Player costs are primary issue

On the one hand, soaring players costs help limit the Packers to a $4 million profit last fiscal year. On the other hand, the difference between profit and loss was the cost of one free agent. Packer Report goes beyond the numbers to show the challenge of running a franchise and how both sides will use the data in the CBA talks.

The most interesting thing about the Packers' $4 million profit during the fiscal year that ended on March 31?

No, not that it's the same figure as a certain retired-for-now quarterback, though there's a certain amount of undeniable irony there.

What's most interesting is the difference between profit and loss can be attributed to general manager Ted Thompson's desire to stay away from high-stakes free agency.

When Packer Report sat down with team President Mark Murphy at the end of last season, he denied that Thompson was under any spending restraints. Murphy echoed those sentiments last week in previewing the team's financial picture ahead of the July 30 shareholders meeting.

"I think that's one of our real advantages, and one of the main reasons we've been so successful," Murphy told reporters. "We give football operations, and Ted in particular, the resources they need to be successful. Even though our profits were down this year, we're not reducing in any way the support we provide them."

Still, if Thompson had bowed to popular sentiment and fortified his 13-3 club with a big-name free agent, the Packers could have posted a loss rather than a profit.

Of course, the difference between finishing in the black and finishing in the red isn't exactly black and white. And it speaks to the challenges of running a professional sports franchise.

Had Thompson signed the right free agent last year, perhaps the Packers finish 9-7 instead of 6-10 and claw their way into the playoffs. An extra game or two — especially at home — means increased revenue from tickets and merchandise, and that means a rosier financial picture.

On the other hand, sign the wrong free agent, and that's some expensive toilet paper swirling down the bowl.

Like anyone with a 401(k), the Packers were dealt a significant blow when the stock market went in the tank last year. In the midst of a recession and without the one-man revenue generator that was Brett Favre, the Packers posted a whopping $20.1 million operating profit, according to team data. But the team absorbed a $16 million loss in its investments.

You can be sure the NFLPA will be poring over all of this as the union and the owners prepare for talks to hammer out a new collective bargaining agreement. As the league's only publicly owned team, the Packers are the only one of the NFL's 32 franchises who open the books every year.

The union will see the Packers' finances and say the status quo is working just fine. If the small-market Packers are able to post a profit, even after getting hammered in the stock market and hit hard with the post-Favre hangover and recession, then the rest of the league must be doing just fine, too.

A $4 million profit is nothing to sneeze at, and the value of the Dow isn't likely to be sliced in half again anytime soon. With the markets stabilizing and some signs that the recession is loosening its grip, the union will say the current CBA — in which players get 60 percent of the economic pie — is a sound business model.

Hogwash, the owners will say, because player expenses are soaring. According to the Packers, they created $82 million in new revenue from 2006 through 2008. Of that, 80 percent — $65 million — went to the players. In the last fiscal year, the Packers' revenue increased 3 percent to $247.9 million. Expenses went up 4 percent, including an increase of almost 11 percent ($14 million to $138.7 million) in player costs, according to the team.

"It's a real concern that our player costs continue to grow at a rate much higher than our revenue's growing," Murphy said. "It's not sustainable, and it's the reason we opted out of the collective bargaining agreement."

With the owners' decision to opt out of the CBA, the 2009 season will be the last with a salary cap, 2010 will be played without a cap and a lockout could be on the docket in 2011. Murphy predicts teams won't go on a spending spree, but one wonders if Dallas owner Jerry Jones — with a $1.2 billion stadium opening for business — will play nice.

Either way, expect the Packers to follow the same tried-and-true formula: Build from within with restrained spending, and hope the general manager throws money at the right players instead of throwing it away.

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Bill Huber is publisher of Packer Report magazine and and has written for Packer Report since 1997. E-mail him at, or leave him a question in Packer Report's subscribers-only Packers Pro Club forum. Find Bill on Twitter at and Facebook under Bill Huber.

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