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Revenue sharing adds to Rams' bottom line
By Jim Thomas
ST. LOUIS POST-DISPATCH
Friday, Mar. 30 2007
PHOENIX — Just 12 years ago, with a new stadium and a sweetheart of a stadium
lease, the Rams were the financial envy of the National Football League.
Boy, have times changed.
In 1995, the first year for the Rams in St. Louis, club president John Shaw
said, "We were either second or third in revenue."
And in recent years? "Somewhere between 22nd and 24th," Shaw replied. "Under
the new program, we qualify as a revenue-sharing recipient."
That's right, things have reached the point financially for the Rams where they
are now being subsidized by the more prosperous teams in the league. The final
touch on this revenue-sharing system was approved Monday when a resolution was
approved at the NFL owners meetings in Phoenix.
Shaw estimates the Rams will receive $5 million this year under the subsidy
program, with the figure based on 2006 finances. The league's top revenue clubs
will provide a pool of $430 million to be distributed to the lower-revenue
clubs over the next four years, or based on annual team revenues between 2006
"I thought the resolution was a compromise," Shaw said. "We were happy with it."
The Rams voted in favor of the revenue-sharing proposal.
"But I think the system is such that it's hard," Shaw said. "The disparity
between local revenues is an issue that has to be addressed in our system."
Network-television money is shared equally among the 32 NFL teams. That revenue
sharing has allowed the game to thrive, and kept small-market teams such as
Green Bay and Buffalo afloat. But over the past decade or so, the amount of
local revenue — money not shared with the rest of the league — has grown
Shaw said the difference in local revenue between the most prosperous NFL team
and the least prosperous club has grown to $110 million per year.
"Local revenue primarily is defined as stadium revenue, tickets, suites, club
seats, concessions, parking, advertising and local radio and TV," Shaw said.
So what has happened to the Rams' financially that has caused them to tumble
from the top five in the league to the bottom third? Has the Golden Goose died,
retired, left town?
"I think a lot of people would like the St. Louis lease," Shaw said. "And I
think there have been a number of instances (of leases) after us that are
similar to the St. Louis lease. But having the lease is still a little bit
different than local revenue."
Shaw is generally considered one of the brightest economic minds in the NFL.
But even he didn't foresee the boom in stadium construction in the NFL since
what is now called the Edward Jones Dome opened in 1995.
Since 1995, 18 clubs have either built new stadiums or undergone massive
stadium-renovation projects. In addition, the New York Giants, New York Jets,
Indianapolis Colts and Dallas Cowboys are in the process of building stadiums.
It's not that the Edward Jones Dome is outdated, but the new stadiums have more
luxury boxes and more club seats. And those new stadiums are charging more for
premium seats. For example, the average price of a luxury suite at the Edward
Jones Dome is about $75,000. That's only about half of what the average suite
costs annually in new stadiums built for large-market teams.
The large-market teams charge more because they can. And in some cases, because
they have to. Unlike the Rams, large-market teams such as Philadelphia and New
England used a lot of their own money to build new stadiums. So they've got to
charge more to take care of the stadium-financing debt.
Even so, those teams are raking in considerably more local revenue, making the
growing disparity in local revenue a major issue between the large-market and
small-market teams. If the trend continues, the revenue-sharing proposal
approved Monday will be a mere Band-Aid to the problem.
"We don't have that category of revenue," Shaw said. "We have a terrific lease.
But we're missing the parking element, which could be $5 million to $10
million. Our (local) media dollars — what we get for radio and television — is
clearly at the bottom of the league."
But the stadium boom appears to be slowing. And although not any time soon, the
Rams will have the opportunity to catch up with at least some of the teams in
the NFL via stadium improvements at the Dome or a new stadium.
"Our time will come around again at some point," Shaw said.
Re: Revenue sharing adds to Rams' bottom line
How long is their lease for? I just may be able to find a little land in Anaheim for them....
Re: Revenue sharing adds to Rams' bottom line
So, they raise ticket prices AND get a subsidy. I guess Deion Sanders is right.....
"It's all about MY money"