By Les Carpenter
Washington Post Staff Writer
Wednesday, September 27, 2006
JACKSONVILLE, Fla. -- To understand the disparity, the helplessness the NFL's have-nots sometimes feel in a league of haves, you need to see the tarps at Alltel Stadium. They are impossible to miss, stretched up over more than 30 rows in eight sections, pulled like window shades over this city's lofty dreams.
Jacksonville Jaguars owner Wayne Weaver decided to install them before last season, cutting the stadium's capacity by 9,713, an admission that the town just isn't big enough to consistently fill a stadium with 76,877 seats.
The Jaguars are the only team in the NFL to take such a measure. Given the fact that only 11 years ago they led the league in revenue, it is a shocking sign of just how far they have fallen.
"It's an important, drastic measure to cover seats," said Dean Bonham, a Denver-based sports marketing consultant who studied the Jaguars' finances at the request of the city. "It's analogous to not being able to stock the inventory necessary for survival."
Professional football can bring a lot to a city, and it has done so here over the last 13 years. It has given the city a major league team, a stadium and a Super Bowl that city leaders say generated hundreds of millions of dollars. "A lot of people didn't know where Jacksonville was," says John Peyton, the city's mayor.
But it also has delivered a rude message that Jacksonville, despite its rise, still is the nation's 42nd-largest metropolitan area in terms of population, and as such has limitations. And if anyone needed a reminder, it will come on Sunday when the Jaguars -- who claim to have lost money two of the last five years -- play the Washington Redskins, who not only don't need tarps over their seats, but have found they don't have enough tickets to sell at FedEx Field, with its 91,704 seats and 243 suites.
For now, the Jaguars hang in with their covered seats. The result of their experiment has been spectacular, if success is measured by sold-out games. The Jaguars sold out every game last season and are completely sold out again this year, which means their home games can be broadcast on local television, providing essential exposure. But there are nearly 10,000 fewer seats in the stadium than before, potentially costing the team some $200,000 a game in ticket revenue.
"What I did was create more demand than supply, which is going to allow me to raise prices over time," Weaver said in his Alltel Stadium office one recent morning. "But there's no way I'll catch up. The league's average [ticket increase] is 5 to 6 percent, so in order to catch up I have to raise mine twice that. I can't do it. Economics doesn't work this way."
Weaver, a wealthy man by virtue of his years running the Nine West shoe company, wants everyone to know he does not begrudge the Redskins or owner Daniel Snyder. In fact, he says he admires Snyder's business acumen and devotion to the Redskins. Nor does he want to be seen as leading some kind of crusade for the smaller-market teams against the behemoths.
He agreed to be interviewed for this story because he thinks it is important for people to understand that the NFL's business model has changed and that the riches enjoyed by some teams no longer apply to Jacksonville, where the goal is not to get rich beyond all imagination but simply to stay afloat.
Because right now, the gap between rich and poor is getting bigger.
Take, for instance, assistant coaches. In 2004, the Jaguars spent a total of $3.311 million on assistant coaches, according to the NFL Coaches Association, which shared its figures with the Florida Times-Union. The Redskins, by contrast, spent $5.22 million. This year, Washington agreed to give Al Saunders, its new associate head coach, $2 million a season.
A small team can't keep up.
The problem with Jacksonville is it just doesn't have that many people. Tucked up in the northeast corner of Florida, the city is surrounded by Georgia to the north, swampland to the west and the Atlantic Ocean to the east. The biggest growth -- and the market is definitely growing -- is in the city itself and to the south.
These geographic restrictions hamper the Jaguars in ways that don't necessarily burden teams in other cities.
"Unfortunately, fish can't buy tickets," says Bill Prescott, the team's chief financial officer.
According to estimates made by the U.S. Census Bureau in 2005, Jacksonville, at 1.2 million people, was the third-smallest metropolitan area in the NFL, bigger only than Buffalo and Green Bay. Yet when you consider that Green Bay really is considered a statewide entity in Wisconsin and draws heavily from Milwaukee, Jacksonville probably is the league's second-smallest market. Hence the problem of selling seats in a larger Alltel Stadium.
The Jaguars weren't even supposed to be awarded an expansion team when the league added two franchises in 1993. But St. Louis -- the presumed front-runner -- had trouble nailing down the final details of its bid. And Weaver, who was recruited to front the effort to bring a team to Jacksonville, challenged the city to purchase the 10,000 expensive club seats he figured the team needed to sell to prove it could get the corporate support to survive in such a small market.
The public came through, with some small-business people vowing to buy as many as 50 seats. When the Gator Bowl near downtown was gutted and rebuilt with suites and renovated seating, a buzz filled the streets.
And when the stadium opened for the Jaguars' first season in 1995, the team generated more money than anyone in the league. It seemed a perfect success story.
Then the Carolina Panthers opened their new stadium the next year and pulled in more money than the Jaguars, and the rest of the NFL quickly began to understand there was gold in the new facilities, with their suites and luxury boxes and naming rights. So as each one of the new palaces opened, the Jaguars fell further and further behind.
"Shame on us as businesspeople," Weaver said. "We should have seen when Jacksonville opened its stadium with the number one gate in the smallest market there is something going on here."
Things soon started to fall apart for the Jaguars. Jacksonville reached the AFC championship game twice in its first five seasons, but then the team ran into problems with the salary cap -- the leaguewide ceiling on player payroll -- and began to slip. At the same time, many of the initial club-seat deals, where people had bought as many as 50 tickets a game, were expiring. The buyers now were looking to purchase maybe only five or 10 seats instead of 50. Some dropped the seats altogether.
Attendance fell and, more disturbingly to the people who run the Jaguars, wide-open chunks of the club seats sat unused. And there were few big-money benefactors to swoop in and buy the tickets.
"The strength of our community is we have 28,000 strong mom-and-pop-type small businesses," Weaver said. "We have a lot of wealth in our community. But it's not the corporate entertainment."
Today's NFL is built on corporate entertainment to the point that crowd size almost is secondary to suite sales and advertising signs. The Jaguars are not blessed with a metropolitan area of powerful lobbying firms, high-priced law firms and influential corporations, as is the case in Washington. To try to keep up, Prescott had to think of something new.
He invented a new giant party suite to satisfy people who didn't want club seats but were put off by the costs of a private suite. He also cut deals with Budweiser and Pepsi for fan areas that actually are some of the more lucrative beverage deals in the NFL. But such contracts can only make up part of the difference.
"We can be as creative as we want to be, but we are controlled by our market here," Prescott said.
It was never supposed to be like this. Not in the socialistic NFL, where everyone was to grab equally from the same pot. But something happened in the last few years. As more and more teams realized they could extract profits from their suites and sponsorships, they grew less willing to share the wealth.
In the latest Forbes rankings of NFL teams, the Jaguars were 26th in the league in revenue with $173 million. The Redskins took in $303 million, according to documents filed with the Securities and Exchange Commission. With this year's salary cap at $102 million and costs such as salaries for coaches and staff, facility rentals and other operational expenses, the Jaguars are always teetering on the break-even line, while the Redskins can enjoy an extra $125 million or so to lavish on their organization, attracting top assistant coaches and players.
The same goes for other high-revenue teams such as New England, Dallas, Houston and Philadelphia -- all of which are valued at more than $1 billion, according to Forbes.
And while the Jaguars currently are more successful on the field than most of the $1 billion teams, there is an impending sense of dread around the organization that the gap between the wealthiest and poorest teams in the league is only going to grow larger. The solution isn't as simple as building a new stadium. The team already has sucked about as much as it can from the market. That's why teams such as the Jaguars are so concerned about the league's new labor deal, which guarantees the players at least 60 percent of the owners' revenue.
For a team such as the Redskins, this is nothing. For a team such as Jacksonville, the average of the league's revenue is probably more like 65 percent of its own. And the Jaguars worry that it could grow to 70 or more.
"We need some mechanism to make sure our player costs stay at 65 percent of our total revenue," Prescott said. "If we get that safety net, we can break even. But if all of a sudden we get our player costs at 70 percent of our revenue, there is only so much you can take out of the front office and it's going to be a competitive imbalance."
The Jaguars, like other small-market teams, will receive some money via revenue sharing with the big franchises. Yet it will amount to only about $7 million, with a possibility for more if the league's new media contracts turn out to be lucrative. Still, in the face of what the Redskins, Cowboys and Patriots bring in, Jacksonville's league cut barely makes a dent in the disparity.
Ultimately, this could be the biggest problem facing the NFL in the coming years. The current deal with the union, which Weaver voted for in an attempt to keep labor peace, can be torn apart in 2008 or 2009. There seems little doubt the Jaguars will be one of the teams pushing hard for a new contract.
"We're not going to derive a lot more revenue ourselves, so how are we going to change things?" Prescott asked.
For now, the answer is in covered seats. But that is only a temporary solution until everyone else builds their new stadiums and the Jaguars fall even further behind.
Still, there is a confidence here that this is a city that will continue to rise. Executives around town imagine a post-Fidel Castro world in which the Cuban market is open again to America. They see giant ships steaming up the St. Johns River laden with new crops ready to be shipped across the country via the CSX Railroad. They see a city booming, with new suburbs sprouting like spring flowers alongside shopping malls and sparkling new office buildings.
This will become the Tampa of the east, they believe, the Orlando of the north.
"I believe solidly in this market," Weaver said. "Ten or 15 years from now, this market will be one of the better markets. It's one of the fastest-growing markets in the southeastern United States."
Yes, in 10 years this might be a wonderful NFL town.
The problem is with what happens until then.
"I think they have a medium-term survival problem," said Bonham, the sports marketing consultant. "Ultimately, the market will grow to sustain them, but for the next five years the Jaguars will face significant issues. It's going to require patience and support from the fans and support from the city and state and it will require creative efforts from the team."
But can the Jaguars wait that long?
The team worries that its string of sellouts this year is less a condition of a booming market and more the result of a generous schedule that brings five of the NFL's more glamorous teams to Alltel Stadium this year. "Next year, I think, will be the real test to keep that premium seat inventory," Prescott said.
Weaver has said he is not interested in moving the team. Even if he were, there wouldn't be many places to go. There aren't many bigger cities than Jacksonville that lack teams. And outside of Los Angeles, where stadium and moving costs would cost more than $1 billion, none of those would provide any better a possibility of success.
The biggest fear here is that Weaver might sell the team. Forbes values the team at $744 million, which would give him and his ownership partners about a $600 million profit over the fees they paid to get into the league. The assumption is that the new owner will want to relocate to a place that can generate more revenue, most likely Los Angeles.
For now, though, Weaver has expressed no interest in selling, and Jacksonville moves forward with its most notable asset.
"The Jaguars are a morale boost, having something that people care about," said Peyton, Jacksonville's mayor. "There are a lot of cities where if you put the Super Bowl there no one in that city would know it was there. Here we had more citizen involvement. We had 9,000 volunteers from the city working at the Super Bowl. This team means a lot."
If only it were sure to stay.