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Sunday, August 6, 1995 - Page updated at 12:00 AM

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Kingdome Isn't The Culprit For Seahawks' Money Trouble -- Numbers Indicate Performance On Field, Huge Payroll Are Factors

The Seattle Seahawks say they lost money last year, and they blame an inferior stadium that they say could lead the team into financial ruin without up to $150 million in improvements.

They are right: The club appears to have lost money in 1994.

And wrong: The stadium was not to blame.

An analysis by The Seattle Times shows the team did not make a profit last year. But the losses were driven by empty seats caused by the club's third straight last-place finish, and by one of the highest player payrolls in the National Football League.

While an improved Kingdome would no doubt generate more revenue, the building in its current condition does not prevent the team's owners from realizing an annual operating profit and a healthy return on their investment, according to the Times' analysis.

The Seahawks brought in about $62.6 million during the 1994 season and spent just over $63 million on team operations, according to Times estimates. The analysis was done without access to Seahawks financial records, but with figures provided by King County, the NFL, the NFL Players Association and other organizations.

The Seahawks claim losses of between $5 million and $6 million last year, but have not said whether that includes payments on the original loan to buy the team or how much those payments might be. Similar studies of professional franchises have not included debt service.

Seahawk President David Behring declined a request by The Times to share the team's financial statements with the public, as the Seattle Mariners have.

ATTENDANCE IS OFF

Whatever the losses, they come with caveats:

-- Poor team performance cost the club an estimated $5 million in additional revenues.

When the Behrings bought the team in 1988, sellouts were the rule and the waiting list for season tickets was long. Last season, when the Seahawks had a 6-10 record and failed to make the playoffs for the sixth straight season, average attendance for five Kingdome dates was 46,218 (plus an average of 13,532 paid no-shows), more than 20,000 below the 66,400 capacity. Rentals of the 47 year-round luxury boxes fell to 13, from 31 in 1990.

With a team the quality of a Super Bowl contender - one that could fill not only the seats but all luxury boxes, plus earn significant playoff monies - the Behrings could realize close to $10 million in revenues above their current level.

-- The Seahawks spent almost $41 million on player salaries and signing bonuses last year, well over the league-mandated salary cap of $34.6 million. Only Washington and Arizona spent more money in actual dollars, according to the NFL Players Association.

Some of those dollars spent last year will count against the Seahawks' future caps. In essence, the unusually high amount of money spent on salaries and bonuses last year will restrict the amount of money the club can spend in ensuing years.

-- The team owners, who ordinarily can expect annual profits from the Seahawks, are bound to more than make up for any losses when they sell the team.

Although the current labor contract gives players more than they received before, NFL franchise values are skyrocketing. The most recent sale was in January, when $175 million was paid for the Tampa Bay Buccaneers, who entered the league the same year as the Seahawks, play in an older stadium and sell only 23,000 season tickets.

The Behrings bought the team in 1988 for $99 million.

"The fact that the NFL has labor peace for the next five years makes NFL franchises more valuable, because they're not going through what baseball's currently dealing with," said Doug Allen, an NFL Players Association official. "They may have less in operating profits, but they're making it up in franchise values."

FLEETING VIEW OF FINANCE SHEET

David Behring wants King County to add a host of amenities to the Kingdome that would increase revenues: 10,700 "club" seats for which the team can charge higher ticket prices, more toilets, wider concourses so that fans can get to concession stands more quickly, more concession space, a 90,000-foot exhibition hall, and an increase in football seating to 67,117. He has threatened to move the team if he doesn't get the improvements.

County officials want to use some of the money from a $410 million ballot issue on Sept. 19 to address Kingdome improvements. The money would also pay for a new stadium for the Mariners and for the Kingdome roof repairs.

Behring has tried to convey that the Seahawks, like the Mariners, are in financial trouble. At a meeting last month, team officials showed King County Executive Gary Locke an audited statement of the club's 1994 losses.

But Locke had less than a minute to view the statement, was not given copies and had no way of checking its validity, said Kevin Raymond, Locke's chief of staff. The county needs to get a thorough examination of the team's finances before accepting the losses as real, he said.

"I don't have any way of knowing what those numbers are," Raymond said. "I have no reason to doubt what the Seahawks are saying, but we've had no chance to scrutinize them, either. There are lots of ways (to calculate) numbers."

The simplest way is to look at operating revenues and expenses - before interest payments on the loan to buy the team, tax depreciation and non-cash items that can detract from or improve the bottom line, depending on the accounting method.

THE MONEY COMING IN

Operating revenues come from several main sources:

-- Media contracts: Each NFL team received $35.5 million last year from league contracts to televise all regular-season games. (The figure will be closer to $40 million this season, the second year of the four-year deal). Exhibition games on local TV bring a small, additional amount.

Teams negotiate their own radio contracts. KIRO paid $2.5 million for radio rights to the Seahawks last year.

-- Gate receipts: NFL teams keep 60 percent of their home gate receipts, give 40 percent to visiting teams during the regular season, and split proceeds on exhibition games. That would have left the Seahawks with $9.7 million for home games and $6 million for road games, based on average ticket prices and the number of tickets sold.

The Seahawks averaged 46,218 spectators at each of their five games at the Kingdome last year, a franchise low. Thousands more bought tickets but didn't show up.

The club drew an average of 55,635 for two exhibitions and three regular-season games at Husky Stadium, where the team played while the Kingdome was undergoing roof repairs.

-- Stadium revenues: With half as many games played at the Kingdome as usual, the Seahawks had a poor year in this area. They got only $800,000 out of luxury seating and $302,000 out of concessions, based on their cut of sales in those areas, said Steve Birge, Kingdome accountant.

The Seahawks get some money from merchandise sales at the stadium but nothing from parking or stadium advertising, as part of their deal with King County. In these areas, the Seahawks are "one of the have-not teams," said Paul Much, an Chicago investment banker who has studied NFL economics.

-- NFL Properties: The merchandising and licensing arm of the NFL distributed $2.6 million to each team last year, regardless of the popularity of any particular team.

The revenue from NFL Properties is one of the fastest-growing areas in the league's economic picture.

The Seahawks were also due money last season from two unusual sources: $1.8 million as part of their cut from expansion fees paid by new franchises in Jacksonville and Charlotte, and $2.346 million from King County as compensation for having to move the five games to Husky Stadium.

The King County payment was designed to make up for any lost revenues from the switch.

THE MONEY GOING OUT

The Seahawks' expenses were made up of:

-- Player costs: Besides the nearly $41 million spent on salaries, $4.4 million more went to pensions, deferred payments, insurance and workers' compensation.

-- Game costs: The Seahawks' rent at the Kingdome is equal to 7 percent of ticket sales, or $574,000 last season, Birge said. Beyond that are security, utilities and other game-day expenses.

The Seahawks also reportedly paid a flat fee of $200,000 a game for each of the games played at Husky Stadium.

-- General and administrative costs: The Green Bay Packers, the only publicly owned NFL team, spent $16 million last season in this category, according to the team's financial statements. The costs included are for coaches, scouts and other front-office employees, travel, medical, meals, training camp, training facility - virtually everything not in the above categories.

Since most teams have similar personnel and equipment, their G-and-A expenses are "relatively similar," said John Underwood, corporate treasurer for the Packers.

Financial World magazine in May placed Seahawk operating losses at $6 million, highest in the NFL. But the magazine underestimated the team's revenues, and appears to have overlooked compensation from King County for the roof-repair hassle.

The bottom line for Behring is, make the improvements or we may move.

But the bottom line could easily be, you have to win a little to make a lot.

Copyright (c) 1995 Seattle Times Company, All Rights Reserved.

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