News Flash: There’s a labor dispute going on between the players and the owners of the nation’s most successful and lucrative sports league, the National Football League. The NFL is the single most popular product on America’s airwaves today. The game fills stadium after stadium nationwide despite soaring ticket prices. Players are making more money in salaries, perks, and endorsements than ever before. NFL franchises are profitable, and extremely valuable.
There are literally billions of dollars at stake, yet the prospect of a lockout for the 2011 season is very real. The issue, of course, is money.
Former NFL Commissioner Paul Tagliabue and late Executive Director of the NFL Players Association Gene Upshaw had worked together for nearly two decades to build a relationship between the league’s owners and the players that was financially rewarding for both sides. They succeeded in establishing a league structure unlike any other major sports league, and guided the game to before unimagined levels of popularity and profitability.
The two men had worked not only to protect the interests of the owners and players respectively, but to do what was in the best interest of the league as a whole. Upshaw and Tagliabue both knew that if the league itself prospered, the owners and players would also prosper. And prosper it did. The League has never been in better financial health, and it is largely due to the constructive nature of the relationship between the former leaders of the two entities.
As his retirement loomed in 2006, and the CBA (collective bargaining agreement) about to expire, Tagliabue was loath to leave behind any kind of labor unrest to his yet unnamed successor. Having a legacy of unprecedented labor peace to protect, Tagliabue and Upshaw hastily agreed to an extension of the CBA already in place, with a few tweaks here and there. The owners reluctantly agreed, knowing that they had the ability to opt out of the accord by a specified date.
The CBA called for the players to receive 60% of the league’s gross revenues, save $1 billion off the top for expenses. The owners quickly concluded that in the face of quickly rising expenses, this was a deal that was slanted pretty heavily in the players’ favor and bad for them. So in 2008, they unanimously chose to opt out.
Now let’s be clear: No one on the owners’ side is crying poor. Thanks to the lucrative TV contracts that the league has been able to sign as a single entity, with revenues split evenly among the 32 member teams, every team is turning a profit. Some, of course, are more profitable than others for a variety of reasons.
But let’s also be clear: You don’t get rich by owning an NFL team. You own an NFL team because you’re already rich. And although the teams are turning modest profits, it’s not like they’re “printing money” as many assume they are. A profit of a few million dollars for a franchise valued at over $800 million is hardly what one would consider making money hand-over-fist. One can argue all they want about how the values of the teams have skyrocketed in the last couple of decades, but that’s a bit misleading because the only way to realize that increase in value is by selling the team, which goes against the point of owning one.
NFL owners are in the business because they want the prestige of being members of the exclusive club consisting entirely of NFL owners (there are only 32 of them in the entire world). They want the notoriety. And in many cases, they want to use that quasi-celebrity status to the benefit of their other business interests. Yes, they also want to make a profit, but by and large they’re not expecting to become multi-billionaires because of their ownership of their teams. They know that will not happen. They simply love the game and they want to be a part of it, and they have the wherewithal to do it.
The players have a point on their side, though. Football—especially at the NFL level—is a physical, violent game with a high potential for catastrophic injury. NFL playing careers on average are typically short—generally around three or four years. The players need to be able to maximize their earning potential while they can, and they see these billions of dollars being thrown around at the business of football and insist that they deserve their fair share of that pie. And of course they’re right. After all, without the players there would be no game of football; no NFL.
But what, exactly, is their fair share? Just how much are they entitled to? They already get 60% of gross revenues, yet they have no real responsibilities towards the business end of the game. All they really have to do is to take care of their bodies during the offseason in preparation for the next season (being an NFL player is truly a full time, year round job these days); show up to practices, team meetings, and games; and make the odd promotional appearance or shoot the odd promotional commercial on behalf of the team or the league. That’s it. Financially they have no real stake.
What the owners are saying is that while they are still profitable at the moment, their expenses are rapidly rising, and it is starting to eat into their profitability. Rising fuel costs are increasing the cost of transporting the teams from one location to another—the teams have no choice but to charter an airliner to get to away games. In the case of the Chargers, and depending on the length of the flight, it’s either a Boeing 757 or 767 (or equivalent). The cost to provide room and board at away games is increasing. The cost to transport players from their offseason homes is increasing. And who pays the skyrocketing costs of their health care?
Then there are the operating costs. The owners have to pay for the massive costs of staging a home game. They have to pay the debt service on their new stadiums, which, while it increases revenues, is still an added cost that wasn’t there before. In many cases, they have to pay to maintain those stadiums (in the Chargers’ case, it’s the city that’s supposed to pay for the maintenance of the stadium. However, if there is a new stadium built downtown, the agreement would be for the Chargers to shoulder most of that burden). There’s the cost to operate and maintain their home offices/training facilities. Who pays for the state-of-the-art weight room equipment used by the players? Who pays for the first rate medical facilities that they must have on site? The hot and cold tubs? The sauna? The steam room? Who pays for the big screen, high definition TV’s in the locker room to make the time the players spend there more comfortable? The comfy leather chairs and sofas that make it seem more like a lounge than a locker room?
Over the years the players have made further demands of the owners, and the owners have agreed. For example, the players wanted to be paid for showing up to offseason workouts. It’s a modest paycheck in comparison to their game checks, but at least they’d get paid for their time. The owners agreed and added it into the CBA; it’s paid in addition to the regular player salaries. The players insisted that the owners should provide meals for the players whenever they’re required to be at the training facilities. The owners agreed; the Chargers typically provide breakfast and lunch for the players any day there is a scheduled practice, whether it’s during the offseason training activities or during the regular season.
The players wanted to expand the rosters to provide more jobs for more players, and pushed for the creation of a practice squad. They argued that it would reduce the wear and tear on their bodies through the vigors of an entire NFL season. The owners agreed. Originally the practice squad consisted of six players. It was recently expanded to eight. The owners provide an abundance of bottled water, sports drinks, and supplements, all at team expense and at no expense to the players.
There’s the cost of the equipment (helmet, shoulder pads, uniforms, etc.), and the veritable shoe store NFL equipment managers are required to maintain. Then there’s the staff salaries; the PR staff, the marketing staff, the athletic training and equipment staff, the accounting staff, the coaching staff. The owners are responsible for the scouting staff—not only their salaries, but their travel expenses (air travel, rental car or mileage, hotel, and per diem) as they traverse the country so that the teams can restock their rosters. The players are responsible for none of this. Not. One. Penny.
The owners have also made significant investments in growing the NFL brand, such as the creation and operation of the NFL Network and heavy marketing efforts overseas, including playing regular season games in Europe and Mexico (the Buffalo Bills also play a regular season game in Toronto every year).
The owners want more money set aside from the gross revenues for expenses. The players want an even bigger piece of the pie. The players are not entirely thrilled with the salary cap—the single reason the NFL has been allowed to flourish the way it has in the first place. There’s a rookie salary cap on the table (an issue that, oddly, both sides agree about).
There are, of course, other issues, such as the owners’ proposal to expand the regular season to 18 games while reducing the pre-season to only two games. The players want an end to the days where being placed on “injured reserve” automatically means the end of a player’s season. The Players’ Association isn’t thrilled with the use of the “Franchise tag,” and would like to do away with it to further a player’s ability to test the free agent market. The union also wants better benefits for current and future NFL alumni, particularly in the area of health care. All reasonable things to talk about, and all issues that should not be significant road blocks to a final deal.
Kevin Mawae, president of the NFLPA and former All-Pro center for the Tennessee Titans recently sent an e-mail letter to “NFL fans” in an attempt to sway the court of public opinion. The letter reads:
Dear NFL Fan:
First off, the players of the National Football League and I want to thank you for doing your part as a fan and signing the Petition to help us Block the NFL Lockout. As you know, the NFL and team owners have planned to impose a lockout of players and fans following the expiration of the CBA on March 3, 2011.
I want to make you aware of a very important online movement happening Tuesday, January 18th that we want you to be a part of. NFL players across the league and fans are participating in a #LETUSPLAY Day, and we want YOU to join us. It will be an opportunity for you to team up with players as we stand together to help prevent the NFL Lockout. Here’s how you can help:
· Tell EVERYONE you can about www.NFLLockout.com and how they can sign the Petition to Block the Lockout
· Donate your Facebook status by posting: “Today is LET US PLAY Day. Help NFL Players and Fans Block the Lockout. Visit NFLLockout.com and sign the Petition.”
· Tweet the following: “Today is #LETUSPLAY Day. Help #NFL Players & Fans #BlocktheLockout. Visit NFLLockout.com and sign the Petition.”
· You can participate in a #LETUSPLAY Chat with me and other players on Facebook and Twitter that day. We will also be responding to fan questions on Ustream and our YouTube page.
The union, no doubt, plays an important role in today’s NFL. They help to make sure the players are treated fairly by the owners. They certify agents to make sure that the people representing the interests of individual players are fully qualified and on the level. They provide valuable financial services. They hold the league accountable for the safety of the players on the field. They make sure that the players’ pay is commensurate with their skill level. And they help determine the players’ pay structure through collective bargaining.
But if the players want an even bigger piece of the financial pie, then perhaps they should take greater responsibility in the financial stakes of the game. Maybe the union should take on the burden of managing the players’ health care plans? It’s not unprecedented. The United Auto Workers have done it, and it practically saved the auto industry.
Maybe the players union should start footing the bill for some of the extra perks they’re getting? If they want more creature comforts in the locker room then perhaps they should pay for them. If they want meal service and more specific menus, then maybe they should take responsibility for planning and paying for it.
If they want the rights of ownership, then they need to take on some of the responsibilities of ownership.
Current NFLPA Executive Director DeMaurice Smith needs to be careful that he doesn’t push the demands he is making of current NFL Commissioner Roger Goodell too far. Goodell, for his part, needs to take a more active role in the negotiation process, and apparently very recently he has; he had said in the past that he wanted to keep his direct participation to a minimum and allow the negotiating team to take the lead in order to avoid becoming a distraction or overshadowing the others in the room.
Smith must also be cautious about his threat to decertify the union in order to sue the owners for antitrust violations. The NFL enjoys an antitrust exemption granted by Congress, and it is that very antitrust exemption that has led to the ultra-lucrative TV contracts that have made NFL football the cash cow that it is today. It has also led to the very progressive revenue sharing agreement and a parity and level of competition among league members that is unparalleled in any other sports league. If Smith isn’t careful, his actions could turn the league upside down and produce a confederation of teams more akin to Major League Baseball with a clear delineation of haves and have-nots; where one team spends $250 million on player salaries, while another only $40 million; where the haves can put a quality, championship caliber product on the field while the have-nots can barely cobble together a roster.
That would clearly not be in the best interest of the game itself, which is something that Tagliabue and Upshaw understood.
The NFLPA has a duty to protect the interests of the players. At the same time they have a duty to protect the integrity of the game, and that means working with ownership to ensure that all sides are being treated fairly. The players have a right to be paid handsomely for their special skills, but the owners also have a right to make a profit and not lose money on the venture. A healthy, profitable NFL is a good thing for both sides. It would be wise for the union to not blow up the apple cart.
{ 10 comments… read them below or add one }
thanks for such a good explanation of the issues. i learned a lot here, but two questions remain:
1) why do the owners want a lockout? do they really think baseball or hockey gained anything by letting their labor pains impact the schedule?
2) why is the players union actively pursuing a policy of “de-certifying” itself?
1) They don’t WANT a lockout. NOBODY wants a lockout. Both sides know that they have a pretty good thing going and by skipping a season there is a great risk of irreparable harm to the League. But it is available to them as a last resort if they can’t get a reasonable CBA worked out. It’s a way to force the union’s hand and push their positions more toward the center.
Some good COULD come out of it, though……for all the damage the lockout did to the NHL in 2004 (and they still haven’t recovered completely), the lockout did result in some rules changes and a salary cap that has made the game better and more exciting than ever. Unfortunately they’re stuck with a TV contract that leaves them mired in obscurity for a bunch of reasons. The NFL is a horse of a different color, though. They won’t suffer the same type of exposure problem the NHL has. And they still have a TV contract in place that likely won’t go away.
2) De-certification, like the lockout, is a tactic of last resort. Without a union, there can be no CBA. No CBA, and many of the anti-trust exemptions the League enjoys are gone. And if the union is gone, then the owners could no longer lock the players out and can be sued for anti-trust violations if they do. It’s really not much more than a game of chicken at this point.
I could survive any work stoppage. I easily could just watch more college football.
Both the Aztecs and Seminoles supplied me with plenty of good football last year.
However, I would like any new agreement to include more benefits for older retired players and a cap on bonuses paid to rookie draft picks. Yeah, it wont happen but I can hope.
I think you’ll see both. The players have been pushing for better retirement benefits for a long time now, and if they don’t get it the owners will take a massive PR hit, particularly in the wake of Mike Webster and the recent brain injury revelations. They just haven’t figured out how to do it yet.
On the rookie salary front, the owners/management side has been complaining for a long time about the ungodly salaries they’ve been “forced” to pay to top draft picks, and every year it gets worse. The veteran players, for their part, don’t like the fact that the exorbitant rookie salaries eliminate jobs for some veteran players (a cause and effect scenario: Higher rookie draft pick salaries mean less money for veterans who, according to the CBA have a higher minimum salary, which leads to teams signing less expensive younger players instead). Bot sides want to find a way to rein it in.
Thanks Andy for such a comprehensive piece about an oft-overlooked piece of the sporting puzzle – this is exactly what I was hoping for when I threw my support behind expanded sports coverage. Good on ya.
I agree that we should expect to see expanded veterans’ benefits, especially given the noise in the last couple years regarding the extensive studies becoming available concerning the impact of concussions suffered while playing. And a separate rookie cap would be a welcomed addition to a new CBA.
The salary cap, however, is what I think is instrumental in making the League the product it is – when baseball teams like the Padres go on a run like they did last year, it’s a fluke, an anomaly, like the Twins in the middle of the last decade. As the Adrian Gonzales saga proves, 2/3 of teams in an uncapped pro baseball league effectively serve as a AAAA-level farm system for the Yankees, Red Sox, and a handful of other big-money teams (though the Cubs and Dodgers prove that you can spend money and still be pretty bad). I mean, here’s a guy who grew up in San Diego loving the Padres, got a chance to play for the team he grew up following, and from reports I’ve heard might have even decided to stay for up to 20% less than what’s considered a fair salary for what he’s accomplished – and even at that discount SD doesn’t even come close to being able to afford him. Hard to fault a guy for not taking what would’ve been a 50% pay cut to stay home, but how can you expect a town to get excited about a team where 25 guys are collectively worth as much as two star-caliber players on a big market team? Without some sort of mechanism to ensure the New Yorks and the Bostons don’t effectively purchase wins every year, would the Chargers have even been able to put a marketable (yet woefully under-performing) product on the field for the last five or six years?
The biggest advantage that the Yankees and other big market teams enjoy is control of their local game broadcasts. The Yankees local broadcast rites are over $100 million of unshared revenues. In the NFL , the league controls all broadcast revenues.
A smaller advantage that should be reformed is our tax code. The purchase of tickets to sports events should not be tax deductible. Cities with a large numbers of corporate headquarters have greater access to premium ticket sales funded by tax deductions.
What we have here is a failure to see the forest through the trees. From my perspective an injury to one is an injury to all and this piece, like the stadium piece by the same author assumes the current aggressive posture of the ownership class towards the working class and its organized sector. “Be careful what you ask for…or else” will be used to whipsaw negotiations as long as power relationship between capital and labor remains one of dominance and servitude. Nothing more elegant than that!
This just in (talk about stadiums!):
When the NFL Players Association (NFLPA)—the AFL-CIO union that represents all professional football players, past and present—suggested a plan for the labor movement to fill a football stadium with unemployed workers, members of the military and children, I got really excited and pledged our support right away.
What could be better than giving the gift of football to folks who may not be able to afford to go to a game while times are tough?
We’d like your help to fill a football stadium with unemployed workers, members of the military and children for the NFLPA Texas vs. The Nation game.
This very special game attracts hundreds of NFL scouts and personnel. It features draft-eligible college seniors who are poised to be our next professional players.
Each ticket to the game costs $10 to buy. But the NFLPA has generously agreed to match 100 percent of our donations. Thanks to this match, every $10 you donate will buy TWO tickets for unemployed workers, military veterans and children.
Please pitch in $10, $20 or $40—and give the gift of two, four or eight football tickets to unemployed workers, members of the armed services and children.
If you can make it to San Antonio, for the game, you also can buy tickets to attend the game yourself.
This is going to be a great game featuring the football stars of tomorrow. Top college seniors with ties to the state of Texas will take on top seniors from across the nation. The five-year-old all-star game is making its debut in San Antonio this year, after previous games in the Sun Bowl in El Paso, Texas.
We’ve been talking to local nonprofits—and they’re really excited about your support. Military bases are already on board, too. But we need you. If the union movement is going to fill the stadium in San Antonio, it’s going to take thousands of small donations.
It takes only 30 seconds of your time and as little as $10 to help.
Please donate a ticket or two—and have your donation doubled—so San Antonio football fans who are unemployed, and others who can’t afford to come, can attend.
In solidarity,
Manny Herrmann
Online Mobilization Coordinator, AFL-CIO
P.S. If you’re interested in attending the game yourself, click here to learn more and click here to buy a ticket.
If you can’t attend yourself, please pitch in $10, $20 or $40—and give the gift of two, four or eight football tickets to unemployed workers, members of the armed services and children.
To find out more about the AFL-CIO, please visit our website at http://www.aflcio.org.
Andy,
Could the officiating at the Steelers/Jets game on Sunday explain why so many home teams win?
No. The Steelers were simply the better team.
Green Bay won in Philadelphia, Atlanta (the #1 seed) AND Chicago.
The Jets won at Indianapolis and New England this year, and at Cincinnati and San Diego a year ago.
In 2005, the Pittsburgh Steelers came into the playoffs as a Wild Card team, played all three playoff games on the road, and won the Super Bowl against the Seahawks.
The team that plays better will usually win.