Inside the CFL Business Model

February 3, 2018

 

(LOS ANGELES) - On Sept. 2, 2003, the Toronto Argonauts and the Hamilton Tiger-Cats played each other in a matchup that was unofficially called the "Bankruptcy Bowl."

 

Both teams had been taken over by the Canadian Football League after their owners failed to pay bills. The news didn't come as a surprise to fans of the teams or the league, as there had always been a fine line between making a small profit and losing money.

 

But things have changed thanks to a reported $40 million (Canadian dollars) per year TV deal with TSN that started in 2014 and runs through 2021. Split among the league's nine teams, it's a C$4.4 million per year infusion in a sport that has a C$5.1 million team salary cap for 56 players.

 

A strong businessman, Bob Young, bought the Tiger-Cats. He was motivated in part by the death of his brother, a huge fan of the team.

 

"When I went to buy the team, there were throngs of people and reporters who wanted to talk to me," Young said. "I've run $100 million businesses and I would beg to have this many people waiting for me."

 

It's a far cry from NFL teams, which draw at least two times the in-stadium audience, pull in more than 13 times the sponsorship money (about $40 million per team), have 38 times the cap space ($155 million) and take in more than 70 times the television revenue ($250 million).

 

"We don't have $1 billion teams, and that means we're on our own a bit more; we have to be more entrepreneurial and innovative," Young said. "We really are nine different businesses."

 

Young said the difference between the position the league was in a decade ago and now is night and day. His staff has gone from 10 to 50 and revenues are up five times. Two-thirds of the league's teams are playing in new stadiums, including the Tiger-Cats, whose venue is sponsored by Tim Hortons, the massive Canadian coffee and donut brand.

 

Financial restraint through the collective bargaining agreement is what guarantees the league's future.

 

Aside from the cap, the league's minimum salary is C$52,000 and, unlike the NFL, which has different minimums for years accrued in the league, it does not exclude veterans. And unlike the NFL, in which teams charter flights, CFL players stay in a city after a game and board planes with common folk.

 

Three teams that are publicly owned give us a rough idea of the financials. For their last reported year in revenue, the Winnipeg, Edmonton and Saskatchewan teams earned profits of between $1.56 million and $4.4 million.

 

Of the 24 starters on the field (the league plays 12 a side), seven must be Canadians, which means teams pay more for good Canadian players.

 

Toronto Argonauts offensive lineman Josh Bourke, for example, makes C$230,000 as a Canadian, whereas a star running back from the U.S. could be paid as little as C$65,000.

 

That's Canadian dollars, which equals $51,000 if a player brings that money back to the States.

 

The devaluing of the loonie, a coin worth one Canadian dollar, relative to the American dollar hasn't hurt the league because all teams are located in Canada, and American players haven't left the league because of it.

 

"Those guys still want to make money playing football," said CFL super-agent Darren Gill, who represents roughly 13 percent of the league's talent. "What has changed is that because of the conversion, guys seem more willing to live in Canada rather than go back to the States."

 

Second jobs are also fairly common for the players. Spending the offseason in the oil business can make players an extra C$10,000 per month. Others get jumps on their next career, knowing that their CFL salary will never make them independently wealthy.

 

Getting a call from the NFL is always a dream, but elite CFL players often don't get the chance.

 

Eyes will be on Eric Rogers, the league's leading wide receiver last year who had 13 NFL offers and eventually signed with the San Francisco 49ers. The most recent poster child for the Canadian call-up has been Cameron Wake, who played on the BC Lions for a couple of years before being signed by the Miami Dolphins and emerging as a Pro Bowl defensive end.

 

American interest in the game, Gill believes, will continue to be driven by fans who want to see their favorite college stars play. With the CFL on ESPN for another year -- the CFL's regular season began Thursday -- the league also is more accessible than it has been in the past.

 

(http://www.espn.com/nfl/story/_/id/16454871/cfl-flourishing-business-side)

 

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