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Thread: Some Interesting Numbers as We Watch the Labor Agreement Unfold

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    Default Some Interesting Numbers as We Watch the Labor Agreement Unfold


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    hey gang,

    I ran across some interesting information on Forbes.com that I compiled and thought I would put up here for some comparison purposes.

    It all has to do with the amount of money in the NFL these days and where that money is being spent. These numbers are from the 2009 season.

    First, a little information about the numbers.

    Current Value = The latest value of the team
    Revenue = The amount of gross income the team received in 2009
    Operating Income = The amount of money left over after expenses but before taxes and interest payments
    Player Expense = The amount of money spent on player salaries, benefits and bonuses
    Gate Receipts = The amount of money from ticket sales including club seating
    Margin Percentage = (not really correct here, but works) this is the percentage of operating income against total revenue
    Players Percentage = the percentage of player costs to revenue
    Overhead = the amount of money that was spent on overhead including stadium costs and everything else that it takes to run the team

    Ok so here are the best and worse along with the Chiefs in each category

    Current Value:
    Dallas Cowboys = 1.8 billion
    KC Chiefs = 965 Million 20th overall
    Jaguars = 725 million

    Revenue
    Cowboys = 420 million
    Chiefs = 235 million 23rd overall
    Lions = 210 million

    Operating Income
    Cowboys = 143.3 million
    Chiefs = 47.8 Million 6th overall
    Dolphins = -7.7 million

    Player Expense
    Giants 166 million
    Chiefs 111 million (we were last in this category)

    Gate Receipts
    Cowboys 112 million
    Chiefs 53 million 16th overall
    Raiders 34 million

    Overhead costs
    Cowboys = 133.7 million
    Chiefs = 76.2 million 14th
    Bills = 57.8 million

    I found this interesting. It looks like the owners could learn a few things from the owner of the Bills on how to get costs down.

    Overall, here are some interesting numbers league wide to think about.

    All the teams in the NFL have a combined value of 32.6 BILLION dollars

    All the teams in the NFL collected 8 billion in revenue for the 2009 season

    All the teams in the NFL ended up with 1 billion in operating income. Interestingly enough, this is what the owners have stated they want to keep that amount at.

    Players have received 4.494 billion in expenses, or 56.06% of total revenue.

    Overhead, or somtimes called operating costs are in excess of 2.45 billion dollars collectively or 30% of revenue.

    For those of you who are business savvy, those numbers will mean something to you. For those of you who see that the players only get 56% and really don't know much about business you will think the players should get more. Interestingly enough, with a margin of 13.3% overall, the NFL is healthy, but not getting overly rich.

    Putting that in perspective, if you owned your own business in construction. If your company made 100K in revenue in one year, you would have made 13K for your troubles. Its all about volume.

    It appears some teams could work hard to get their costs down and save some money, which is another of the owners demands as they ask the players to pick up flights and hotel rooms on their own.

    Anyway, I thought this information was interesting. If you want to see the numbers for yourself. You can visit:

    #32 Jacksonville Jaguars - Forbes.com and walk backwards through each team from the end forward.


    Are you man enough? Eric Berry? Apparently Not!

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    Thanks for the research. I think those are really good numbers for the owners. They own a football team, and still making some (good) profit.
    Sports is a special industry, with special interests. It is much closer to entertainment than construction. You can do a movie with an unknown leading actor and pay him pennies, or you can do it with a top seller cast and pay him tons of money, getting most of the revenue (sometimes all of it). Big studios choices second option most of the times, why? Because it is less risky.
    If you want to have superstars players, that will make super audiences ratings, you have to share most of the revenues. Without these players, teams worths close to zero.
    The best Chilean fan.
    Follow me on twitter @ChileanChief

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    So teams are supposed to learn from the Bills, yet the Bills suck...

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    Quote Originally Posted by Hayvern View Post

    For those of you who are business savvy, those numbers will mean something to you.

    Putting that in perspective, if you owned your own business in construction. If your company made 100K in revenue in one year, you would have made 13K for your troubles. Its all about volume.

    Good thing these guys aren't having to run lowly construction companies.

    Anyway, let me try my hand at this "Business savvy" thing ...

    If $4.494 billion is 56.06% of total revenue, as indicated in the story, then (4.494 / 56.06) gives us $80,164,109.88 to represent 1% of total revenue. Multiply that by 100, for 100%, and you get $8.016 Billion Total revenue.

    Then he indicates that the owners, after all operating costs, collect 13.3% of total revenue. This is where it is made to look like a bad deal with the construction co. comparison.

    $80,164,109.88 is 1%, so we multiply that by 13.3 and...

    That comes to $1,066,182,661.43.

    But he also mentions that "All the teams in the NFL ended up with 1 billion in operating income."

    That comes out before they determine the Total revenue. Sort of like "before taxes". They take that right our of the grand total, then work the numbers with what remains.

    So, now, the owners total for profits comes to $2,066,182,661.43.

    If we divide that among 32 owners, the average income, after all expenses, comes to $64,568,208.17 for the 2009 season.

    What was that one line again?.... "the NFL is healthy, but not getting overly rich."

    I'll disagree FTW.

    I don't care what percentage of the revenue you are getting, if the actual amount comes to over $64.5 million a year, after all expenses, I will not be on your side when you demand more and threaten to cancel the NFL season for it.

    But don't worry. I think most will.

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    Quote Originally Posted by chief31 View Post
    Good thing these guys aren't having to run lowly construction companies.

    Anyway, let me try my hand at this "Business savvy" thing ...

    If $4.494 billion is 56.06% of total revenue, as indicated in the story, then (4.494 / 56.06) gives us $80,164,109.88 to represent 1% of total revenue. Multiply that by 100, for 100%, and you get $8.016 Billion Total revenue.
    Wowo good for you, you understand 5th grade math
    Quote Originally Posted by chief31 View Post
    Then he indicates that the owners, after all operating costs, collect 13.3% of total revenue. This is where it is made to look like a bad deal with the construction co. comparison.

    $80,164,109.88 is 1%, so we multiply that by 13.3 and...

    That comes to $1,066,182,661.43.
    WOW, look at you go!

    Quote Originally Posted by chief31 View Post
    But he also mentions that "All the teams in the NFL ended up with 1 billion in operating income."

    That comes out before they determine the Total revenue. Sort of like "before taxes". They take that right our of the grand total, then work the numbers with what remains.
    Actually, this is where you lose it. That is not how Operating Income works. Operating income is what is left over from revenue AFTER expenses are factored. So your math gets off base here, that is alright, we have moved into business concepts now.

    Operating Income = Gross Income - Operating Expenses - Depreciation

    Quote Originally Posted by chief31 View Post
    So, now, the owners total for profits comes to $2,066,182,661.43.
    This is where you are wrong. Total profit is not factored into this in anyway. The calculation of profit is operating income minus taxes and interest payments. I do not have the numbers on profit, but it will be less than the 1 billion that is stated in the article when you make the subtractions. It will obviously change per team, for instance, I am sure the Chiefs financed their stadium renovations and that interest payment will come off of operating income. What is the interest payment on 375 million? I don't have a clue.

    Quote Originally Posted by chief31 View Post
    If we divide that among 32 owners, the average income, after all expenses, comes to $64,568,208.17 for the 2009 season.

    What was that one line again?.... "the NFL is healthy, but not getting overly rich."
    Actually, I cannot calculate total profit since I do not know what each team pays in taxes and interest as stated above, but the average operating income around the league is more like 33.4 million, almost half of what you say it is. It is a pretty common mistake.

    Quote Originally Posted by chief31 View Post
    I'll disagree FTW.

    I don't care what percentage of the revenue you are getting, if the actual amount comes to over $64.5 million a year, after all expenses, I will not be on your side when you demand more and threaten to cancel the NFL season for it.

    But don't worry. I think most will.
    Well as proven above, owners are not making that on average, but yeah, they make millions of dollars. It is all economies of scale though. So the simple person sees 33 million and they say "Man that is a lot of money per year" and it is a lot of money I admit. But at the same time, how much money is the top contracts getting?

    Well here are some numbers from 2009

    NFL TeamAverage Annual Salary
    Julius Peppers, 16.6 million
    Carson Palmer 16.16 million
    Eli Manning 15.28 Million
    Namdi Asomugha 15.1 million
    Ben Rothlesberger 14.6 million
    Peyton Manning 14 million

    Some of those players made more money that year than the following teams:

    Carolina Panthers 15 million
    Green Bay Packers 9.8 million
    New York Jets 7.6 Million
    Oakland Raiders 2.2 Million
    New York Giants 2.1 Million
    Detroit Lions -2.9 million
    Miami Dolphins -7.7 million

    That's right, Asomugha made more money than the collective Raiders organization did. I find that very funny.

    The point here really is that the profit margin average for all the teams in the NFL is probably closer to 8 - 9% which is low. For a team to borrow money, and have cash on hand to run their business, they would need to have 10 - 12% to be considered healthy. Even though they have millions of dollars, it costs millions to run the team. When we look at it compared to our small 50K salaries it seems a travesty, but again, economy of scale comes into play here.

    To give you a comparison. Microsoft has a 40% operating margin and a 30% profit margin

    Netflix has a 31.73% Profit Margin

    Caterpillar has a 7.11% profit margin OH snap, can we say union?

    General Motors 1.1% profit and 1.7% operating margin, wow unions strike again

    Verizon 57.7 % Profit Margin

    Apple Computers 40% profit margin

    So you can see that at less than 13%, the NFL owners are not nearly getting as rich as others, but at least they are not yet down to Government bailout levels like GM.


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    Quote Originally Posted by Seek View Post
    So teams are supposed to learn from the Bills, yet the Bills suck...
    Yeah, well they could learn how to keep their costs down, but then part of keeping costs down is not paying a lot for players, so yeah, they suck!


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    Hate to spoil the fun, but those numbers are messed up from the offset. You are forgetting that the owners get a credit off the top for expenses - close to a 1 billion dollar credit currently, after the numbers are worked out.

    Per the NFLPA site: "The NFL generated $8.8 billion in gross revenue in 2009, more than any other league." The 'total revenue' number is after that first amount is knocked off the top. Further, the actual percentage of player costs out of all revenue in 2009 was 50.6%, per the last link, or 57.1% of the actual 'total revenue' as used in the CBA terms.

    Here you can check out all the things that the owners are compensated for off the top, before any pie splitting takes place. Pretty much the only things not listed are the things the owners are now asking to have covered - travel, lodging, funds for a new stadium, and the such.

    Sorry, but the numbers just aren't that simple. The owners hide their compensation as much as they can, so simply adding the totals you see on Forbes won't cut it. If it was that simple, the owners wouldn't be so opposed to showing the players their books...

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    I think I'll hold off on buying a NFL team, till next year.

    I'm only 1,799,999,999.76 short of owning the Cowboys

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    Quote Originally Posted by Xanathol View Post
    Hate to spoil the fun, but those numbers are messed up from the offset. You are forgetting that the owners get a credit off the top for expenses - close to a 1 billion dollar credit currently, after the numbers are worked out.

    Per the NFLPA site: "The NFL generated $8.8 billion in gross revenue in 2009, more than any other league." The 'total revenue' number is after that first amount is knocked off the top. Further, the actual percentage of player costs out of all revenue in 2009 was 50.6%, per the last link, or 57.1% of the actual 'total revenue' as used in the CBA terms.

    Here you can check out all the things that the owners are compensated for off the top, before any pie splitting takes place. Pretty much the only things not listed are the things the owners are now asking to have covered - travel, lodging, funds for a new stadium, and the such.

    Sorry, but the numbers just aren't that simple. The owners hide their compensation as much as they can, so simply adding the totals you see on Forbes won't cut it. If it was that simple, the owners wouldn't be so opposed to showing the players their books...
    I did forget about that, but rather I was not aware of that. What I will have to do though, is go back and see how that factors into the numbers, because ultimately the only thing that changes is whether the operating costs, those subtractions that leave operating income, are included or are over and above the expenses incurred. This I do not know for sure.

    Interestingly enough, when you calculate expenses with the numbers, the total in expenses is stated to be 2 billion dollars. So if the 1 billion dollar allowance is factored in, owners are still paying 1 billion in expenses league wide.

    That would leave 26% in operating margin, which is certainly better than 13% and places them squarely in the profitable range.

    I am guessing that the 1 billion expense allowance is a bookkeeping tactic to avoid having to pay taxes on the first billion received. The same way someone who is paid per diem for working away from home gets that money tax free, which is why it would likely not be reported in revenue, I was just not aware of it.

    The interesting thing to find out, which might be in the NFLPA contract, is how much per diem player's receive for travel expenses and lodging. For the numbers to be fair, that money should ALSO be factored into what the players get if you are going to fractor in the owner's expense allowance. Again, since that is not classified as income, then it would not be reported as salary. It could be part of the expense costs.

    Either way, I never claimed this was the be all end all, nor was it meant to make the case for or against the players. These guys all make more money than I can ever dream of, so let the rick fight out there own.

    Ultimately though, if the owners cannot afford to field the teams, the NFL will fail. Players come and players go, and the product may not be as good, but it would still be a product without the current crop of players, without the owners, you got nothing.


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