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SBJ/20100628/This Week's News
Labor agreement keeps CFL rolling
Published June 28, 2010
A major football league has imminent plans to announce a groundbreaking labor deal, helping to stave off player unrest and a possible work stoppage.
Sorry, NFL fans. It’s the Canadian Football League, whose regular season is scheduled to kick off this week, presuming the paperwork is finished on the labor pact that was tentatively agreed to in late May.
Touting itself as “Canada’s league,” the CFL has had its recent ups and downs. Average attendance in 1994 fell to its lowest mark since 1969 (less than 22,000) as the league expanded to add U.S. teams. But a stadium building boom approaching $900 million in total spending, improved TV numbers and attendance up to nearly 29,000 a game last year are signs that the league (now with eight Canadian-based clubs) is headed in the right direction.
Perhaps most important is the new labor deal, which will keep a salary cap but sever it from overall revenue, sources said. That’s a major departure from how these deals are structured in the United States, where salary caps typically are determined by a percentage of league revenue.
The CFL had been paying players about 56 percent of net revenue but will now have a fixed team cap each year, currently at $4.2 million (Canadian) for each of the eight clubs. The CFL declined to comment on the pending labor deal, citing its unfinished nature.
“Hockey is Canada’s game, but the CFL is Canada’s league,” said Mark Cohon, the CFL’s commissioner since 2007 and a former MLB and NBA executive. “Forty-three percent of Canada tuned in to the Grey Cup, and this year’s Cup sold out 5 1/2 months in advance.”
With the 100th Grey Cup league championship game scheduled in 2012, the CFL is building marketing plans around that date and expects to announce several big sponsors in the coming months.
Before Cohon, the CFL had become known for backroom squabbles and ownership difficulties. Its marketing could be quirky, with one slogan a decade ago the obvious double entendre “Our balls are bigger.” (The CFL uses a bigger game ball than the NFL, in addition to playing on a 110-yard field and with only three downs.)
The league in the 1990s needed a $3 million loan from the NFL just to stay afloat. It has since been repaid. Now, seven of the league’s eight teams have major building projects under way, and Cohon, learning from his U.S. sports experience, has encouraged the teams to focus on the grassroots, family experience.
“The CFL gets a tremendous amount of support — grassroots support — in the West,” said Reg Bronskill, who runs a Canadian-based sports event and marketing company. “In Toronto, it is much more challenging because there are so many other sports available.
“Back in the ’90s, there was the thought the NFL would nudge them out,” Bronskill said. “I don’t think that will happen. There are too many people in Canada who think the product is a real product.”
Five of the eight CFL teams are privately owned, with three community controlled, like the Green Bay Packers. Some of the teams are profitable, but Cohon, like his NFL counterparts, cites the cost of stadium expansion as necessitating a new labor deal.
Among the league’s stadium projects is a $400 million upgrade to BC Place, home of the BC Lions, that includes the addition of a retractable roof to the 27-year-old venue. The Lions are playing at a temporary home this season before returning next year to BC Place, when it also will become the home of Vancouver’s MLS expansion club.
Additional facility projects in Edmonton, Hamilton and Winnipeg are each valued in excess of $100 million.
On the TV front, the league is talking to the NFL about putting games on the NFL Network and also is talking to ESPN. Currently, there is no deal to televise games in the U.S. this season.
Expansion is on the horizon, too, with another team slated for Ottawa, pending a City Council vote on a local stadium development plan. The league would like to expand into eastern Canada, as well.
The CFL has no issues with the Buffalo Bills playing a regular-season game in Toronto, Cohon said. “So far, it has had no impact on our league,” he said of the NFL initiative that began in 2008. And financially, the CFL is little threat to the NFL, which has approximately $8.5 billion in annual revenue. The CFL by comparison has roughly $150 million in revenue, or well less than the amount just one NFL team generates.
There also, in Canada, is the matter of competing for fan interest and dollars with the NHL.
“Whenever you have capital investment in a sector, it shows the sector is on an upswing,” said Tom Mayenknecht, a Vancouver-based sports radio show host. “Having said that, it is still, comparatively speaking, a small business compared to a large business such as the NHL.”
Mayenknecht noted that the CFL, despite some nice TV numbers, is still primarily a gate-driven business.
But the CFL does appear to have labor peace. The NFL’s labor deal expires in March, and the league and its players are far apart on reaching a new agreement.