CFL FORCED TO LOOK AT UGLY FISCAL PICTURE
Massive team discrepancies require league to consider revenue sharing once again
As team presidents and commissioner Randy Ambrosie continue to talk about and around revenue sharing, it seems likely the Canadian Football League will travel down that road again, hoping it leads them to prosperity, or at least sustainability.
What they’re doing now — nine teams and a head office generating annual combined losses of $10 million to $20 million on revenues of about $210 million — is neither equitable nor sustainable. The Saskatchewan Roughriders punch well above their weight class, with a league-leading $40 million in revenues in their 2019 financial statement. Winnipeg reported $36 million, Edmonton $23 million. That leaves the remaining six privately owned teams to combine for about $110 million, with the laggards in Toronto, Montreal and B.C.
A massive discrepancy between the highest and lowest earners is reason enough for the league to revamp its business model for the good of the whole, and some form of revenue sharing appears imminent.
“It’s important that we re-examine how we’re doing business and how we’re sharing within this league,” Argonauts president Bill Manning told TSN 1050 radio in Toronto earlier this week. “You have three major markets that all essentially struggle, especially at the gate, and you have some wildly successful franchises.
“Like some of the other leagues, how can we better align all the groups so that as a whole the CFL is much stronger? We cannot have another situation like we had in Montreal where the owner just hands in the keys. It’s really important that the three major market franchises can play on equal standing with the other teams.”
Sources inside and outside the league say the Argonauts, owned by Maple Leaf Sports and Entertainment, are leading the charge on gate equalization. But these are early days and there has been “no formal discussion yet” on the specific topic of gate equalization, according to a league source.
The CFL’s leadership has instead been consumed for months with trying to launch a six-game season in a Winnipeg bubble environment. When the season was cancelled Monday, their focus shifted to hammering out a package of benefits for players who haven’t been paid since last fall.
Next up, there will be outreach made to CFL fans, some of whom have season-ticket money on deposit with their local teams.
Much of that cash will have been spent to keep coaches, general managers and other staff employed through the pandemic pause. The league and its teams are not in position to pay that back immediately, and will surely come up with incentives for fans to decide against reimbursement.
Once those priorities have been addressed, the league will eventually shift the focus to managing its revenues and expenses and building a real, meaningful business partnership with the CFL Players Association. The league needs help from the players and plenty of ideas. Revenue sharing will surely be on the table.
“Topics like that absolutely will come up,” Riders president Craig Reynolds told the Regina Leader-Post on Monday. “Every aspect of your business model should come up when you’re doing the type of work that we need to do (if ) we’re going to make sure the CFL is stronger coming out of this in 2021.
“The thing we remind ourselves of often is that our team was the one that needed support not too long ago where we had telethons. So it’s important that we have a strong league and we have a strong nine teams. That’s really the work that will start in the coming months.”
There is plenty of pro sports precedent for revenue sharing. In the National Football League, the home team currently collects 60 per cent of its gate receipts, while the remaining 40 per cent is tossed into a pool and distributed evenly to all teams.
The CFL has embraced revenue sharing as recently as the late 1980s, when profitable teams paid five per cent of gate revenue to unprofitable franchises. It wasn’t a popular strategy, as the have-nots were seen as a drain on resources. After the Alouettes folded just prior to playing their first game in 1987, then B.C. general manager Joe Galat said his franchise would be $500,000 better off with Montreal out of the picture.
In the spring of 2019, when the Wetenhall family walked away from the newest incarnation of the Alouettes, the CFL took ownership through a numbered company.
The remaining eight franchises paid about $1 million apiece to operate the team until it was sold to S and S Sportsco in January.
“So they already have de facto revenue sharing, because whenever a team goes belly up, the league floats it,” said a source. “They should acknowledge it, pay the money up front and you won’t have that kind of thing happening anymore.” dbarnes@postmedia.com Twitter.com: @sportsdanbarnes