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Packers financials raise specter of unshared revenues

Posted by Mike Florio on July 14, 2010 2:26 PM ET

In response to our item regarding the Packers' claim that increases in player costs are outpacing revenue by a 2-to-1 rate, Ross Tucker of SI.com and Sirius NFL Radio and probably some other outlets we can't think of at the moment raised a great point on Twitter.


If the salary cap (which applied during the term of the Packers' most recent fiscal year) arises from a fixed percentage of revenue, how can player costs be growing at twice the speed of revenues?


Here's the answer. Packers CEO Mark Murphy said that the team's "local revenues" have been flat since 2007. So the growth has come from revenues shared by all teams. And because the salary cap and floor were determined by total revenues, shared and unshared, the small-market Packers are experiencing the pinch of other teams' revenues driving up every team's player costs.


So when Murphy says that the current system creates a "non-sustainable model," the real problem from the Packers' standpoint arises from the fact that other teams are experiencing enough of a rise in local, unshared revenues to chew more deeply into the Packers' total profits, since player costs are determined by the combined revenues of all teams.


Thus, instead of taking money back from the players, the league should perhaps be revisiting supplemental revenue sharing, the current needs-based strategy for redistributing unshared money.


Then again, that's far easier said than done.


Four years ago, owners squabbled loudly and repeatedly about revenue sharing, with guys like Cowboys owner Jerry Jones calling out Bengals president Mike Brown for failing to sell the naming rights to the stadium named after Brown's father. The final combined labor/supplemental revenue sharing deal that was jammed through over the objection of only Brown and Bills owner Ralph Wilson gave players 59 cents of every dollar earned, and created the Band-Aid system for funneling money to the haves from the have mores.


In the months leading up to the next new labor deal, the owners have managed to keep a lid on the deep differences regarding the ongoing problem of unshared revenues. And they'll keep trying to do so, in the hopes of demonstrating a united front to the NFLPA. But the Packers' situation points to a big part of the problem being not the money paid to players but the revenues shared -- and not shared -- by the 32 franchises.

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