What are the costs of running the Argonauts, and could a community group possibly meet them?

The ongoing discussion about a potential sale of the Toronto Argonauts and its complicating factors, including the team's need for a new stadium, took a notable turn this week when owner David Braley told The Toronto Starhe had received two offers for the team outside of MLSE's reported interest.One of those offers is reportedly a proposal that would set the team up as a not-for-profit community-owned franchise, along the lines of other CFL teams such as Edmonton, Saskatchewan and (to a degree) Winnipeg. The Star's Curtis Rush dug into that idea more deeply Wednesday, exploring how those other franchises work and how much money might be needed, but his piece suggested "annual operating expenses could be in the area of $30 million to $35 million." That's drawn from the Roughriders' reported $32.1 million in operating expenses in 2013 (report available in PDF here), but it seems very high; Saskatchewan's the CFL's richest team and spends way more than anyone else, so a more reasonable number can be obtained by looking at the costs Edmonton and Winnipeg have reported. In reality, operating expenses for the Argonauts could be around half of that $35 million number, potentially making community ownership more feasible in Toronto. Here's a look at the operating expenses for Edmonton and Winnipeg over the last two years:

(Note: this chart is constructed from the audited financial documents presented in each club's annual report. Those can be found in PDF form here and here for Edmonton and Winnipeg respectively. Edmonton's is included line-by-line, while only Winnipeg's totals are included because they break down their expenses into different line items and don't have separate line items within categories like football operations. See the Winnipeg financial report for more of a breakdown of how they spent their money.)

It's notable that Edmonton's increased 2013 profit ($1,399,711 versus $16,196) came almost entirely from slashing expenses, as they actually made less revenue ($18.6 million versus $18.8) in 2013, but spent far less. Thus, their 2013 operating expenses of $17,195,015 (and Winnipeg's 2012 expenses of $16,001,882) represent a relatively lean operation. However, there's no reason the Argonauts can't aspire to that. Even the high number here in operating expenses (Winnipeg's $21,273,798 in 2013) is way less than what Rush's story cites as potential costs for Toronto, and the average for both teams across those seasons ($18,326,092) certainly seems like a reasonable target. There's no particular reason visible from this corner why it should cost so much more to run the Argonauts than the Eskimos or Blue Bombers.

Keep in mind that Winnipeg and Edmonton have been cited as the league's second- and third-most profitable teams, too. They may be more willing to spend than teams in the middle or the bottom. Thus, it may be quite possible to run a team for even less than this. We just don't know because of the lack of publicly-available financials for teams other than the three clubs run as non-profit organizations.

The financial picture should get even rosier, too. Here's a look at the revenues for Winnipeg and Edmonton in 2012 and 2013 (from the same audited financial documents as above, with the same disclaimers):

In particular, those CFL distribution numbers should skyrocket this year thanks to the new TV deal, which is estimated to give each team upwards of $2.7 million extra. Yes, the player salary cap has risen slightly too, but only by $600,000 this year. That's at the cap ceiling of $5 million; the floor is only $4.4 million, which is a $400,000 increase over 2013's floor. Thus, teams are only required to spend $400,000 more, and they can spend only $1 million more (if they were at the previous floor and want to go to the new ceiling). That means there's at least a $1.7 million increase in revenues over expenses out there for each team, and likely much more (as no one has to spend to the new ceiling). Thus, new owners might not have to spend as much as has been suggested, and they'll have more money coming in.

Does that mean community ownership would work in Toronto? Not necessarily. You'd need a deep-pocketed group to not only buy the team from Braley, but also potentially put in some money to help fix their stadium crisis, and still have enough left over for a war chest that could get them through some bad years. Moreover, as Rush writes, the ownership structure would have to be set up in such a way that the league approves it, and that could be difficult. The community groups in Edmonton and Saskatchewan (franchises that have both sold shares to the public) and Winnipeg (where the team is run as a non-profit corporation, but has not sold shares to the public) exist largely because of history; trying to bring in a new one in this day and age could be a challenge.

However, the financial picture of expenses for whoever winds up buying the Argonauts shouldn't be as bleak as it has been painted. The numbers suggest the team's likely to face $20 million or less (perhaps substantially less) in annual operating expenses, and it should make over $4.5 million annually in distributions from the league alone. That leaves $15.5 million or less to make up in gate revenues, sponsorships, merchandising and the like. Doing that won't be easy, but that's certainly much more attainable than trying to make $30 to $35 million a year.