Pro sports are supposedly "big business," but that depends on how you define "big." Forbes ranks America's Team as America's most valuable team, estimating the Dallas Cowboys' worth at $1.81 billion. That's 0.5% of Apple's market capitalization. Were the Cowboys publicly traded, they'd be the 1821st most valuable public company in the world. In fact, the combined value of every NFL, NBA, and Major League Baseball team is less than that of Applied Materials, a Silicon Valley semiconductor manufacturer that you've probably never heard of. (For more on sports teams, read 4 Reasons Pro Sports Teams File For Bankruptcy.)

TUTORIAL: Financial Concepts

The difference is publicity. There isn't a semiconductor section of the local paper or of the nightly newscast. Nor are there 24-hour cable semiconductor TV networks. And the next fantasy semiconductor league will be the first.

One of the main talking points for people who own professional sports teams is "we're losing money." Thus, "we can't compete in this outdated venue, court free agents or cut you a break on parking and concessions." Is it true? You'd have to get your hands on a team's financial statements to know. No pro sports team has been publicly traded since the Boston Celtics - in the late '90s - so the documents are unavailable to the general public.

Packers' Restrictions
Fortunately, there's something of a workaround in the case of the Green Bay Packers, the defending Super Bowl champions and the only community-owned team in major North American sports. The Packers aren't owned by an individual, partners or even a corporation. Instead, every few decades the team sells a fixed number of shares of its stock to whoever's first in line. The stock comes with more strings than a harp covered in spaghetti: you can't own more than 4% of the team, you don't receive dividends and you'll never be able to sell your stock back to the team for more than face value.

Call it serendipity or coincidence, but the fifth stock sale in Packer history just happened to take place on Dec. 6, 2011. You can imagine what's on the wish list of several Wisconsinites this year. One advantage to this, at least from our perspective, is that Green Bay Packers, Inc. discloses more of its financial information than do the privately-owned teams. Last year the Packers took in $282.6 million, a 10% year-over-year increase. Again, that's hardly "big" business. Walmart pulls in about that much every six hours. Unlike Walmart, the Packers' profit margins are gigantic. (For more about profits, see A Look At Corporate Profit Margins.)

Ticket Volume
The Packers' revenue of $282.6 million is, as best we can tell, comparable to the revenue of the other NFL teams. The Packers' ticket volume is strong if not extraordinary. Their attendance according to ESPN is 11th in the 32-team NFL, a league in which every team but one draws at least 55,000 fans a game. On a related note, the Packers last had an unsold season ticket during the Eisenhower administration.

The biggest revenue item for any NFL team is television money. There are no local NFL television broadcasts, at least outside of the preseason. This means that every few years, when the national TV contracts come up for renewal, the four major broadcast networks (including ABC partner ESPN) fall over themselves to see who can write the NFL the biggest check. The money is split equally among the teams, to the tune of $95 million apiece.

The Packers' profit was $17.1 million in the last fiscal year, a margin of 6%. Granted, not every year is a Super Bowl year, but success on the field bears little correlation to financial success in the NFL. The Indianapolis Colts might go winless this season, yet every game sells out and, of course, the Colts get as large a slice of the broadcast pie as any other team does. The Packers made $9.8 million the previous year, during which they went 11-5 and lost a wild card playoff game. They made $20.1 million the year before that, and finished 6-10. (For more on player salaries, check out The Surprising Salaries Of Fringe Sports Stars.)

The biggest explanation for the divergent revenue numbers is player salaries. This summer, Packer management argued that salary increases were responsible for halving profits. Not coincidentally, the NFL simultaneously locked its players out in an ultimately successful bid to control costs.

When TV revenue is essentially fixed, and out of the team's hands, where do teams go to find more money? The Packers raised ticket prices about $9 across the board last year. NFL home teams keep $3 of ticket revenue for every $2 they give to the opponents, resulting in about an additional $4 million for the Packers this year. And the Packers clearly could have increased prices even more, what with the 51-year season ticket waiting list and all.

Are these numbers expandable to the NFL as a whole? Yes and no. The league's salary structure prevents teams from being stingy. The team with the smallest payroll (Kansas City) still spends 60% of what the team with the largest payroll (the New York Giants) does. Contrast that with Major League Baseball, where the highest-spending team outspends the lowest-spending team (also a New York team and a Kansas City team, respectively) 6-to-1. Meanwhile, the Packers are unusual among pro sports teams in that they don't carry a nickel of long-term debt. Lambeau Field is essentially paid for.

The Bottom Line
When you hear the bromide "he just wants to win" about a sports owner, understand that it's not necessarily true. Plenty of them would just as soon lose. And when a team opts not to re-sign a star, or tries to pass off stadium construction financing onto taxpayers, realize that it's almost always a purely economic decision. In other words, it's nothing personal. It's just business. (If you are a sports fan, to save some extra cash read Money-Saving Tips For Sports Fans.)

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