Saturday, May 15, 2010

Without New CBA Smaller Market Teams May Struggle to Survive

For the first time since 1993 the NFL is entering a season without a salary cap, which could have damaging ramifications on the competitive balance throughout the league.

Thanks to a one-year loop hole in the expiring collective bargaining agreement, which is set to expire at the end of the 2010 season, smaller market teams such as the Jacksonville Jaguars and the Buffalo Bills are forced to pinch pennies in order to survive.

Labour peace has existed in the NFL since 1987 which was the year of the league’s last work stoppage. With no salary cap in place this year it means, the higher revenue teams such as the Washington Redskins, Dallas Cowboys and New England Patriots will be free to far outspend lower-revenue clubs such as Jacksonville and Buffalo as they try and improve their teams for the upcoming season.

In 2009, the cap was $128 million and the floor which is the minimum amount of money each team is required to spend was $111 million.

In 2008 the NFL owners opted out of the CBA citing revenue sharing and operating cost as the two main reasons why the current agreement is no longer economically feasible. The deal was scheduled to run through the 2012 season. The players receive approximately 60 per cent of the revenues used to determine the salary cap.

All 32 teams continue to split ticket and television revenues, however, they do not share money generated from things such as luxury seating, naming rights, parking and concession sales.

According to Forbes Magazine, the NFL is an $8 billion a year industry, the average gross income of each team currently stands at $31 million. This translates to $99200000 in revenue for the entire league.

Player costs including bonuses and benefits escalated by about four per cent, to an average of $135 million per team in 2009 according to Forbes. While the 2008 season represented the NFL's third most profitable year ever in league history. Operating income which is earnings before interest, taxes, depreciation and amortization) jumped 31 per cent, to an average of $32 million.

The Jacksonville Jaguars have been battling the threat of loosing their franchise for many years to larger media markets such as Los Angeles as the NFL looks to place a team in that market for the first time since Dec. 24 1994. The Jaguars are a major source of revenue for their city and creating and maintaining some national interest in the team from the media and fans will go along way to ensure the team stays in Jacksonville according to John Peyton the mayor of the city of Jacksonville.

“In terms of national image, philanthropic support and community pride, no other entity has contributed more than the Jaguars. The Jaguars are a $200 million plus revenue and culture generating business that brings jobs, revenue, national exposure and tourism to our city,” said Peyton.

The city of Jacksonville ranks 47th on the Neilson TV Households media list, the team also struggled to attract fans last season. According to the fan attendance statistics released by the NFL Jacksonville ranked 30th in the league attracting an average of 49,651 fans per game, for the entire season the Jaguars had a total of 397,214 fans attend all eight home games in 2009.

The Jacksonville Jaguars had trouble attracting fans last season they ranked 30th in the league averaging a total of 49,651 fans per game in 2009. They’ve been battling the threat of loosing their franchise for many years to larger media markets such as Los Angeles as the NFL looks to place a team in that market for the first time since Dec. 24 1994. File photo.

Peyton says the Jaguars presence in the community is extremely important when trying to attract new businesses to the area and sustaining economic growth and development in the local economy.

“They employ about 170 people full-time, and support more than 2,500 at the stadium on game day. When looking to relocate, companies like Fidelity, Bridgestone and Deutsche Bank took into consideration the future of our city and the quality of life that we offer here. Having the Jaguars is a very important part of our economic development package,” said Peyton.

District two city councillor, Bill Bishop, says NFL football will be a part of the community in Jacksonville for many years to come do to strong fan support.

“I believe the future is good for NFL football in Jacksonville. Jacksonville is a very big football town and given enough time, the Jaguars will become an integral part of our culture. People's memories are short,” Bishop said.

Bishop believes the Jaguars must continue to build a strong fan base, in order to experience long term and sustainable success.

“The team needs to cultivate a native fan base. I believe that means the next generation of football fans that grew up with the Jaguars. The current population of ticket purchasing fans is populated by those whose allegiance was, and to a great degree, may still be with a team from another location,” said Bishop.

District three city councillor, Richard Clark, says the community is starting to embrace the Jaguars.
“I believe the city is rallying around the Jaguar’s ticket effort, and we will see a new era of Jaguar fans,” Clark said.

Since free agency and the salary cap were established 17 years ago, 22 of the NFL's 32 franchises have participated in the Super Bowl.

Peyton says he’s confident the team will remain in Jacksonville.

“I am confident that the Jaguars will stay in Jacksonville, and that Wayne Weaver is committed to our city. He and his wife, Delores, have made their home in Jacksonville and contribute tremendously to our community,” he said.

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