Ownership in professional football

Although this post is about football, it's really not about football. Theoretically, I am writing this in honor of the Green Bay Packers, as a tribute to the team that lost to the New York Giants last night in the NFC title game, but really I just find this really interesting and wanted to share it.

It is an excerpt from a 1998 book called Going Local by Michael Shuman. It told me something I didn't know about the Green Bay Packers, something that as Shuman notes has broader implications. Maybe this is common knowledge and I'm just too young or oblivious to have known it, but I suspect that it's not terribly well known. It's rather long, but I hope it will prove interesting.

After discussing the infamous move by Art Modell to uproot the historic Browns franchise from Cleveland and move it to Baltimore for profit motives, Shuman writes that 

A few hundred miles across the Great Lakes was a community with a football franchise that had no such worries. To much of the world Green Bay, Wisconsin--a smallish town with 97,000 people--is known for on thing: the Packers. In 1922, three years into their existence, the Packers were teetering on bankruptcy. The team's original owners had invested very little at the outset, and gate receipts were lower than expected. But then four fans decided to help. They reorganized the franchise into a non-profic corporation whose 15 directors would be elected by local shareholders. With the help of the city and the school board, the nonprofit built the team's first stadium. During the Depression the team stumbled again, and went into receivership, but now the nonprofit leadership came up with a novel idea. Pointing out how vital the team was for local businesses and tourism, the Packers' Executive Committee convinced the Green Bay Association of Commerce to organize its members into neighborhood teams and sell $25 shares, door-to-door. As of this writing, 1,915 shareholders owned 4,634 shares of the team, and 60 percent lived in Green Bay. Shareholders can trade shares within their families or sell them back to the corporation for $25. But nobody can own more than 20 shares.

Because the Green Bay Packers are a nonprofit corporation, shareholders receive neither annual dividends nor capital gains upon resale, though they do exercise control over the franchise by voting for the board of directors (currently numbering 45 members). The team's general counsel, Lance Lopes, proudly says that the corporation's mission is "to field a competitve team and maintain the team in Green Bay in perpetuity. You might have noticed, I never mentioned the word 'profit.'" When the team runs a financial surplus, as it has in recent years, net revenues are reinvested either in the stadium or in the players, or in both. If the team were ever to run a loss (it hasn't, however, failed to sell out a local game since 1958), the corporation could sell additional stock to members of the community to rejuvenate finances. The bylaws stipulate that, in the event of dissolution, the proceeds are to be donated to the local chapter of the American Legion. Green Bay will never be run by an Art Modell, and Baltimore will never have a team called the Packers.

Sports teams and stadiums may be overrated tools for community economic development, but the Packers have proven to be a remarkable exception. A recent study by the conservative Wisconsin Policy Research Institute calculates:

The direct economic benefits to Green Bay from the Packers are about $60 million a year from an asset that would cost roughly $200 million to replicate, if it were even possible to do so. The indirect economic effects of the Packers as a part of the area's magnet are almost impossible to measure, but locals believe the team is important for their long-term well-being. Local charities will earn about $400,000 this year operating the Lambeau Field concession stands.

The team's victory in the 1997 Super Bowl undoubtedly will boost these numbers.

Liberals and conservatives alike are impressed by the structure of the Green Bay Packers. "Essentially public property," argue Harvey Kaye and Isaac Kramnick, two liberal social scientists, "the Packers have been secured for the generations and to the city. If the corporate types who dominate the NFL had their way, the Packers would have long ago been transferred to a bigger city with a larger population and media market. In the fashionable language of the day, the Pack would have been 'privatized.'" Paul Gigot, a right-leaning columnist on the op-ed page of the Wall Street Journal, says "If any team can be called conservative, it is the one that embodies tradition and communal loyalties the way [the Packers] does.
...
The Green Bay Packers Corporation, it needs to be said, is not a model that other communities can copy. The National Football League dominates the professional market and imposes rules on its 30 franchises. Revenues from the sales of television rights, tickets, T-shirts, and nicknacks are shared among all NFL teams, and "caps" (limits) are placed on the sum of the salaries a team can pay. Without these rules, the Packers would have lower revenues and be less able to compete for top players. The NFL also made it impossible for other teams to follow Green Bay's example: Every franchise, with an exception carved for the Packers, now must be at least 51 percent owned by a single individual.

Imagine, for just a moment, what a world it would be if all sports teams were non-profit corporations owned by the fans and really, truly benefiting the community instead of demanding taxes to build stadiums and offering only dubious benefits to the city, even including bread and circuses.

tags: football  green bay packers  going local  michael shuman  community ownership  

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