Despite improved financial performance in some categories, the Green Bay Packers dropped in National League Football revenue rankings for the fifth straight year. Corporation treasurer John Underwood said it was a clear indication that the team needs the Lambeau Field redevelopment more urgently than ever.
"What we found is that we had some improved performance in some categories, but at the same time we fell further behind everyone else," Underwood said. "The good news is I can look you in the eye and tell you that we're going to preserve this story, the greatest story in professional sports, for at least another generation, but we couldn't do it without the Lambeau Field redevelopment."
This week the franchise will distribute to Packers shareholders its annual report of the 2001-02 fiscal year, which ended March 31. The report will detail an operating profit of $3.2 million, up from a profit of $2.7 million last year and a $419,000 loss in 2000. The overall performance of the team as reflected in net income before expansion revenue dropped from $5.6 million in 2001 to $3.7 million in 2002, a 33 percent decline.
Over the past five years the team has declined in revenue ranking among NFL franchises from ninth in the 1997 season, to 15th in 1998, to 16th in 1999, to 18th in 2000, and now stands 20th among 31 teams following the 2001 season.
"You could be lulled into a sense of complacency that our profit from operations this year is a little bit better than last year," said John Jones, Packers executive vice president and chief operating officer. "But we've got to be focused on that league revenue ranking. We're competing against the NFL and other teams' financial ability to win Super Bowls."
It's not enough that the Packers succeed locally, Jones said, they must meet their competition head on, whether it's in a smaller market like Kansas City, or a large market like New York City.
Think of it this way, on the football field the Packers offense could improve to score 50 points per game this season, but it wouldn't mean anything if the opposition put up 60 points a contest. Improved? Yes, but still losing.
The bad news for the Packers is that they stand to lose even more ground in 2002, largely due to the boost four organizations -- the Detroit Lions, Houston Texans, New England Patriots and Seattle Seahawks -- will receive with the opening of new stadiums.
The good news is that the Lambeau Field renovation project has the team on the road to recovery.
Underwood likens economic success in the NFL to a three-legged stool. The first leg is revenue sharing, the second leg is a hard salary cap and the third leg is stadium revenue.
Like every NFL team, the Packers benefit from revenue sharing and a hard salary cap -- in fact, the team might have died long ago without them -- but the stadium revenue leg has been weakening over time, especially with the recent rush toward new state of the art venues across the country.
The simple truth is that without the stadium renovation project, the Packers would continue to slip down the league revenue rankings until the day came where they couldn't slip any further. The losses in the front office would lead to losses on the football field. And at some point, all could be lost.
Without the renovation project, Underwood said the Packers would be "on the road to oblivion."
This point was driven home to Jones and Packers president and chief executive officer Bob Harlan at a league meeting last month.
Remembered Jones, "The Commissioner (Paul Tagliabue) told the room that if you don't have a new stadium, or are about to get a new stadium, you will be in the bottom quartile of revenue in the league and you will have to be prepared to deal with that in how you operate your team.
"You hear that kind of a message coming from the commissioner to the teams in the room and you just thank your lucky stars that you've got a stadium (on the way) and that you're in the group that's going to be able to have viability, versus the group that's going to have to find an answer as prices continue to go away from you at a rapid clip."
The Lambeau Field redevelopment project, which will be completed in time for the 2003 season, is about more than patching a hole and meeting the league's status quo. While renovation will increase the Packers' revenue in the same ways other new NFL stadiums provide a shot in the arm for those franchises -- increasing private box revenues, for example - the birth of the Titletown Atrium should catapult the Packers to yet another level.
"We are going in a brand new direction in the National Football League, because we are transitioning from 10 days a year of a proven game-day revenue system, into 365 days a year of a destination venue/Packers cultural center, that also includes 10 game days a year," Jones said. "This, to us, represents the next step. This is the direction the others will need to go, we believe, to finding new revenue sources (and) . . . creating a true tourism and destination attraction.
"Can everybody do that? You can look at new buildings all over America and they're not going to attract that kind of attention. We have the hallowed grounds of football. We have Lambeau Field, where today people stand in the parking lot and take each other's pictures because they can't get inside.
"We know that there is a demand and a reverence for this place, that fans will come here."
And that's the key. For all the ways that Lambeau Field is to many an existing 'Field of Dreams,' just like in the movie, for it to survive, people must come.
By the time a redeveloped Lambeau Field is fully operational, the Packers hope they can attract 2-to-3 million fans annually. What the Titletown Atrium will mean to the fans on an experience level can't be measured, but what it will mean to the Packers organization is profits. Not league-shared profits, but Packers profits.
Consider that the majority of the Packers' operating income of $132 million last year came from a national television contract that increased from $65.1 million in 2001 to $69.4 million in 2002. It's a sizeable check and a nice increase, but also a league-shared allowance in which the Packers gain no ground.
On the other hand, the Packers Pro Shop generated revenue of $6.2 million, up from $4.8 million the year before. One of the reasons for the leap in Pro Shop sales was related to an extra home game, courtesy of the playoff contest against the San Francisco 49ers.
Among the team's top 'non-shared' revenue sources, in August the Pro Shop will move from its current 1,700 square foot location to its new 8,000 square foot location in the Lambeau Field addition and will also operate from a 4,000 square foot location in the west side lobby on game days.
Whether it be from purchases in the physical Pro Shop location or via catalogs and the internet, Jones cited Pro Shop retail among the key components of the Packers' future.
"That reflects that we are the retailer," Jones said. "On licensed apparel, if you buy a Packers sweatshirt anywhere else, every other team in the league shares the licensing royalty on that, but when you buy from the Pro Shop, the Packers are the retailer.
"So when you buy from the Pro Shop, you're buying from the team, which then funds football operations. That's why we have that little tagline, 'Where your purchases help the Packers win.' That's what the Pro Shop means to our organization."
Translation: Buy from the Pro Shop, help the Packers win. Buy anywhere else, help the Chicago Bears win, too.
Although they might be two years away from seeing results in their annual fiscal report, the Packers believe they are on the road to recovery and that a redeveloped Lambeau Field will protect the organization for at least another generation.
But they're looking beyond that, too. While funding the existing football team always will be the top priority, Underwood said there is a need to increase the Packers' reserves fund, which is equivalent to an organizational piggy bank.
Currently the Packers' net reserves fund stands at $36.9 million, which reflects a $24.7 million liability of deferred compensation owed by the team that reduces the gross reserves fund of $61.6 million.
"We don't have an owner with deep pockets, so we need to build up this reserve so that we will be here for at least the next generation," Underwood said.
For all that Lambeau Field has meant to the Packers in terms of history, tradition and reverence, the redevelopment project, including the addition of the Titletown Atrium, will mean even more. Both Underwood and Jones said that had the stadium referendum not passed, and it only did so by a 53-47 percent margin, the future of the organization would be bleak.
"We would be one of the teams in the room that has no stadium that the Commissioner has just told, you better be prepared to have operations that reflect the fact that you're in the lowest tier of revenue," Jones said. "We would not have the opportunity to look ahead.
"Imagine if we had the on-the-field success and we would be sitting here saying, we're not sure how we're going to sustain it, we're not sure that we can."
Thankfully, both Underwood and Jones don't see that day on the horizon. The opening of the redeveloped stadium in 2003 is a very bright light at the end of the tunnel, Underwood said. While a potentially difficult financial year lies ahead, the Packers know they have to take forward steps if they hope to maintain the organization's history of excellence both on and off the field.
"The beauty of the way we're structured, is that every dollar of profit that we make within this organization, stays within the organization, either in the form of players, or facilities, or whatever is needed to make this thing work," Underwood said. "The financial side of it and the performance on the field are interrelated. You can't have one without the other."
