Bombers’ profits are impressive: now, the question is whether to invest or save?

An overall net profit of $2.333 million in a year would be impressive for most CFL clubs, but that number's even more remarkable when it's from the Winnipeg Blue Bombers' 2011 season. There were plenty of factors working against the Bombers this past year, including their league-worst 4-14 campaign in 2010 (which undoubtedly affected some season-ticket renewals and advance sales), the return of the NHL's Jets in a market that some have declared too small for two professional teams (although those declarations are flawed) and their less-than-dramatic offseason. Despite all that, the Bombers started with strong attendance, and that built throughout the year (and was by far the best in the East Division) thanks to their impressive on-field showing and run to the Grey Cup game. They reaped the rewards off the field, too, making a record operations profit (before the costs of the new stadium development) of $3.014 million, the highest they've ever recorded in a year where they didn't host the Grey Cup; that bodes well for the club's future. Now, the key question is what Bombers' president/CEO Garth Buchko and his staff should do with the money: invest it all back in football right away, save for a rainy day or mix the two approaches?

Investing the profits back in the team immediately sounds great, but it can't really be done directly. In sports with no salary cap or a high one, profits can be directly reinvested in player salaries with the aim of giving the club a competitive advantage over less-wealthy teams. That's not really the case in the CFL, as the cap ($4.3 million per team in 2011) is low enough that most teams tend to be near it. If everyone's spending essentially the same amount on player salaries, club wealth isn't an enormous factor there.

There are still plenty of advantages for a well-heeled club, though, and one of the biggest is boosting the budget for coaching and front-office staff. A wealthy team can put more money into those areas, perhaps hiring more full-time scouts or coaches; they can often also attract bigger names to those spots. The rich teams can also finance more long-distance scouting trips in both Canada and the U.S. and can run more free-agent camps in an attempt to unearth overlooked talent, and they can also hold offseason voluntary workouts for current players more easily despite geographic disadvantages; an analysis I ran last year suggested that Winnipeg was the third-most difficult city to fly American players into (but the Bombers did still hold voluntary workouts in 2011). Rich clubs can afford to have more personal trainers, physical therapists, sports psychologists and the like on staff as well. Thus, although excess money can't be directly poured back into the active roster, it can go a long ways towards making that roster better.

However, while putting the profits back into the club's football operations may sound compelling, there are advantages to saving as well. Keep in mind that the Bombers are going to eventually have to pay back an $85 million loan for their new stadium, and there are significant advantages to paying that down as early as possible; the first $15 million is interest-free if paid back by 2016. It's also worth pointing out that while their revenue streams will hopefully rise in the new stadium, bringing in even more money, no team's going to have record profits every year, and the 2012 season will likely hold extra costs thanks to the need to operate two stadiums for at least part of the year (the Bombers will play at the old Canad Inns Stadium while construction on the new Investors Group Field continues). It's always good to have some extra money around in case of unexpected football costs, too, such as firings of coaches or general managers or new facility needs, and it's worth pointing out that the Bombers have already spent substantial amounts on their football staff.

The best plan for Winnipeg may be a mix of the two approaches. Additional investment on the football side could help, particularly with extra scouting staffers or trips, and if that translates into more on-field wins, that will help atdtract more fans and keep the bottom line healthy as time goes on. However, the team needs to save a substantial amount of money, and paying off the first $15 million of their loan by the interest-free deadline of 2016 has to be a key goal (as that will save them massive amounts of money down the road). The Bombers have to simultaneously focus on both short-term and long-term success, and they need to keep both on-field and off-field goals in mind; investing in the on-field product can help boost the off-field revenues, but saving money to deal with loans and produce strong future off-field revenues can give you the ability to invest more in football operations down the road. It's not a particularly easy line to walk, but it's one that the Bombers are going to have to do if they want to have more years where the release of the club's financials is a joyous event.