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SBJ/February 1 - 7, 1999/No Topic Name
Cash cop keeps close eye on NFL
Published February 1, 1999
The NFL season is over, but Charles Bennett's interest in each team's 1998 performance is just beginning.
Bennett, 46, is a former FBI agent who has taken his mastery of accounting, coupled it with his investigative training and turned his attention on NFL franchises. As the forensic accountant for the NFL Players Association, Bennett soon will begin poring over each team's 1998 financial records, looking for any revenues that aren't going toward the league's salary cap.
He may be the man NFL owners least want to see roaming the halls of their front offices.
"I'm the league's financial cop," Bennett said from his Albuquerque office, where he scours the NFL's books to make sure the players are receiving their fair share of the league's gross revenues. "[NFL Players Association Executive Director Gene] Upshaw always gives a speech about how much the owners hate me, but it's more like the owners just don't want to see me coming. Let's put it this way: The owners always know if I'm in the building, but all I want to do is to make sure the players get their fair shake."
The NFL's collective-bargaining agreement calls for each club and the league office to be independently audited, with the results sent to a committee of league and union members to review and address financial issues unearthed.
After the desk audits are completed, Bennett will then pay a visit to about six teams each year where he has sensed some shifts in revenue. It's a visit that the owners would rather avoid.
"Issues come up, and Charles dissects the numbers," said Tom DePaso, an NFLPA attorney. "He's our man to be sure things are being reported. For various reasons he finds things, and what he finds will be used to increase the salary cap."
The NFL Players Association hired Bennett in 1994 after he found that some NBA teams had underreported revenue to the union. Though the NBA owners are loathe to open their books, Bennett got an inside view of league finances in a Chicago courthouse after Bulls owner Jerry Reinsdorf sued the league over local television rights. Included in the lawsuit were financial records for each NBA team, and it took Bennett a week to uncover discrepancies that led to a reported $100 million settlement in 1992.
Today, Bennett is paid by the NFLPA to ensure that owners accurately report their gross revenue as part of the league's collective-bargaining agreement, which tightly binds player salaries to team revenues while setting the salary cap. He is also a consultant for the NBA Players Association and for minor league hockey.
According to the NFL bargaining agreement, owners must spend at least 58 percent of gross revenues on player salaries and benefits. Gross revenues are defined by gate receipts, network and local broadcast rights and sponsorship. This past season, the cap was $53 million per team, and as the league's prosperity continues to skyrocket, Bennett said the owners' accounting methods are becoming more complicated and creative than ever.
Complicating matters is that many franchises are part of complex ownership structures that bundle the franchise, stadiums and concessionaires into a single entity, making revenue more difficult to track. Even more diligence is required when teams sign new stadium deals.
"There are so many related entities where a team may also own the broadcast station or an arena management company, and revenue can flow through related parties, and we have to find them," Bennett said. "With cities doing anything to attract teams, lease negotiations have become an art form."
Most revenue discrepancies, Bennett said, are inadvertent. They are typically resolved with cooperation from the team.
"There are checks and balances," said Andy Wasynczuk, vice president of business operations for the New England Patriots, a team that likely will be targeted by Bennett when it moves to its new stadium planned in Hartford, Conn. "For the system to work, it's important for both sides to have accuracy and correct interpretations. It's what has led to the league's stability."
Bennett recently wrapped up visits to the Kansas City Chiefs, Green Bay Packers, San Diego Chargers, Carolina Panthers and the NFL office in New York for field audits, spending weeks poring over financials to verify revenue. Confidentiality agreements prevent Bennett from disclosing what he has found, but discrepancies could push more money toward the players.
A recent pattern uncovered by Bennett is the funneling of franchise sponsorship revenue through its charities, a move that he said was allowing revenue to bypass the salary cap calculation.
"It's becoming very common," he said. "A sponsor writes a check that flows directly through the charity, but the money should go directly to the team first and count as gross revenue toward the cap. I'm not accusing anyone of anything, but there are a lot of accounting gimmicks."