One of the least relevant NFL teams dominated the NFL news cycle on Tuesday, a whirlwind day of activity for the Jacksonville Jaguars. Head coach Jack Del Rio was terminated -- his contract, not him -- general manager Gene Smith was given a three-year contract extension, and most notably, the team was sold to Illinois business mogul Shahid Khan.
Garrard Cost Cut
It now seems clearer as to why the Jaguars released their starting quarterback only days before the season opener.
David Garrard, as a vested veteran, was about to receive his entire $8 million salary had he been on the roster opening day. He was even introduced at a team luncheon a couple hours before his release. However, in what was described as a "football decision," Garrard and his $8 million salary were shed later that day.
The Garrard release now appears a business decision by the owner to remove what would have been a sunk cost in preparation for a sale. Speaking of that owner...
Wayne's World
With Khan entering -- his approval should go smoothly as he has been comprehensively vetted and parsed by the NFL -- Wayne Weaver, the only owner the Jaguars have known, will exit.
Weaver has been a loyal and conscientious owner during his time in the league. My sense, though, is that he tired of being a voice in the wilderness taking on some of the more powerful and larger market owners. Although he was not scoffed at in the way Mike Brown of the Bengals was, Weaver had some clashes.
I remember Cowboys' owner Jerry Jones and Weaver having vocal disagreements on revenue generation. Jones clearly felt that certain teams -- such as the Bengals, Bills, and Jaguars -- were not sufficiently aggressive in pursuing local revenues and that their complacence should not be rewarded with equal shares of national revenues. Jones and Weaver clearly sparred on this issue.
Capped Percentages
Weaver lobbied for spending restrictions using a formula tied to a capped percentage of overall revenues.
For example, whereas the Cowboys may have $300 million in gross revenues, the Jaguars may only have $200 million. However, in an effort to compete, both teams may be spending around $120 million on players. For the Cowboys, that $120 million represents 40% of their total revenues. For the Jaguars, that same $120 million represents 60% of their total revenues. Weaver tried to correct this inequity through either (1) an increased revenue sharing system, and/or (2) a capped percentage of gross revenues that teams could use for player costs. Jones' -- and others' -- response was always the same: just create more revenue. Leading to...
Stadium Economics
The economics of the NFL have changed with the advent of new stadia -- and thus new revenue streams -- in the past twenty years. When I arrived in Green Bay in 1999 our standing in the NFL revenue rankings was dropping every year. We needed revenue from Lambeau Field for more than ten days a year.
Following the Lambeau Field renovation in 2003, the Packers soared up the revenue rankings due to $20-30 million a year in additional stadium revenue from our expanded Pro Shop, restaurants, meeting space, club and luxury seating, etc.
The Jaguars need that revenue boost to keep them competitive.
Los Angeles: Pros and Kahns
Jacksonville -- the third smallest market in the NFL -- is not the most desirable league locale. Every home game presents a challenge to avoid local blackouts, as the team ranks 26th leaguewide in ticket sales.
Khan has reportedly paid $760 million to purchase the Jaguars. There have been strong affirmations by Weaver and Khan that the franchise is committed to Jacksonville and there are severe financial penalties were they to break their lease in Jacksonville. However, my sense is we will soon hear the siren song of Los Angeles in regard to Jacksonville. Whether Los Angeles and its unique and lucrative revenue opportunities beckon -- Minnesota, San Diego and perhaps Oakland are also potential Farmers Field tenants -- only time will tell.