As uncapped year approaches, both sides refuse to budge. Andrew Brandt
Before getting back to your regularly scheduled programming of Super Bowl talk for the next 120 hours, here’s an opening primer on the NFL-NFLPA negotiations for a new Collective Bargaining Agreement (CBA), which you’ll be hearing a lot about – some accurate, much inaccurate -- over the coming weeks/months/year(s).
Why is the NFL frustrated with the negotiations?
Owners want the players to share the risk. They point to their numbers showing that NFL players have received a $500 million increase in compensation since the terms of the player-bloated 2006 CBA was ratified, while their side has been cutting costs. In their view, the downturn in the economy, the ebbing of sponsorship and suite sales and the massive debt undertaken to finance new stadiums are all being felt by ownership without being similarly felt by players.
In bargaining meetings, the theme from the NFL is “collective sacrifice.” The NFL wants players to roll back some of their gains made through the 2006 CBA to more accurately reflect the cost of doing business and financing these massive facilities.
Why is the NFL Players Association frustrated with the negotiations?
The NFLPA wants full disclosure in this age of transparency in corporate America. It listens to the problems ownership presents and says repeatedly, “Show us your books.” With the publicly owned Green Bay Packers the only team mandated to report their financial statement, the union looks at the smallest market in the league making money and says there must not be any issues.
As I know so well, the Packers not only have a unique fan base in the vast Packer Nation, they also have strong revenues and no debt. So they paint a nice picture for the union as the only public showing out there.
The league’s response to these repeated requests is to point out the audit rights the union already has through the CBA. The NFL also argues that “opening the books” in the NBA and NHL did little to avert work stoppages. The league simply feels the union has enough information without opening the inner workings of teams’ finances, which frustrates the union to no end.
Why is there a report that the NFL wants an 18-percent reduction?
There’s internal data showing the need for that type of rollback to offset the gains the players have made compared to the league’s incremental revenue since 2006.
At the end of the day, this is a negotiation. That’s the opening offer.
Why is the rookie salary issue a non-starter?
Pay no attention to this; nothing to see here. Both the league and the union understand that something has to be done, especially at the top of the draft. Both sides have agreed that incoming rookies in future years have no voice in this negotiation and will be the sacrificial lambs.
Why does the Supplemental Revenue Sharing (SRS) decision cut both ways?
The union declared victory this week in a decision by the Special Master to continue the SRS program into 2011. However, it may be a pyrrhic victory for the players since the SRS is based on revenue rankings only, and some of the top revenue producers also have enormous debt, largely due to private stadium construction. The fact they are paying down debt with some of their revenue and now sharing it more with other teams, who may have low revenue but no debt, may have a chilling effect on player spending in the long run.
The union’s focus should be on ensuring that owners do not pocket any revenue-sharing money, no matter how much or how little, but spend it on players. That’s the real issue.
Why is the Final Eight plan being misreported?
I’ve heard many reports that top unrestricted free agent (UFA) players such as Julius Peppers are closed off from signing with a quarter of NFL teams as a result of the Final Eight rule. Well, uh, no. Peppers and others are fair game for teams that lost in the divisional round – Cardinals, Cowboys, Ravens and Chargers -- and are allowed to sign one player with a first-year salary of $5.7 million (projected).
True, the Final Four teams are prevented from signing top UFAs unless they lose their own in similar value, but a quarter of the league is a lot different than an eighth of the league.
Why are coaches’ contracts now being affected by the labor dispute?
Teams are at least preparing as if there will be no football in 2011, with adjustments to assistant coaches’ contracts in 2011 that call for pay reductions of anywhere from 25 to 50 percent and even rights to terminate in the event of a lockout with 30-60 days notice.
What’s ahead?
More meetings – starting Saturday -- and probably more frustration from each side; the NFL frustrated that the union will not share the risk and the union aggravated that the NFL will not share its financial information to prove its point. Meanwhile, teams and players are – or should be – preparing for an uncapped year and a different way of operating in the NFL, coming soon to a team near you. As for 2011, a potential lockout year, all bets are off.
To get you ready for the uncapped year ahead and the new way of doing business in the NFL, we’ll be offering our first NFP Webinar on Feb. 17, “The End of the NFL as we know it.” I’ll go through all you need to know (and some you don’t) about the new NFL landscape in 2010. It will be “must-have” information for every football fan.
Follow me on Twitter: adbrandt
Goodell's ownership ranks have fractured into competing factions. That is the strike danger at this time. The old guard vs. the nouveau riche, several of the people at the NFP could give better insight to the cleft and the reasons so. This rift is a threat to the integrity of pro football's pillars, and its place in popular culture, as the premiere sporting entertainment value in North America.
I see the playes as having zero leverage, but the owners can't be relishing the prospect of a lockout in 2011. Wouldn't the same logic that is driving the league toward an uncapped year in 2010 also apply in 2011 and beyond? Why not just continue without an agreement? The small market teams could cut their payrolls even more and start to make some serious jack from revenue sharing. They might also be inclined to play real hardball with high draft picks and let them sit out a year if necessary.
Your four teams that lost in the divisional round are incorrect, they are the Cardinals, Cowboys, Ravens and Chargers.
The owners want a collective sacrifice? Does this mean they won't be asking taxpayers to pay for their stadiums anymore?
I have not seen it here or other places, but what kind of rookie contracts can we see this year? Are they going to be heavily slashed? Will there be loads of holdouts in the first and second because of it? Just curious on how you think the top 5 signees will react to a drastic cut in guaranteed money.
@ Klaggs: It won't be a strike by the union - it will be a lockout by the owners.
Andrew's comment about debt is the key for me. It has to be serviced and there must be a revenue stream to accomplish that. The Glazer's have huge debt with Man Utd in England. They had to take a bond offering out for that. There has to be some backwash into their Tampa Bucs finances. Lerner and Kroncke have similar concerns but not on the level of Glazer.
Like European football, costs have to come down and that means player salaries too. I wonder what the next TV contract will bring. NBC is losing money hand over fist. The CBS, NBC and Fox contracts are up following the 2011 season with ESPN going two seasons longer. Both NBC and CBS may find an increase hard to swallow. Fox too but they make tons of money through Murdoch's SKY which has the most of the rights to the british EPL
The players are going to have to come to the table and be willing to compromise as people begin to prioritize and dump season ticket packages, reducing the revenues. Add a lower TV bid and it is that much harder. We may soon see the advent of total pay per view for all NFL games if the broadcast rights are not at least stabilized
Can someone explain to me why the players need to take on any more of the risk.
They are employees not shareholders, they dont have guaranteed contracts and for the guys on minimum they are literally risking their short and long term health every game for not, in comparison with the risk and damage done to them, a lot of money.
What is the owners risk? They make a little less money? If so sell the team to someone prepared to take the risk on or move the team to another market.
And if the owners want to prove the risk is real surely the best way is for them to open the books and show it.
You keep saying "share the risk". One problem with that, there is no risk in owning an NFL team.
It's quite difficult to feel sorry for a 25 year old making millions of dollars per year, 'tis true. But the real goal here by the owners is far more diabolical: to kill the union once and for all and impose a minimum-wage scale. That's what happens in America(or it did until the North American Free Trade Agreement and other free trade trickery) when you have no competition. Salaries in the NFL went up when the USFL came into being and openly competed for talent like Reggie White. The bottom line is the owners want to pocket more money. The players want to pocket more money. But in this arrangement, the players might end up looking like the bad guys. But the owners are far from broke. It's more of a matter of: we want more!
Revenue sharing is critical, and to a lesser degree a salary cap, but by 2020 look for the NFL to look more like Major League Baseball: half-a-dozen big market cities with all the players and all the money, and a number of smaller market teams struggling to field a competitor. And look for season tickets to the Los Angeles Packers game coming to a ticket outlet near you.
I'm not sure what the owners mean by "share the risk", I think that's just PR rhetoric. Owners take all the business risk. It's clear they think the last deal gave too much money to the players, and they want/need this to be lessened. My em,ployers have no obligation to show me their books, so again I believe this demand is also PR rhetoric.
I hope the owners have the gonads to see this through, even bringing in so called 'scab' players if it comes down to it. I root for purple, not any individual players (I obviously have my favorites). In this economy, I don't see the fans siding with the players on this. They are going to be skewered. There is ONLY trickle down economics, and the fact that a family cannot afford to go to game is directly related to inflated salaries. If they try to lower salaries on their own, they will face a potential collusion suit. This can only help the fans. Once scab players come in, I would terminate negotations and move forward without the union. The players will trickle back.
D Smith will not allow the negotations to go this far, but I can hope!
The landscape of the NFL, the End of the NFL as we know it, is a natural evolution of the game. Organizations adapt to cultural changes or they expire. There is no tragedy here.
If I had power within the NFLPA, I would start the process of creating a Player’s Owned League. Stocking player (union) owned teams wouldn’t be a problem. Creating or renting facilities, health care, legal matters, filling jobs, etc. would take time to finalize.
I would plan for the league to come into existence at the time of the expiration of the television contracts. If the networks were aware of the Player’s League (PL), existing TV contracts would not be renegotiated until their expiration date. At that time the TV networks would have to consider the viability of the PL – how viable would the PL be if the networks awarded them a multi-billion dollar contract?
Current players may take a hit for a year or two in their remuneration. But going forward, they would not have to share any of the profits with the owners, so their revenue source could increase substantially.
As a side note, who would be hiring the coaches and other team and league-wide administrators? How would that dynamic work?
And if nothing else, the PL would be a huge bargaining chip within the current negotiations.
I'm not sure what it costs to run a franchise, but I can't imagine even players like Peyton Manning can afford to run a football team. Perhaps Robert could chime in on the feasability of AGJ's suggestion. I would have no interest in such a league, can you imagine the lack of oversight? Players policing themselves? *shiver*
Add to that the lack of business intelligence of the average NFL player and I just don't see this working.
The players have a partnership right now with a guaranteed portion of revenue going to the players WITH NO BUSINESS RISK to the player. The portion amount will be adjusted in these negotiations, but it seems like a golden goose to me. Why kill it?
I'm not sure what it costs to run a franchise, but I can't imagine even players like Peyton Manning can afford to run a football team. Perhaps Robert could chime in on the feasability of AGJ's suggestion. I would have no interest in such a league, can you imagine the lack of oversight? Players policing themselves? *shiver*
Add to that the lack of business intelligence of the average NFL player and I just don't see this working.
The players have a partnership right now with a guaranteed portion of revenue going to the players WITH NO BUSINESS RISK to the player. The portion amount will be adjusted in these negotiations, but it seems like a golden goose to me. Why kill it?
Let's be honest. There are no good guys in this fight. The players, while many are extremely dedicated, etc, are overpaid vastly for what they add. There are a dozen or so guys people will pay to watch in the entire league. The rest are filler. You could let each team pay five guys big salaraies and the rest $100k a year, and the product would not suffer much. That $100k is still double what most of those guys could earn anywhere else.
The owners are walking contradictions. They talk the talk of business, profits, losses, risk, etc. The reality is they have monopolies, which they are trying to expand, and for most of them, they are almost completely subsidized by municipalities which cannot fund adequate school systems but somehow can free up hundreds of millions for sports stadiums which the vast majority of their taxpayers will never set foot in.
The players have no leverage, as they can be easily replaced and have very short careers to earn their life's savings in. The owners surely do not want a lockout, as it would take decades to earn back what a lost season would cost them. Somehow they will reach an agreement, probably around june or July of 2011.
Stadium debt is an issue that franchises should resolve internally prior to financing and building these new facilities. If the debt service is prohibitive, then don't self-finance the stadium.
Unlike baseball, where it's all about market-size, the NFL haves and have-nots are separated by the varied rates of return that franchises get from the stadium deals.
This is about a specific group of owners that wants three things:
1. New stadiums that maximize revenues to their respective franchises.
2. Operating expense reductions (mainly players' salaries) to free capital that helps them service the stadium debt.
3. Exemptions from league-wide revenue sharing for revenues that are driven by their new stadiums.
It's Jerry Jones, Bob Kraft and other privately-financed stadium owners vs. everybody else.
Mack has hit on the key weakness in the owners position to create a lockout.... DEBT.
If you've financed a stadium like the JonesMahal you will have massive debt payments throughout your note.
Can't imagine that the financial institutions owed big money will be on the side of ownership in a work stoppage initiated by ownership.
When the testicles of the owners with the heaviest debt are placed on the anvil of financial pain with a ticking clock, a deal will take place before the hammer swings.
Snake, true it is a double edged sword. They have to keep feeding it (ie creating revenue) but the costs are getting higher. I wonder what the salaries are as a percentage of that debt. If it is over 40-50% they are in deep doo doo
I think that Jbuskirk will get his wish. I don't know about scab players though. I personally don't think the public will buy it now. Times have changed and people have more options about how to spend an entertainment dollar.
Andrew last year wrote about Upshaw saying that the players should share in the Lambeau Atrium revenue. The hell with that. The players didn't build it, the taxpayers of Wisconsin did and shareholders too.
With the present salary cap based on revenues, it's hard for me to understand how the NFL thinks the players don't already share some of the risk of a bad economy. If revenues decline due to the bad economy, so will the salary cap, and so will the amount of money that flows to the players. It seems like the NFL is just throwing out this "sharing the risk" thing as a talking point that has little basis in reality, and the author of this article bought it hook, line and sinker.
Boy this rhetoric is getting bad. In this day and age of 10+% unemployment, shrinking revenues and bad economy to have such vehement union venting is really quite disturbing. I really would like to know why all of these sports organizations feel that it is their right to demand a percentage of the profits. Especially when there is no down side from a performance-based perspective. Imagine if entertainers such as Bon Jovi or The Eagles showed up and didnt play or played horribly - people would be demanding and getting their money back and the promoters wouldnt be signing them without guarantees etc etc. These boys better start getting their PR organized much better because the ticket buying, merchandise buying general public will not stand for the threat of a work stoppage when they are paid an insane amount of money. A final note about risk - the players do not share any part of the risk - if they get signed they get paid big time - currently the higher they are drafted the more insane the pay. If they become a free agent and are playing well they can get even more insanely paid. Where is the risk - most cases they either get it up front or just for making the roster - dont see any paying it back if they are not playing well!
""""According to Smith, the NFL's opening offer called for an 18% rollback in total football revenue.
On average, each of you needs to take a $340,000 pay cut to save the National Football League' Tough sell -""""
It is may be a tough sell to tell NFL players that instead of making $1,888,888 on average you will be making $1,548,888 - But tell me why they are screaming at the bankers for their bonuses. That is the starting point for negotiations isnt it?? Fans need to unite and form the football fans version of the Tea Party and fight ridiculous salaries and dumb owners who overpay - why do you have to make first Ely Manning and then Rivers and now Peyton Manning and Drew Brees successively the highest paid players ? and then it is no wonder the owners are looking to ding the fans anyway they can like seat licenses and $10 hotdogs - Things need to get back to some form of reason.
""""According to Smith, the NFL's opening offer called for an 18% rollback in total football revenue.
On average, each of you needs to take a $340,000 pay cut to save the National Football League' Tough sell -""""
It is may be a tough sell to tell NFL players that instead of making $1,888,888 on average you will be making $1,548,888 - But tell me why they are screaming at the bankers for their bonuses. That is the starting point for negotiations isnt it?? Fans need to unite and form the football fans version of the Tea Party and fight ridiculous salaries and dumb owners who overpay - why do you have to make first Ely Manning and then Rivers and now Peyton Manning and Drew Brees successively the highest paid players ? and then it is no wonder the owners are looking to ding the fans anyway they can like seat licenses and $10 hotdogs - Things need to get back to some form of reason.
Klaggs:
as far as risk sharing goes, I think it is flawed to examine it on a player-by-player basis. The bottom line is that under the current system, the players, viewed as a whole, get a certain percentage of revenues. If revenues fall, so does this amount.
As I am sure you know, there are several battles being fought. One is the battle of the sound bites, which can be overlooked as mere cocktail conversation. Interesting to a point, and more interesting as the alcohol flows; a precursor to nothing.
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Feb 03, 2010
01:54 PM
Sorry to say this but it looks like a strike .Cant say that I sympathize with the players union. I do sympathize with some players though. But that is typical of unions - representing principals over people. First all it doesnt matter whether they see the books or not - every company probably carries several sets of books. The NFL is making money - maybe not as much as they should. Most players are making money and some of them too much. Some players ie draftees are making more than what they should without proving themselves and we as ticket purchasers and merchandise buyers pay for that. Some players get ruthlessly cut because the teams have to keep these draftees even though they have been good employees. Some players suffer from post career injuries and are not properly supported because the union wont give something up for so that the owners can fund this. Football has many good things going for it - hopefully they wont go the way of baseball and kill the goose that laid the golden egg but I doubt it - Goodell and Smith seem bent on a strike.