Win or Lose, the Bears Make a Profit
This article originally appeared in the Chicago Tribune on Nov. 10, 2014.
By Irving Rein, Ben Shields and Adam Grossman
Chris Conte, a Nashville news anchor, knows just how angry many Chicago Bears fans are about the team's performance this season. Conte shares the same name as the Bears' free safety, and the anchor's Twitter feed has inadvertently become a popular target for fan outrage.
In response to the deluge of misdirected criticism, Conte created the Twitter hashtag \"#wrongconte.\"
Perhaps some Bears fans found some levity in the mix-up. They sure could use a reason to laugh. Since the team played in the 2007 Super Bowl, the Bears have only made the playoffs once. If the Bears have any real hope of making the playoffs this year, they need to defeat their archrival, the Green Bay Packers, at Lambeau Field on Sunday. Even with a win, the team would be tied for last place in the NFC North division and face an uphill climb to the playoffs.
If the Bears continue to struggle, what does that mean for the team's success as a business? In the multibillion-dollar sports industry, where money matters and competition is fierce, it is an increasingly important question to ask. The Bears, like other National Football League teams, have the right answer. The team will likely make money regardless of how it performs.
For starters, tickets are virtually sold out for all home games this season. And even if the Bears do not make the playoffs, 2015 season ticket prices will likely increase. In fact, the Bears have increased season tickets every year since 2003.
How can the Bears keep charging more for tickets when the team fails to even make the playoffs? One only has to look at the Chicago White Sox or Chicago Cubs recent attendance problems to see that teams that struggle on the field have trouble getting fans to come to games.
The Bears play in the second largest market in the NFL and in the league's smallest stadium. The law of supply and demand dictates that when a relatively small number of seats is available for the most popular sport and team in town, then ticket prices will increase.
Or as Bears President and CEO Ted Phillips said, \"Given that we have the smallest capacity building in the NFL, it's pretty much a given that every year there's going to be some type of ticket price increase.\"
And it is not just ticket prices that the Bears can rely on to ensure that the team will keep making a profit. The NFL has the largest national television contract deal in all of American sports. Each NFL team will make more than $200 million a year from TV revenues. To put that in perspective, the league salary cap for 2014 is $133 million. While the salary cap is not the only expense of NFL teams, it is easy to see why the teams are so valuable. Without selling a ticket, a beer or a hot dog, the team can easily cover the entire salary obligation for all of its players.
There is a reason why the Bears are in such a strong position. Founder George Halas was one of the greatest sports strategists of all time. Halas had the foresight to see the value of televising games and how sharing revenues among all NFL teams made every team valuable. While it is obvious today as sports leagues sign broadcast deals paying them billions of dollars, most owners were hesitant to take this position in the 1950s and '60s. Without Papa Bear's blessing, neither the Bears nor the rest of the NFL family would likely be in the positions they are in today.
The Bears could actually be making even more money. The organization made a decision to allow the city of Chicago to maintain ownership of Soldier Field in exchange for financing most of the stadium's renovations in 2003. Not only does the team pay $5.7 million a year in rent to the city, it also does not earn anything from events that occur at Soldier Field throughout the year. It is also why the team has not been able to sell naming rights for the venue. While the Redskins and the Cowboys make tens of millions of dollars each year from branding their venues, FedEx Field and AT&T Stadium respectively, the Bears have no naming rights partner because the city does not want to lose the military and historical significance of the Soldier Field name.
We hope the Bears win on Sunday. However, even though it is unlikely that a sports franchise will win all the time, the NFL has constructed a business model that profits regardless of a team's record.
The Bears' greater victory could be that the team is profitable whether it wins or loses.
- Irving Rein is a professor of communication studies at Northwestern University. Ben Shields is a lecturer in managerial communication at the Massachusetts Institute of Technology. Adam Grossman is founder and president at Block Six Analytics. They are the co-authors of “The Sports Strategist: Developing Leaders For A High Performance Industry.”