Revenue sharing ugly business for Bombers, Riders

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This article was published 23/05/2014 (4466 days ago), so information in it may no longer be current.

The CFLPA’s proposed concept of a salary cap based on gross league revenues should be worrisome to fans of the Blue Bombers and the taxpayers of Manitoba. Such a deal would inevitably lead to a bailout of financially unstable franchises.

Three of the league’s eight teams showed a loss last season and had they been forced to meet a salary floor predicated on the revenues of thriving operations, the numbers would have been worse.

Eventually teams struggling to meet the floor turn to their partners and ask for help.

Call it revenue sharing or cost redistribution but call it bad news for folks in Regina and Winnipeg, where sold-out stadiums would eventually lead to paying for empty seats in other cities.

In a nine-team league with the most important market (Toronto) a constant money-loser, there needs to be thought put into keeping all franchises afloat. A cap unhitched from gross revenue helps accomplish that.

Sharing exists in almost every league where the cap is tied to revenue. They go hand in hand. Maybe it’s ironic that Winnipeg shouldn’t want to share revenue with mighty Toronto but it’s reality in the CFL.

Picture the Bombers writing a cheque to an owner to offset losses in Toronto. Picture CEO Wade Miller, as a result of having to pass along some of his operation’s profit, not being able to meet his stadium debt obligations. That’s money out of the province’s coffers and the effects eventually trickle down to you.

Just as the notion of pro athletes deserving a certain level of salary because they “put it on the line,” is complete nonsense, so are the optics of an owner crying poor.

If you want to play, do so. If you don’t like the money, do something else. If you want to own a sports franchise, be prepared to pay the bills. Including labour costs.

But if a league, as a result of its CBA, sets up franchises to fail, owners will become scarce.

Complaining

Current owners in Toronto, Montreal and Hamilton have lost in the neighbourhood of $100 million, according to the CFL. What have we heard from them over the years in terms of complaining? Nothing. But that can’t go on forever. They’ll want out. It’s why the league is against having a rare ray of prosperity twisted into a blade of financial burden.

Already there aren’t enough interested parties to float all nine teams. David Braley owns two clubs — the B.C. Lions and the floundering Argonauts. Instituting a system that will make it tougher for that franchise to bear the burden won’t help attract buyers. Revenue sharing among teams is a way to equalize. However, in the CFL it would only serve to put all teams at the break-even point or worse.

Sharing the modest gains from clubs that generate profits with teams that do not (or those that turn marginal profits) reduces all the businesses to the lowest common denominator and puts all franchises in a tenuous financial position.

This makes for a stagnant business that won’t produce increased compensation for players over time.

The CFL previously had gate sharing but took it off the books before 1993’s expansion into the U.S. The established Canadian teams didn’t want to share revenue with Birmingham and Shreveport, etc.

It was a prudent decision as the already doomed experiment could have been even more damaging to the league. Imagine the Edmonton Eskimos being pulled into drowning waters by the Las Vegas Posse et al.

The same threat exists today, but it comes from Toronto, Montreal and Hamilton. Maybe Ottawa and its checkered financial history, as well.

The CFL needs to make all of its franchises viable. But it needs to do it without dragging down the clubs already standing on their own. A fixed cap offers part of the solution.

A stable and sustainable CFL can transition into a cap tied to revenues and league-wide sharing, which will eventually be more profitable for all owners and players.

But making a move in this direction too early could cripple the weak and diminish the strong.

Bad for owners and, if the weak cannot survive, eventually worse for the players.

gary.lawless@freepress.mb.ca Twitter: @garylawless