Monday, July 04, 2005

The financial side of the NFL has always interested me because a team's ability to generate and spend revenues is just as important as its ability to scout and coach. Take Philadelphia and New England for example. Both teams had the best collection of talented players and coaches in the NFL during 2004. Another big plus for both teams is that they've greatly improved their revenues with new stadiums and have avoid salary cap problems. Both teams acquired a big star in 2004 (Philadelphia WR Terrell Owens and New England RB Corey Dillon) and neither team busted their salary cap (ala Baltimore in 2000) to do it. Both teams should not have a Tennessee-type salary cap roster purge in the near future. When an aging star plays out a contract (New England's CB Ty Law or Philadelphia's DE Hugh Douglass), they let other teams spend big money on them and sometimes the player eventually ends up back with the team after a season or two (Douglass and Trotter both returned to Philadelphia). The three financial steps that Philadelphia and New England follow to create a great team are to maximize revenue, maintain salary cap flexability, and avoid overspending on aging veterans.

This comes to mind because of John Clayton's article about the Packers annual report. It is a huge benefit for all NFL financial junkies that the Packers are the one NFL team that actually reports their financial position each year because they are the only publicly owned team. Clayton's article is about the NFL's overall financial condition and next collective bargaining agreement, which isn't what really interested me as much as his comments regarding the Packers financial future.

Clayton wrote "The Packers' $25.4 million profit showed a team can hustle and compete with the bigger cities. Revenue from the Packers Pro Shop and the new Atrium at Lambeau Field accounted for $23.1 million in local revenue. They made another $18 million through marketing. They maximized revenues by being aggressive and smart."

Clayton has reported that the Packers have followed the first financial step; maximize financial revenue. Hopefully this is a good sign that the Packers have the organizational structure to continue to the success of the past 12 seasons and avoid the ineptness that plagued the organization from the end of the Lombardi era to the beginning of the Holmgren/Wolf/Favre era. The Packers did manage to avoid overpaying for their aging veterans such as OG Marco Rivera, however, the Packers haven't done well at maintaining salary cap flexability and it has cost them players. The Packers had to let FS Darren Sharper and OG Mike Wahle go, although they both could be productive for the next few seasons, and they haven't had the ability to trade for a veteran, such as CB Patrick Surtain who went from Miami to Kansas City this offseason, who could have helped improve a poorly played position during the 2004 season. There will probably be a lot of change with the Packers after the 2005 season, both Mike Sherman and Brett Favre could be gone after it, but it is good to know that some financial steps for long term success are already well established in the organization.

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