Eskimos’ profits soar despite diminishing revenues, boosting the CFLPA’s case

Is it possible for a pro sports franchise to post a consolidated net profit eight times higher than the previous year's despite losing more games, missing the playoffs, having less fans show up and losing overall revenue? Apparently so, if the franchise in question is the Edmonton Eskimos. The Eskimos released their financial results for 2013 at their annual general meeting Thursday, and there are some fascinating tidbits in that report (which is available for download here). Most notably, despite a season that saw them struggle on the field and bleed attendance in the stands (especially over the last few games of the year), the team made a consolidated net profit of $1,683,920, more than eight times the $207,060 they announced for 2012 last May. That's certainly good for the Eskimos, as it suggests they're on solid financial footing even in the lean times, but it might also provide some ammunition for the CFL Players' Association's position that its members deserve more money. If the league's in a place where one of its teams can make that much despite a terrible season (and keep in mind, massive new TV revenues kick in this year), it's hard for it to plead poverty against players' salary demands.

How did the Eskimos manage to pull this off? Well, it certainly wasn't through a superior on-field product. Granted, the team's 2012 campaign wasn't great either, but it at least saw them go 7-11 and make the playoffs. By contrast, 2013 saw a 4-14 finish, second-worst in the league. Yes, there were some bright spots (most notably the emergence of quarterback Mike Reilly), but it was also a year that featured a whole lot of dismal play, especially on the offensive line. It wasn't that fans kept showing up regardless, either; Edmonton's last three home games had crowds under 30,000, well below their season average of 31,549, and their total gate receipts were $8,073,214, a drop of $213,000 from 2012. Thus, if all other factors had been held equal and only attendance revenues had changed, the team would actually have posted a loss of $5,940 instead of a profit of $1,683,920. Things got worse in other areas thanks to the decreased attendance, too: game-day revenues (food and such) dropped by $325,000, and merchandise sales fell by $102,000. Overall operating revenues were $18.6 million, down by $255,000 from 2012. Fortunately for the Eskimos, there were bright spots elsewhere.

The biggest part of the team's financial success in 2013 came from cost-cutting, and it's staggering how much they were able to reduce their costs. Their operating expenses this past season were just $17.2 million, $1.6 million (or 9.5 per cent) below 2012. The biggest part of that came from administration costs dropping by $798,000, but game-day costs also fell $271,000, and sponsorship and sales costs dropped by $98,000. (Remarkably, despite spending less money to attract sponsorships, the team pulled in an extra $476,000 in sponsorship income, thanks largely to the addition of LED advertising boards on the east sidelines.) Football operations costs also fell by $299,000 overall, but that doesn't mean the team's skimping there; they actually spent $390,000 more if you don't count 2012 expenses on football personnel turnover (primarily ditching GM Eric Tillman), playoff travel, accommodations and game cheques, and players on the injured list. While the football operations costs may not stay down going forward (the team would undoubtedly like to get back to the playoffs, even on the road, and it's tough to predict injury costs or personnel turnover), most of the other cost-cutting should hopefully be sustainable. With the team set to rake in big TV money starting this coming season, their profits could soar even further if they put together a solid on-field product and start drawing more fans again.

This doesn't necessarily mean that absolutely everything is rosy in Edmonton, of course. Keep in mind that the team lost $2.3 million in 2010 despite hosting the Grey Cup and only made $473,471 in 2011 (PDF). There were other factors involved in those years, of course, including massive one-time expenses of almost $9 million for stadium upgrades in 2010, but it's notable that this year's million-plus profit is the exception recently rather than the rule.

Still, you'd imagine CFLPA leadership will be happy to see these numbers. The league has been steadfast in their desire to keep a fixed salary cap rather than one that's a percentage of revenues, and they've said that teams aren't making all that much despite the league's strong overall foundation. The Eskimos' financials suggest that's not necessarily the case; if a 4-14 team can make a profit of $1.6 million despite declining revenues and before new TV money kicks in, it's easy to imagine that most of the CFL's teams are doing pretty well. That's not universally the case, of course; see how concerned the Winnipeg Blue Bombers are about season-ticket numbers declining and how they're going hat-in-hand to the city for transit subsidies. Despite that, these remarkably strong numbers in Edmonton may prove a valuable addition to the CFLPA's negotiating arsenal.