Publicly, Green Bay Packers brass put a positive spin on its finances from 2018-19.
But if that bottom-line trend continues on an annual basis, the Packers could be at a competitive disadvantage with other NFL teams on the playing field.
Packers President Mark Murphy recently reported that a major drop in the Packers’ operating profit over the past fiscal year was due to multiple atypical expenses.
Profit from operations fell from $34 million a year ago to just $724,000 for the fiscal year that ended on March 31, 2019, a decline of 98%. While revenues increased a healthy $23 million (5%), expenses grew at a substantially greater rate.
An increase of more than $56 million in expenses (13%) was due mainly to three factors – significant player contracts, the overhaul of the coaching staff, and the team’s obligations to the concussion liability reserve, which funds the legal settlement being drawn upon by former players.
Total revenues reached $477.9 million, with total expenses at $477.2 million.
“It was a unique year,” Murphy said. “We had some irregular expenses that affected our financial performance, but we’re still in a strong financial position. It’s allowed us to invest in the team, Lambeau Field, our fan experience and the community.”
Player signings and another $10 million hike in the salary cap (the sixth straight year of an eight-figure cap boost) accounted for roughly $30 million of the $56.4 million increase in expenses. The record contract extension signed by quarterback Aaron Rodgers last summer and the early splash made by General Manager Brian Gutekunst in free agency this past March were among the major moves.
Payments to the concussion settlement and the team’s first head-coaching change since 2006 accounted for a large chunk of the rest. Additional costs related to the franchise’s year-long celebration of its 100th season in 2018 also factored in.
“The settlement fund is providing what was intended, and it’s important former players are getting the resources they need,” Murphy said.
“The player signings are a positive, as active as we’ve been,” he continued. “They ebb and flow, and this year was a little higher than we would normally have.”
“We’ve been very fortunate. We’ve had consistent success over the last decade, and continuity has served us well, but obviously with the coaching change there were some significant expenses in terms of moving forward.”
The Packers revenue is generated through various sources locally, and nationally through the NFL’s television contracts.
What’s concerning is that player and coaching costs will always be there. Whether we like it or not, player contracts dwarf those of just 10 years ago. If we are going to be in the game, we have to play the game.
If revenues don’t stay ahead of expenses, the logical solution would be to reduce player and coaches salaries. But that would keep the top players and coaches from wanting to play in Green Bay, because salaries would be lower than on other NFL teams.
And that would put the Packers at a significant competitive disadvantage on the field.
Will that happen?
It’s hard to say. But it’s definitely food for thought.