MartyBall4Buffalo Posted June 9, 2005 Share Posted June 9, 2005 I think this is a pretty good idea as it would level the playing field between the higher revenue teams in the league and lower revenue teams. http://www.jaguars.com/story/4408.asp Weaver talks about plan 6/7/05 By Vic Ketchman, jaguars.com senior editor This is the first installment in a five-part series entitled “Revenue-sharing 101,” which will address the issues confronting the NFL's small-market and large-market teams in their attempts to adopt a new business model. Jaguars owner Wayne Weaver comments in Part I. Wayne Weaver is promoting a proposal he and Steelers owner Dan Rooney made at the recent NFL owners meetings as being a solution to the problem of an ever-widening revenue gap between the league's small-market and large-market teams. It's known as the “Jacksonville-Pittsburgh plan” and it's based on sharing of all local revenues. According to Weaver's and Rooney's proposal, 34 percent of all local revenues would be put into a pool and divided evenly among the league's 32 teams. “I've been very outspoken about this at the league meetings. It was a good fit for the two of us to take the lead. We're a small market; (the Steelers) are a middle market,” Weaver said of the plan. The NFL has long operated with a “pool the revenue” concept, though some revenues were designated “unshared.” The league modified that concept in 2002, and now more dramatic changes may be required if small-market and large-market teams are to continue to compete on a level playing field. Previous to the '02 season, the home team would give the visiting team a 34 percent share of the gate. As of '02, 34 percent of the gate receipts from each game were put into a pool and distributed 32 ways. Now, Weaver and Rooney have created a plan that applies the 34 percent idea to all local revenue. The “Jacksonville-Pittsburgh plan” would put all local revenue, including such unshared monies as luxury suites, stadium naming rights and sponsorship into a 32-team pool. It's a formula intended to ease a revenue disparity between small-market and large-market teams that has reached the point of alarm. “Does it have a chance? Absolutely it has a chance,” Weaver said of his and Rooney's proposal. “It's the only rational long-term commitment, or we become baseball or the other sports leagues.” Large-market teams such as Washington, Dallas and Houston, of course, are obvious opponents to such a strategy. Those three teams would say that if you're going to share my revenue, you should also have to share my debt. Purchase prices, franchise fees and new stadiums are driving those teams' debts and they argue that they need their local revenues to address those debts. The small-market concern is that the revenues generated by the large-market teams will drive up the salary cap to a level beyond the small-market teams' capabilities. Simply put, the competitive balance the league has always enjoyed between small-market and large-market teams will be at risk if the small-market teams can't afford to spend to the level of the cap. “It's a small-margin business and all of the margins reside with the top teams in the league,” Weaver said. “What (the Jacksonville-Pittsburgh plan) does is re-distribute revenue to teams in small markets who have lower revenues.” In the Jaguars' inaugural season, 1995, the difference in revenue between the top revenue team in the league and the bottom revenue team in the league was $28 million. In 2005, that difference will be about $140 million. Each team will spend about $103 million on player salaries and benefits this year, leaving the low-revenue teams in danger of operating at a deficit. The Jaguars are in the bottom third of the league's revenue rankings. “In the early years, our TV revenue covered our player costs,” Weaver said. The owners almost have to come to a revenue-sharing agreement before the league can move forward on a Collective Bargaining Agreement with the players union. The players union is also pursuing a new business model for its next agreement, and it's likely the players will be successful in that attempt. In 2005, according to the current CBA, the players will receive 65.5 percent of the league's “Defined Gross Revenue.” Those revenues do not include monies from luxury-suite licenses and local sponsorship, to name two categories. The current CBA runs through 2007, but '07 is scheduled to be an uncapped year and that means a new CBA needs to be in place by then. Should the league not have a new CBA by the '07 season, the salary cap system the league has enjoyed since 1993 will be at risk. A new CBA is expected to be based on a “Total Football Revenues” model in which the players would share in all of the league and individual team gross revenues. Speculation is the players would receive 59 percent of “TFR.” In 2005, the NFL is projected to be a $5.6 billion business. “It's critical,” Weaver said of the need for an agreement among owners on a revenue-sharing plan. “The problem now is it's beginning to get so acrimonious that it's pitting partner against partner.” And that's not the formula that made the NFL the most successful pro sports league in the world. Link to comment Share on other sites More sharing options...
Nanker Posted June 9, 2005 Share Posted June 9, 2005 "Large-market teams such as Washington, Dallas and Houston, of course, are obvious opponents to such a strategy. Those three teams would say that if you're going to share my revenue, you should also have to share my debt. Purchase prices, franchise fees and new stadiums are driving those teams' debts and they argue that they need their local revenues to address those debts." This is why the Jerky Joneses and Dimmy Scheeder's of the world should not be allowed to buy into the NFL ownership club with a debt service of a few hundred million dollars. In their eagerness to get into the club they'll overpay knowing their debt will be financed by the fans. Just because the old guard is "sitting on tons of money" doesn't mean it's all in cash and readily available. Most of the profit inherent in the ownership of a team can only be realized by A.) Borrowing against its value or, B.) Selling. In that respect, owning a team is a lot like owning an apartment house. Link to comment Share on other sites More sharing options...
ganesh Posted June 9, 2005 Share Posted June 9, 2005 I don't understand why the big market teams with the so called "big debts" give a net profit that subtracts their debts payments from the total profits and put it in this common pool....Why can't it be that simple....that way everyone wins...and the NFL maintains its competitive balance. Link to comment Share on other sites More sharing options...
MadBuffaloDisease Posted June 9, 2005 Share Posted June 9, 2005 I don't understand why the big market teams with the so called "big debts"give a net profit that subtracts their debts payments from the total profits and put it in this common pool....Why can't it be that simple....that way everyone wins...and the NFL maintains its competitive balance. I agree. Even though these owners built their new stadiums probably already having their debts covered (in the form of long-term sponsorships), this would be equitable for all involved. Link to comment Share on other sites More sharing options...
FTW_BillsFan Posted June 9, 2005 Share Posted June 9, 2005 I'd have to see the #'s, but I'm not sure that 34% would be enough... If the difference between low and high revenue teams is 140 MIL, I'm not sure 34% would make that low revenue team competitive... Good info in the article tho. Please post the others when they come up. Link to comment Share on other sites More sharing options...
SF Bills Fan Posted June 9, 2005 Share Posted June 9, 2005 I like Weaver. He, Mr. Rooney an Mr. Wilson will carry the torch for us. Jacksonville will be in more trouble than Buffalo should a revenue sharing plan that benefits the small markets not happen. Link to comment Share on other sites More sharing options...
MadBuffaloDisease Posted June 10, 2005 Share Posted June 10, 2005 I'd have to see the #'s, but I'm not sure that 34% would be enough... If the difference between low and high revenue teams is 140 MIL, I'm not sure 34% would make that low revenue team competitive... Sure it would. When considering the difference between the highest and lowest currently being $140M, you have to realize that the smallest revenue teams still are making a good amount of money under the current system, and make a good amount of money outside of what is shared. And the top 6 teams alone make about $500M collectively in non-shared revenue, so considering that about $155M would be shared among the 31 other teams (about $5M a piece) plus the 66% they get from their local revenues, and it should be enough to make things work. And I'm sure Weaver and Rooney wouldn't have proposed it if it didn't help them out. Link to comment Share on other sites More sharing options...
BillsFan Trapped in Pats Land Posted June 10, 2005 Share Posted June 10, 2005 I'd have to see the #'s, but I'm not sure that 34% would be enough... If the difference between low and high revenue teams is 140 MIL, I'm not sure 34% would make that low revenue team competitive... Good info in the article tho. Please post the others when they come up. 354724[/snapback] Yeah, it probably should be somewhere in the 40%+ area. Getting to 50% and above starts to get downright commie though. Link to comment Share on other sites More sharing options...
The Avenger Posted June 10, 2005 Share Posted June 10, 2005 I don't understand why the big market teams with the so called "big debts"give a net profit that subtracts their debts payments from the total profits and put it in this common pool....Why can't it be that simple....that way everyone wins...and the NFL maintains its competitive balance. 354239[/snapback] This would seem simple, but when you talk about "profits" rather than revenues you have to define "profit". Unless there is an open audit of the books, teams can claim little to no profit by claiming that their huge debts offset their revenues. This is what happens in Hollywood all the time - creative Hollywood accounting leaves many people wondering why a hit movie that grossed $400 million somehow made no "profit" and those who were owed a percentage of "profits" got nothing. Link to comment Share on other sites More sharing options...
MadBuffaloDisease Posted June 10, 2005 Share Posted June 10, 2005 This would seem simple, but when you talk about "profits" rather than revenues you have to define "profit". Unless there is an open audit of the books, teams can claim little to no profit by claiming that their huge debts offset their revenues. This is what happens in Hollywood all the time - creative Hollywood accounting leaves many people wondering why a hit movie that grossed $400 million somehow made no "profit" and those who were owed a percentage of "profits" got nothing. The difference is that the NFL as a whole knows their own business. They know what revenue is generated and what expenses there are. You can bet that Jones won't allow Kraft or Snyder, and vice versa, to cook the books at their expense. Link to comment Share on other sites More sharing options...
The Avenger Posted June 10, 2005 Share Posted June 10, 2005 The difference is that the NFL as a whole knows their own business. They know what revenue is generated and what expenses there are. You can bet that Jones won't allow Kraft or Snyder, and vice versa, to cook the books at their expense. 355434[/snapback] I think revenues are pretty easy to judge without a thorough audit, but expenses are a different story - infinite accounting games you can play on that side of the ledger. I still see it as a huge problem to this approach. Kraft or Snyder might not let Jones get away with anything (although they probably wouldn't have the info to know), or maybe they would in a tit-for-tat situation. You could still have big problems with big market vs. small market teams. There would have to be some sort of independent audit to prove "profit" and I doubt that Jones, Snyder and Kraft will let anyone go through their books to that degree and share that information with other teams. Link to comment Share on other sites More sharing options...
MadBuffaloDisease Posted June 10, 2005 Share Posted June 10, 2005 Kraft or Snyder might not let Jones get away with anything (although they probably wouldn't have the info to know), or maybe they would in a tit-for-tat situation. You could still have big problems with big market vs. small market teams. There would have to be some sort of independent audit to prove "profit" and I doubt that Jones, Snyder and Kraft will let anyone go through their books to that degree and share that information with other teams. They won't have a choice. The NFL isn't run by the minority like them: it's run by the majority. They are all part of a larger entity and they NEED that entity to make gobs of money. And I'm sure they've all disclosed their debt-loads in the past, i.e. when it wasn't to their advantage to cook the books, and any major deviation from that will trigger an audit. Link to comment Share on other sites More sharing options...
The Avenger Posted June 10, 2005 Share Posted June 10, 2005 They won't have a choice. The NFL isn't run by the minority like them: it's run by the majority. They are all part of a larger entity and they NEED that entity to make gobs of money. And I'm sure they've all disclosed their debt-loads in the past, i.e. when it wasn't to their advantage to cook the books, and any major deviation from that will trigger an audit. 355515[/snapback] That's what I'm saying - there has to be an audit. If there is no provision for an audit it can't work. I contend that it will be difficult for some owners to agree to an audit - they simply won't want someone else going through the books with a magnifying glass. Link to comment Share on other sites More sharing options...
MadBuffaloDisease Posted June 11, 2005 Share Posted June 11, 2005 That's what I'm saying - there has to be an audit. If there is no provision for an audit it can't work. I contend that it will be difficult for some owners to agree to an audit - they simply won't want someone else going through the books with a magnifying glass. It takes at least 3/4's (24) of the (32) owners to pass something. If it's less than 8 owners who intend to "cook the books," and that's what it seems like, a resolution to call for an audit for anyone seemingly overstating debts will pass. Link to comment Share on other sites More sharing options...
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