Packers financial snapshot has impact
Today is the long-awaited release of the Green Bay Packers’ financial report for the preceding fiscal year, a report sure to draw a lot attention and interest in the ongoing labor dispute between the NFL and the NFLPA.
In my nine years with the Packers, I remember the release of the annual report well. As our profit was reported for all to see, I would count the minutes until the calls came in from agents advising on how I could spend some of that profit. It was also a tougher task to ask for pay reductions or stonewall negotiations, as it was transparent about how well we were doing financially.
The Packer financials would also be part of an annual NFL program for young executives at Stanford. While there – my alma mater -- to lecture on the Cap, I also watched sessions analyzing – what else – the Packers financial report (I couldn’t shake it).
In the ongoing labor negotiations, the NFL wants the players to share more risk on things like stadium construction, team travel and even practice facility and training costs, arguing the CBA extension of 2006 – ratified by a 30-2 vote – is too rich for the players and a rollback is needed. The response from the union, of course, has been “Show us your books” to which the NFL says no. Now one team’s books -- the publicly owned Packers – will be shown, and the union waits.
ICONUpshaw treated the Packer report as an important marker for the NFL.
The former Executive Director of the NFLPA, the late Gene Upshaw, used treat the Packer financials like the Magna Carta, saying that if tiny Green Bay – the smallest NFL market– could show profit, imagine how well rest of the league fares?
I would tell Gene that he was technically correct but that Packer nation is unique. Not to underestimate other passionate fan bases, it was rare to find a following as ardent as the Packers. I knew this from the first moment I stepped off the plane and saw half the people wearing Packer gear; from looking for a home and finding Packer "shrine rooms” common; from being asked by strangers how negotiations were going with players, etc. I told Gene that the Packers were a national treasure that was hard to replicate.
Following the renovation of Lambeau Field in 2003 and its revenue streams -- tours, meetings, weddings, restaurants and the ever-busy Packer Pro Shop – creating ancillary income of roughly $20 million per year, our net income went from a loss in 2000 and small profits in 2001 and 2002 to the $20-$30 million range in the middle of the decade.
That was then; this is now. Last year, as the clouds gathered for labor unrest, the Packers showed $4 million in net income, and 83% drop from the prior year. Profit last year was $20 million, a significant drop from two years prior when we had profit of $34 million. Now comes the latest crop report, with onlookers prepared for the worst.
Exhibit A for Commissioner
And in another twist to this bargaining year, Commissioner Goodell will be attending the Packer annual report to its shareholders on July 29, a festive event for thousands of “owners” to descend on Lambeau field to hear reports on the team. Goodell’s presence is strategic in the bargaining context, standing in front of the shareholders of the most passionate fan base in the NFL while bemoaning the financial situation of the team and its partners.
The Packers will likely fall in line with the league today in discussing its challenging financial environment in light of a player-friendly CBA. The union will be skeptical and ask for the rest of the teams to show the same, and we will be back to where we started.
At least agents won’t be calling with ways for the team to spend its profit.
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UPDATE: The Packers report has been released, showing a net profit for the preceding year of $5.2 million, up from $4 million a year ago, while noting that profit from operations, which does not include investment income, dropped dramatically by $9.8 million.
Predictably, the team emphasized increased player costs as a concern going forward, as discussed above towards the larger issue of bargaining between the league and the union. Stay tuned for more.