Super Bowl Teams Go Deep In Their Pockets
Sept. 5 -- — Throughout the 1980s, the Tampa Bay Buccaneers clocked a league-worst 45 wins and 106 losses in regular-season play while the San Francisco 49ers posted a 104-47 record, the league's best, including four championships. Trivia question: Which program made more money during the decade?
Answer: The Bucs: "The team that lost the most money [in the 1980s] was the 49ers," says Jeffrey Phillips, senior vice president of the sports group at Houlihan Lokey Howard & Zukin.
Such are the socialistic economics of the NFL. Thanks to a long-standing revenue-sharing system combined with a relatively short postseason, teams that win the Super Bowl may not necessarily score supersized profits. The salary cap instituted a decade ago has kept spending somewhat in check. Still, "you might lose money on a playoff run," concedes David Carter of the Sports Business Group, a marketing consultancy. (The Bucs, last season's Super Bowl champs, declined to comment.)
Since the early 1960s, the NFL sought to win fans across the country by establishing parity within the league. If all teams can afford to pay talented players, the theory goes, all teams will be competitive and able to attract fans (the Cincinnati Bengals notwithstanding).
Each of the NFL's 32 teams receives an equal cut of league revenue — $80 million from national broadcasts and $2.5 million from merchandising — accounting for two-thirds, on average, of their top lines. As for ticket revenue (called the "gate"), the home team gets just two-thirds of it; the remaining third goes into a pool shared by all the other teams.
By contrast, other sports leagues survive mainly on local distribution. Basketball and hockey franchises keep all local broadcast revenue plus the gate. Last year Major League Baseball gave a nod to parity, calling for 30 percent of revenue from local broadcasts, tickets and concessions to be shared among all teams.
Larger Expenses on Smaller Revenue
The rub on gridiron economics: Larger expenses on smaller revenue in the playoffs. First, Super Bowl contenders usually have to pay bonuses to players and staff. Then there's the burden of moving all that equipment to the game, as well as hosting a gaggle of friends, families, staff and sponsors. Gate receipts don't pick up the slack as much of the largesse goes back to the NFL's corporate offices. Costs continue to pile up the next season as players, coaches and scouts push for fatter paychecks.
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