The NFL pays its players billions of dollars a year and fans pack its stadiums every week, but even the deep-pocketed league is shedding jobs.
Commissioner Roger Goodell said Tuesday that the league is cutting more than 10 per cent of its staff in response to the downturn in the U.S. economy that could put a dent in ticket sales for next season.
Goodell announced the cuts in a memo to league employees. The NFL is eliminating about 150 of its staff of 1,100 in New York, NFL Films in New Jersey and television and internet production facilities in Los Angeles.
"These are difficult and painful steps," he wrote in the memo. "But they are necessary in the current economic environment. I would like to be able to report that we are immune to the troubles around us, but we are not. Properly managed, I am confident the NFL will emerge stronger, more efficient and poised to pursue long-term growth opportunities."
The NFL has long been regarded as one of the wealthiest pro sports leagues anywhere. In September, Forbes called the NFL "the richest game" and the "the strongest sport in the world." The league has annual revenues of approximately $6.5 billion US, of which an estimated $4.5 billion goes to players.
But now it joins the NBA, NASCAR teams and the company that runs Major League Baseball's internet division in announcing layoffs. The NHL hasn't laid off workers, though it is in a hiring freeze, a spokesman said Tuesday.
Cuts to take place over 60 days
So far, NFL fans haven't noticed the cuts, which also include a reduction in travel by some league staff, and such secondary costs as printing and minor events. The NFL announced last month that it was reducing the cost of playoff tickets by about 10 per cent from last season.
"We're looking at everything with an eye to how we can be more efficient and reduce costs," league spokesman Greg Aiello said.
The cuts will take place over the next 60 days, running past the Super Bowl, which will be played Feb. 1 in Tampa. Employees who volunteer to leave will be offered what was termed "a voluntary separation program."
The layoffs are separate from the cuts in front-office and other personnel being made by the 32 individual teams.
Aiello said the NFL still plans to throw parties at the Super Bowl, elaborate events for which the game has long been known. However, local organizers say the companies that regularly host their own parties are watching expenses, scaling back plans and inviting fewer guests.
Goodell said last month in an interview with The Associated Press that the league and its teams could feel the economic slump in sponsorship and marketing.
Ticket sales for this season have been strong and stadiums have been largely sold out. But NFL officials, including Goodell, believe that is because season tickets for this year's games were sold in the spring and summer. The commissioner feared the league and its teams would take a bigger hit when season tickets go on sale next spring for the 2009 season.
"There's no secret on sponsorship, advertising, licensing — those numbers are going to be impacted by the current climate. We're aware of that," Goodell said in the interview.
2009 a bigger barometer
"We're still, unfortunately, in the beginning stages of this. And most of our tickets are sold in the spring. And so '09 is going to be more of a barometer of how impactful the economic environment's going to be on the NFL."
Marc Ganis, president of Sportscorp Ltd., a Chicago-based sports consulting firm that works extensively with the NFL, says pro football is unlikely to feel the downturn as badly as baseball because it has fewer tickets to sell and still has a guaranteed revenue stream in its national television contracts, which dwarf those of other sports.
But he noted that the league also has fixed costs — almost 60 per cent of its total revenue will be paid to players this year, with an increase next season. Labour costs are one reason the NFL opted out of the labour contract, which will now expire after the 2010 season instead of 2012, as when first negotiated.
"There is uncertainty on ticket sales, revenue pressures on sponsors and a problem with the auto industry, which is their biggest advertiser," Ganis said. "Yet you still have your biggest fixed cost in the players. So there is a real problem there."
In September, the NBA became the first major American sports league to announce layoffs due to the economic downturn when it said it was eliminating about 80 jobs in the United States. Major League Baseball Advanced Media, the company that runs the sport's highly successful internet division, said Monday that it has laid off about 4.5 per cent of its workers. And nearly 70 people have been let go from NASCAR racing teams recently.
NHL commissioner Gary Bettman said team owners and executives met with an economist from Scotiabank and banker from JP Morgan Chase at the league's board of governors meeting in Palm Beach, Fla., on Tuesday.
After the meeting, Richard Peddie, chief executive of Maple Leaf Sports and Entertainment, wryly said the pair of economic advisers were nicknamed "Dr. Doom and Gloom."
"We are very mindful of what's going on and very cautious that we're focused on doing the right things to the extent necessary and people are focusing on costs," Bettman said.
"We haven't laid off anybody at the league office, and I'm not — at least for the immediate future — planning on even thinking about that."