFL player salaries reach 67% of designated gross revenues (DGR). That mouthful includes everything but the money that rolls in from stadium concessions and goods licensed by the NFL, as well as luxury-box revenues already pledged to cover mortgage expenses. Once the magic 67% figure is reached, teams will cut payrolls over three years until salaries are equal to 62% of designated gross revenues.
If the 62% cap had been in place in 1991, what kind of money would the owners have made? According to the court exhibits, the NFL had operating revenues of $1.36 billion in 1991. Of that total, some $160 million can generously be assumed to fall outside the definition of designated gross revenues.
That leaves roughly $1.2 billion, or about $42.9 million per team, to go toward operating expenses and player salaries. A salary cap of 62% means that team payrolls would average out to about $26.6 million per team. The remaining $16.3 million, plus monies excluded from the designated gross revenues calculation, would be earmarked to cover operating costs, averaging about $15.3 million per team in 1991. That leaves an average profit of $1 million before adding in money excluded from DGR. Throw those funds into the mix, and suddenly you've got per-team operating profits of some $6.5 million. That's right--the NFL version of free agency would have yielded each owner an extra half a million bucks.
So free agency won't break the bank. And it won't stop some owners from writing themselves big checks. Take the Philadelphia Eagles, owned by car dealer Norman Braman. According to trial documents, the Eagles claimed $10.5 million in general and administrative expenses for the 1990 season (team-by-team breakdowns are unavailable for 1991). Rather high, given the league average of $4.9 million for such expenses that year. But the Eagles' administrative costs were inflated by the $7.5 million salary Braman paid himself. By contrast, two other team owners paid themselves nothing at all, and only two besides Braman drew more than $1 million.
A STRETCH. Braman can pay himself whatever he wants. But how many other CEOs make $7.5 million a year for running an organization that in 1990 had revenues of some $51.5 million? And to call Braman's salary an ordinary cost of doing business, as the Eagles did, is a stretch. Still, even with Braman's sizable paycheck, the Eagles' operating costs, including player salaries, totaled $44.8 million in 1990. That leaves a tidy operating profit of $6.7
"The owners ought to make as much profit as they can," says James W. Quinn, lead union lawyer. "Just don't do it on the backs of the players."
Fair enough. So next time you pick up the sports page and gag over the bucks being snagged by a wide receiver, shed no tears for the owner. There's still plenty of money in running an NFL team--whether you want to call it profits or salary.