If you enjoy seeing big, tough men pushed around by old guys in suits, you’re going to just love following the coming NFL-NFL Players Association (NFLPA) labor negotiations. On the other hand, if you like a fair fight, I suggest that you change the channel.
The current collective bargaining agreement (CBA) expires on March 4. All you NFL draftniks out there, fear not! There will still be the combine in Indianapolis (February 28-March 1) and the draft (April 28-30). If there’s no new agreement by then (there won’t be), NFL operations will, for all practical purposes, shut down. This includes the ability to sign any of the drafted players.
So how did we get here, what are the issues and what happens next?
How did we get here?
The current CBA went into effect in 1993 and has been amended/extended a couple times since then, most recently in 2006. In 2010, the two sides had the ability to extend the agreement. The players happily agreed. The owners adamantly didn’t.
This sets up the very real possibility of a work stoppage for the 2011 season. If it happens, it will be the first such stoppage for the NFL since 1987 when the owners locked out the players and went on with the games using “replacement players.”
The basic revenue split
In most labor negotiations, each of the two sides claims to have briefcases full of issues. Most are nonsense and this NFL-NFLPA situation is no different. Because of the very high profile of NFL football, the negotiations will include a public relations war in which these relatively frivolous proposals are used to distract and sway public opinion to one side or the other.
Don’t be fooled. There’s really only one issue and to no one’s surprise, it’s who gets how big a portion of the approximately $9.0 billion NFL revenue pie.
In the current agreement, team owners receive the first $1 billion of revenue…you may hear this “off the top” portion referred to as “expense credits.” After that, 60% goes to the players and 40% to the teams. On the current revenue base, it’s roughly a 53-47 split in favor of the players. The owners have proposed that they double what they get off the top (from $1 billion to $2 billion) and that the players then get 58% of what remains. This would change the current 53-47 split that favors the players to about 55-45 in favor of the owners.
You can pretty much ignore all the other issues. If the players agreed to this owners’ proposal, they’d have a signed deal in a matter of days.
The NFLPA recently proposed to simplify matters by getting rid of the expense credits and go to a simple 50-50 split. Since this actually lowers the players’ percentage, it sounds pretty reasonable, particularly for an opening proposal. The owners said they were insulted and canceled future talks, leaving no doubt that they intend to play some “good ol’ country hardball” in their negotiations with the players. It’s because of this stance that most observers predict a protracted struggle.
Other issues
Among the secondary issues, the one that has gotten the most press is lengthening the regular season from its current 16 games to 18 games and eliminating 2 preseason games. NFL Commissioner Roger Goodell claims that this proposal is essentially a fan mandate. On this point, Goodell is only kinda right. Many fans, and particularly season ticket holders, would like to see the preseason shortened, but in a recent AP poll, only 45% of those describing themselves as NFL fans favored Goodell's 2-18 proposal, and only 18% strongly favored it…hardly a mandate.
Despite fans’ lukewarm reception, Goodell continues to beat the 18-game season drum and for good reason…not because fans want it, but because the league receives far more in television revenue for regular season games than they do for preseason games…the estimate is that the lengthened regular season would add another $500,000,000 to the league’s coffers. The players are firmly against expanding the regular season, citing increased chance of injury. They also see the proposal as hypocritical in light of the NFL’s proclaimed increased emphasis on player safety.
If you’re looking for an issue where the two sides can agree it’s the NFL rookie salary scale. Well, at least they can agree that any system that pays rookie Sam Bradford more than this year’s unanimous selection for MVP, the Patriots’ Tom Brady, is seriously messed up. Importantly, it’s easy for both sides to take money from the pockets of players who are not currently members of the union.
Naturally, the two sides differ on what to do with the savings and I’ll only give you one guess as to the nature of their disagreement. Correct…the owners want to keep the savings and the players want the savings distributed to them. The players also want to shorten the length of rookie contracts from 5 years to 3 which would, for those who make it to their 4th season, enable them to begin recouping some of the money they lost due to their “sacrificial lamb” status in these negotiations. The owners of course, have absolutely no interest in hastening the onset of free agency for these players.
One last issue that is likely to be talked about a lot in the media is retired player pensions and health benefits. The reason that it will get more than its fair share of airtime is that it can (and will) be used by both sides as a “public relations club” with which to bludgeon their opponent. It also has the added advantage of posessing heartstring-pulling human interest angles…sad tales of our former heroes living in near poverty conditions, former players unable to afford costly treatment for their football-related disabilities and generally making fans feel that “someone has to do something about this, Dammit!”
I mean, it’s truly a great issue…too bad neither side really cares all that much about it.
Under the current agreement, the benefits for retired players are the responsibility of the NFLPA. They have control of the pension and welfare fund and can allocate it as they see fit. From ownership’s perspective, if the players association wants to relieve the misery of retired players, all they need to do is to direct more money their way. After all, the players remain a brotherhood even after their playing days are over, right? Thanks to NFL personalities like Mike Ditka’s (and his NFL Alumni organization’s) open confrontations with former NFLPA head, Gene Upshaw over this issue, the union has received more than a few black eyes on this one.
The players association is fighting back by proposing that the owners designate 2% of their profits to retired players. In essence, they’re tired of being beaten up on this issue by the owners and are telling them to “put their money where their mouth is.” Not surprisingly, the owners find the current situation, and the difficult PR position in which it places the NFLPA, completely satisfactory.
Naturally, there will be other issues discussed, like how quickly pensions become vested, limitations on suspensions and fines and player safety, but they can be easily resolved.
So what’s going to happen?
Unless I miss my guess, for the next couple months, nothing. Players have been paid for the past season and the first preseason game is still 6 months off. Sure, there will be talks and all kinds of posturing, but until the threat of lost earnings and revenues loom a good deal larger than they do now, neither side is likely to yield much from their opening positions. Expect an owners’ lockout…also expect most fans to incorrectly call it a strike…they always do.
After that, I expect this to be a pretty one-sided affair. It almost has to be since the owners hold just about all the cards.
Probably the biggest advantage the NFL owners have in this dispute is the unique way the league is run financially. In the other professional sports leagues, local television revenue is a large portion of most teams’ revenue. It’s also the key revenue item that creates the “big market vs. small market” distinction that is so important in those sports, since the differences between a local TV deal in New York is many times more valuable than a local package in, say, Kansas City. NFL teams have virtually no local television revenue (preseason games only). NFL teams live off of their national TV contracts that are negotiated by the league. This revenue is shared equally among the teams. The NFL also has the most even revenue sharing of game-day “gate receipts” at 60%-40% (home team-road team). In contrast, NBA home teams keep 94% of gate receipts. One result of the “all for one and one for all” NFL financial dynamic is that it creates one very cohesive group of rich guys.
The current collective bargaining agreement (CBA) expires on March 4. All you NFL draftniks out there, fear not! There will still be the combine in Indianapolis (February 28-March 1) and the draft (April 28-30). If there’s no new agreement by then (there won’t be), NFL operations will, for all practical purposes, shut down. This includes the ability to sign any of the drafted players.
So how did we get here, what are the issues and what happens next?
How did we get here?
The current CBA went into effect in 1993 and has been amended/extended a couple times since then, most recently in 2006. In 2010, the two sides had the ability to extend the agreement. The players happily agreed. The owners adamantly didn’t.
This sets up the very real possibility of a work stoppage for the 2011 season. If it happens, it will be the first such stoppage for the NFL since 1987 when the owners locked out the players and went on with the games using “replacement players.”
The basic revenue split
In most labor negotiations, each of the two sides claims to have briefcases full of issues. Most are nonsense and this NFL-NFLPA situation is no different. Because of the very high profile of NFL football, the negotiations will include a public relations war in which these relatively frivolous proposals are used to distract and sway public opinion to one side or the other.
Don’t be fooled. There’s really only one issue and to no one’s surprise, it’s who gets how big a portion of the approximately $9.0 billion NFL revenue pie.
In the current agreement, team owners receive the first $1 billion of revenue…you may hear this “off the top” portion referred to as “expense credits.” After that, 60% goes to the players and 40% to the teams. On the current revenue base, it’s roughly a 53-47 split in favor of the players. The owners have proposed that they double what they get off the top (from $1 billion to $2 billion) and that the players then get 58% of what remains. This would change the current 53-47 split that favors the players to about 55-45 in favor of the owners.
You can pretty much ignore all the other issues. If the players agreed to this owners’ proposal, they’d have a signed deal in a matter of days.
The NFLPA recently proposed to simplify matters by getting rid of the expense credits and go to a simple 50-50 split. Since this actually lowers the players’ percentage, it sounds pretty reasonable, particularly for an opening proposal. The owners said they were insulted and canceled future talks, leaving no doubt that they intend to play some “good ol’ country hardball” in their negotiations with the players. It’s because of this stance that most observers predict a protracted struggle.
Other issues
Among the secondary issues, the one that has gotten the most press is lengthening the regular season from its current 16 games to 18 games and eliminating 2 preseason games. NFL Commissioner Roger Goodell claims that this proposal is essentially a fan mandate. On this point, Goodell is only kinda right. Many fans, and particularly season ticket holders, would like to see the preseason shortened, but in a recent AP poll, only 45% of those describing themselves as NFL fans favored Goodell's 2-18 proposal, and only 18% strongly favored it…hardly a mandate.
Despite fans’ lukewarm reception, Goodell continues to beat the 18-game season drum and for good reason…not because fans want it, but because the league receives far more in television revenue for regular season games than they do for preseason games…the estimate is that the lengthened regular season would add another $500,000,000 to the league’s coffers. The players are firmly against expanding the regular season, citing increased chance of injury. They also see the proposal as hypocritical in light of the NFL’s proclaimed increased emphasis on player safety.
If you’re looking for an issue where the two sides can agree it’s the NFL rookie salary scale. Well, at least they can agree that any system that pays rookie Sam Bradford more than this year’s unanimous selection for MVP, the Patriots’ Tom Brady, is seriously messed up. Importantly, it’s easy for both sides to take money from the pockets of players who are not currently members of the union.
Naturally, the two sides differ on what to do with the savings and I’ll only give you one guess as to the nature of their disagreement. Correct…the owners want to keep the savings and the players want the savings distributed to them. The players also want to shorten the length of rookie contracts from 5 years to 3 which would, for those who make it to their 4th season, enable them to begin recouping some of the money they lost due to their “sacrificial lamb” status in these negotiations. The owners of course, have absolutely no interest in hastening the onset of free agency for these players.
One last issue that is likely to be talked about a lot in the media is retired player pensions and health benefits. The reason that it will get more than its fair share of airtime is that it can (and will) be used by both sides as a “public relations club” with which to bludgeon their opponent. It also has the added advantage of posessing heartstring-pulling human interest angles…sad tales of our former heroes living in near poverty conditions, former players unable to afford costly treatment for their football-related disabilities and generally making fans feel that “someone has to do something about this, Dammit!”
I mean, it’s truly a great issue…too bad neither side really cares all that much about it.
Under the current agreement, the benefits for retired players are the responsibility of the NFLPA. They have control of the pension and welfare fund and can allocate it as they see fit. From ownership’s perspective, if the players association wants to relieve the misery of retired players, all they need to do is to direct more money their way. After all, the players remain a brotherhood even after their playing days are over, right? Thanks to NFL personalities like Mike Ditka’s (and his NFL Alumni organization’s) open confrontations with former NFLPA head, Gene Upshaw over this issue, the union has received more than a few black eyes on this one.
The players association is fighting back by proposing that the owners designate 2% of their profits to retired players. In essence, they’re tired of being beaten up on this issue by the owners and are telling them to “put their money where their mouth is.” Not surprisingly, the owners find the current situation, and the difficult PR position in which it places the NFLPA, completely satisfactory.
Naturally, there will be other issues discussed, like how quickly pensions become vested, limitations on suspensions and fines and player safety, but they can be easily resolved.
So what’s going to happen?
Unless I miss my guess, for the next couple months, nothing. Players have been paid for the past season and the first preseason game is still 6 months off. Sure, there will be talks and all kinds of posturing, but until the threat of lost earnings and revenues loom a good deal larger than they do now, neither side is likely to yield much from their opening positions. Expect an owners’ lockout…also expect most fans to incorrectly call it a strike…they always do.
After that, I expect this to be a pretty one-sided affair. It almost has to be since the owners hold just about all the cards.
Probably the biggest advantage the NFL owners have in this dispute is the unique way the league is run financially. In the other professional sports leagues, local television revenue is a large portion of most teams’ revenue. It’s also the key revenue item that creates the “big market vs. small market” distinction that is so important in those sports, since the differences between a local TV deal in New York is many times more valuable than a local package in, say, Kansas City. NFL teams have virtually no local television revenue (preseason games only). NFL teams live off of their national TV contracts that are negotiated by the league. This revenue is shared equally among the teams. The NFL also has the most even revenue sharing of game-day “gate receipts” at 60%-40% (home team-road team). In contrast, NBA home teams keep 94% of gate receipts. One result of the “all for one and one for all” NFL financial dynamic is that it creates one very cohesive group of rich guys.
Unfortunately for the players, an exceptionally tightly-knit ownership group is not all they need to overcome.
While most sports-related labor disputes are characterized as “millionaires squaring off against billionaires,” this isn’t nearly as true of the NFL (except for the owners being billionaires part) as it is of other pro sports. The NFL’s average player salary is “only” $1.3 million, ranking them behind the NBA ($4.9 million), Major League Baseball ($2.6 million) and even the NHL ($1.8 million). And averages don’t truly tell the story since a solid majority of NFL players earn less than $1 million per year. This is very important because, though the TV cameras will likely look for defiant comments from the players who are the most recognizable (and therefore highest paid), unions work on a “one member-one vote” basis.
Add to this the fact that no professional sport has a shorter average length of career than the NFL’s approximately 3 ½ years…and it’s not close. It will be unthinkable to a majority of the players to spend a season without football (and a paycheck that they can’t come close to matching outside the NFL).
And for those of you who say “the players are the game and owners can be replaced…the players should just start a new league,” please stop yourselves. It’s never worked before and certainly won’t work now. In addition to owning the teams, NFL owners own virtually all the premier football venues they play in and have standing agreements with the major networks. By the time “the players” could make this work, none of them would still be “the players.”
The players can’t win this one and my guess is that they know it. They’ll try mightily to plead for support through the media to force the owners to “be fair.” Unfortunately for them, poll after poll says that fans believe the players make too much money. The players know this too.
In the end, I see the real drama in all of this as being just how mercilessly the owners want to beat the NFLPA…it’s really their call. I don’t think that the owners have any particular ax to grind with the current NFLPA leadership, but that could change in the course of these negotiations. This said, the owners need a signed CBA with the rightful representatives of the players…without it, the player draft and other compensation-limiting aspects of the relationship between the teams and their players would violate US anti-trust laws.
My guess is that this dispute will last into the summer which means that Organized Team Activities (OTAs) will be scratched and the start of training camp will probably be delayed. My prediction is that no regular season games will be missed and the full 16-game schedule will be played…with the new 18-game schedule to begin in 2012. The owners will get their $2 billion in expense credits off the top and there will be something pretty close to a 58-42 split (favoring the players) on the remaining revenues. There will be a new rookie salary scale without a change to the length of rookie contracts. If this sounds pretty much like a clean sweep for the owners, you’d be right.
Add to this the fact that no professional sport has a shorter average length of career than the NFL’s approximately 3 ½ years…and it’s not close. It will be unthinkable to a majority of the players to spend a season without football (and a paycheck that they can’t come close to matching outside the NFL).
And for those of you who say “the players are the game and owners can be replaced…the players should just start a new league,” please stop yourselves. It’s never worked before and certainly won’t work now. In addition to owning the teams, NFL owners own virtually all the premier football venues they play in and have standing agreements with the major networks. By the time “the players” could make this work, none of them would still be “the players.”
The players can’t win this one and my guess is that they know it. They’ll try mightily to plead for support through the media to force the owners to “be fair.” Unfortunately for them, poll after poll says that fans believe the players make too much money. The players know this too.
In the end, I see the real drama in all of this as being just how mercilessly the owners want to beat the NFLPA…it’s really their call. I don’t think that the owners have any particular ax to grind with the current NFLPA leadership, but that could change in the course of these negotiations. This said, the owners need a signed CBA with the rightful representatives of the players…without it, the player draft and other compensation-limiting aspects of the relationship between the teams and their players would violate US anti-trust laws.
My guess is that this dispute will last into the summer which means that Organized Team Activities (OTAs) will be scratched and the start of training camp will probably be delayed. My prediction is that no regular season games will be missed and the full 16-game schedule will be played…with the new 18-game schedule to begin in 2012. The owners will get their $2 billion in expense credits off the top and there will be something pretty close to a 58-42 split (favoring the players) on the remaining revenues. There will be a new rookie salary scale without a change to the length of rookie contracts. If this sounds pretty much like a clean sweep for the owners, you’d be right.
Like I said, this one isn’t a fair fight.
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