Losing is Winning(article)

Losing is winning
Eskimos didn't make playoffs, but they did make a major profit

The Edmonton Eskimos were $850,000 over the $3.8 million salary cap last year - but still showed a major profit.

In the unique financial world of the CFL, the Green and Gold have posted a $610,168 profit from last year partly because the club missed the playoffs for the first time in 35 years.

"There is a whole financial sensitivity in the CFL of: the farther you go on the field, the more it costs you in dollars," said Edmonton Eskimos president Rick LeLacheur.

Case in point came in 2005 when the Esks had to spend almost $365,000 on Grey Cup costs - from travel to championship rings.

As a result, the club only posted a $163,839 profit in 2005. But also helping the bottom line is the Esks massive $8.72 million stabilization fund.

By being able to draw a bottom line number of $456,634 in investment income off that fund, it greatly helped offset the ballooning player salary costs.

Of the $850,000 over the cap, $460,000 was signing bonus money for 13 veteran players.

Taking advantage of a salary cap loophole only available until Grey Cup Sunday last year, the Esks signed 13 players to new bonus-laden contracts.

The bonus money doesn't count toward the 2007 salary cap of $4.05 million.


The bonus clauses also allowed teams to sign players to lower base salary long-term contracts to help get under the enforced cap this season.

"It made some sense," said Eskimos head coach Danny Maciocia.

"These are some guys that were going to be free agents or were entering their option year."

Key veterans like Mookie Mitchell, Robert Brown and Joe McGrath are on the list.

So is rising star Adam Braidwood.

But contrary to public reports, the Esks didn't file a ridiculously low $52,000 base salary contract for Mitchell with the league office.


The Sun has learned Mitchell's base salary is closer to $65,000. Regardless, Mitchell should be making a base-salary contract near $100,000 - but with a significant signing bonus, he still gets the total money he wants.

While player salaries are rarely revealed, the Sun has also learned the Esks handed out bonuses ranging from $2,000-$35,000, with the high end bonus clauses coming with several conditions.

But LeLacheur strongly pointed out last night at the club's annual general meeting that he didn't dip into the stabilization fund for any player contract money.

SHORT HIT: As usual, the Esks led the league in total attendance with 368,700 people filing through the stadium.

But that was down from 414,644 in 2005 because of the 7-11 regular season record and suspect weather conditions.

FINISH LINES: Sponsorship dollars continue to rise. The club pulled in $2.7 million in sponsorship sales, up almost $300,000 from 2005.

"We are now getting to a point when we are running out of inventory," remarked LeLacheur.

In the CFL, a strong gate and sponsorship department make all the difference in the world.

"The biggest difference between the CFL and NFL: 85% of our revenues come from bums in the seats and sponsorship and 15% from the league," said LeLacheur.

"It is about the opposite in the NFL because of the TV contracts."

[b]LUCKY 13

The Eskimos signed 13 veteran players last fall to bonus-laden new contracts to help get under the 2007 CFL salary cap.

They included RB Mike Bradley, FB Mike Maurer, SB Mookie Mitchell, OL Patrick Kabongo, DE Antico Dalton, SB Pat Woodcock, SB Andrew Nowacki, DT Robert Brown, LB A.J. Gass, DE Adam Braidwood, FB Deitan Dubuc, OL Joe McGrath and LB Mike Botterill. [/b]

Eskimos paid $460,000 to sign players before CFL salary cap took effect

By Scott Petersen,
Edmonton Journal

EDMONTON -- The Edmonton Eskimos dumped $460,000 into a salary cap loophole to nail down the discounted services of 15 players for next season and beyond.
Derrell (Mookie) Mitchell, Adam Braidwood, A.J. Gass and Joe McGrath are some of the Eskimos who signed contract extensions in 2006 before penalties in the Canadian Football League's new salary-cap management system kicked in. In return for signing before the Grey Cup day deadline and accepting a smaller annual salary for coming seasons, the players received sizeable bonuses up front that totalled $460,000.

Other teams in the league rushed to hammer out similar bonus-laden deals as the Grey Cup approached, and Eskimos president and CEO Rick LeLacheur doesn't believe his team was the biggest spender. He released the team's numbers to the media prior to their annual general meeting Wednesday night.
"Basically, we've pre-paid," said LeLacheur.

"We up-fronted some bonus money. We didn't get crazy with it. Because at some point, somebody's going to get burned. For example, if Mike Maurer's head didn't get better in that fight (mixed martial arts bout in February) and he couldn't play again, we're out that money."

A trial CFL salary cap figure of $3.8 million was floated last year, but with no penalties for exceeding it. The Eskimos went over by $850,000 -- more than half that amount attributed to player bonuses used to strengthen their roster for the future.The bonus loophole is now closed and the Eskimos plan to abide by the 2007 salary cap figure of $4.05 million, even though they'd like the figure to be a little higher.

"We've lived up to all the disclosure," said LeLacheur. "The CFL auditor has been in here and looked at everything. That's all part of the plan, which we support."
The Eskimos made a major splash into free agency in mid-February by signing defensive backs Omarr Morgan and Stanford Samuels to six-figure deals. The moves raised eyebrows around the league and drew comments from Saskatchewan general manager Eric Tillman, who lost Morgan, his top cornerback.

"We have teams using their war chests to skew their numbers with front-loaded contracts,'' Tillman told the Regina Leader-Post. "The Edmonton Eskimos have $15 million in the bank. We're not in that ozone layer.

"You see a team with a $450,000 quarterback (Ricky Ray) adding three six-figure defensive backs to their roster, while we could only afford to try to sign one. But there's no doubt that they're operating within the '07 salary cap.''

LeLacheur rebutted that the team hasn't touched its $8.7-million "stabilization fund" for football operations and that they're playing by the same rules as everyone.
Head coach and director of football operations Danny Maciocia said the team freed up money to sign Samuels and Morgan with recent cuts, with more cuts to soon be announced.

"Sure it's unfair," said Maciocia of the outside comments.

"Our No. 1 concern here in Edmonton, if you're working for the Eskimos, is to worry about the Edmonton Eskimos ... I don't have time to think about what other clubs are doing and how they're operating. We've got a cap, we're going to abide by the cap and we're going to try and put a competitive team on the field.

"Let's all be honest with one another. When salaries were all being discussed as far as where everyone was at last year, Saskatchewan, I think, was second overall and we didn't spend more money than Saskatchewan. But nobody said a word."

LeLacheur expects league revenues to continue to rise and the 2008 salary cap to be adjusted to a higher limit at some point during the summer.


Receiving bonuses averaging about $31,000 each, here are 13 of the 15 Edmonton Eskimos who signed contract extensions before the salary cap loophole closed on Grey Cup day, Nov. 19, 2006:

  • Michael Bradley, RB

  • Adam Braidwood, DE

  • Robert Brown, DT

  • Michael Botterill, LB

  • Antico Dalton, DL

  • Deitan Dubuc, FB

  • A.J. Gass, LB

  • Patrick Kabongo, OL

  • Mike Maurer, FB

  • Joe McGrath, OL

  • Derrell (Mookie) Mitchell, SB

  • Andrew Nowacki, WR

  • Pat Woodcock, WR

**Two undisclosed recipients.

All this says is that if Edmonton was at the 4.05M cap then they would make an extra 850K a year, if they didn't over-spend on Travel and Training camp they could make an extra 400-500K.

they could make that Stabilization account grow extremely fast.(over 1M a year) and they would still have money to score points with the fans with some solid Donations to local Community charities(like 100K more a year).

over 500K on away games?
it only costs around 360K to Travel to Montreal From edmonton 10 times(60 people round trip air-fare, 3 nights hotel, unsure on meal inclusion)(costs are in July, 4* hotel) yet the Eskimos spent atleast 20% more then that.. flying first class 24/7? Private plane?

spending on travel = making players happy and attracting potential free agents

spending on training camp = more US camps, more scouts, leading to finding better players

spending $ on travel and training camps = a more competitive team, and a happier team

The Eskimos are the best run team in the CFL, I'm quite certain they don't need your advice.

The fact that you have to spend money to make money seems to fly right over this barnes guy's head. The Eskimos generate more revenue than any other CFL team, and have higher profits, in most years, than any other CFL team.

Not sure where barnes credentials come from, but I wish him luck in his never ending pursuit to change the Edmonton Eskimos business model, to make them even more successful. One would think that his infinite business wisdom would be better directed towards another CFL team. But, I guess he feels the team that is already the best run organization in the CFL needs that extra boost to be even better.

Email the Eskimos directly with your suggestions, barnes. I would be genuinely interested to hear how many of your recommendations they put into place.