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PACKERS REEXAMINE FINANCIAL SITUATION, WILL RAISE TICKET PRICES FOR '99
posted 02/27/99
After a careful and searching reexamination of their current and potential financial circumstances, the Green Bay Packers have found it necessary to raise ticket prices for the 1999 season.
"It is true that we announced earlier we would not be raising ticket prices this year," Packers President/CEO Bob Harlan acknowledged in announcing the decision. "However, after taking a long and in-depth look at our current financial situation and our business future, we have concluded that it is imperative - for several reasons.
"Primarily, putting it as simply and explicitly as possible, it is essential because the cost of doing business in the National Football League in these days of free agency and multimillion-dollar signing bonuses has escalated dramatically - to a point where we as an organization are experiencing serious cash flow concerns.
"For current example, Ron Wolf and our football people targeted five players they feel are critical to our success on the field - Dorsey Levens, Mark Chmura, Earl and Santana Dotson and George Koonce - and we re-signed them all.
"But we did so at a cost of $28 million in signing bonuses, an expenditure which has had a major impact on our cash flow...to where we are dangerously close to dipping into our endowment fund for current operations, which we do not want to do.
"Secondarily, the need to increase our ticket prices is underscored by figures for all NFL clubs, released by the league office. They show that in 1998, the Packers ranked 21st out of 30 teams in gross average ticket price. With the projected increase, and considering other teams that already have announced they are raising ticket prices, we will be approximately in the middle of the league out of 31 teams from a pricing standpoint.
"We assure our fans that we have no intention or desire to raise our ticket prices to the upper levels in the league. At the same time, we are members of the National Football League and it is incumbent upon us to remain competitive.
"Also it is necessary that we meet our responsibilities to the 30 other NFL teams in terms of the visitors' share of the stadium gate receipts for our home games. We need to remain competitive in that area as well, and at the moment, the visitor's share of the Lambeau Field gate ranks in the lower third in the league.
"We are aware that we are likely to get some criticism, which generally accompanies an increase in ticket prices. But we also know that, across the board, we are being fair compared with what other ticket prices are around the NFL.
"Admittedly, it may be somewhat startling to our shareholders when we report to them at our annual meeting July 7 that we had a record year financially - including $16 million from the Cleveland Browns as our share of their franchise payment to the league - and yet are experiencing major cash flow problems. Without the Cleveland money, however, we probably would have had to get into our line of credit for $10 million in order to pay those signing bonuses. And that $16 million from Cleveland, I might point out, shrank to $10 million after taxes.
"What may be equally difficult to understand but - in fact accurately represents our real bottom line - is that putting the best face on our fiscal 1998-99 financial report, it was a break even year, despite the record net profit and the $16 million from Cleveland.
"And without the Cleveland money, we would have had a $10 million negative cash flow. We can't afford to let that happen next year."
Expanding on the latter concern, while looking to the organization's future, Corporate Treasurer John Underwood cautioned, "For some time, I've been saying 'We need to build cash, replenish cash.' We obviously are reaching a point now where that has to be taken seriously. Very simply, we've got to generate more revenue.
"As far as the ticket price increase is concerned, I might also point out that, for every dollar of increase, we only get to keep approximately 33 cents because a third of every dollar goes toward the visitor's share of the gate and the remaining third for the tax on each dollar."
Under the new ticket pricing structure, club seats will increase by $18 - from $90 to $108; sideline tickets between the 20-yard lines will increase $7 - from $39 to $46; private box tickets will increase $6 - from $44 to $50; sideline corner tickets (from the 20-yard line to the end zone) and end zone tickets each will increase $5 - the former from $36 to 41 and the latter from $32 to $37; and wheelchair tickets $4 - from $36 to 40.
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