Packers Report Record Revenues, But Capital Expenses Stifle Potential Profit Increase

The Packers yesterday reported record revenues, hitting $375.7M, but core profit rose modestly in comparison despite declining player costs because of debt and capital expenses, including a $9M-per-club debt assessment imposed by the NFL. While player costs, usually far and away a club’s highest expense, were down, total team expenses still jumped 12.7% to $336M as the club aggressively added to Lambeau Field and an adjacent development dubbed Titletown. The team’s revenues rose 16%, while the capital costs kept net income at $29.1M for the 12 months ended March 31, 2015, up $3.8M from last year. Operating income, which filters out certain expenses not tied to core football operations, was $39.4M, a 54% increase (if one excluded the league-imposed debt assessment, the figure would have been over $48M). The bulk of the team’s revenues came from national revenues, boosted by new TV contracts.The Packers reported $226.4M of national revenues, up 20.6%. That means the league distributed $7.244B to its 32 teams from national money, which includes TV, sponsorship, licensing, digital and NFL Network. The national increase also bumped to above 60% the amount the Packers receive from the league, up from 58% last year. Packers President & CEO Mark Murphy said that the team ranks ninth in total revenues. The team’s local revenues did increase by $12.9M to $149.3M, with half of that increase boosted by gains in the team’s pro shop (Daniel Kaplan, Staff Writer).

HOME SWEET HOME: In Milwaukee, Rich Kirchen noted the total revenue increase of $51.6M outpaced a $37.8M increase in expenses, "resulting in the higher operating income and net income." The Packers' profits "benefited from a decline in expenses related to player costs." Murphy said that those expenses "spiked" in '14 "due to contract extensions" with QB Aaron Rodgers and LB Clay Matthews. For FY '15, player costs were $159M, compared with $171M in FY '14. The Packers are the "only NFL team that releases its earnings" (BIZJOURNALS.com, 7/20). In Green Bay, Richard Ryman notes the team's total revenue has "increased every year since the Packers moved into the renovated Lambeau Field" in '03. Murphy said that ticket sales success "allows the team to "continue to invest in Lambeau Field and surrounding areas." Those investments "will include renovation of Lambeau Field’s luxury suites and club seats during the next two years." Murphy said that the $55M renovation of suites and club seats "will include windows that open, full-size refrigerators, better concessions equipment and flow, smart TVs and new furniture." About 240,000 square feet "will be included in the renovation." The team contributed $3M to the Green Bay Packers Foundation, "bringing that group’s endowment to just more" than $22M. Murphy also said that the team is "nearing an announcement on its development plans" (GREEN BAY PRESS-GAZETTE, 7/21).

IF YOU BUILD IT...: In Milwaukee, Bob McGinn reports the Packers "expect that the renovations at Lambeau Field and the soon-to-begin massive development west of the stadium referred to as Titletown will lead to even greater prosperity in the NFL's smallest city." The Titletown project has seen the Packers "buy up 63 parcels of property within a mile of the stadium that covers more than 65 acres with an assessed value" of about $49M. Murphy: "We've had pretty significant development costs over the last two, three years that's affected that (net income) as well. Buying property. Razing the buildings. Preparing land for development." He added, "We've been very deliberate in our process. We're trying to build on the success of the redevelopment in 2003 and bring more visitors to the area and capitalize on the popularity of Lambeau Field and the Packers" (MILWAUKEE JOURNAL SENTINEL, 7/21). Murphy said that the Packers "expect to make money from leases in the coming years, but they expect most of the money to come in when the success of the revitalization leads to more people spending more time and money around Lambeau" (ESPN.com, 7/20).

THAT'S THE TICKET: ESPN.com's Rob Demovsky reported the Packers have "discussed variable-pricing models for tickets in large part because the cost of preseason games, which have the same face-value price as regular-season games, is out of whack." But because the Packers "have two season-ticket packages (the second came about when the Packers pulled games out of Milwaukee after the 1994 season), they have not adopted that plan, which Murphy said is now being used by the majority of NFL teams." Murphy said that the team "ranked 18th out of 32 teams in average ticket prices last season (down from 17th the previous year)." Meanwhile, Murphy "knows there's a problem with the NFL preseason," but he "isn't sure there's a palatable solution." Murphy, who is a member of the league's competition committee, said that there "have been discussions about shortening the preseason from its current four-game format, but that it's unlikely to happen in the near future" (ESPN.com, 7/20).