Leaked NFL Documents: While Owner Cried Hardship, Carolina Panthers Had $112 Million Profit Over Two Years [UPDATE]

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In 2010 and 2011, as the NFL prepared for and staged a lockout of its players, Carolina Panthers owner Jerry Richardson was among the hardest of the hardliners, urging his fellow owners to "take back our league" by demanding a more management-friendly collective-bargaining agreement.

Meanwhile, according to an audited financial statement obtained by Deadspin, Richardson's Panthers were making more than $100 million in profit over the fiscal years covering those two seasons.


The statement is for the years ending March 31, 2011, and March 31, 2012. Over the first period, as Richardson argued that the NFL's business model was hopelessly broken and steered the owners toward a showdown to extract more money from the players, the Panthers recorded an operating profit of $78.7 million. The team had gone 2-14 on the field, but Richardson and his partners were able to pay themselves $12 million.

Over the following year, after the owners had won their lockout and reduced the players' share of league revenue from 50 percent to 47 percent, the Panthers brought in $33.3 million in operating profit. Richardson began lobbying for public subsidies to renovate his 17-year-old stadium. The team went 6-10.


The pro football business was very good in Carolina in those two years, even if the pro football wasn't. That much is evident from the document, which can be found at the bottom of the post and which offers a rare look inside an NFL club's books.

Team financials in all sports are closely guarded documents, particularly because so much league business—stadium deals with municipalities, negotiations with players unions—relies on obscuring the owners' financial picture. During collective bargaining in 2011, the NFL players union repeatedly asked owners to open their books. They were repeatedly denied.

"These franchises are a license to print money," says Dennis Howard, a business professor at the University of Oregon, who looked over the Panthers' financial statement at Deadspin's request. "This team is pretty damn healthy," he says, and its financial outlook is "very bright," citing the new, owner-friendly collective bargaining agreement and the league's fat new TV contract, signed in 2011, which kicks in next year. Under the terms of that deal, Howard estimates, the Panthers could bring in an additional $60-$65 million in annual TV revenue alone.


Richardson's public posture over the past two years certainly hasn't suggested a man presiding over a twentysomething percent profit margin in one of the NFL's smaller markets. He was management's point person in labor negotiations. A witness told Yahoo's Michael Silver about a March 2010 meeting at which Richardson addressed his fellow owners: "Jerry said, 'We signed a [expletive] deal last time, and we're going to stick together and take back our league and [expletive] do something about it.' He was practically yelling. It was amazing, and it set an incredible tone." In one memorable press conference before the work stoppage, Richardson, now 76 years old, drew a crude pie chart that showed the players swallowing up a preponderance of league revenue.

"I don't think many business schools would say that's a model that's going to sustain itself," Richardson said, claiming that team owners had "a negative cash flow of $200 million."


In 2011 and 2012, however, the cash position of the Panthers was healthy: $8.3 million and $38.4 million, respectively. Assuming Richardson's number has any basis whatsoever, it's likely he was factoring in an accounting sleight-of-hand known as the roster depreciation allowance (more on which later). "If one is searching for a reason for the early termination of the CBA and the lockout in 2011," writes Roger Noll, a sports economist at Stanford, in an email, "financial distress is not it!"

Last fall, the team began drawing up plans for renovating Bank of America Stadium, which was built largely with Richardson's money and which opened in 1996. The Panthers figured renovations would cost $300 million, $200 million of which, they'd hoped, would come out of the public till. Charlotte has been eager to help, to the tune of $144 million. But the state thus far has been less accommodating, and with good reason.


"Based on the team's financial condition, there is absolutely no justification for such a large public subsidy," Howard writes in an email. The financials "show unequivocally that the team has the capacity to finance the improvements on its own. The team could easily pledge a portion of the anticipated increase in TV revenues to finance the debt service for the improvements."

A few other notes about the Panthers' financial statement:

  • Why the big gap in operating profits between 2011 and 2012? The Panthers decided to spend money on talent. Player payroll jumps from $78 million to $100 million, and amortization of player signing bonuses goes from $24 million to $54 million.
  • If we shuffle around the line items on page 5 in the viewer below, we can get a broader sense of where an NFL team's revenue comes from. The Panthers' local revenue—game receipts, luxury suites, and so on—was $95 million in 2011 and $98 million in 2012. (Incidentally, Carolina's ticket prices are among the lowest in the league.) Revenue from the league—national TV contract, NFL Ventures—was $150 million in 2011 and $155 million in 2012. In other words, the league kitty accounts for more than 60 percent of the Panthers' operating revenue. Why is that important? Local money lay at the heart of the lockout. The impetus behind the work stoppage wasn't so much player costs as it was a widening gap among teams in stadium-generated revenue. The lockout, as we've written many times before, was actually an intramural dispute that the owners chose to take out on the players instead. At bottom was a growing imbalance between those clubs with new, revenue-rich, luxury-box-fattened stadiums, many of them built through the league's G-3 financing program, and those in older facilities.
  • Richardson's claim of $200 million in negative cash flow is difficult to fathom, says Howard, who a decade ago had access to profit and loss statements for NFL teams and recalls only two teams, the Arizona Cardinals and the Oakland Raiders, suffering operational losses. One possibility is that Richardson was figuring in the infamous roster depreciation allowance. The RDA is an accounting gimmick whereby a new owner of a sports franchise gets to write off 100 percent of the purchase price of the team over a 15-year period, on the specious logic that a roster depreciates the same way, for instance, that your office's new fax machine does. That tax deduction shows up on the books as an operating expense, even though it's a pretend-loss that exists only in the quirks of the tax code. Thus, Stephen Ross, who purchased the Miami Dolphins for $1 billion, can claim an operational hit of nearly $70 million. "It has a huge impact on the bottom line," Howard says. "You're able to transform a real profit into an operational loss."
  • On page 7 of the viewer, you'll see an $80 million loan repayment in 2011. That's explained on pages 16 and 17. The NFL offers revolving credit to teams at very low interest rates, another perk of ownership.
  • Regarding the $12 million self-payment (page 6, "Distributions to partners"): We don't know if this is typical without access to other teams' financials. But given the Panthers' financial success under Richardson, Howard says, "I think he's extracting his fair share." You can find the team's organizational chart and entity listing here.

Carolina Panthers, 2011 & 2012


[View in DocumentCloud | Download as PDF]

Update, 9:40 p.m.: The Panthers respond:

The Deadspin story presents an incomplete picture of the Carolina Panthers profitability. The figures offer an isolated snapshot of the team's financial situation during an unusual time as the NFL lockout loomed.

At the time, the team had strategically reduced its spending because of the uncertainty and as part of a long-term plan to secure the team's best talent once a collective bargaining agreement had been reached.

The team's actual operating cash flow, even before federal and state tax payments were made, was significantly less than the accounting income reported in the story. The most meaningful reflection of a company's profitability is cash flow, and the team's operating cash flow fluctuated between pre-tax figures of $26.7M in fiscal year 2011 and $39.8M in fiscal year 2012.

A detailed review of the financial statements demonstrates the difficulty of being competitive in the NFL, paying players to the cap, and trying to add the financing of a major stadium renovation.


More: What Can You Learn From The Carolina Panthers' Leaked Financials? Ask A Sports Economist