Is the CFL business model broken?

From 13th man, interesting post.

"I'm sure a large number of you won't want to see these words in print, but there is no point sweeping it under the carpet. What follows is my opinion only, so take it for what it's worth. I'm looking to open some debate, not start a war here.

If the salary management system fails, the CFL is doomed.

And even if it does work, there is no guarantee it will save the league from dying.

While a number of people in existing CFL markets have been told things are running smoothly by the league's hype machines (including TSN), the Ottawa situation has uncovered the true nature of this league. Nobody with any real business sense is willing to step into the current circus.

I would love to know who you people think will take over when aging hobby owners in cities like Hamilton and Vancouver decide it is time to sell their toys. There aren't too many Mark Cuban types left over from the tech boom any more. Smart rich guys like Eugene Melnyk have said the CFL's business model does not work.

Guys like Frank D'Angelo want in, but the Globe and Mail reports that despite his bluster, his own home is mortgaged to the hilt. And it's not even his own money he's throwing around. (Plus, the CFL told him "no".)

The CFL has appeared extremely greedy during the Ottawa "unsuspension" process (I will not call it "expansion" because the Renegades franchise was "temporarily suspended", using the CFL's own words). The CFL absorbed the assets of Bernie Glieberman's franchise without paying him a single cent, yet they wish to collect a reporteed $6M from a new person who wants to repossess those assets.

Of course nobody wants to play ball.

Which brings me to my main point...

Maybe it's time for something new. Maybe it's time to get a brand new start. Maybe it's time to set up new teams for a new, smaller, intelligently run league. A league in which the commissioner actually has veto power. A league in which owners work collectively for the good of the entire league and share their financial information.

No, the history of leagues such as the WHA and XFL have not all been glorious... but I'm sure Edmonton Oiler fans will tell you it worked out fine for them. Is it worth a shot? Maybe it's just the kick in the pants the CFL and its fans need.

Take your time thinking about this possibility. Think about how attractive an alternative option might be if your team has fallen to desperate times -- as several CFL teams have done countless times over the past two decades.

What if YOUR team ends up indefinitely "suspended" by the CFL and nobody wants to pay $6M because the former owner died or gave up and walked away, and the league decided to seize his property and hold it for ransom?

It could happen to you. It happened to us in Ottawa.

But hopefully for the sake of the CFL, the salary management system is the first huge step towards sensibility. If it proves to the business world that the new CFL business model works, maybe potential owners will be willing to take a $6M hit... because I can't think of too many people who want to throw away that kind of money for the opportunity to lose a whole lot more of it."

http://13thman.com/cheers/viewtopic.php?t=31726

My reply over there.

"Good post Jediah. I am one who has thought for some time that maybe a smaller more inclusive type CFL would work, one where the TD Waterhouse stadiums of about 10,000 could be included in the CFL, with a lower salary cap etc. But I really don't know if this is the way to go, the talent would be far shallower and the TV boys might not like it at all even if the league were to have say 12-15 Canadian teams.

But let's look at the NHL, a horse of a different colour for sure but really some problems in some US markets. But then they have the Kansas City's waiting with brand new buildings and such, something the CFL doesn't have the luxury of.

The CFL model as it currently is has problems without a doubt. But whatever happens, even if some sort of a catastrophic meltdown should happen, something would be resurrected that we would still call the Canadian Football League I think.

Also, people need to remember that the Grey Cup doesn't need the CFL to exist, it existed long before the CFL came into existence. This, to me, is a very important point. Say the CFL goes bust tomorrow and is history, the Grey Cup lives on as long as some form of football is played, the CIS boys will happily take it over. Remember that U of T and Queen's do have their name on the trophy. And quite brutally honestly, this might not be a bad thing. Not that I'm wishing for it but also not saying it wouldn't be interesting watching communities all over Canada vie for Earl Grey's mug even if all the teams were amateur. The word amateur does, after all, appear on the trophy. I wonder though if the NFL would want this, who knows. Do they have any stake in supporting pro football in this country? They once gave us a loan of some $3-$4 mill to help keep the CFL going in the dark '90's."

This all depends on the pool the CFL fishes from.

Canadians with deep pockets
are proving to be the best.

The CFL used to survive fishing from a pool
of far less affluent owners than we have now.

Dave Braley sold the Ticats when he discovered
what his CFL partners, then, were all about.

As owner of the B.C. Lions, Dave Braley
helped land a deep pocketed American
to buy the Alouettes, Bob Wettenhaul.

Later, he coaxed and coddled Hamilton born
Bob Young to buy the Hamilton Tiger Cats.

About the same time..other Canadian boys
with deep pockets, Richard Sokowloski
and David Cynamon bought the Argos

Then Ted Hellard in Calgary, David Asper
is likely taking a bigger role in Winnipeg.

The list of local Canadian boys
with deep pockets is building.

Nothing leads me to believe our present owners
can't help the CFL attract buyers like themselves

to buy CFL teams that become available
to keep the CFL surviving and thriving.

That is the way the league will keep attracting
rich, very deep pocketed local Canadian investors.

To ad to Rons Comments:

Last year their were rumours that Braley was going to sell the Lions. Braley denied he wanted to sell, but if the right offer from the right person came along, he would consider it. He went on to explain, that the "Right Person" had to share his vision about the league, and team, and he would NOT sell the team just to make a buck.

weren't there rumours of braley selling the lions to buy the gades cheap and make them valuable again?

Flip,

Flip,

Flip,

Flip,

Ah, there it is...... Found it.....Rumour # 132 Yup Drummer, that was one of them. Along with Rumour #165 Braley selling the Lions and re-purchasing the Ti-Cats. Oh, and Rumour #198 Selling the Lions and buying the Argos...... :wink: :wink: :wink:

I'll agree that the business model s-ucks, but I don't think we're at the point of fracture just yet.

The comissioner needs to be stronger. Look at David Stern in the NBA, he rules with an iron fist and no one complains, and the league does very well. lol but then again, i guess you get the odd Gary Bettman thrown in there, but since there's less owners in the CFL than the NHL, a coalition of say 3 owners has much more power in the CFL than they would in the NHL. Could be a counterweight against the Bettmans of the world.

While I'm sure the city of Ottawa is partly to blame, the fact that Palmer had to go to THE RIDERS to get an idea of team finincing, just shows how closed booked these owners are. The reason most businesses play the cards close to the chest regarding the books is that they're often battling competitors. However, CFL franchises compete on the field, not on Bay Street. In that sense there should be much more sharing of information among accounting department, since the success of each franchise in the CFL is intertwined.

You hear it again and again with the CFL: "Perception is everything". It doesn't matter how many speeches talk about "The League is more healthy than it's ever been". Casual fans can't relate to that. But when new franchises start popping up in the rest of the country, that perception suddenly changes. Expansion will stop Canadians from viewing the CFL as a one-foot-in-the-grave league and once again as a major (inter)national player.

Haha, this is funny, Since when is the NHL a Money making venture? it isn't.

Maybe if your one of the top 15 teams, but for the bottom 15(specificly bottom 10) the NHL is a league where you lose money, why? a bad business model, bad expansion, going beyond the amount of teams they should have.
24 or 28 teams would be best for the NHL(4 division) and moving alot of their teams to hockey markets.

Now as for the CFL, I'm sure people said this for years and years: "the CFL is going to die, the CFL is going to die" yet the CFL is the heathiest it has been in a long time.
Basicly a double of TV revenue in 2008, all CFL teams seem to have ended up making money in 2006(yes after other ventures but still inthe end made money)

I do not beleive any team is currently in debt.

New Stadium Talk is starting up for the first time in what.. 16 years?

Expansion to 2 cities, quebec City, Ottawa or Halifax/(or)Moncton.
it isn't needed, but it would really help the league no major rush on it but preferably in 5-6 years the team can be at 10 teams.

FYI for everyone, the 6M to activate Ottawa was:
part Deposit and Part Activation/Purchasing fee for the Ottawa team.
That is not why the deal failed, blame the City of Ottawa as it's their fault largely and the other part Blame is to the Riders for spending 15M.
If they followed the Salary cap they would have spent only 14M and made over a 1M profit.
If anything this should encourage Ottawa, because if teams go past the Salary cap they will be needing to spend money in Revenue sharing to low revenue teams. Although Ottawa still needs a new stadium regardless.

no, they don't NEED a new stadium....and they likely wont get one until they have a team thats been around for 10 years and shows no signs of folding again.

why would the government invest the money for a new stadium there when they have no team and its prospects of ever keeping a team for the long term are in some doubt?

the ticats should get government funding for a stadium long before any government thinks of funding a brand new stadium in ottawa.

they should upgrade it, see what happens for 10 years then talk about a new stadium.

hamilton fans are there game in and game out dispite a crappy stadium and an even worse team.

So now here we are again engaged among the oldest of Canadian pastimes - predicting the doom of the CFL.

If the salary system fails - its doomed - because a team in Ottawa failed - the league is doomed!!!

the CFL has problems - more power has to wrestled away from the board of gov. into the commish's office so a more focused and consistent effort can be made to market and grow the league.

The Ottawa 'thing' is not indicative of the health of the league. The league is very healthy. The problem with what happened to Ottawa is the team was owned by the Gliebermen (sp.) idiots. I know it wasn't started by them - the people who started the franchise didn't have deep enough pockets. And this isn't a CFL thing either - anyone starting a new business is expected to have deep enough pockets to weather the first few years.

Just a couple of years ago - with Hamilton and Toronto in recievership - CFL football was dead in Southern Ontario - its doomed. In the 80's - No CFL in Montreal - its doomed. Yet some 25 years later Im going to be watching and enjoying CFL football this summer and fall - what's up with that?

This thread started with something to the effect of 'you guys are not going to like to here this'. Point is, no I don't like hearing it because it's getting old - and I would think by now that the CFL doom-sayers would have become so very tired of being wrong :lol:

Of all the sports models, save and except the NFL which rakes in billions, the CFL and the new SMS has a potential to work.
While like barnes mentioned, it is the NHL model which is bankrupt for the vast majority or the remaining two thirds. It was only a couple of years ago in the playoffs, it was announced as the Bankruptcy Bowl, the Sabres vs the Senators. Both owners bailed out and the team was bleeding red big time. In comes billionaire Eugene Melnyk and another rich guy from Syracuse to buy the Sabres.
Still without both teams going deep into the playoffs today, neither will make money.
The new NHL with its cap does not work for the majority.
A CFL team with a gross budget of some $15M annually can at worst break even and when the Grey Cup comes calling to each city, the big profit year of upwards $3M is guaranteed.
A franchise is only worth what someone is willing to pay. So to suggest artificially the league should devalue the product to make it affordable, well that is economic suicide and is wrong in the free market place and will lead to many more Gleiberguy, Schwartz and Macdonald scenarios.

it lost all credibility with me when I realized that original author was just another disgruntle Ottawa fan.

I agree on Hamilton should get a new stadium, especially when Hamiltons Ivor Wynn is very Player un-friendly(Dangerous for one thing with the Close Stands)

But Ottawa's stadium is older, it originates pre-WWI(parts of it) while the oldest bits of Ivor Wynn are 1930(around 20 year difference)

Now question, why invest the amount of money it will take to give the Stadium a 10 year life span?
Canad Stadium in Winnipeg is in better shape right now then Frank Clair and it would cost around.. I think it was 24M to give it a 10 years more in life.

So if it costs 24M to do that to Frank Clair and Frank Clair is on land worth 30M.. your only looking at a difference of under 50M to build a state of the art facility that would really help a team alive.

Finally found it cost for Boxes to Sens games per game:

[url=http://www2.scotiabankplace.com/eng/suites/single-night.cfm]http://www2.scotiabankplace.com/eng/sui ... -night.cfm[/url]

NOTE I realise Sens boxes will cost more ESPECIALLY during the playoffs, don't get me wrong there.

There are 142-144 Boxes at Scotiabank place
Their all selling out(yes it is hockey big difference) at a per ticket cost exceeding 100$, getting as high as 175$ for Game 1/2 of the finals.(Box costs are between 4.5K and 2.15K for 20 person Suites)

I in no way would expect a CFL team to get that much, get me right on that. But if Boxes got between 75 and 100$ per person in a Box they are doing their job.

So a new Stadium, say a 30K seat Stadium should be able to support:(in ottawa)
40 - 20 person Luxury Boxes per game cost of 1K-
3K$(2K average)
4 - 40 person Sponsor Suites per game cost of 3K
2 - 60 peron Party Suites per game cost of 3.5K

In Total those Boxes would net(per game):(These should be Low Balled Numbers)
Luxury boxes - 80K
Sponsor Suites - 12K
Party Suites - 7K
Total per game - 99K$ or 990K per season
doesn't count playoff games + alternate box revenues
That's 99K(per game) from 1080 People(91-92$ per person)
These boxes are bought by members of the corporate Community normally and are also normal used by people who aren't regular attendees of games anyways so it doesn't effect season ticket sales.(atleast greatly)
Other then that having a 30K Seat Stadium(so not counting the Boxes at all in that number) with Seats fans are used to, not low Quality thing same with top line concessions/Washrooms.

Back to Stadium financing, now apparently the Asper Stadium in Winnipeg will be a 40K seat stadium, partially covered and have around 30 boxes for 120M

so Ottawa should be able to get a similar 30K seat stadium with 46 boxes for 100M or less(depending if Partial Coverings are added and if upgrades around the stadium is done to the same degree)
Take the Money the City/Prov/Feds are going to need to upgrade the stadium anyways if they want to have any events in the stadium + the money from selling the stadium/land(30-40M)
Call up Frank D'angelo and Hunt(owner of the Ottawa 67's) and ask if they want in on the deal.

Just with the current 7M upgrades that are being done for the soccer games + selling the stadium that's 40% of a new stadiums fundings secured?

Going by the Asper plan, Feds/Province get back their money in under 5 years if they put less then 1/3 of the total funding in and a CFL team is operating out of that Stadium.
Thus there will be needs of a garantee that a CFL team will operate out of that stadium for say 5 years, however with a good lease the team will be able to survive easily(providing Ottawa fans are as good as everyone says)

Say the team sells Season ticket packages for 150$(before taxes) and sells out their boxes.
30K*150 = 4.5M + 990K = 5.49M That is 1M more then Bombers made from their Ticket sales.
Corporate sponsorship of say 2.8M(around 500K less then Winnipeg gets)
League Revenues of around 1.8M(what new TSN should bring + other things)
Concess/marketing Revenue similar to Winnipeg = 800K

Ottawa's Revenue will be: 10.9M
Now I'm missing where 10% of the Bombers Revenues come from(No not grey cup stuff) it may be a stadium sponsorship.. but that doesn't make sense, likely events to raise money for the BB/Charities.

There should be 30K Ottawa fans willing to pay atleast 150$ for tickets.(15$ per game) and if there isn't, Obviously Ottawa doesn't really have Football fans, 15$ per game is a pretty good deal.

Again going with the Sens, most tickets were beyond 25$(alot being 50$+)
So even if most tickets are 50% that Of the Sens ticket costs a 20-25$ ticket average is reasonable.

20$ ticket average * 30K fan average = 6M + 990K from Boxes = 6.99M(destroys Winnipegs 2006 numbers)