The latest version from both writers, who are generally pro CFL. Naylor forgets(?) to mention how the Grey Cup was a windfall and a profit or $3M+ and also how the losses sustained by the disfunctional owners were written of financially and is/can be a winfall.
As for Brunt, he has been anti CFL of late and this from a guy who was previously a huge supporter. In fact, he rarely writes on the positives and is starting to remind me of Marty York.
From goal line to red line
The dying Renegades are just the latest in a long line of Canadian Football League clubs that lurch from crisis to crisis. The product isn't the problem. The bottom line, DAVID NAYLOR writes, is that the business model doesn't work
OTTAWA -- In many ways, the past decade has been a period of great prosperity for the Canadian Football League.
Overall attendance is the largest in league history and the league's television numbers are strong, anchored by a string of wildly successful Grey Cup games. The product, as always, has never been an issue.
But, yet again this past week, the league was asked to come to the rescue of one of its teams when the owners of the Ottawa Renegades concluded they simply can't make a go of it.
Dating back to the insolvency of the B.C. Lions and Ottawa Rough Riders in 1996, through the near-collapse of the Saskatchewan Roughriders a year later and the Hamilton Tiger-Cats' and Toronto Argonauts' receiverships of 2003, Ottawa became the sixth CFL franchise in less than a decade to come begging to the league for life support.
Add in the serious financial scares of the Winnipeg Blue Bombers and Montreal Alouettes during the past decade and the league is averaging nearly one financial calamity a season since the dream of U.S. expansion died at the end of the 1995 season.
The question many CFL fans are asking is why?
Why does a league that at times appears to have so much momentum lurch from crisis to crisis, each time delivering self-inflicted blows to its credibility?
The answer lies in the bottom line.
"The basic business model is broken," one former club official said. "You can't sell enough tickets and sponsorships to cover your expenses in most instances. It's systemic."
Understanding the difficulty of a business that spends more than it takes in may seem like a simple matter. But it's one the CFL has yet to adequately confront.
The original owners of the Ottawa Renegades learned that after paying $4-million for an expansion franchise in the fall of 2001. The Renegades lost $4-million that first season before taking on $6-million more in losses over 2003 and 2004. With no end in sight, the group decided it wasn't prepared to lose more, opting instead to welcome former Rough Riders and Shreveport Pirates owner Bernie Glieberman as the majority owner last spring.
"At some point it just becomes a basic business proposition," said Randy Gillies, one of the Renegades' original owners, who exited the picture after the 2004 season. "You have to be able to generate enough revenue to offset your costs."
Gillies's CFL experience stood in contrast with that of his other sports venture, the National Lacrosse League's Toronto Rock.
Though the Rock are a smaller operation than a CFL team, the club's expenses are significantly less and it generates a profit. As a result, the owners have not only made money, but also have seen their equity skyrocket in terms of franchise value. A similar phenomenon exists in major-junior hockey, where many franchise values are approaching $5-million.
"It's a basic equation," Gillies said. "Our revenues meet or exceed our cost base and our cost base is controllable because of a number of things.
"Obviously for some markets, the CFL business model works, and in others, it's a challenge. I think that may be one of the things the league has to look at: how to balance between some of the stronger markets and the weaker ones."
Not all CFL clubs lose money. But the ones that turn a profit year after year, such as the Calgary Stampeders and Edmonton Eskimos, are in the minority.
In most markets, factors such as poor on-field performance, injuries or bad weather can mean the difference between a chance to break even and multimillion-dollar losses. In markets where CFL teams are owned by wealthy businessmen whose love for football exceeds their degree of financial pain, the damage is minimal. But where that's not the case, such as with publicly owned teams in Saskatchewan and Winnipeg, it means a crisis.
Winnipeg president Lyle Bauer recently suggested his club would forecast a loss this season for the first time in five years, raising the question of how much the league's new $3.8-million cap on each club's player payroll is really going to help.
But Bauer, like Hamilton owner Bob Young, has long since abandoned the notion of relying on the football team alone to generate enough money to cover expenses. Which is why both clubs have ventured outside the box to other related businesses, such as managing sports events and sports websites in order to create a more workable business model.
"There's no question it's a tough business to manage," Bauer said. "The margins are always slim and the margins for error are even slimmer. I believe the best model is the Eskimos, but people like us could only hope for 41,000 in average attendance. So we have to find new ways to generate revenue, which we are.
"In our case, we've negotiated a situation with the city where we operate the facility where we play and there are other opportunities that we will examine. With a limited market and limited stadium, you have to create other opportunities, and most of those are not football-related."
Sources said Ottawa Senators owner Eugene Melnyk might have had some interest in the Renegades if he could have gained control of managing Lansdowne Park, where Frank Clair Stadium and the Ottawa Civic Centre are located. That structure would be similar to the model being developed in Winnipeg.
"You can only extract so much from football entertainment, so if you expand it to other things, it opens the door wider," Bauer said. "You have to be creative and inventive to feed the beast because the cost of football will not go down."
There is one way the league could make the cost of football go down. That would be to slash player salaries drastically, making them closer to those of NFL Europe, where the average salary is roughly $20,000 (U.S.), compared with the projected $80,000 average for the CFL this season. While evidence would suggest players would play for a lot less, Bauer said that's not a direction the league is prepared to go.
"If you start cutting into those salaries, you'll lose guys because it's not worth the price they pay with their bodies," Bauer said. "I think the player compensation issue is the least of our concerns. What you're suggesting is a non-starter because it would reduce the product and the players are the product."
Adding it up
Ottawa Renegades' sample budget from 2002-04 (estimated):
Ticket revenue: $5-million.
League distribution: $1.2-million.
What the original owners of the Ottawa Renegades paid for a CFL franchise in 2001.
What the Renegades lost in 2002, their first season.
What the Renegades lost
in 2003 and 2004 combined.
The Renegades' projected
loss through the 2006 season.
What the CFL is willing to accept for the Renegades now, provided the new owners agree to pay all the bills.
"The basic business model is broken. You can't sell enough tickets and sponsorships to cover your expenses in most instances. It's systemic."
Former CFL team official
From goal line to red line
The CFL should set modest and realistic goals off the field, STEPHEN BRUNT says, because the unique on-field sport is still great
E-mail Stephen Brunt | Read Bio | Latest Columns
For the better part of a quarter of a century, the Canadian Football League has been fretting about what it wants to be when it grows up.
On the face of it, that might seem ridiculous, given the game's long history in this country, which stretches back to the very origins of North American football in the mid-1800s.
But it's the business side of the game that's the issue, not the sport and not the culture. And ever since the league's ambition began to outstrip its means -- about the time a wonderfully lucrative television deal negotiated by outgoing commissioner Jake Gaudaur turned out to be a one-time windfall and not the beginning of a trend -- the league has struggled with ways to get bigger, or simply to get different, in order to pay the bills.
We may be losing bags of money as currently configured -- so the mantra has gone under a series of commissioners -- but when some day we become this other, slicker, richer thing, everyone involved will be swimming in profit, will see their franchise values vastly increased and will be mighty glad they got in on the ground floor. (Yes, there are shared elements with a pyramid scheme.)
The most obvious example was the disastrously executed expansion into the United States, a move borne out of pure desperation at a time when league extinction was a real possibility. But even the more recent theory that the CFL needed to become a 10-team league with the addition of Halifax or Moncton, finally stretching from coast to coast, originated in the belief that the sport had to be headed somewhere in order to survive, long-term.
This week's implosion of the Ottawa Renegades ought to bury that notion for the time being, and perhaps forever, given that the Maritimes still lack both a stadium and potential owner and given that the last expansion team crumbled because it couldn't find a way to stay out of the red.
A perfect time, then, to take stock of what the CFL is and what it isn't, to wonder whether existing as a modest, eight-team loop in which at least a few people find a way to make money might be goal enough.
The foundations of its business -- gate receipts and television and sponsorship revenues -- won't be altered dramatically whether or not there are franchises in Ottawa or Halifax or Quebec City, other than to be divided into one or more extra shares. There's a strong national audience, especially for the playoffs and the Grey Cup, and for ticket-buying fans in the member cities. The potential number of visiting teams has never been the issue.
People will pay to watch the games in person in numbers that are historically consistent (with a few peaks and valleys in individual markets), and people will tune in on television, even when the CFL occasionally falls out of fashion. There is also added value in the league's history, in its continuity and in its cultural currency. It's not just some rootless, fly-by-night sport that's been imposed on the country.
That's pretty much the entire story, and it's not about to change dramatically. There are no new markets, new media or new opportunities outside Canada's borders that will dramatically alter the picture.
So the challenge is finally learning to live within those bounds, made more difficult by the league's own class divide.
Right now, there are two models for CFL ownership. One is the community team, which has only ever been successful in the West, which relies on grassroots commitment to the cause and which is the first to be affected when operating costs far outstrip revenue because, by definition, it can't operate at a deficit for long.
The other is wealthy hobbyists who aren't quite big enough players to get involved in the National Football League or National Hockey League, but want the fun and the ego boost that come with being at the helm of a professional sports franchise. They can make life tough for their community brethren because for them, losing money to win more games is often treated as a viable option.
If there were an endless supply of rich guys, happy to blow the kids' inheritance on CFL teams, perhaps reining in the league's cost structure wouldn't be an issue.
But assuming that's not the case, assuming that stumbling from cash crisis to cash crisis is no one's goal, perhaps it's time to finally cut the CFL to fit.
It's a great little league, and, especially, it's a great, unique game. That's enough, and that ought to be preserved.