Blog Post #3

This week my primary goal was to start working on the finances behind the operations. Nothing has been finalized, as I will hope to finalize projections by next week. The first order of operations was to look at the TV contract, as that will generally be one of the greatest sources of income.

Here were the tables and graph produced that portray the data that was gathered:

TV Contract

League	Total Cost	Years	Annually	Network
NFL	27 B	9 years	3 B	FOX/NBC/CBS
CFL	150 M	5 years	30 M	TSN
ACC	1.86 B	12 years	155 M	ESPN
Big East	500 M	12 years	41.7 M	FS1
SEC	5.25 B	15 years	350 M	ESPN/CBS
Pac 12	2.7 B	12 years	225 M	ESPN/Fox
A-10 (Basketball)	40 M	8 years	5 M	NBC/Sports
Mountain West	116 M	7 years	16.6M	CBS/Espn

Notes and interpretations of data:

 These are certainly some exorbitant numbers. I think the Mountain West conference and the Canadian football league are the most comparable. The Canadian football league is in a unique situation, as it was able to accrue a contract of only 150 million dollars and didn’t have to compete with the NFL as much as they’re located in Canada and aired on the Toronto Sports Network. So even though our league will be similar to the NFL, the revenue would be slightly less due to competition. As aforementioned, the competition will be slightly less due to the fact that the league will take place in the spring and summer. The Mountain West is a small NCAA conference and has to deal with competition in the U.S. therefore their annual income is only 16.6 million. However, they do not have to pay their players salary, so they can easily provide with that steady income. I think 150 million over 7 years would be a sustainable and profitable contract. The next section I worked on is what the projected player’s and coach’s salaries would be.

Salaries

Coaches:

League	Head Coach	Highest Paid
NFL	3.25 M	7 M (Mike Shanahan and Pete Carroll)
SEC	2.72 M	5.17 M (Nick Saban)
NCAAFB	1.34 M	5.17 M (Nick Saban)
CFL	200,000	500,000 (John Hufnagel)

Players:

League	Revenue	Average Player Salary	Highest paid player	S/R*
NFL	9 Billion	1.9 million	$27,773,000 (Tony Romo)	About 33 percent
CFL	185.5 million	77,000	500,000 (Casey Printers)	About 24 percent
NBA	5 billion	5.15 million	23,500,000 (Kobe Bryant)	About 46 percent
NBADL	N/A	17,300	28,000 (Pierre Jackson)	N/A
NCAA	800 million	0	0	0

*S/R=Ratio of revenue to total salary given to players (AVG players salary X players) / Revenue)

 

Notes and interpretations of data:

This table shows the projected salaries of the players and coaches. I was hoping the NBA d league would have information available on their revenue so I could calculate the proportion of the NBA player’s salaries to their D-League counterparts, however the revenue is undisclosed due to the fact it contributes to the NBA’s revenue and isn’t an independently run organization. Despite the fact that our league would want to act as a D-League with the NFL, we would not like to be affiliated or under the control of the NFL. I think this league could potentially adopt a salary format like the NBADL, in which there are three tiers of salary, with each one making a different amount of money based on skill, but not necessarily an open market. The four tiers could be 50,000, 75,000 150,000, and 250,000. On a forty player team, the top 4 players could be tier 1, the next 8 could be Tier 2, the next 12 could be tier 3, and the final 16 would be tier four. This would result in 3.8 million dollars doled out in salary for each of the 6 teams, in total 22.8 million in player salary. Coach’s salary is also a factor. In most professional sports leagues the coaches make a little more than the average player salary. The coach’s salaries can range from 200,000-300,000. One of the most significant takeaways I had from this data was the correlation of the average player salary and the S/R ratio. It is advantageous to keep this percent as low as possible.

Tickets

League	Avg. Ticket Price	Tickets bought p/g	Revenue generated p/g
NFL	78.38	68,949	5.4 M
CFL	53	30,637	1.62M
ACC	83	41332	3.43 M
SEC	143$	75,538	10.8 M
Mountain West	61$	25,888	1.6 M

Notes and interpretations of data:

After TV revenue, the next largest area of revenue would be ticket sales. As shown in this chart, the revenue per game (p/g) could be projected around 3,000,000 from ticket sales, and over the course of 33 games in the season, the revenue generated from ticket sales would be approximately 100 million dollars. However, we will also have to incorporate the expenses of renting a stadium and then hiring people to complete the numerous tasks such as cleaning and hiring workers to distribute foods and merchandise. And that will be my goal for the next week.

Until Next Time:

The primary revenue sources will be television contracts and ticket sales. But the next order of business will be to determine the primary expenses, such as stadium rentals, uniforms, pads, helmets, referees and staffers. By the end of next week I would hope to have completed the revenue projections and the expense projections.