CaptainHook Posted July 26, 2005 Share Posted July 26, 2005 (edited) When the Jacksonville Jaguars first took the field 10 years ago in newly rebuilt Jacksonville Municipal Stadium (now Alltel Stadium), sports business analysts predicted the expansion franchise would be one of the most profitable teams in the NFL. They said the stadium's 10,000 pricey club seats, a fairly unique concept in football stadiums at the time, would put more money in Jaguars owner Wayne Weaver's pocket than other NFL owners could make with their conventional stadium seats. But fast forward to the present and the Jaguars say they are struggling to make money, and now some analysts agree that the team is probably at the bottom of the NFL's financial rankings and is struggling to break even. The big question: What happened to sour the team's profits?? "The economics have changed dramatically," said Michael Huyghue, the Jaguars' vice president of operations when the team began and now a sports agent in Jacksonville. Basically, other teams have caught up with, and passed, the Jaguars in revenue by moving into their own new stadiums with so-called "premium" seats and lucrative naming rights deals. At the same time, the cost of operating an NFL team is continually on the rise. "Two expenses that have increased dramatically are player costs and team expenses," said Jaguars Chief Financial Officer Bill Prescott. Meanwhile, "our local revenue is flat compared to 1999," he said, when the Jaguars were still one of the league's most profitable teams. "The Jaguars are one of the lowest revenue clubs in the NFL," said Marc Ganis, president of SportsCorp Ltd., a Chicago sports marketing consulting firm. "They are struggling to break even. It's not unexpected because of the size of the market," he said. Jacksonville is the second-smallest market among NFL teams, behind the Green Bay Packers. The Packers are an unusual case because they have a strong fan base throughout Wisconsin and the entire country, but other small market teams struggle to sell tickets, particularly for their high-priced luxury seats. "The Jacksonville market is a very small market. We have to do things differently here," Weaver said. Weaver, along with Pittsburgh Steelers owner Dan Rooney, has been pushing the league owners to adopt a new revenue-sharing plan that they say will allow smaller market teams to compete evenly with big city teams like the Washington Redskins and Dallas Cowboys. As a privately-owned business, the Jaguars won't reveal financial data. But Weaver said in a recent letter to Jacksonville Mayor John Peyton, without giving specific figures, that the team incurred a pre-tax loss in two of the last three fiscal years. Data made public in a lawsuit brought by the Oakland Raiders against the NFL showed that the Jaguars accumulated about $78 million in operating profits between 1995 and 1999. The profits likely dwarf any losses the team has suffered in the last three years, but Weaver doesn't want to see the losses continue. Prescott did say the team's operating profit has fallen from fourth-best in 1999 to 22nd in 2003 among the 32 NFL teams. The Times-Union has done its own analysis, based on available data. A look at revenues The Jaguars are looking for more ways to increase revenue, such as The Bud Zone, which opened at Alltel Stadium for the 2003 season. The Times-Union file To understand the Jaguars finances, you first have to understand the operating structure of the NFL in which a great deal of revenue is shared equally by all 32 teams. The biggest chunk of money comes from the league's national television contracts with the major networks and with DirecTV, which offers all NFL games to satellite subscribers. While that's the main source of shared revenue, there are others. The NFL takes 34 percent of the ticket revenue from all teams and puts it into a pool that is divided evenly among the 32 teams. The league also shares revenue from licensing agreements to sell merchandise, such as official team spamshirts. The rest of the revenue must be generated by each team individually. The main source is ticket sales. Teams get to keep 60 percent of revenue from tickets, with 6 percent of ticket revenue set aside to cover game expenses. Other local sources of revenue include concessions, stadium advertising and local radio broadcasting rights, which can vary widely from team-to-team. While the Jaguars and most NFL teams do not disclose financial data, the Green Bay Packers are publicly owned by 110,000 shareholders who receive an annual report with full statements of income. A look at the Packers' financial results do give some insight into the Jaguars' numbers. For the fiscal year ended March 31, 2005, the Packers reported a total of about $110.8 million in national revenue, consisting of $84.2 million from the television contracts, $12 million in shared ticket revenue and $14.5 million in "other" league revenue, which would include licensing agreements. Since national revenue is shared, it is safe to assume that the Jaguars also had $110.8 million in national revenue last season. The big difference between the Jaguars and the Packers comes in the form of local revenue. Although the Packers' market is small, the team has a huge following of fans and sells out every game at the 72,569-seat Lambeau Field, while the Jaguars have struggled to fill Alltel Stadium, which seated 76,877 last year. The Packers reported local ticket revenue of $26.6 million last year. Based on available data, it appears the Jaguars' local ticket revenue would have been only $16.1 million. That's based on the reported paid attendance figures for all eight regular season and two preseason home games last year of 656,011 and an average ticket price of $40.80, as reported by sports business publication Team Marketing Report. That would indicate total ticket sales of $26.8 million, with the Jaguars keeping 60 percent of that. The Jaguars are also making less money on luxury suites. According to a report prepared in June for the City of Jacksonville by ScheerGame Sports Development for use in the city's lease renegotiations with the Jaguars, the team took in $4.8 million in premiums from suite rentals in 2003. While no figures are available for 2004, if the 2004 figure was roughly the same, it's well below the Packers' $11 million in private box income. The Packers' national following also brings in other revenue that the Jaguars don't have. The Packers get revenue year-round from its Packers Pro Shop store and a retail mall called the Atrium at their home stadium. The Pro Shop and Atrium revenue totaled about $23 million, revenue that the Jaguars don't match. The ScheerGame data shows the Jaguars were competitive with the Packers in a couple of areas in 2003, with $3.5 million from local radio and preseason television rights and another $3.4 million from parking and concessions. The Jaguars also had $8.2 million in revenue in 2003 from sponsorships, stadium signs and advertising and small amounts of revenue from other sources. Add it all up, and it would seem that the Jaguars' total revenue for the 2004 season was close to $150 million, well below the Packers' $200 million. When presented with the $150 million estimate, Prescott said "we're less than that," noting that the correct revenue figure was about $5 million to $7 million less. But he would not be more specific. A look at expenses It is more difficult to estimate the Jaguars' expenses, because the ScheerGame study and other sources provide little expense data. An NFL team's biggest expense is player salaries. According to NFL Players Association data, the Jaguars paid out $72.1 million in salary expenditures in 2004. But that's only part of the story. The NFLPA reported the Packers' salary expenditures at $80.4 million, but the team's income statement reports player costs at $97.9 million. That's because of additional costs such as payments into benefit plans and workers' compensation taxes. Prescott also said the NFLPA data is based on the league's salary cap and does not reflect actual payments made. Under the league's salary cap rules, which specify how much a team can spend on its players, certain payments can be amortized over a period of years, regardless of when money was actually paid to the players. Because the salary cap dictates how much teams pay their players, there is not much of a difference in expenses among the 32 NFL teams, Prescott said. Besides the player costs, the other major costs are team expenses, which include the coaches, scouts and other football-related personnel, and general and administrative expenses, which include the office staff. The Packers reported total expenses of $166.3 million last year. That included more than $16 million in expenses related to the Pro Shop and Atrium, which would not apply to the Jaguars. The Packers also listed $5.4 million for operations and maintenance. The ScheerGame study points out that the city, and not the Jaguars, pays the operating costs of the stadium on game days. If you subtract the Packers' expenses for the Pro Shop, Atrium and operations, their total expenses come to about $145 million, which was approximately the total revenue for the Jaguars last year. Those figures would indicate the Jaguars are indeed struggling to make a profit. The Packers had an operating profit of $33.7 million with their $200 million in revenue last year. While not giving exact figures, Prescott did give data on the Jaguars' ranking among the NFL teams in 1999 and 2003. Prescott said the Jaguars have remained constant in expenses, ranking 25th in the league in 1999 and 24th in 2003. But it has fallen behind in ticket sales and revenue. The team ranked second in 1999 ticket sales but 27th in 2003, and its ranking in total local revenue fell from seventh to 24th. A look at the future Not all fans are staying away from the Jaguars and Alltel Stadium, but they're not as many as a decade ago. The Times-Union file Jacksonville's total local revenue is about the same as in 1999, but the increase in revenue by other teams has dropped the Jaguars in the rankings. And because of the NFL financial model, that has hurt the bottom line. The salary cap, which limits the amount a team can spend on salaries, also requires teams to spend a minimum amount. The cap is based on overall league revenue and as other teams increase their revenue, the salary cap amounts rise as well, even if the Jaguars' revenue remains flat. So the Jaguars' expenses have risen without an increase in their revenue. "You are somewhat penalized by what your brethren are doing," said Mitchell Ziets, founder of MZ Sports, a Maryland consulting firm. Not only do more teams have stadiums with premium seating and luxury suites, they are selling more of them at higher prices than the Jaguars. And when teams sell the naming rights to their stadiums, they are getting far more than the $620,000 per year that Alltel Corp. is paying for naming rights in Jacksonville through the 2006 season. "The larger markets have considerably more revenue to work with than the smaller markets," said Dean Bonham, CEO of the Bonham Group, a Denver sports consulting firm. "That probably is exacerbated for the Jaguars in that they're experiencing problems in the Jacksonville market selling premium seats," said Bonham, who is working for the City of Jacksonville in its lease negotiations with the Jaguars. The team has about 80 suites, at $70,000 to $125,000 a season, with about 10 percent unsold, Prescott said. The club seats, which cost between $1,200 and $1,925 per season, are 25 percent to 35 percent unsold, he said. David Carter, founder of the Sports Business Group in California, said teams are looking beyond game-day revenue to bring in more money by "monetizing" the area around a stadium with year-round attractions, like the Packers' Atrium. "It's not just the stadium but the development immediately surrounding the stadium," he said. Weaver said the Jaguars' have taken steps to increase revenue with areas like the Bud Zone sports bar in Alltel Stadium. "Where we can compete we do very well," Weaver said. But he said the Jacksonville market cannot compete with larger cities in areas like luxury suite prices and stadium naming rights. He would like the league to adopt a sharing plan for that type of revenue similar to the plan for general ticket sales, in which 34 percent of ticket revenue is pooled and distributed evenly to all teams. "The NFL has a great history of all leagues in terms of sharing revenue," Weaver said. "When we go to camp, every player knows we have a chance to compete and win." Besides making teams competitive on the field, Huyghue said revenue sharing is a key to the league's overall financial success. "I think that has served well to grow the league. What you're really trying to sell is a brand and a product, not individual teams," he said. Although some owners, such as Jerry Jones of the Cowboys, have voiced opposition to increased revenue sharing, Weaver said a "substantial number of clubs" support his idea. But he needs 24 teams to agree, and he's not there yet. "Will we get there? I don't know," he said. Weaver's recent letter to the mayor suggested that the Jaguars could leave Jacksonville if its financial issues are unresolved, but the owner has maintained that he remains committed to bringing a Super Bowl champion to Jacksonville. "We continue to work hard and do the things we can to fill our stadium and create the best possible game day experience and field a winning team," he said. "My intention has never been to move or sell the team. That's not my intention now," he said. But Weaver is pushing for financial conditions to change. "You can't have a business losing money every year," he said. link Edited July 26, 2005 by CaptainHook Quote Link to comment Share on other sites More sharing options...
Pope Flick Posted July 26, 2005 Share Posted July 26, 2005 Well, look at the dates. Seems they've had trouble making money since they stopped making the playoffs. Coincidence? Nope. Quote Link to comment Share on other sites More sharing options...
spain Posted July 26, 2005 Share Posted July 26, 2005 Bad market plus horrible demographics plus no fan base plus not winning = losing money and moving to Los Angeles Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted July 26, 2005 Share Posted July 26, 2005 They can kick Miami's arse in the playoffs, but they probably aren't taking away many of their fans. Quote Link to comment Share on other sites More sharing options...
Bill Swerski Posted July 26, 2005 Share Posted July 26, 2005 I never understood why Florida needed a third football team. Floridians do love their football, but if people in the Jacksonville area weren't already Dolphins or Bucs fans back in the mid-90's, they were probably Falcons fans. Quote Link to comment Share on other sites More sharing options...
Big Red Posted July 26, 2005 Share Posted July 26, 2005 I never understood why Florida needed a third football team. Floridians do love their football, but if people in the Jacksonville area weren't already Dolphins or Bucs fans back in the mid-90's, they were probably Falcons fans. 895193[/snapback] It had everything to do with TV market. When Jacksonville was awarded the 2nd expansion team, everyone was surprised until they realized it was the largest TV market without a team within X miles. Cities like St. Louis, Baltimore and Memphis where passed over because of this. St. Louis and Baltimore have successful franchises while Memphis successfully hosted the Oilers while their new home in Tennessee was being built. Seems like the NFL picked the wrong city. Wonder how long their lease is (didn't read the entire article, it's too darn long). Quote Link to comment Share on other sites More sharing options...
MikesVikes Posted July 26, 2005 Share Posted July 26, 2005 The league is happy when there is at least one big tv market that needs a team. Supply, demand, and threats go hand in hand. Quote Link to comment Share on other sites More sharing options...
Jolly Rodgers Posted July 26, 2005 Share Posted July 26, 2005 I never understood why Florida needed a third football team. Floridians do love their football, but if people in the Jacksonville area weren't already Dolphins or Bucs fans back in the mid-90's, they were probably Falcons fans. 895193[/snapback] Yeah Jacksonville is pretty much south Georgia so most of them were Falcon fans. Quote Link to comment Share on other sites More sharing options...
charty Posted July 26, 2005 Share Posted July 26, 2005 (edited) This makes it even more annoying that the NFL brought the Super Bowl to this city. The NFL is handing out Super Bowls as part of these bad business deals. "Ya, in the long run, your franchise will crash and burn, but hand us the $500M and you get a franchise AND a Super Bowl". So, if the city isn' big enough for an NFL team, how the hell is it big enough for a Superbowl??? I like Bill Simmons idea, the NFL should build a Super Bowl stadium in Vegas. Have it there every year, or at least keep Miami, San Diego, and New Orleans in the rotation. And the 2 best Super Bowl cities, New Orleans and San Diego are in trouble too. Edited July 26, 2005 by charty Quote Link to comment Share on other sites More sharing options...
Bill Swerski Posted July 26, 2005 Share Posted July 26, 2005 It had everything to do with TV market. When Jacksonville was awarded the 2nd expansion team, everyone was surprised until they realized it was the largest TV market without a team within X miles. Cities like St. Louis, Baltimore and Memphis where passed over because of this. St. Louis and Baltimore have successful franchises while Memphis successfully hosted the Oilers while their new home in Tennessee was being built. Seems like the NFL picked the wrong city. Wonder how long their lease is (didn't read the entire article, it's too darn long). 895199[/snapback] Since putting butts into the seats on Sundays and merchandise sales determine the financial well-being of a franchise, I agree that the NFL picked the wrong city. Large TV market or not, Florida's population isn't large enough to support three NFL teams and there are too many established teams nearby. In addition to St. Louis, Baltimore, and Memphis, San Antonio and Portland also would've been better choices, IMO. Quote Link to comment Share on other sites More sharing options...
H8tank Posted July 27, 2005 Share Posted July 27, 2005 Yeah Jacksonville is pretty much south Georgia so most of them were Falcon fans. I don't know where you people come up with this garbage and or vocal excrement. I lived there for a long time and the falcons were no where on the map. There are also 3-4 military bases in that town, and there is not a very large native population, most people that live there relocate from somewhere else, and bring a team with them. I will blame the teams current financial troubles on poor management. At least the team is competive, not some pushover like the Bucs of yesteryear, or the bungles or cards of the early 2000's. They were fighing for a last playoff spot last year and just missed out, they were not going to go all the way but they can beat just about any team in the NFL, ask peyton and farve. Quote Link to comment Share on other sites More sharing options...
Ruffian Posted July 27, 2005 Share Posted July 27, 2005 Will they be called the Anaheim Jaguars of Los Angeles, by way of Santa Barbara and near (but not really next to) San Bernadino? Quote Link to comment Share on other sites More sharing options...
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