Today in leaked sports organization financial statements news, Deadspin’s latest scoop is the audited financial statements of NFL Ventures, L.P. and Subsidiaries. NFL Ventures consists of the following subsidiaries: NFL Enterprises, NFL Properties, NFL Productions and NFL International. These companies perform operations from broadcasting to advertising to the NFL Network to Super Bowl hospitality.
As you can imagine, professional football in the United States is a pretty lucrative business. Forget the mess that is the NFL League Office’s G-3 program. NFL Ventures and its subs are where the money gets made. Let’s take a look around.
Tommy Craggs notes that Ventures had a notable increase in its operating income from FYE March 31, 2009 to March 31, 2010 mostly on the back of NFL Enterprises:
In 2009, Enterprises recorded an operating income of $685 million. In 2010, that figure rose to $935 million — this despite whatever losses presumably were incurred by the NFL Network. (In 2009, the Philadelphia Daily News reported that the network “is losing about the same amount of money right now as NFL Europe was when the owners pulled the plug,” which is at least partly attributable to the league’s inability to strong-arm cable companies into placing the network on basic channel packages.) Those losses are not a minor issue, either. They come out of the revenue the league shares with the players, which means that, in a roundabout way, Ray Lewis pays for Rich Eisen to run around the NFL combine in wingtips.
Craggs also notes the line “Revenue Remittance and Royatlites” which is the largest deduction on the income statement. The notes to the financial statements explain:
Ugh. That’s an ugly one, huh? I managed to get pretty close on the math, however. If you multiply the total expenses by 1.09 and then subtract that total from the gross revenues of $1.7 billion, you get the $1.2 billion (within $15-20 million or so). Craggs writes that this “accounts for the drop in net income” although that doesn’t seem correct (I emailed him to see if he can clarify) but is correct in saying that this remittance is simply “money moving from one pocket to another.”
Other than that, the report, also audited by Deloitte, is fairly lengthy and seems fairly innocuous since the companies as a whole appear to be extremely healthy (e.g. robust working capital, growing operating profit, impressive cash flow). There was a cash distribution FYE ’10 of $136 million to the limited partners, however nothing else really stands out.
Of course if you’re a rabid football fan, this is all quite infuriating because it stands as evidence that the team owners simply want more money for themselves. And Craggs smartly points out that since the G-3 program ran dry in ’07, that left some owners in the lurch:
[T]he case could be made that the real dispute at the heart of the lockout lay between the owners who’d exploited the G-3 program to build bright new revenue-generating stadiums and those who hadn’t and now couldn’t because their peers had burned through the fund. In this light, the lockout looks like something else entirely — less a battle between management and labor and more a proxy war in which the owners, unwilling to fight each other for money, decided to extract it from the players instead.
The full report is on the next page. Enjoy.
