Chicago Bears and the Potential NFL Lockout: The Financial Impact

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Chicago Bears and the Potential NFL Lockout: The Financial Impact
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The spotlight is on the National Football League and its players as we get closer to the March 4 deadline for a new Collective Bargaining Agreement.  The Chicago Bears and 31 other teams will head into uncharted territory of unknowns such as player acquisitions, contract extensions and financial uncertainties to name a few.

The Chicago Bears, the city of Chicago and the state of Illinois would experience a significant financial impact if the 2011 season is locked out. The NFL Players Association has estimated the city of Chicago and the state of Illinois would lose an estimated $160 million in lost revenue and jobs. The city’s hotels, bars and restaurants would all experience the financial impact of the lockout.

The Chicago Bears and the rest of the NFL franchises are preparing for financial setbacks. According to reports from the Sports Business Journal, the NFL is requiring banks who lend money to NFL teams to extend grace periods for loan defaults in the event of a lockout for 2011.

The Chicago Bears, owned by the McCaskey family, is valued at $1.1 billion, which ranks them ninth overall in the NFL.

The Bears have one of most recognizable brands in sports and are in the NFL’s second-largest television market. The McCaskeys and CEO Ted Phillips have come under fire for failing to maximize revenues from Forbes Magazine writer Monte Burke.  The Bears could be one of the most profitable franchises in the league; however they have been dubbed a financial flatliner for not being as dynamic and innovative, such as Jerry Jones of the Cowboys

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Traditionally, the Bears have been good at keeping payroll down for its players; however, as most teams were tightening up for the financial crunch of the lockout, the Bears spent huge money. The Bears signed Julius Peppers to a six-year, $91.5 million contract resulting in hiked ticket prices in 75 percent of the seating at Soldier Field.

Because of the NFL’s lucrative television deal with several broadcasting networks, the Chicago Bears would still receive approximately $135 million for their television market.  That revenue should be enough to cover all operating expenses in the event of a lockout. The Bears and the rest of the league will reduce operating expenses by approximately 50-55 percent (an estimated $4.5 billion) with the elimination of player salaries, benefits, temporary layoffs and salary cuts to various team employees. 

It’s estimated the coaches, front office staff and other team employees could see a 50 percent to 75 percent pay decrease during the time period of the lockout throughout the NFL.  The Bears coaching staff could see a 25 percent pay cut during the lockout as outlined in their contracts. Using the league average of $4.5 billion, the Chicago Bears would cut roughly $155 million from the overhead if the lockout shuts down the 2011 season.

Financially speaking, the Chicago Bears will feel an impact, as will the rest of the teams in the league. That being said, the Bears could feel it more than others because of their inability to maximize revenues and increase income streams. Forbes estimates the team could be worth $800 million more than it's currently worth.  That may force the Chicago Bears to be extremely cautious financially in the event the lockout occurs.

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The Bears will participate in the NFL Draft April 28-30 with the rest of the teams throughout the NFL.  That being said, they will not be able to sign the players drafted until the new Collective Bargaining Agreement is in place. The Bears can sign their own free agents until March. If they fail to do so, they will have to wait and sign them, and any other free agents they decide to pursue after the new CBA is in place as well.  They have 24 players on their way to free agency through 2012.

The 12 players that become free agents in 2011: P Brad Maynard, QB Caleb Hanie, RB Garrett Wolfe, TE Desmond Clark, WR Rashied Davis, C Olin Kreutz, DT Anthony Adams, LB Nick Roach, LB Pisa Tinoisamoa, CB Corey Graham, S Danieal Manning and S Josh Bullocks.

The 12 players that become free agents in 2012: TE Greg Olsen, WR Earl Bennett, RB Matt Forte, TE Kellen Davis, T Kevin Shaffer, G/C Roberto Garza, S Greg Steltz, CB Tim Jennings, CB Zach Bowman, LB Hunter Hillenmeyer, DT Marcus Harrison and DT Israel Idonije.

It’s hard to say who the Bears will offer extensions too from those lists. With the potential lockout date closing in fast, the Bears will have to do some quick thinking to protect the players they deem worthy of roster spots.

The Bears are expecting the league will go back to having a salary cap, after one year without one. Forbes reported the Bears last season had $144 million in player expenses that included benefits and bonuses. The cap is estimated to be around $127 million next season. 

The next couple of weeks will be interesting to say the least. It’s paramount for both sides to get together and get a deal done. The fans are the ones who will suffer the most through all of this. It’s the fans who have the jobs that will be lost. It’s the fans who support the local economy and if the 2011 season doesn’t happen, the impact on a local level will be felt mostly by the fans of the Chicago Bears.

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