Bombers stand to lose up to $10M if season lost
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Hey there, time traveller!
This article was published 01/05/2020 (841 days ago), so information in it may no longer be current.
Amid the COVID-19 crisis, the Winnipeg Blue Bombers remain hopeful that three-down football will return sometime this year. That hope is based not just on their desire to defend last year’s Grey Cup title, but also to avoid an expensive bill in the event the 2020 season is completely wiped out.
The Free Press, with the help of finance experts, league sources and information from the Bombers’ most recent financial report, in 2018, estimates if the season were to be cancelled, the Winnipeg Football Club could be on the hook for as much as $10 million.
It’s a daunting outlook, owing to a coronavirus that has proven to be both unpredictable and relentless. But it’s the reality all industries are forced to deal with at the moment, and sports leagues are no exception.
“We are fully supportive of the directives from the public health officials and political leaders who are working so hard to guide Manitoba and Canada through this unprecedented crisis,” Wade Miller, president and CEO of the WFC, told the Free Press in an email earlier this week.
“Of course, the crisis also creates a massive amount of uncertainty for all kinds of businesses, including ours. As we monitor the latest news and guidance from the experts, we are working as a league through a wide range of possible scenarios. We’ve said our goal remains a full 2020 CFL season or as close to one as we can get.”
Miller added: “The virus and those guiding society’s response to it will ultimately set our direction. Clearly, we face a loss of revenue but it is impossible to quantify that until we know what the future, and therefore the season, looks like.”
As it stands, the best-case scenario is for the CFL to return sometime in September. How that might that look, including whether fans will be allowed to attend, remains to be seen. Commissioner Randy Ambrosie has said in the past that he wasn’t willing to entertain a season without butts in the seats, but sources say that stance has since changed.
But it’s the fear — and, seemingly, the most likely scenario — that the 2020 campaign is destined to be lost, given various financial and logistical challenges to an abbreviated season. Which brings us back to what it could mean for the Blue and Gold and their bank account.
Before diving any deeper, it should be reiterated that this is simply an estimation, because the WFC doesn’t provide intimate details of their revenues and expenses, it’s nearly impossible to come up with an exact number.
Still, a source within the team that has access to these numbers first-hand predicted a financial hit of anywhere between $5 million to $10 million in the event of a lost season and the Free Press has come up similar numbers.
LACK OF REVENUE
The Bombers have generated very little revenue this year. While season-ticket holders have shelled out money for the 2020 season, that money isn’t being counted as revenue coming in.
A cancelled season would mean no money from the league’s television deal with TSN, which comes in around $5 million per team. Also gone is any game revenue, which made up 36 per cent of the Bombers’ $33.4 million in income in 2018, corporate sponsorship money (17 per cent) and whatever significant take-home revenue that would have come from hosting other events at IG Field.
What little revenue the Bombers have generated this year has come from retail and merchandise sales. The club did see a massive boost after winning the Grey Cup in November, and the hits on the cash register continued through the Christmas holiday season. That would have trickled into the new year but not in any way significant.
It would be a guess at this point, as the numbers still need to be tallied, but a source within the team said the best bet would be to consider the revenue stream pretty much non-existent at this point.
OFF THE BOOKS
While the revenues have mostly dried up, there are some expenses that can be tossed out the window, too, if the 2020 season is cancelled.
“When looking at the costs that remain, the trick is to look for costs that aren’t associated with revenues. The idea being if there is a cost that is associated with the revenue then that cost will disappear if the revenue disappears,” said Robert Biscontri, an associate professor in the accounting and finance department at the U of M’s Asper School of Business. “This is what happens with casual salaries and consumables. In the case of the Bombers, much of the marketing and most of the game-day costs would be saves, as would the public transportation.”
In 2018, the money spent on marketing, administration and game-day preparation came in at $11.8 million, 38 per cent of all expenses. According to a team source, a cancelled season would result in paying approximately 15 per cent of that total, which, assuming costs would be similar this season, would mean $1.78 million.
What remains unclear is just how much it would cost to manage the stadium, which is the responsibility of the WFC. This falls under a category of “stadium occupancy” and it accounted for 18 per cent — or $5.5 million — in 2018. Just because there are no games doesn’t mean the lights and water won’t stay on. One source estimates a possible savings of around $1 million but said it was hard to tell at this point and depended on how often IG Field was being used.
The Bombers would also be off the hook for public transportation for games, which would save around $850,000. As for any stadium payment, WFC would be mostly exempt from payment, per their agreement with Triple B, which is based on various taxes earned through ticket sales.
FOOTBALL OPS A BIG COST
Given the information above, the Bombers are on the hook for as much as $6.2 million, minus whatever unknown revenue they’ve generated from retail and merchandise sales.
That leaves the team’s biggest expense: football operations, which accounted for $12.2 million (or 40 per cent) of all revenues in 2018. This category includes salaries for executives, coaches and players, as well as all others costs — travel, hotels, food, etc. — of running a football team.
“The biggest question is what happens inside the football operations item and I would guess player salaries and other salaries are included in that item, so at that point it comes down to obligations under that control,” Biscontri said.
In the event of a cancelled season, players would not receive payment, and instead would be eligible for either employment insurance or, if Canadian, possibly assistance from the Canadian Emergency Relief Fund.
But that doesn’t mean the Bombers are completely off the hook; teams are responsible for paying off-season bonuses. A source with access to player salaries, which was reviewed by the Free Press, showed that Winnipeg paid out bonuses to 15 players for a combined $808,000.
What the Bombers are on the hook for are the salaries of executives, coaches and other team employees. Using a league average for each role, the total in salaries, including for Miller, general manager Kyle Walters, head coach Mike O’Shea and dozens of others, totals around $4.4 million.
That number has the potential to change, as the WFC continues to work under reduced salaries. Miller has taken a pay cut of 25 per cent, while senior managers have taken 15 per cent reductions and all other employees 12 per cent.
The Bombers have also applied for the government wage subsidy, which will cover 75 per cent of employees salaries — at least on the first $58,700 — but that, at least at the moment, is only good for three months, until June 1. It’s also unclear how many staff would remain in the event the season was wiped out.
Another thing to consider is just because there might be no football, doesn’t mean opportunities to earn other revenue won’t crop up. As the government eases the public back to a form of normalcy, these revenue doors will open. And if the season is ultimately cancelled, the Bombers will be first to walk through.
“If you know who is running this football team,” a source said, speaking about Miller, “he’s going to find as many ways as he can to minimize any losses.”
After a slew of injuries playing hockey that included breaks to the wrist, arm, and collar bone; a tear of the medial collateral ligament in both knees; as well as a collapsed lung, Jeff figured it was a good idea to take his interest in sports off the ice and in to the classroom.
Updated on Friday, May 1, 2020 11:01 PM CDT: Adds photos