Lions' big debt load weighs heavier in work stoppage
Uncertainty about the National Football League's labor situation has exposed a lingering financial weakness of the Detroit Lions: an estimated $350 million in debt stemming from construction of Ford Field and other borrowing.
While the league's executive staff and 32 owners negotiate via federal mediator, a new multiyear collective bargaining agreement with the NFL Players Association -- talks were extended Friday through midnight March 11 -- the Lions are among the teams contending with a huge debt load that's a drag on profitability and team value.
The franchise's fiscal situation, however, is not thought to pose an immediate problem, even with a work stoppage that would cancel games and halt revenue.
"That's a big (debt) number, but the Ford family does have assets outside of the football team," said Kurt Badenhausen, a senior editor at Forbes, which annually estimates pro sports financial snapshots. "The Lions aren't going to go under. I can't imagine they're going to miss any payments on the obligations for the stadium debt."
The debt load remains a long-term issue for the Lions, however. Revenue -- already limited because of fan apathy toward the struggling team -- has to be diverted to pay the stadium construction debt and other obligations. And any future borrowing the team might need to do might not be at the most favorable rates.
Some of the Lions' $350 million debt is from borrowing from the NFL's $1 billion credit facility, which arranges low-interest loans for teams. It's unknown how much the Lions borrowed from the facility.
"(The Lions) borrowed all this money, but the value of the franchise didn't go up," Badenhausen said. "The team had an awful decade on the field, and the economy in Detroit affected revenue for the team."
Detroit hasn't had a winning season since 1999, and in 2008 it became the first NFL team to lose its entire 16-game regular season schedule.
Forbes estimates that the franchise is worth $817 million and its current debt-to-value ratio of 43 percent is third-highest behind the New York Jets (66 percent) and New York Giants (55 percent), which just financed a new joint stadium.
Detroit's $210 million in revenue was lowest in the league (the Dallas Cowboys were first with $420 million) and the team is estimated to have minus $2.9 million in operating income.
The Miami Dolphins -- owned by University of Michigan alumnus Stephen Ross -- was the only other team believed to have lost money, at $7.7 million, according to Forbes. The estimates are based on the 2009 season.
Ford Field opened in 2002 at a cost of $430 million, about 36 percent of which came from direct public financing, according to a report from the National Sports Law Institute at Marquette University.
Construction was financed by $219 million in Wayne County revenue bonds, which continue to be paid off by a 2 percent rental car tax and 1 percent hotel room tax approved by voters for that purpose in November 1996, according to the report. The levies also pay off public debt for neighboring Comerica Park and other construction on the site, and some of the $219 million debt is for the wider project.
Other direct and peripheral Ford Field construction costs were financed by the city, county, state, the quasi-public Downtown Development Authority, the Lions and other corporate contributions.
The Ford Motor Co. is paying $40 million over 20 years for the stadium's naming rights.
The Detroit-Wayne County Stadium Authority, a five-member public board, owns Ford Field and Comerica Park and leases them to the county, which then subleases them to the Lions and Detroit Tigers. The Lions and Tigers have 35-year leases.
The public debt on Ford Field is unrelated to the NFL labor issue, and revenue obligated to pay off the bonds is still coming in from hotel and car rental taxes.
The team won't discuss its finances or the collective bargaining talks.
"We are not commenting on anything related to the labor situation or the CBA," said Bill Keenist, senior vice president of communications for the Lions, via e-mail.
The previous labor deal, struck in 2006, expired last week and there's been wide speculation that the NFL would experience its first work stoppage since 1987.
A new labor contract requires the approval of 24 of the 32 team owners.
William Clay Ford Jr. bought the Lions for $5 million in 1964.
