Could Financially Healthy Packers Now Survive Without the Salary Cap?

Bright revenue future might mean small town Green Bay can hang with the big boys.

Even with their loyal, world wide fan base and unique public ownership, the Packers are able to continue to exist in small market Green Bay for only two principle reasons. In 1961 the National Football League made the seminal decision to equally share it's national TV revenue. Then in 1994 the league began operating under a clearly defined salary cap, meaning everybody can only spend the same amount of money on players. It has always been gospel that without these two policies the Packers could not survive.

Well, this past week the team had its annual stockholders meeting, virtually of course, and the news was good......very good. The Packers are in excellent financial shape. So good in fact, you could make the case that even if the salary cap went away, as many believe it eventually will, the Pack would not only survive, it would thrive.

President Mark Murphy reported record revenue of $507 million in the fiscal year ended March 31. It's the first time the team has exceeded half a billion dollars in one year. Total expenses were given as $437 million, yielding a $70 million operating profit. Murphy says by far the biggest expense is player salaries. The cap for the current year is just over $198 million.

But what if the cap went away?   What if teams could spend as much as they want on players?   No doubt the uncapped NFL world would  be a scary place.   It wouldn't be just the established stars getting huge deals.   Imagine what kind of salary figure rookies like Joe Burrow and Tua Tagavailoa could command to sign with the teams that drafted them.   Remember Sam Bradford?   The quarterback out of Oklahoma had the good fortune to be the last overall number one pick to negotiate with his team, the St. Louis Rams, before the rookie salary cap went into effect.   Bradford broke the bank with a $78 million deal, $50 million of which was guaranteed, the highest figure ever at that time.  If that sort of landscape became the rule around the NFL, could the Packers compete?

So long as TV revenue sharing remains in place, I believe Green Bay would be okay.  Murphy reports that national revenue (read "TV money") accounts for roughly two thirds of the Packers total income.   In its 2018 annual report, the Packers revealed they received $255 million from TV contracts for that season.   That figure went up in 2019 and will continue to rise.   As you can see, and as Murphy confirmed Thursday, TV money more than covers player salaries. Without it Green Bay would be in deep trouble. I might add, so would many other franchises.

Now, naturally, if there's no boundaries, the bidding for star players, perhaps even mediocre ones, would skyrocket.    Salary expenses would rise, maybe even in excess of the TV revenue income.   How would the Packers make up the diffference? 

The best players want two things: They want top money, and they want to compete for championships. Green Bay's most important free agent signing of all time, Reggie White, did not come to Titletown because he likes to play in the snow. He came because the Packers outbid all of his other suitors.   And he could see that Ron Wolf would surround him with championship caliber players.

Without a cap, is there enough money coming in to allow Green Bay to attract enough good players to continue to compete for titles?     In 2019 the Packers ranked 10th in the league in revenue.   They would need to have enough coming in to hang around in that top ten.   Where would the cash come from?   The answer is several places.   There is the obvious,  ticket sales, concessions, merchandise,  local broadcast revenue, rental of the atrium facilities, Hall of Fame, etc.   The team's reserve fund stands at $411 million.   (That sounds like a pile of money, but consider that Patrick Mahomes deal alone is worth $450 million if it plays out.)   

There would be tremendous pressure on scouting departments to identify diamonds in the rough and players who can outperform their salary amounts.. 

But what Green Bay would really need is a huge recurring source of income unrelated to football, something to compete with Jerry Jones' oil wells and Shad Khan's automotive empire.

This is where the vision and foresight of Mark Murphy and Chief Operating Officer Ed Policy comes in to play.   The brilliant concept of the Titletown District figures to be Green Bay's oil well.   Eventually, the project will generate revenue to the Packers from townhouses, apartment towers, high end restaurants, high tech think tanks, recreation areas and much more.   There may be limitations as to what money sources can be used for players, but the overall result should be adequate cash to keep facilities upgraded and to bid for the players needed to keep the Green and Gold in the playoff hunt for generations to come.  

The new ten year extension of the Collective Bargaining Agreement, including the recent Covid 19 adjustments,  means it is unlikely the salary cap is going away any time soon, but if and when it does, don't worry about the Green Bay Packers.   Not only can the team on the field play with the big boys, but it now appears the guys in the business office can as well.    

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Ken Lass is a former Green Bay television sports anchor and 43 year media veteran, a lifelong Packers fan, and a shareholder.

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Comments (8)

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mnbadger's picture

July 26, 2020 at 09:25 pm

Thanks, but I'm looking forward to football stories. Practice highlights and roster building. I see we already released Willis, one of the new defensive linemen. Hopefully making room for Snacks Harrison. GPG

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Bure9620's picture

July 27, 2020 at 08:48 am

Financial health for the Packers is paramount and more important for them than most teams obviously due to their public structure. Their is no narcissist billionaire at the helm entertaining themselves. Titletown was a very visionary project. Say what you will about Mark Murphy but he is going nowhere anytime soon due to the revenue he is bringing in.

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Fiona88's picture

July 27, 2020 at 03:14 am

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Thegreatreynoldo's picture

July 27, 2020 at 06:19 am

Maybe, but I don't really know. I do think a handful of teams would have twice as much local revenue and a couple would have three times as much. I am inclined to believe that Wisconsin simply doesn't have enough concentrated wealth to sustain it properly. I suppose it might continue to exist, but the competitive disadvantage would be large.

GB is 9th in local revenue, but Murphy has noted that it isn't far from 13th. After building goodwill for 28 years by fielding generally good and sometimes great teams, but the success can change.

I don't want to find out.

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Bure9620's picture

July 27, 2020 at 08:49 am

True, a string of bad seasons and fan apathy would hit the Packers really hard....

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Thegreatreynoldo's picture

July 27, 2020 at 09:32 am

I think the stadium would still sell out, at least for quite a long time. Not sure about the pro shop and the like. I have never seen a good breakdown regarding where the Packers get their local revenue.

I stopped watching the brewers after I realized that even with Miller Park the team would not be able to compete financially. Clearly, they have been doing well but now that I stopped watching, I don't feel any urge to follow them.

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NitschkeFan's picture

July 27, 2020 at 02:09 pm

Though the Brewers and the Bucks survive it would be a stretch to think they compete financially with the big boys in their respective leagues.

One possible scenario that I can think of is that small market Jacksonville and Buffalo were able to find very rich owners who wanted an NFL franchise.

I don't understand what limitations there might be on a billionaire buying the Packers but if the team is struggling in a decade perhaps in the interest of saving a franchise the rules on owning the team might change.

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Ferrari-Driver's picture

July 27, 2020 at 11:14 pm

Without a salary cap, I believe we would see the New York teams and Dallas completing for the Championships on a regular basis within 10 years. I hope that never happens.

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