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Packer's profit less than hoped by PG's R. Ryman

Discussion in 'Packer Fan Forum' started by PWT36, Jun 22, 2008.

  1. PWT36

    PWT36 Cheesehead

    Apr 15, 2005
    For those Packer fans who are interested in financial condition of the Green Bay Packers, Inc. at end of Packer FY ending 3/31/08. This is article just published in Green Bay Press-Gazette today- Sunday, June 22, 2008.

    "Packers profit less than hoped--Revenue increases, by so do expenses."

    By Richard Ryman- of the Green Bay Press-Gazette

    The Green Bay Packers were financially successful last year, but not as profitable as the team's on-field success would seem to indicate.

    The National Football League's only publicly-owned team reported operating revenue of $241 million for the last fiscal year, an increase of almost 11 percent.

    Net income was $23.3 million, a 6 percent increase, but profit from operations, which does not include investment income or provisions for taxes, fell to $22 million from $34 million.

    "It was a strong financial year, but it was not what you would have thought, given our success on the field," said Mark Murphy, the team's president and chief executive officer. "Revenue was up 10 percent, but expenses were up at a rate twice that."

    Murphy, treasurer Larry Weyers and vice president of finance Vicki Vannieuwenhoven discussed the Packers' financial results on Friday, an annual overview given in advance of the team's shareholders' meeting, which will be July 24.

    The Packers are the only NFL team whose finances are made public. The team's stock is not traded, and does not increase in value or pay dividends. The 111,000 shareholders elect the organization's board of directors.

    The Packers were 13-3 last season and won their division and a home playoff game before losing to the New York Giants in the NFC championship game at Lambeau Field.

    Murphy said player costs, the team's biggest expense, traditionally have been covered by national revenue, primarily television contracts. Those costs, however, are rising at a faster rate than revenue, he said. It's a trend that concerns the Packers and was responsible for NFL owners' recent decision to opt out of the collective bargaining agreement with the players union.

    Total operating expenses were $219.9 million, up from $183.8 million. Of that, player costs were $124.7 million, a 13 percent increase over the previous year. Player costs were $102.8 million two years ago.

    "Player expenses were up more than national revenue. That does concern us. It puts more pressure on local revenue," Weyers said.

    Local revenue is important to teams, because it doesn't have to be shared with other franchises. It is the only area where a team can increase income on its own.

    The Packers renovated Lambeau Field five years ago to be able to increase their local revenue, something other NFL teams are doing as well.

    Where the Packers' revenue ranks in relation to other NFL teams matters, because it determines revenue sharing payments. The top revenue producers make an additional payment. Last year, the Packers ranked 11th in the 32-team league. They were seventh the year before and 10th for several years before that.

    Team officials have said the Packers must rank near the top middle of the revenue producers to remain competitive.

    Vannieuwenhoven said the team is "probably close" to where it wants to be, but the NFL will not release this year's rankings until the fall.

    Success on the field traditionally means more income for the Packers, and last year was no exception.

    "We were tracking ahead of budget early on," Vannieuwenhoven said.

    Local revenue increased to $105 million from $93 million, continuing evidence that the renovated Lambeau Field is doing the job, Weyers said.

    He said local revenue is becoming a larger percentage of the whole.

    "That's consistent with where we need to be," Weyers said.

    He attributed the increase to the regular-season performance, two home playoff games, Brett Favre's retirement and the renovation of the Packers Pro Shop. The Pro Shop was expanded and checkouts added last year.

    The Pro Shop Game Day store on the west side of the stadium is being expanded for this season.

    The Packers no longer report Pro Shop revenue separately from that of other sales and marketing efforts, but Weyers said sales and marketing revenue increased to $50 million from $40 million the year before.

    "The Pro Shop carried the majority of that increase," he said.

    Pro Shop revenue was $17.5 million for 2005-06, and a little less than $16 million for 2006-07. Weyers said this year's sales were a record.

    Murphy said retail and Internet sales continue to provide opportunity for increasing income.

    The Packers added $2 million to its Franchise Preservation Fund, bringing that account to $127.5 million. Initially, the goal was to put aside enough cash to operate the team for a year. Those costs have grown faster than the fund, and at any rate, Weyers said, team officials aren't sure the fund would be enough.

    "We may need substantial resources in the future," he said.

    Estimated operating expenses increased to $151 million from $137 million in the last year.

    Murphy said that under current collective bargaining agreement provisions, 2010 could be a year without a salary cap and 2011 could see a work stoppage, mostly likely a player lockout.

    "That's where something like this will help us. We would not have revenue, but we would continue to have expenses," Murphy said.

    The Preservation Fund contribution of $2 million was smaller than in previous years — it was $10 million in 2006-07 — but the Packers also purchased 15 acres around Lambeau Field, which Weyers said they consider to be preservation-related. The Packers have not determined how the land will be used, but Murphy said they are talking to municipalities about development possibilities.

    "The basic idea is to develop around the stadium and drive visitors to the area," Murphy said.

    Murphy said the Packers are a strong enough brand that on-field success is not the only driver of income, but Weyers said winning football games is the key to long-term success, and the point of being successful financially is to give the team the resources to field winning teams.

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