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Detroit Lions one of the few NFL teams to lose money
Michigan
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in Sports Talk
Two years ago, the Lions lost $3.1 million, which, according to an editor at Forbes magazine who spends much of his year breaking down the worth of NFL teams, is not an easy thing to do.
Forbes' research found that the Lions were the only NFL team to lose money in the 2007 season.
The team also lost $1.8 million in 2006 (although it wasn't the only club to post a loss that year). Numbers for 2008 aren't out, but an 0-16 record, five games that didn't sell out and a slew of discounted tickets make it hard to fathom that the bottom line will be better.
So how does a team with a state-of-the-art stadium, an old-school brand and an exceedingly loyal fan base fail to make a profit during a 7-9 season -- its best in years -- in the flushest league in pro sports?
"Usually, the performance on the field indicates the performance off the field," said Mike Ozanian, Forbes' national editor.
In other words, he said, compiling one of the worst eight-year stretches in NFL history isn't a good way to make money, even in a league that encourages parity, institutes a salary cap and shares its massive television revenue equally among its teams. His research suggests that from the NFL's perspective, the Lions are one of the top underperformers.
For years, some fans have argued vehemently -- on sports-talk radio, through blogs and in print -- that the only way the Lions will improve is if owner William Clay Ford Sr. felt pain in the pocketbook, though it would be unfair to assume that Ford really wants to lose. The Lions declined to comment for this article.
Still, it's hard to imagine how much pain the operating losses could cause Ford, whose net worth Forbes placed at $1.2 billion in 2005.
The good news for the Lions, according to those who study the business of sports, is that a new coach and a high draft pick can put fans back in the seats and generate buzz, both of which increase revenue. The bad news is that the economy in Michigan is horrible.
Worse news?
"It would be wrong to just blame the economy," Ozanian said. "It is not an organization where everybody (has been) working in the same direction."
Last week, general manager Martin Mayhew said the coaching staff and the football management operations were never in sync during the Matt Millen era. Ozanian said when a team loses money, the problems on the field often mirror those in the financial offices.
Yet despite the operating losses in 2006-07, the value of the franchise continues to skyrocket.
When Millen took over after the 2000 season, Forbes estimates the club was worth $328 million. Eight seasons and 97 losses later, it's $917 million.
That staggering jump is a product of the powerful NFL brand and its revenue sharing, where the weakest teams receive the same amount of television money as the strongest. Try to imagine another business that easily doubles its worth even as it produces a shoddy product.
Credit the world of pro sports, Ozanian said, where the value of a franchise has little to do with its profits. This tidy little irony is why he sympathizes with fans in markets where teams perpetually struggle.
"Where is the incentive to put out a good product?" he said. "Or to be forced to be creative in marketing?"
It is something the Lions wouldn't discuss, citing the proprietary nature of their business.
Even without the explicit help of the franchises, Forbes has nevertheless managed to ferret out the worth of each NFL team and rank them the past 11 years. Ozanian said he and his researches used sources, such as bankers familiar with the teams, and some documents to get the financial picture. Sometimes sources within the teams help, too.
The latest rankings -- before the 2008 season -- list the Cowboys as the most valuable team at $1.6 billion. The Lions' worth of $917 million, no doubt helped by the opening of Ford Field in 2002, was good enough to rank 24th -- out of 32 teams.
What has become clear during Forbes' decade-plus of breaking down the numbers, Ozanian said, is that it is difficult to lose money. There are aberrations, of course, such as the old 49ers that skirted the salary cap to pay all those Super Bowl-winning players, or a team that got itself into a bad stadium deal, or a team with a one-time cost.
But, Ozanian said, "you generally have to be both horrible on the field for a consistent period of time and have given sponsors and corporate suite holders a very good reason not to buy signage and or premium seating."
For example, according to Forbes, in 2007 the Lions generated roughly $21 million from suite and club seat licensing revenue. By contrast, the Jacksonville Jaguars, a much newer team in a far smaller market, produced about $24 million in corporate sales.
While it is worth noting that the Lions must compete for a finite share of sponsorships with three other major pro sports teams in town -- the Jaguars operate in a one-team town -- Forbes said the Lions didn't compare well with other larger-market franchises, either.
Patrick Rishe, a professor of economics at Webster University in St. Louis who specializes in the business of sports, said in the Lions' case, a front man would help.
"You need" a face, "somebody that will convince the fans that change is on the way, that we are in this together," Rishe said. "Ownership has to take a vested interest."
He said Detroit's biggest problem was its lack of identity.
Ford, 83, is rarely seen in public. He talks with the media even less. After the season ended Dec. 28, he did not attend three news conferences meant to change the direction of the franchise he has owned since 1963. A day after the 2008 season, coach Rod Marinelli was fired. The next day, long-time employees Tom Lewand and Mayhew officially were introduced as president and general manager. On Jan. 16, Jim Schwartz took the podium at Ford Field as the Lions' 25th coach (and seventh this century).
Kevin King, chairman of Madonna University's sports management program, said a team's identity doesn't always have to come from the owner.
"A new coach can provide fans with optimism," said King, who once worked for the Tampa Bay Buccaneers and interned with the Lions. "The thinking is: 'This time around, maybe the Lions got it right.' "
Rishe said normally the money from the national television contract (approximately $115 million a year per team under the deals that expire in 2011) was enough to cover the costs of running a franchise. But these are difficult times. Corporate money is drying up, particularly in places like Detroit. Add to that the 0-16 season and the economic outlook suffers.
For the first five seasons under Millen, the Lions put a bad team on the field and still made money. For the moment, that is no longer the case.
Forbes' research found that the Lions were the only NFL team to lose money in the 2007 season.
The team also lost $1.8 million in 2006 (although it wasn't the only club to post a loss that year). Numbers for 2008 aren't out, but an 0-16 record, five games that didn't sell out and a slew of discounted tickets make it hard to fathom that the bottom line will be better.
So how does a team with a state-of-the-art stadium, an old-school brand and an exceedingly loyal fan base fail to make a profit during a 7-9 season -- its best in years -- in the flushest league in pro sports?
"Usually, the performance on the field indicates the performance off the field," said Mike Ozanian, Forbes' national editor.
In other words, he said, compiling one of the worst eight-year stretches in NFL history isn't a good way to make money, even in a league that encourages parity, institutes a salary cap and shares its massive television revenue equally among its teams. His research suggests that from the NFL's perspective, the Lions are one of the top underperformers.
For years, some fans have argued vehemently -- on sports-talk radio, through blogs and in print -- that the only way the Lions will improve is if owner William Clay Ford Sr. felt pain in the pocketbook, though it would be unfair to assume that Ford really wants to lose. The Lions declined to comment for this article.
Still, it's hard to imagine how much pain the operating losses could cause Ford, whose net worth Forbes placed at $1.2 billion in 2005.
The good news for the Lions, according to those who study the business of sports, is that a new coach and a high draft pick can put fans back in the seats and generate buzz, both of which increase revenue. The bad news is that the economy in Michigan is horrible.
Worse news?
"It would be wrong to just blame the economy," Ozanian said. "It is not an organization where everybody (has been) working in the same direction."
Last week, general manager Martin Mayhew said the coaching staff and the football management operations were never in sync during the Matt Millen era. Ozanian said when a team loses money, the problems on the field often mirror those in the financial offices.
Yet despite the operating losses in 2006-07, the value of the franchise continues to skyrocket.
When Millen took over after the 2000 season, Forbes estimates the club was worth $328 million. Eight seasons and 97 losses later, it's $917 million.
That staggering jump is a product of the powerful NFL brand and its revenue sharing, where the weakest teams receive the same amount of television money as the strongest. Try to imagine another business that easily doubles its worth even as it produces a shoddy product.
Credit the world of pro sports, Ozanian said, where the value of a franchise has little to do with its profits. This tidy little irony is why he sympathizes with fans in markets where teams perpetually struggle.
"Where is the incentive to put out a good product?" he said. "Or to be forced to be creative in marketing?"
It is something the Lions wouldn't discuss, citing the proprietary nature of their business.
Even without the explicit help of the franchises, Forbes has nevertheless managed to ferret out the worth of each NFL team and rank them the past 11 years. Ozanian said he and his researches used sources, such as bankers familiar with the teams, and some documents to get the financial picture. Sometimes sources within the teams help, too.
The latest rankings -- before the 2008 season -- list the Cowboys as the most valuable team at $1.6 billion. The Lions' worth of $917 million, no doubt helped by the opening of Ford Field in 2002, was good enough to rank 24th -- out of 32 teams.
What has become clear during Forbes' decade-plus of breaking down the numbers, Ozanian said, is that it is difficult to lose money. There are aberrations, of course, such as the old 49ers that skirted the salary cap to pay all those Super Bowl-winning players, or a team that got itself into a bad stadium deal, or a team with a one-time cost.
But, Ozanian said, "you generally have to be both horrible on the field for a consistent period of time and have given sponsors and corporate suite holders a very good reason not to buy signage and or premium seating."
For example, according to Forbes, in 2007 the Lions generated roughly $21 million from suite and club seat licensing revenue. By contrast, the Jacksonville Jaguars, a much newer team in a far smaller market, produced about $24 million in corporate sales.
While it is worth noting that the Lions must compete for a finite share of sponsorships with three other major pro sports teams in town -- the Jaguars operate in a one-team town -- Forbes said the Lions didn't compare well with other larger-market franchises, either.
Patrick Rishe, a professor of economics at Webster University in St. Louis who specializes in the business of sports, said in the Lions' case, a front man would help.
"You need" a face, "somebody that will convince the fans that change is on the way, that we are in this together," Rishe said. "Ownership has to take a vested interest."
He said Detroit's biggest problem was its lack of identity.
Ford, 83, is rarely seen in public. He talks with the media even less. After the season ended Dec. 28, he did not attend three news conferences meant to change the direction of the franchise he has owned since 1963. A day after the 2008 season, coach Rod Marinelli was fired. The next day, long-time employees Tom Lewand and Mayhew officially were introduced as president and general manager. On Jan. 16, Jim Schwartz took the podium at Ford Field as the Lions' 25th coach (and seventh this century).
Kevin King, chairman of Madonna University's sports management program, said a team's identity doesn't always have to come from the owner.
"A new coach can provide fans with optimism," said King, who once worked for the Tampa Bay Buccaneers and interned with the Lions. "The thinking is: 'This time around, maybe the Lions got it right.' "
Rishe said normally the money from the national television contract (approximately $115 million a year per team under the deals that expire in 2011) was enough to cover the costs of running a franchise. But these are difficult times. Corporate money is drying up, particularly in places like Detroit. Add to that the 0-16 season and the economic outlook suffers.
For the first five seasons under Millen, the Lions put a bad team on the field and still made money. For the moment, that is no longer the case.
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Comments
There's a built in profit margin for Ford every year to the tune of 10 million+++
It's sad for the Lions. Why would Ford change his ways???