For years, the Bears have appealed for a new stadium on the grounds that it is vital for them to compete in the player market. Without a better lease in Soldier Field, without sharing concession and parking revenue, without the advantage of increased skybox and club-seat revenue, the Bears could not afford to pay rising salaries.
But with the new system of free agency, such logic may no longer be valid. If a salary cap is triggered by 1994 as expected, teams are restricted to paying no more than 64 percent of leaguewide designated gross revenues for player costs. The designated gross revenues are network broadcasting contracts, gate receipts, and local, international and pay-per-view broadcasting money. Except for ticket sales, all stadium revenue from skyboxes, parking and concessions is not included in money designated for players.
Over the five years of the current television contract, each team got an average of $32 million a year. This year, it’s $40 million. The Bears’ payroll last year was $23.9 million. Benefits just negotiated last week will cost $4.04 million per team this year and rise to $6.6 million by the end of the contract in the year 2000. That still doesn’t add up to $32 million. That means the Bears could cover player costs without selling a single ticket. Since national broadcasting rights and gate receipts are shared in the NFL, teams with good crowds should have no trouble covering all player costs without dipping into additional sources of revenue.
“I’m not ready to draw that conclusion yet,” said Bears President Michael McCaskey. “I need to see what happens to spending in areas other than players. I think there will be some significant expenditures the Bears face over the next several years.”
Providing better practice facilities is one area that could affect how well the Bears compete for players. They just bought a new air-inflated bubble to replace a patched used one for winter practices. Compared to the new, permanent, indoor facility being built by the Green Bay Packers, any kind of bubble pales. The Bears also have outgrown their Halas Hall training and office facility in Lake Forest, with coaches and office workers sharing cramped, partitioned spaces.
Dave Wannstedt accepted the coaching job as Mike Ditka’s successor after McCaskey convinced him the Bears will be able to do whatever is necessary to field a winning team. That McCaskey himself is becoming more and more involved in the everyday operations of the football team means his own ego is now a bigger factor in the future of the club on the field. It is no longer the team George Halas turned over to Mike Ditka; it is finally and completely the McCaskey Bears.
During and before the draft, it was McCaskey making phone calls to other teams to inquire about trades. Bill Tobin, vice president of player personnel, used to make those calls.
McCaskey hired brother Tim to take over the pursuit of either a new stadium or renovation of Soldier Field, a task that had consumed much of Michael McCaskey’s time and led to nothing but dead ends.
The new model owner in the league is Jerry Jones, who bought the Dallas Cowboys and Texas Stadium for $130 million in 1989 and saw two huge returns four years later-a Super Bowl championship and last week’s designation by Financial World magazine as the most valuable franchise in sports, worth $165 million. Jones is one of the league’s few working owners, serving the Cowboys as general manager as well as owner and president. Jones has a reputation for cutting costs that is the envy of peers. His philosophy includes the fielding of younger, cheaper players to combat the free-agent system.
It will be difficult for McCaskey to compete with Jones at the valuation table without a stadium. Over the last year, the value of the Bears franchise fell from $139 million to $136 million, according to the magazine. This was largely due to a “poor stadium situation,” said Michael Ozanian, the magazine’s statistics and special projects editor.
Although the values of 22 NFL teams increased from last year’s report because of labor stability, the Bears and five others slipped for various reasons. Stadium revenue is a key factor now that other costs are more predictable. The question is how much the Bears now need a stadium to compete on the field.
“He (McCaskey) doesn’t need it (stadium revenue) to compete on the field; he needs it to compete on the value of his franchise,” Ozanian said.
The great advantage the Bears have over the Cowboys is they have no debt service. While the Cowboys cost Jerry Jones $130 million, the Bears cost the McCaskeys minimal estate taxes upon the 1983 death of George Halas Sr., who had set up a complex “preferred stock recapitalization” to restructure the team and reduce taxes.
According to Tim McCaskey, franchise value is not important to the McCaskeys because they don’t intend to sell.
“I can’t envision that happening,” said the newest member and fifth brother of the McCaskey family to be employed full time with the Bears. “I think that will be up to the next generation of McCaskeys to see if they can get along. I think this one is pretty solid.”
In 1990, the Bears sold 20 percent of the franchise to Chicago businessmen Andrew McKenna and Patrick Ryan to cover the purchase of 20 percent of stock from the two children of the late George Halas Jr.
With the value of franchises now in the $150 million range, the issue of corporate ownership once again surfaced at recent league meetings because owners who want to sell their franchises may find that only big corporations can afford the price. Unlike baseball and basketball, football has prohibited corporations from obtaining a majority interest for fear of losing control of the tightknit private ownership group and fear of corporations outspending mom-and-pop operations. But the new system of controlling costs under a salary cap removes the fear that corporations would threaten competitive balance.
Cleveland Browns owner Art Modell is pushing for corporate ownership that could mean the beginning of the end for family-owned franchises like the Bears. The last time a new collective bargaining agreement was signed in 1982, five teams were sold within 18 months.
Beyond the ego of owners, which can be a significant force, incentive to win in the NFL is no greater from a financial standpoint under the new system than it was under the old. There is incentive to stay competitive in order to fill stadiums, but teams in the future are prevented by the system from trying to outspend each other. Eddie DeBartolo Jr.’s San Francisco 49ers are being dismantled before his eyes, and he is not allowed to buy them back.
Since player costs come from a percentage of television revenue and ticket sales, other questions of incentive arise. The league is in the last year of its television contract. Despite dire warnings from networks that the golden goose is dying, NFL Commissioner Paul Tagliabue predicted in March that the average payout over the length of the new contract will not be smaller than the average $32 million of the current contract. What if it is smaller? Players, as well as owners, will have to absorb the hit because players get only 64 percent whether it’s $32 million or $3 million.
By not including luxury-box revenue, stadium concessions and advertising or NFL Properties and Films in the designated gross revenues players can share, owners kept the fastest-growing revenue streams for themselves.
Will there ever be any need again for teams to increase ticket prices?
“That’s one of the primary sources to get money to pay the players,” McCaskey said. “If you don’t get it from ticket prices, where are you going to get it? You can’t just look at the player costs. That’s our largest single cost, but like any other business, there are other costs that have to be paid for. We have to stay in the black.”
The Bears ranked sixth in the league in average ticket price last year with seats at $35, $30 and $27. There is no increase for 1993.
McCaskey says the team’s profit margin will be down in the future because the competition to sign free agents will push every team to the cap.
“The amount of money made will be more modest, and it will be more difficult than ever even for well-managed teams to win,” McCaskey said. “It will be harder to keep players you have developed on your ballclub.”
But every sign points to one conclusion: The Bears are well-positioned to continue to thrive at the gate and at the bank. A new stadium and more Super Bowl teams can only increase an already prosperous venture.
