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This is a must read for anyone with an interest in the sports business.
Kansas City Chiefs’ tax returns provide rare look inside the business of pro football
Kansas City Chiefs’ tax returns provide rare look inside the business of pro football
The Chiefs and the team’s owners almost certainly make much more money today, thanks to television revenues that have been soaring ever since. But it’s hard to know for sure, because the finances of NFL teams are largely a mystery. Only the Green Bay Packers disclose their numbers, and then only because they are publicly owned.
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HOW THE CHIEFS MAKE MONEY
Sports economics professor Rodney Fort at the University of Michigan also took a look at the tax forms and saw nothing unusual.
“They take full advantage of tax reductions on intangibles like player contracts and acquisitions,” he said, which he noted is completely within the IRS rules.
But for anyone interested in how the NFL operates, they provide insight. At the time the team filed those tax returns, the Chiefs were halfway between the era when Steadman called the game’s business performance lackluster and now, when all evidence points to the NFL being a financial and cultural juggernaut.
The documents show the Chiefs grossed $302 million from all revenues streams in 2010, compared to $231 million in 2008. Nearly a third of 2010’s total came from two league entities: NFL Ventures and NFL Enterprises.
NFL Ventures is the league’s marketing arm, which makes money from, among other things, the sale of apparel by brands like Nike. Virtually all of NFL Ventures’ revenue is split equally among the league’s franchises.
NFL Enterprises oversee the league’s controlled media, such as the NFL Network and NFL Sunday Ticket — the league’s subscriber service to view out-of-market games. That money is also shared equally across the league.
Add in the team’s share of the television contract — $99.9 million — along with those revenues from NFL Ventures and NFL Enterprises — $99.8 million combined — and that’s nearly two-thirds of the gross receipts before a single ticket, parking pass or cup of beer was sold.
More than enough to cover its biggest expense each and every year, which in 2010 was the $148 million paid in salaries and wages for players, coaches and other personnel.
