The NFL, The NFLPA, Their CBA, and Their Fans

>> 8.26.2010

Since before I can remember, I’ve lived and died with the boys in Honolulu Blue.  I’ve adorned myself with their colors, idolized the players, and directed electronic facsimiles of them to electronic facsimiles of Super Bowl championships.  As a kid, I’d wake up at dawn on Sunday mornings to catch all of the gameday coverage, and I’d fall asleep in my bean bag chair trying to stay up until the end of Monday Night Football.  I’d vigorously champion Barry Sanders case as the greatest running back in football, starting the moment he was drafted and never stopping.  I thrilled with the Lions’ rare successes, and I kept a stiff upper lip through the many failures.

In many ways, when I watch the Lions, I watch as that four-to-fourteen year old self: with unabashed, unreserved, unbridled adoration.  Without great understanding of the game, without any care for the business side of things, wanting nothing but a Lions victory.  It’s that youthful, innocent passion that drives me to keep cheering, keep connecting with other fans, keep their spirits up, and yes—keep the blue fire burning.

There’s another part of me that watches the Lions, though, another set of eyes I look through: the eyes of a man approaching thirty.  The eyes of a man with a wife, three children, a mortgage, and a minivan.  The eyes of a man whose flaming passion for social justice became an ashen pile of expiring college credits.  Yes, I see the Lions, and professional football, through the eyes of a man who votes, drinks beer, has bosses, and pays taxes.  I remember a time before the NFL salary cap, before NFL free agency.  I saw how talent, motivation, and organization in the front office became just as crucial to on-field success as talent, motivation, and organization on the sideline.

I recall the 1991 playoffs, when the Lions earned their lone postseason win of the last fifty years.  They beat the Dallas Cowboys 38-6, and in the aftermath one analyst (can’t remember who) said, “these two teams had the young talent to rule the NFC for the next decade.”  That was true, but there was a significant difference: the Cowboys had a supremely motivated owner, and an ahead-of-his-time coach/franchise architect in charge.  They’d spend the rest of the nineties stockpiling both in-house and free agent talent, circumventing the cap whenever necessary, and beating everyone else’s brains in.

Meanwhile, the Lions had an owner, as Brian VanOchten once said, more concerned with hosting cocktail parties than winning—and a COO/capologist whose inability to keep top veterans around wasted that nucleus of talent.  The annual exodus of veteran starters kept the Lions in stuck in almost-there mode, and ultimately inspired Barry Sanders to retire in frustration.  So yes, mortgage-and-minivan me understands well that this is a business, and money talks just as loudly on the field as off.

I watch football with both sets of eyes—as I do the rapidly developing labor situation.  The NFL and NFLPA are deadlocked in a media arms race, aiming to conquer public heart- and mind-share.  Both are trying to rally us, the football-addicted public, to their side.  We’re  hearing stories of crippled and destitute retirees, and cautionary tales of players counting their millions from inside prison walls.  We’re being buried under layer upon layer of spin intended to “frame the debate” in a way that reminds me, sickeningly, of election-cycle TV ads and their virulent soundbite lies.

It’s all wasted effort.  The public, as a whole, will never accept either side as the villain, or either side as the hero.  It’s painfully obvious to even the most casual fan that player salaries—and, especially, rookie salaries—are escalating at enormous rates.  It’s further obvious that with skyrocketing franchise values, jawdropping TV contracts, and unprecedented attendance figures, both sides have raked in unprecedented stacks of chips over the past decade . . . but, Detroit Lions Pajamas Ty doesn’t give one whit about what happens once the chips are raked.  The millionaires and billionaires can divvy up the pot however they want; just give me my football!

Of course, I-just-had-to-vote-to-raise-my-taxes-so-cops-can-afford-to-patrol-the-town me is inclined to look a little bit deeper . . .

The seeds for the current situation were sown in 2006.  With the old CBA, 2006 , there was to be an uncapped 2007, and then the CBA would expire—much as this season is uncapped, and this CBA is set to expire after the 2011 draft.  After several last-second deadline extensions, coming about as close as possible to triggering the Last Capped Year without actually doing so, the NFL and NFLPA agreed on a CBA extension.  Guaranteeing labor peace deep into the next decade, this negotiation and agreement was the ultimate achievement for both then-NFL Commissioner Paul Tagliabue, and the late NFLPA executive director, Gene Upshaw.

But, just two years after the 2006 agreement, NFL owners voted unanimously to opt out of the current CBA.  Why?  In a letter to Upshaw, new NFL Commissioner Roger Goodell cited three reasons:

  • High labor costs
  • Problems with the rookie pool
  • Inability of teams to recoup bonus money paid to athletes who breach their contract or fail to perform

Until the 2006 extension, the salary cap and salary floor were based on a percentage of shared revenue: TV contracts, ticket sales, etc.  Every NFL team had to spend at least X (the salary floor) and Y (the salary cap) percentages of the same 1/32nd slice of the NFL’s shared-revenue pie.  However, the NFLPA wanted the salary cap to be based on what’s now called total football revenue.

Every team has ways of making money beyond the shared revenue: stadium naming rights, concession vendor arrangements, parking, etc.  Players were getting frustrated that significant monies were going directly from our pockets into the owners’.  So, rather than fight for a bigger slice of the same old shared-revenue pie, players negotiated a smaller slice of a bigger pie: 59.6% of “total” revenue instead of (in 2006) 64.5% of shared revenue.  That smaller slice, bigger pie approach upped the total cash available to for player salaries by eight percent—great news for the players.

Problem: the shared-revenue pie is contributed to equally.  Leaguewide TV deals are split 32 ways, leaguewide apparel sales are split 32 ways, each game the home and away teams split ticket revenue 60/40, etc.  But the total-revenue pie is not distributed equallyeach team’s locally-generated revenue varies wildly.  This is why there was such a big push for luxury-box-laden stadiums in the mid-90s; teams don’t share luxury-box revenue.  The Cowboys’ new stadium, nicknamed “Jerryworld,” is more like a Dallas Cowboy theme park than a stadium: you could have a great time (and spend a lot of money) at it for a few hours without seeing a minute of the game.  Another big-revenue team is the Redskins; they get $7.6M in free money every year just because their stadium is named “FedEx Field.”  Somehow, I don’t think Curly Lambeau’s estate can match that largesse.

Besides the varied revenue, each team’s costs vary wildly.  The Bengals play in a stadium bought and paid for by the people of Hamilton County, and pay relatively little rent to do so.  But Jerry Jones had to take out multiple nine-figure loans to birth his cash cow—and its feed bills (debt service) are huge.  You can see where this is going: with the salary cap—and floor—derived from all the income generated by all the teams, penny-pinchers like the Bengals, Bills, Jaguars, and Vikings had to keep up with the Joneses.

The owners tried to ameliorate this by implementing a “supplemental revenue sharing” system that works kind of like a luxury tax; the top earners kick some into a fund earmarked for the less aggressive.  All the owners were almost immediately dissatisfied with this solution.  The high roller teams wanted the penny-ante teams to “earn” their supplemental cut by working harder to generate local revenue, but the small-market teams cited inherent market disparities; they couldn’t generate local revenue like the big boys!  Just two years after the 2006 agreement, owners opted out of the CBA, making 2009 the Last Uncapped Year, 2010 completely uncapped, and 2011 a year without football.  Here is where we enter the Spin Zone.

Clearly, the owners see the ‘06-‘09 arrangement as untenable. Prior to 2006, NFL franchisees were guaranteed a healthy profit, whether  they chose to run their businesses like Ebenezer Scrooge, or Howard Hughes.  Now, though, crazy year-over-year increases in rookie salaries, and the inclusion of unequally earned revenues in the salary cap—and floor—created a bubble in individual player salaries, eating into the profits of the Scroogier teams.

Of course, we should not cry for the billionaires that own these teams, and their not-as-great-as-they-used-to-be profit-margins.  But, the pre-2006 model essentially guaranteed profitability, which in turn made it easy for small market, non-competitive, or less-aggressively-run teams to stay put and make money.  Even with no full-time GM, a skeletal scouting staff, and a longtime coach who’s avoided the reaper partially because the owner won’t pay his buyout, the Bengals were not only competitive in 2009, they won their division!  But if individual salaries keep growing at their current rates, the Bengals will have to either spend more, or be less competitive.

My inclination is to support a return to the old model, where the salary cap and floor are derived from “designated gross revenue,” i.e. shared revenue.  Let player costs be a fixed portion of the shared revenue, let the zillionaire-tycoon types seek their own fortune, and let family-owned teams in smaller cities turn a decent profit with a competitive product.  However, the players won’t want to give up their hard-won slice of bigger pie.  In fact, they think the pie isn’t big enough.  Check out the NFLPA’s “Where Dat Billion At?” fact sheet:

Q: In real dollars, as opposed to salary cap calculations, what percent of all revenues do players receive?

A: 51% in 2008. Since 2001, players have never received more than 53% or less than 50%.

Q: So why does the league say that the players get 60%?

A: Once again, that is the maximum salary cap calculated AFTER deducting $1Billion in real dollars in 2008 that the league and teams received.

Q: Where Dat $1Billion?

A: Where do you think?

The clear implication here is that every year, the owners pile that sneakily-hoarded billion dollars into a McDuckian money bin and have a good swim.ScroogeMcDuck

The owners, of course, have a perfectly rational explanation: the billion dollars is for expenses.  Building stadiums, marketing, paying for coaching staffs, executives, scouts, administrators, sales, etc..  Eight billion dollars in revenue is not eight billion dollars in their pocket; the players don’t necessarily deserve a share of money that’s definitely going right back out the door.  In this fact sheet, we see the NFLPA “framing the issue”: this expense deduction was collectively bargained, not some sort of mysterious embezzlement!  The owners aren’t just “arguing” that that money shouldn’t count; the union explicitly agreed to that $1B expense deduction as part of the CBA.

Of course, if Dat Billion covers the major expenses, why are the owners insisting the players can’t have any more than a sixty percent of what’s left?  We know the revenues coming in the door—but what are the owners’ expenses, and how big are these dwindling profits?  That’s exactly what the players would like to know.  They’ve been repeatedly asking the NFL to open their books, and show the world not just their revenues, but their expenditures and profit.

Those of us who are hockey fans remember a similar demand from the NHLPA during their ‘04/’05 lockout—terrifying, because that demand, and the owner’s refusal to capitulate, was a major sticking point in the 310-day disaster.  Ultimately, the NHL contracted former SEC (Securities and Exchange Commission, not South Eastern Conference) chairman Arthur Leavitt to conduct an independent financial review of the NHL’s 30 teams.  The conclusion was grim, indeed:

"The results are as catastrophic as I've seen in any enterprise of this size," Levitt said. "They are on a treadmill to obscurity, that's the way the league is going. So, something's got to change . . . I would not underwrite as a banker any of these ventures, nor would I invest a dollar of my own personal money in what appears, to me, a business that's heading south," Levitt said."

Of course, the players didn’t buy this whole independent-analysis thing.  In fact, the demand for open books was at least partially disingenuous; I remember several players saying that even if the books were “opened,” the owners would just funnel cash into their other businesses to make it look bad.  To me, though, the vanishing revenue streams were obvious: terrible ratings, loss of media coverage and national mindshare . . . the NHL simply wasn’t pulling eyeballs, and player salaries were growing unabated.  Even if the majority of teams had their heads above water, it was obvious that the NHL needed to structure itself in a way that guaranteed that growing costs wouldn’t overwhelm shrinking revenues.

NFL teams have a slightly tougher sell when they plead poverty.  Cash has been pouring into the Money Bin at an accelerating rate, with income rocketing towards the NFL’s staggering goal of $25 billion in annual revenue by 2027.  Owners will be quick to tell you that it takes money to make money; business ventures like the NFL Network have required a ton of investment (risk!) to see a return—but dang.  The ratings are insane, attendance has held steady at “outstanding,” and every year sees the NFL garner more and more mindshare.  Hence, players’ demands that the owners open their books and prove the financial picture is somehow getting dimmer.  31 of 32 teams steadfastly refuse—but one, as a publicly traded company, is legally obligated: the Green Bay Packers.

The Packers released their financial report for FY2010 (which ended March 31st), with a predictable headline: “We Are Still A Profitable Non-Profit Organization, But No Longer Wildly So [not really the headline]”. 

“The organization is in good shape financially, and we remain fully able to support our football operations and provide all the resources needed to field a championship-caliber team,” Packers President/CEO Mark Murphy said. “But over the last few years we’ve been concerned with the escalation of player costs relative to overall revenue and reduced incentives to ownership to grow the game. That’s what we’re looking to address in the CBA negotiations, because if the current trend continues, it’s not good for the Packers or for the NFL.”

Here’s where we get to the meat of the matter.  The NFLPA correctly notes that the salary cap and floor, are/were derived as a percentage of revenue, ergo it is impossible for player salaries to grow faster than revenues.  This certainly makes sense—and yet, here’s the Packers’ official website, pinning their loss of profit directly on increases in salaries:

But it’s the 51 percent decrease in operating profit, from $20.1 million to $9.8 million, that’s most notable, particularly when the team on the field went from 6-10 in 2008 to 11-5 and in the playoffs in 2010. This past year’s $22.1 million increase in player costs was substantial, in part due to significant long-term contracts given to veteran players Ryan Pickett, Nick Collins and Chad Clifton. But the Packers’ negotiating position with regard to those contracts was aided somewhat by the new free-agency rules in the final year of the current CBA, which kept players with four and five years of experience as restricted rather than unrestricted free agents.

The Packers, a small market team that—despite being a non-profit organization—has been quite profitable, is seeing a chunk of those  profits eaten up by the increases in individual player salaries.  It’s not that total, or average, or aggregate salaries are somehow rising faster than revenue—as the NFLPA points out, that’s impossible.  It’s that the market rates for top rookies and veteran free agents are exploding, and teams that have previously minded their Ps and Qs are finding themselves forced by the market to pony up big-time guaranteed money.

That the Packers' official release on this matter exquisitely reinforces the NFL's talking points is a little unsettling—and of course, just like in the NHL case, even with a partial examination of the books, there’ll be suspicion that the owners aren’t telling the whole truth.  Nevertheless, the numbers that have been released do back up the owner’s claims.

The notion that market rates for top rookies and veterans have been exploding is undeniable.  Ndamukong Suh’s contract is worth at least $60 million over five years, with $40 million in  guarantees—and that guaranteed figure is a 21% increase over 2009’s #2 overall pick.  According to Forbes.com, the contracts of the top three picks of the 2010 draft are all amongst the ten richest guarantee-laden deals in the NFL.  Obviously, when rookies are getting vastly more guaranteed money than the overwhelming majority of proven veterans, something is wrong.

The dispute between the owners and players on this isn’t about whether the top salaries need to be capped, but what happens to all those millions of dollars.  The NFLPA proposed a rookie cap that would siphon about $200 million away from the top rookies, and guarantee that it be spent on veterans instead. Further, their proposal would cap the length of rookie contracts at three years.  The NFL, in their counterproposal, would rather take that money and use it as a nest egg for retired players’ health care—simultaneously reducing current-player costs, while avoiding spending “new” monies for old players.  This is a matter of negotiation, and there are many bargaining chips to work with: amount of rookie money to be redistributed, length of rookie contracts (under the NFLPA’s proposal, Matthew Stafford would have been due for UFA after next season!), where the money for retirees comes from. . . that will all get hammered out.

So if the rookie pool is just a matter of "hammering it out," what about the NFL's other point, the recoverability of guaranteed/bonus money to players who flagrantly breach their contracts?  Paying a hardworking superstar like Andre Johnson an astronomical salary is one thing; he earned his rookie deal, outperformed his second deal, and will likely be worth nearly whatever Houston can afford to pay him.  But what about the player who went one spot before him in the draft, Charles Rogers?  He received an even fatter rookie deal, and earned about four game checks’ worth of it.  The Lions needed five years in court to win back Charles Rogers’ money, and to this day, seven years after he signed, I don’t believe they’ve seen a dime.

I think the NFLPA recognizes this--and again, I'm sure they'd rather the Lions have given that nine million to a proven veteran on the team at the time, like . . . um, well, you take my point.  The NFL and NFLPA have already agreed to improved standards for on-field disclipline—in terms of fine schedules, appeals processes, etc.—so I’m optimistic that a reasonable set of rules, or standard contract language, can be developed to protect teams against the most egregious of “busts.”

What is much less likely to get hammered out anytime soon is this whole “pie” thing.  Remember Dat Billion, the “expense credit” that the owners take off the top before the money’s even divvied up?  Well, the NFL wants it to be more like Dat Two Point Three Billion.  In their proposal, the expense credit will swell to 18% of the full gross revenue.  In a doozy of a letter to current NFLPA members by former New York Jet Pete Kendall, the NFL’s proposal is thoroughly broken down from the players’ perspective.  His conclusion:

You would have to turn back the clock to the early 1980’s, in the days before free agency, to find a season in which the players’ share of football revenue was as low as that being proposed by the NFL owners for 2010 and beyond. Thus, the only way to describe this proposal is that it is a dramatic reduction in player compensation, which is not justified given the NFL’s unprecedented growth and their failure to provide meaningful financial data relating to their expenses.

Despite the owners’ failure to provide the financial data to support their assertion that expenses have escalated faster than revenues, the Players remain willing to create incentives for NFL owners to develop new revenue streams for their clubs. Our current proposal would specifically allow NFL clubs to obtain substantially increased deductions for costs incurred to generate new revenue streams. We have also proposed additional credits for stadium construction and/or renovation. But we should not and will not agree to pay for items such as expenses to operate practice facilities or for travel costs as the owners have included in this 18% proposal.

The NFL’s entire response to Pete Kendall’s extremely well-informed, well-written, letter is as follows:

“The NFL owners are looking for a fair system that allows continued investment to grow the game. NFL player compensation has almost doubled in the last decade because of investments made by the clubs. If we continue to invest and grow, current players will have higher compensation, former players will have higher benefits, and fans will enjoy a better game. Expenses for NFL franchises have risen faster than revenue in the current agreement and the economics must be adjusted. But, as we have repeatedly emphasized, constructive and creative negotiations can lead to a balanced agreement that will not reduce current player salaries.”

Now we need to step back to 2006.  The NFL was racing against time to get a deal done with the NFLPA before the Last Capped Year—because the threat of totally uncapped salaries, and the destruction of financial parity, was just hours away, several times.  The late NFLPA executive director Gene Upshaw repeatedly said that if the cap ever went away, it would never come back.  With their backs to the wall, the owners knew they couldn’t let that happen.   The union leveraged its . . . uh, leverage, and the owners did what they felt they had to do.

After the initial round of celebration for Commissioner Tagliabue’s great achievement, everybody read the fine print.  According to ProFootballTalk, the league’s reaction to the new CBA was swift and decisive:

We've heard from several front-office types around the league who believe that the NFL Players Association "kicked our ass" in conjunction with the new CBA.

"The union ate the league's lunch -- big time," said one league source.

"The owners were so focused on their pockets and infighting, they never talked about the CBA," added the source.  The thinking is that Commissioner Paul Tagliabue just wanted to get the CBA done, so that he could ride into the sunset as a hero.

So clearly, the owners don’t just want to make sure that the money they’re sinking into expanding revenue via the NFLN, NFL.com, and overseas ventures doesn’t count toward the cap.  They’re in it to make sure they get back some of what they gave away the last time around.  In fact, Commissioner Goodell implicitly said so at the NFL’s annual meeting back in April:

“We knew when we entered this CBA that the pendulum would swing the way of the players. We just didn’t know how much how fast.”

It's not just about adjusting the current cost/revenue structure to reflect the realities of the market; the NFL is actively trying to “swing the pendulum” back their way, by dramatically shrinking the expanded-revenue pie, and making the player’s slice smaller as well.  The NFL notes that by going to an 18-game schedule, and by reinvesting Dat Two Point Three Billion in their revenue-expanding programs, the total revenue will grow to the point where the amount of actual dollars going to the players won’t shrink. This is where the NFL's referenced "creative negotiations" come in.

How can the owners pretend to be fair in this, when they’re coming in to negotiations looking to both shrink the pie, and the players’ slice of it—relying on projected future growth to offset the give-back?  Well, If you don't believe that the players really did come out way ahead in the 2006 deal, just reference the NFLPA’s “First and Ten Questions NFL Players Want Answered:”

6. Why did the NFL and NFL team owners embrace an uncapped year and not preserve a salary cap system that gives every team a chance to win on any given Sunday?

Wow.  Two years ago, the NFLPA was resolute: if the salary cap that had been holding them back ever went away, it would never return.  Now, they’re challenging the league to explain its opting out of the salary cap, when the cap was so obviously awesome for everyone!  What could have caused so radical a change?

For starters, the uncapped year was hardly the cash bonanza players assumed it’d be.  All throughout the 90s, teams bumped hard up against the cap—and then creatively worked around it and spent over the cap.  By the time the mid-aughts had rolled around, the concept of “cash over cap” was a common occurrence; if you weren’t spending all your available money, and then some, you were putting yourself at a disadvantage!  I remember Eagles fans constantly freaking out that their big-market team always kept under the cap, for no discernable reason.  Here’s one page of Philly sports blog Philly2Hoboken’s 2005 archives where they do just that, several times (text search “under the cap”).

But, without a cap floor, teams can spend as little as they want, save for veteran-minimum rules.  Moreover, the incentive to spend up to the cap has disappeared; NFL teams are no longer spending just because they have the space to do it.  They’re looking at their budgets, looking at their profits, looking at the market, and if the player isn’t worth the asking price, they’re not spending.  It’s like boiling water with the lid closed: the water is noisily bubbling and rolling, the lid is rattling, steam is shooting out the cracks—but when you take the lid off, instead of water exploding all over the kitchen, everything equalizes, and the raging tempest becomes a gentle simmer.

Okay, so.  The NFL wants to get back what it gave away in 2006, when it allowed unshared revenue to count towards the players’ total share of income.  They don’t want the greater expenses they’ve sunk into growing the league as a whole to still count as part of the players’ share.  The owners want to be able to spend money to make money—but they also want to be able to be competitive on a shoestring budget. 

The players want to keep what they negotiated for in 2006, when they stopped the owners from generating sizeable streams of income that they’d never get to see.  They want to be able to share in the rewards of massively profitable enterprises like NFLN and NFL.com, even if that means sharing in the financial risk of launching and maintaining such enterprises.

What can be done?  There’s no bad guy here, and no good guy either.  The NFL gave up a lot in the last round, and they want the NFLPA to return the favor this time.  Both sides are making boatloads of cash, and both sides are highly motivated to hunker down for the long haul, regardless of the feelings of the people they’re all getting rich off of.  Well, they say never to criticize without better ideas—so here are my ideas:

Some Sensible Suggested Solutions

Rookie cap.  Yes.  Rookie salaries are flatly out of control.  The money saved should go to veterans, not just go in owners’ pockets—but at least a portion going towards a retired players nest egg makes too much sense.  Three-year contracts, and unrestricted free agency, for players who might not be any good for three years, would make no sense.  Rather than place a hard cap on the number of years, I’d prefer they re-work the way salaries count against the cap--so it’s not always a big bonus check in front of massively backloaded base salary on a six- or seven-year deal that neither side intends to honor (see: Johnson, Andre and Revis, Darrelle).  Regardless of contract length, though, rookies shouldn’t be eligible for UFA until they have four years of service.

Shorter, but more guaranteed, contracts. While we’re at it, let’s address that huge-bonus, tiny-salary problem that seems to be the root of so much current unrest.  Since the only real guaranteed money in the NFL is bonus money, players are heavily incentivized to sign long-term deals—the only kind that can bear the cap weight of big bonii.  Yet, most players and franchises are loath to commit to each other like that.  I’d like to see a cap structure that incentivizes two- and three-year deals with low bonuses, but decently-sized, guaranteed salaries—so we avoid the “What do you mean I’m only due to make $583,000 this year” problem afflicting many young veterans.  It would also cut down on the “I spent my bonus money on a mansion and a Rolls and now I’m broke” syndrome.  Maybe guaranteed base salary should only count towards the cap at fifty cents on the dollar?

Minimum salaries: triple them.  If Ndamukong Suh can avoid dismemberment and Purple Drank for two years, he and his family, and his kids, and their kids, will be set for life.  For the rest of the NFLPA’s rank and file, though, the seven- and eight-digit paydays getting dumped on these rookies (and a few free agents) seem as unattainable as The Big Chair Behind the Mahogany Desk in The Corner Office does to most of us.  Many NFL players will be in and out of the league in just a few years, after exposing themselves to all the same physical risks the stars do—but with a regular job is certainly their long-term future.  Why build a kajillion-dollar warchest to take care of broke retirees, but not also care of them while they’re playing?  A little of that Big Suh money could go a long way towards securing his teammates’ futures.

Return to the DGR model.  The only way to ensure that all 32 teams have guaranteed profitability—no matter their business philosophy—while ensuring competitive levels of talent on the field for all, is to make sure that the player cost is a portion of the shared revenue that all teams receive.  However, I’d re-size that slice to approximate the current total dollars going to the players.

Stock options, and profit sharing.  But wait, what about all the local revenue being generated—and what about the leaguewide enterprises?  If we cut the players out of local revenue, again, owners will be able to hoard cash—and if we cut the players out of NFLN and NFL.com money, they’ll miss out there, too.  Well . . . make the players have to spend money to make money, too.  Why not allow players to purchase stock in their clubs, or have an option to reduce their salary in return for percentage of the team’s profit?  This way, the players help reduce operating costs for the club, while also ensuring for themselves a piece of the windfall they’re helping create.  Further, players being minority owners will help both sides bridge the interest gap, and help turn “NFL vs. NFLPA” into just “NFL.”

Of course, this is all just flowing from my rudimentary understanding of the issues at work—and my rudimentary understanding of business, for that matter!  After all, Pushing Thirty Minivan Me is just that: pushing thirty with a minivan.  I’m not pushing fifty with a Harvard MBA, and I’m not pushing twenty with a Rolls Royce Drophead Coupe.  I’m not in a position to bear investment risk, or rake in dividends off the profit.  I’m the schmuck in line at the gate, ready to part with fistfuls of hard-earned jack I should spend on more important things.  I’m the tool with a family of five, all dressed in jerseys on gameday.  I’m the fool at the bottom of the pyramid scheme, the rube all this is built upon, the mark they’re all getting rich off of . . .

. . . and I’m the kid in front of the TV set, eyes as big as saucers, watching Barry run.  Owners, players, coaches, front office, staff, agents, flaks, and all the rest: please.  Remember me.  Remember us.  Remember who really bears the financial burden here—and ultimately, who really holds the cards.  Baseball, 1994?  Hockey, 2005?  We are the golden goose, and you have your hands around our neck.


17 comments:

Ron August 6, 2010 at 9:09 PM  

Ty, it looks like this article ended in the middle of a sentence. Was there a lot more?

Just curious,
Ron

Ty August 26, 2010 at 4:48 PM  

Ron--

I accidentally published a really, really, really early draft of this a few weeks ago, which is what you saw and commented on a few weeks ago. This is the whole thing.

Peace
Ty

Neil August 26, 2010 at 6:19 PM  

Terrific, terrific article, Ty.

There is almost too much to comment on so I'll just say that I'm with you on virtually every point rather than going through everything bit by bit.

This was incredibly fair, nuanced, and even handed and really, I think this is a must read for any football fan.

Just an awesome job, my man.

Anonymous,  August 26, 2010 at 10:16 PM  

Really good analysis and suggestions, thank you. With the revenue sharing idea though, would that be between the player and the NFL or between the player and the team? If it were between the player and the team the players would have to cash out their stocks every time they were traded or else there would be a conflict of interest. I'm sure that difficulty could be worked around somehow, but it's still something to contest with.

Thanks again, always enjoy reading.

T, Arizona (late of Michigan)

Ryan,  August 27, 2010 at 8:41 AM  

Bonii. Nice.

I agree with your suggestions for the most part. I agree with the person above on the stock options. That might get tricky.

My suggestion would be that the NFLPA negotiate a deal with the NFL Network and nfl.com. How good would the network be if the players did not give them access.

I understand that the players make way too much to play a game, but the owners shouldn't get to walk away with all of the money. These guys put their bodies on the line for this league. The fans pay their money to see the players play. It's not like the owners are going to drop ticket prices if they players concede. It seems like the NFL has a plan to continue fleecing us way into the future and are trying to think of new ways to do it.

Good article, one day I will remember to listen to the fireside chat live.

Ryan

Clusterfox,  August 27, 2010 at 9:38 AM  

First off, Great Read Ty!!

Anon and Ryan,
Coming from that industry, It shouldn't be sticky or tough at all. Its been going on for years in Corporate America. Every(Most) Board member, CEO, CFO,...have a vested interest in the Company via Stock ownership or apperciation rights, and there employment doesn't always last. They should be able to do the same thing with the teams(like a non-voting share). The answer to the player switching teams is the set up of vesting schedule and 10b5-1 type exit strategies that have to be adopted.

side note 10b5-1( in laymens terms) creates an exit straegy for an Insider of a company to cash out some of his/her stock exposure through the implementation of a planned/ structured selling schedule.(ie I will sell 1/4 of my shares every feb 15 for the next 4 years) This allows a situation were that person can access the value of those shares, and avoid implication of trading on insider info, or trying to influence prices to increase there own gains.(in theory, atleast its made public so people can see whats going on or about to occur)

Hope this helps, Love the Ideas TY.

Clusterfox

Jim,  August 27, 2010 at 9:52 AM  

It's important to note here, I've felt like the NFL is butting up against the plateau of it's popularity in the US for a few years now. ESPN talks about the draft starting about two weeks after the season is over until sometime in Mid May. Then around the beginning of July OTA's and training camp talk starts up again. Essentially a six-month sport has turned into a year long sport in the eyes of this fan, they just happen to be off six months a year.

I don't think there is much room for the NFL to grow in the US anymore. At this point you either like the NFL or you don't. I've always thought the reason they picked Goodell as Commish was because he would be excellent at upholding the quality of the product on and off the field. But he's never struck me as a risktaker or someone who would drastically grow the game.

How the players and owners can't see they're about to kill the golden goose smacks of arrogance on both sides. I watch the NFL because I have a fantasy league with my friends. That's it as a direct cause. Indirectly, I appreciate it because it's where most college players strive to go, so the college game is improved because of it.

Frankly, I don't care who's getting how much money. Anyone who makes a roster for even a year will make more that year than I will in a year in the forseeable future. A big name with a big contract will make more that year than I will in my whole life. A poor owner probably makes more in a year than the town of 10,000 I live in. I don't say this to emphasize how poor we all are.

I say this to emphasize how rich you are. And how good you have it. If you strike, and in 20 years from now when the NFL has had to take 4 teams away because they're "new" revenue sharing strategy is meekly sharing 75 percent of the total pie they used to make. It won't matter because the players didn't win, the owners didn't win and the fans didn't win.

Ty August 27, 2010 at 9:56 AM  

Neil--

Thank you, thank you, thank you, many times over. I was striving for all of the above . . . it was one of those things where the research kept pushing me to research, and the writing kept pushing me to write. I didn't even get into the 18-game schedule, which I could have easily done another thousand words on. I hope I did all sides justice.

Peace
Ty

Ty August 27, 2010 at 10:03 AM  

T--

Yeah, I waffled about that myself. My initial thought was to allow players to buy stock in their own teams--but you're right, it'd be pretty ridiculous if Ernie Sims started against the Lions, while being a Lions stockholder.

Peace
Ty

Ty August 27, 2010 at 10:59 AM  

Ryan--

I was hoping "bonii" would tickle someone's fancy.

"It seems like the NFL has a plan to continue fleecing us way into the future and are trying to think of new ways to do it."

. . . yeah, pretty much. I mean, it IS a business, but as Jim notes, they're already squeezing us pretty much dry. Look at what's happening with the New York teams; the PSLs for season tickets are being snapped up corporations instead of people, because most regular people can't afford them.

I'm not sure how the NFL is going to get from 8-to-9 billion to $25 billion in revenue in 20 years, unless the NFL can steal some thunder from soccer and become a global sport in that time.

Peace
Ty

Ty August 27, 2010 at 12:33 PM  

Clusterfox--

Wow, thanks for the info! That makes a ton of sense. Players being shareholders of their own team is a really logical way to share the burdens and benefits of generating unshared revenue--also, I'd suspect that if players from all 32 teams could do "employee stock purchases" in the NFL, it'd be tougher to maintain the NFL's antitrust status (though I'm not an employment lawyer, either, LOL).

Peace
Ty

Matt,  August 27, 2010 at 1:56 PM  

Wow, this was amazing. Your writing talent really shown through in your ability to cover such a complex issue as articulately as you did. I am going to have to read it a second or third time to digest it all but it will be well worth the time spent.

DrewsLions August 27, 2010 at 1:59 PM  

Ty - Fantastic read, my friend. I was thinking about doing a piece on this same topic over at POD a few weeks back, but I knew it would be a long, difficult read and I didn't want to put the effort into something that guys would give up on after a paragraph or two. This is a tough topic to engage people with, but your article was written perfectly and I stayed captivated until the end. Kudos!

I have to say I agree with your personal take on the matter 100%. I'm a finance analyst for a Fortune 500 company here in Michigan, so I live and breath business... and politics. The posturing and jockeying for position going on in the NFL is very much like that in any manufacturing-based company with a white-collar business force contracting a blue-collar workforce... propaganda galore from both sides. I don't blame anyone for trying to "get theirs", but the shameful part of this process is the only true-blue victim is the consumer. In this case... us.

And this is no ordinary product. I too, was that Lion's pajama-laden tot who treated every Sunday morning like Christmas. As a family, we praised a little God, then we praised a little Lions... both faithfully every Sunday. It's fully and completely embedded into my being to be a Lion's fan. It's out of my control now. I'm in far too deep and yet, we've been forgotten. Forgotten by a league we've created and brought to the apex of cultural media phenomenon. Forgotten by players who through us, get to play a game for a living and reap fortunes the likes of which ordinary Joes like us will never taste.

We are the reason. We are the only reason. Without us, there are no mansions. There are no girls and cars. Bling goes the way of the Do-Do. Yet, the only presence missing in these negotiations is the one that truly matters. Thus, fans perceive the in-fighting over a slice of billions to be petty, trivial and a simple greedfest consortium for ego-maniacal millionaires who come off like Paris Hilton whining over a missing quarter.

Sorry, didn't mean to get long-winded... Good articles bring out emotion in me and I gotta let it out! Once again, bravo good sir!

Ty August 27, 2010 at 2:22 PM  

Jim--

Fantastic points: the NFL can't squeeze blood from a stone. When I was a kid, it was "The Four Major Pro Sports"--and though everyone had their favorite, baseball, basketball, football, and hockey were on roughly equal footing. Each waxed and waned relative to the others (I remember a early-90s SI cover: "Why the NHL's Hot, & the NBA's Not), but football has reached a level of dominance I didn't think possible.

With the NFL TV ratings so dominant, I can't imagine there are many (any?) casual fans left to bring in--and even the most casual of fans are far more involved and knowledgeable than they used to be. And the hardcore? We've been bled dry.

The only real way to grow the game would be to grow it globally, but they've been trying that for 20+ years with questionable success--and they folded NFL Europa right when it was kind of catching on (in Germany at least).

Maybe a work stoppage popping the bubble a bit would bring the league and players back to Earth--or maybe they'd have all their beliefs about how badly we're hooked confirmed.

Peace
Ty

Ty August 27, 2010 at 2:37 PM  

Matt--

Thanks, man, I really appreciate it. A lot, lot, lot of love went into it.

Peace
Ty

Anonymous,  August 28, 2010 at 4:39 PM  

Hey Ty,

I read your blog pretty regularly and I have to say this is one of the best written blogs I have ever seen.

I could easily see this as a piece in SI or even Esquire(you should really submit it).

Thanks for the awesome article!

Kennaaye from Mlive

Matt,  August 30, 2010 at 11:47 PM  

This is a fantastic article. I think the overall arc, a fan/cash cow's perspective on the negotiations (pronounced "bickering greedfest") between owners and players, is refreshing and desperately needs to be inserted into the overall debate. As you say, it all ultimately comes down to us.

That's part of the problem, though. The Big Four Sports have all been semi-derailed by these disputes in the not-too-distant past and, every time, the fans come back with their wallets wide open when the dust settles. I know some teams in these sports have come close to folding before, but, to the best of my knowledge, none have recently (and, also to the best of my knowledge, none of them were NFL teams). So there really isn't any incentive for either side NOT to fight tooth and nail for every penny 'cause the pennies ain't going anywhere. I'm not advocating for a boycott of the NFL if there's a work stoppage and I'm not for several reasons: #1) it couldn't be pulled off because #2) I, for one, will be right back in line when they start selling tickets again (I'd piss and moan about it, but I'm far too addicted to NFL football to just say "To hell with y'all") and #3) I'm not sure it'd really work anyway. Maybe, MAYBE an organized boycott could humble each side a little, but there's too much money and too many people involved to think it'd last for long.

This is the frustrating part to me and, I think, most fans. From my very outside, rather uninformed perspective, owning an NFL team is as close to a turn-key business as it gets. You can run a just-north-of-shoddy business (or hire Some Guy to do it), put out a mediocre-at-best product, and still rake in millions. Just ask William Clay Ford. Just about everyone involved is getting rich, so can't y'all just get along? All of us fans are ready, willing, and able to throw money at you, just keep playing the game we love. From my simple perspective, it really does seem that simple.

One final, very, very minor issue I have with the article is the notion that all players, the highly paid and the not so much, sacrifice their bodies equally. That's just not true. I'm making these numbers up, but part of why Peyton Manning gets $20 million and Jim Sorgi gets $1 million is because Jim Sorgi hasn't taken a meaningful snap his entire career (and that may well continue now that he's backing up Peyton's brother). Yes, obviously Manning is far more talented than Sorgi and deserves to be compensated for that talent, but I bet Sorgi gets out of bed easier when he's 60. In my view, that's also part of what Manning is being paid for. SportsNation recently asked, after Brett Favre's latest unretirement, "Do you feel sorry for Tarvaris Jackson?" I don't remember the poll results, but my vote was a resounding "NO!" Yes, I do feel bad that the guy is getting jerked around, but, according to FoxSports.com, he'll make $540,330 this year for holding a clipboard and taking some practice reps in a red jersey. I can't feel sorry for that guy. There's just no justifiable way to say he takes the same physical beating that Favre or Manning or any other starter, at any position, takes. A running back who gets 5 carries a game does not take the same beating as one who gets 20. Now, I'm not saying back-ups don't deserve to get paid, but starting from a point of "all these guys get physically wrecked" is inaccurate. A minor point, but one I felt compelled to make.

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