It's good to be Terry and Kim Pegula. Or any of the NFL's other 31 owners, for that matter.
The Buffalo Bills pulled in a staggering $244 million last season as their share of the $7.8 billion in national revenue split among the league's 32 teams. That figure was revealed Wednesday as the publicly owned Green Bay Packers released financial data from the fiscal year April 1, 2016 to March 31, 2017. By doing so, the Packers – the only publicly owned team in professional sports – provide a glimpse into the mega-money world of the NFL. Packers CEO Mark Murphy, a Clarence native, revealed that his team brought in $441.4 million in total revenue.
"We’re very fortunate that we’ve seen the kind of growth that we have, and I feel very confident that we’ll continue to see it, at least through the rest of this collective bargaining agreement,” Murphy said on a conference call, according to Bloomberg.
Undoubtedly, the Pegulas feel the same way. League revenues rose nearly 10 percent from the previous year, when teams pulled in $222.6 million, Bloomberg reported.
Most of that revenue comes from television deals with NBC, CBS, FOX, ESPN and DirecTV. The deal to air games on NBC and CBS on Thursday nights, for example, pays the league $450 million. Amazon paid $50 million to stream 10 Thursday night games. League-wide sponsorships, licensing and merchandise sales also contribute to the national revenue split amongst the 32 teams. The current TV contracts run for the next six seasons, so in the short term, the money will continue to pour in.
The Packers' $441.4 million in total revenue includes $197.4 million in local revenue. That's money teams make from things like ticket sales, local sponsorships and merchandising. Despite playing in the smallest market in North American professional sports, the Packers ranked ninth in the NFL in total revenue.
That’s where things get thorny, if you will, for the Bills. According to Forbes, the Bills were the NFL’s least-valuable franchise in 2016, at “only” $1.5 billion. Despite total revenue of $326 million in 2015, the Bills had an operating income of “just” $26 million, according to the magazine. The Bills were one of only three NFL teams, with the Bengals and Lions being the others, not to make Forbes’ list of the 50 most valuable sports franchises, which was released Wednesday.
The average NFL team, according to Forbes, “earned an operating profit (earnings before interest, taxes, depreciation and amortization) of $91 million and no one banked less than $26 million” – the amount the Bills pulled in.
At the other end of the scale, the Dallas Cowboys are valued at $4.2 billion, and had an operating income of $300 million. That’s a massive disparity in a league that shares revenue the way the NFL does.
Long term, there are two key issues which will have a major impact on the finances of the Bills and every other team. The first is the collective bargaining agreement between the league and players, which runs through the 2020 season. In light of the massive deals signed by free agents in the NBA, there have been grumblings among NFL players — including the Bills’ Sammy Watkins — to get a bigger piece of the pie. On Wednesday night, Seattle Seahawks cornerback Richard Sherman addressed his colleagues’ need to be willing to go on strike when the next negotiations occur.
“If we want to get anything done, players have to be willing to strike,” he said during an interview at the ESPYs. “That’s the thing that guys need to 100 percent realize. You’re going to have to miss games, you’re going to have to lose some money if you’re willing to make the point, because that’s how MLB and NBA got it done.”
The NFL hasn’t had a strike since 1987.
The second issue is the league’s TV contracts, which run through 2022. As more and more people “cut the cord,” the question of whether the multi-billion-dollar deals networks were willing to pay out will still be there only grows louder.
The Bills have took steps toward building up their local revenue in recent years through ticket-price increases, the construction of the new team store on Abbott Road and selling the naming rights of the stadium to New Era Cap Co.
The Pegulas also took over ownership at a good time – with three franchises having moved in the last year and a half. The Rams and Chargers reportedly will pay $650 million to the other 30 teams for moving to Los Angeles, while the Raiders will pay $350 million to move to Las Vegas. Those annual payments, which will begin in December 2019 and last for 10 years, are currently worth about $27 million per team, Murphy told reporters.