In that case it's interesting that the Packers only reported $27 million in revenue stemming from relocation fees as it seems they will earn a total of $55 million out of it.
There could be a variety of reasons that the CFO would have to explain. Since the Raiders have not yet moved, not yet having "taken delivery" on the contract as it were, their fee may not yet be treated as earned in full or in part. Maybe the Rams and Chargers are not deemed fully relocated until they occupy their new stadium so a part of their contract is not deemed executed. Or perhaps this windfall is treated on a cash received basis, not accrual, since the relocation contracts are with the NFL, Inc., not the individual teams. Or perhaps there are contingencies in the contract that make the final amounts somewhat variable and are thereby deferred. It's hard to say. The NFL, Inc. surely has a cadre of CPAs and tax attorneys interpreting accounting rules and tax law that handle issues like the timing of revenue recongition which is anything but straight forward, passing their interpretations down to the teams.
We do know a couple of things.
First, the $55 million is a one time (or two times, as it were) enhancement to revenue and earnings. In trying to project future operating earnings power, it's best to look at the past trend without that money. At the same time expenses went up $44 million some of which Murphy seemed to suggest related to temporary issues like coaching and depreciation expenses. In any case, if you back out the $27 mil from the prior year, earnings went up $7 mil year over year
What's odd is if you back the $27 mil out of revenue, then revenue actually went down. while revenue went up about $40 mil excluding the $27 million relocation windfall. In any event, looking forward, it's best to think of the $55 mil as a cash add to the balance sheet rather than part of the earnings trend.
Second, "Murphy said player expenses tend to be cyclical, rising and falling with new contracts." Now, we know cap is not cyclical, it's been up, up and then up for decades. He's talking about cash disbursements being cyclical which would be chiefly signing bonuses. That he would comment on it tells you the variability of of those outlays from a cash management standpoint is viewed as material. I'm sure he's thinking about the possibility of the mother of all signing bonues and it's cash outlay hitting "soon".
Third, while I'm still not finding this most recent annual report, the prior year's balance sheet showed $397 million in cash and investments. It's easy to say, for example, "Rewrite Rodgers last 2 years, give him a $100 mil signing bonus and $1 million salary in 2018, for a net additional cash outlay of $80 mil this year. However, we don't know what portion of those investments might be illiquid, have a large taxable capital gain attached to them, are earmarked for near term spending outside the football operation such as Titletown Phase II, or how much management deems prudent to hold sequestered as an emergency reserve such as for an event causing major damage to the stadium.
Fourth, perhaps none of that matters, the cash expense for Rodgers has been planned for, but like me they want to wait to see if the golden arm can still make all the throws in game action.
Or fifth, they want to see if they can win the Super Bowl this year after which they'll have established enough good will among fans to clear cap with the older star free agents let go as they move into rebuilding on the fly and Rodgers gets his money. If anybody thinks that's stupid, consider the last two share sales were done immediately after Super Bowl wins on the back of that good will.
