Forbes Mag article on the CBA

[Kelly the Dog]

Without getting a clear look at the real books, it's impossible for us fans to know with any certainty whatsoever how much a team actually makes in profit. For example, do the Forbes numbers include the monies the team individually makes from the luxury boxes, or just the league-wide numbers. Does it include local sponsorships and things like radio rights? There are dozens of ways books, even the ones made available to the public, can be shown to either make it look like they made a lot more or a lot less.

 

IMO, Packers could just as easily have made 133 million or 3 million in profit before taxes than 33 million.

 

The most surprising thing in the article to me was the amount ESPN is allegedly willing to pay for the new TV rights. Astronomical, at a time when TV networks are struggling to arm themselves against the web and piracy, etc.

 

Also, the rookie wage scale will be interesting to see how it plays out. Using average salaries for rookies is just plain stupid. The only salaries that are really out of whack are the ones first rounders get, and it's really only the top 15 or so in the first round that get foolishly huge contracts. Second rounders don't make a lot of money at all, relatively.

Edited January 15, 2011 by Kelly the Fair and Balanced Dog

[Vinny4sum]

I suspect there is more to it than that.

Keep in mind that the Green Bay Packers ownership is unique:

"The Packers are the only non-profit, community-owned major league professional sports team in the United States"

They are owned by shareholders, and if sold, the money goes to the Green Bay Packers Foundation, a charity.

We'd need to look at last year's balance sheet and this years, to understand the drop in profit, but as a non-profit organization, it's not clear to me what happens to their "profit" anyway.

 

I doubt fan attendance dropped, even in the bad economy.

Green Bay is one of the few places with more fervent fans than the Bills (hence the traditional Lambeau Leap) and the team is winning. And the fans like beer.

I'd be surprised if their revenues dropped that much.

 

My guess is: 1) the drop in profits reflects something else - donation to a charity, infrastructure investment, or increased expenses

2) Green Bay is not at all reflective of the NFL as a whole because their ownership is such a different beast

 

Well it appears wages may have had something to do with increased expenses, the Packers total payroll was 94 million in 2008 and 114 million in 2009.

[....lybob]

Well it appears wages may have had something to do with increased expenses, the Packers total payroll was 94 million in 2008 and 114 million in 2009.

Aaron Rogers new contract with 20mil guaranteed probably accounted for most of that.

[JohnC]

Without getting a clear look at the real books, it's impossible for us fans to know with any certainty whatsoever how much a team actually makes in profit. For example, do the Forbes numbers include the monies the team individually makes from the luxury boxes, or just the league-wide numbers. Does it include local sponsorships and things like radio rights? There are dozens of ways books, even the ones made available to the public, can be shown to either make it look like they made a lot more or a lot less.

 

 

 

The owners have an incentive to hide their profitablity, not their lack of it. If the owners were losing money the owners would be eager to demonstrate that fact to the union and the fans. When the NHL went through their lockout it was obvious, even to the players' union, that most of the franchises were losing money. Thus a new CBA structure had to be constructed to deal with that more stringent fiscal reality. That certainly is not the case in the NFL.

 

Don't misconstrue my point about the owners' position on the CBA: There needs to be some changes to the current CBA, most notably a more realistic rookie salary structure. But the claim that the owners are losing money and are on an unsupportable fiscal path is bogus. It is simply greed.

Edited January 15, 2011 by JohnC

[Hplarrm]

I also thought that the Forbes article provided a far more straightforward explanation of the situation than most. One can easily disagree to some extent about the relative motivations it assumes, but in general, the facts know see, to be well analyzed and stated.

 

The big issue here is that the unknown facts are the question of what are the actual individual team fiscal situations and since the NFLPA has asked for that to be revealed and the NFL has refused it is not unreasonable to assume that these facts would undercut the NFLs case.

 

It is particularly interesting to me that the NFLPA proposal is not one to expand their power or $ take but to maintain the status quo. Even if the status quo is not as lucrative as the owners would like it clearly is doable. The GN numbers are likely not those of the average team but in the absence of the NFL providing real numbers it is not unreasonable to realized that they actually may be wrong because the average team makes a lot more.

 

I do think the article actually does give too short a shrift to weapons potentially on the NFLPAs side.

 

1. As mentioned above, the debt loads carried by some teams are likely to be something which will force the owners to cave. I actually am quite surprised and amazed that the networks have agreed to pay the NFL even if they do not provide the networks with games to sell soap, beer, and car ads around. Yet, even if this subsidy for the owners from other for profit businesses is true, my guess is that this will not be true for all the vendors and businesses which provide a far smaller amount of income than the nets, but still a lot.

 

When the banks come calling for loan payments and the teams have a large source of income in the nets to pay but do not have the marginal millions from other sponsorship deals the pressure on owners to settle will be high.

 

2. Yhe NFLPA under Ed Garvey and the AFK-CIO types got their butts licked by the mif 80s lockout and replacement players. However, the players led by Upshaw were now much more willing to listen and try new ideas. The untought of notion of decertification caused the owners to run and not walk to essentially cave in to NFLPA demands )as demonstrated when Upshaw said publicly before the last negotiation that the salary cap # would need to start with a 6 (the final deal set the new total revenue cap at 60.5%, What new idea or approach will the NFLPA take> It is doubtful that they will simply be static in the face of the owners forcing a retalk.

 

3. Ovverall I think that this last point highlights the fact that the NFL actually is the beneficiary of a huge taxpayer subsidy provided by the NCAA (many of its members are taxpayer funded entities like the U. of Mebraska et al. Most other major leagues actually pay exhorbitant contracts to kids to train and develop them (MLB contracts for 16 year olds and South American recruiting and contract- NHL developmental and minor league teams(.

 

The NFL not only gets the subsidy of the training and development of these child athletes, but even gets their coperation in the Combine and on campus pro days. Even better for the NFL (and current players through the NFLPA they actually have colluded to do the un-American thing of denying adults the ability to sign contracts until they reach 21 amd uses the draft to restrain free trade of player negotiation by locking them to one team,

 

The downside of this benefit for the NFL is that they are negotiating with adults rather than with the minors who with their parents bind themselves to team when the athletes are kids. My bet is that he talented 10th of adult players in the NFLPA may well lead other players to access other sources capital than the current NFL team owners if a lockout occurs.

 

My guess is that a deal will be made because if one is not then the NFL owners are going to take it on the chin.

[SDS]

2. Yhe NFLPA under Ed Garvey and the AFK-CIO types got their butts licked by the mif 80s lockout and replacement players.

 

[RJ (not THAT RJ)]

 

 

If he does not bother to read his posts (he has admitted as much in the past when explaining his typos), why should anyone else?

[In-A-Gadda-Levitre]

My guess is that a deal will be made because if one is not then the NFL owners are going to take it on the chin.

The owners get a big chunk of change from the networks and DirectTV regardless if the games are played or not, and don't pay player salaries or benefits , along with reduced expenses in many cases (if there's no deal). They play hardball and the NFLPA, or whatever new union succeeds them, need to compromise, in order to maintain their lifestyles, provide for their families, etc.

 

How do the owners take it on the chin, outside of the court of public opinion?

 

I agree that might be a huge PR problem for the league, but the owners will get most of what they want. Simply because they can outlast the other much more comfortably, while of course, making less money then they would have if there wasn't a lockout.

Edited January 16, 2011 by In-A-Gadda-Levitre

[reddogblitz]

the average team earning $33 million in 2009 in operating profit (earnings before interest, taxes, depreciation and amortization)

This is laughable that they put it this way. Makes it sound like they're not being totally honest or have something to hide. That's like saying the average schmuck makes his gross pay before taxes and social security and insurance. Threrfore, (s)he's well paid. HAH!

 

As far as working for a profitable company and taking a pay cut, that's what my wife's company did. They put in a 5% cut across the board. They are a big company and I know you've heard of them.

[NoSaint]

This is laughable that they put it this way. Makes it sound like they're not being totally honest or have something to hide. That's like saying the average schmuck makes his gross pay before taxes and social security and insurance. Threrfore, (s)he's well paid. HAH!

 

As far as working for a profitable company and taking a pay cut, that's what my wife's company did. They put in a 5% cut across the board. They are a big company and I know you've heard of them.

 

 

Truly there are a lot of things hidden - that 33 million would shrink rapidly if you start looking at loans for stadiums and original purchase of a team.

 

Truly the NFL owners have NOTHING to gain by opening the books. It's numbers the average fan wouldn't be able to comprehend and would either scream look at those greet bastards or OMG my teams going bankrupt and there going to have to move to LA. There is nothing that could even be remotely construed as positive coming from opening the books to fans.

[Bills(70)]

Truly there are a lot of things hidden - that 33 million would shrink rapidly if you start looking at loans for stadiums and original purchase of a team.

 

Truly the NFL owners have NOTHING to gain by opening the books. It's numbers the average fan wouldn't be able to comprehend and would either scream look at those greet bastards or OMG my teams going bankrupt and there going to have to move to LA. There is nothing that could even be remotely construed as positive coming from opening the books to fans.

You are correct, and you have no idea how close to correct you are.

I've been at a table where 1 or 2 billion dollar deals were being discussed. Bottom line here is they cannot actually expect me to believe that at an average of 33 million annually league wide, there would be some nut willing to finance that, especially give the current state of the economy and the fiscal sector. People need to except the fact that high risk investment has officially gone the way of the doodoo, and for a good long while I might add.

There is no inflationary factor built in that's realistically flexible enough to curve itself on a sliding scale outside of the roughly 2% annual range. We all know (or atleast you better dam well know if you plan to make some money in the next 10 years) that inflation is coming, and coming hard. There has never been a successfully controlled deflationary period then inflationary period to equate out to a balance sheet. It doesn't work, it can't work.

 

The owners are the ones people should be paying attention to. The public sectors are out of money to help stave off a shutdown in any particular situation. The owners, not the players, have the upper hand now. If a lockout occurs, it's merely a write off for the owners, no biggy given the financial burden that lifts. Adn the most important thing of all, the owners only lose concession and gate ticket sales, an amount to be sure, but nothing compared to merchandising of NFL products.

[JohnC]

Truly there are a lot of things hidden - that 33 million would shrink rapidly if you start looking at loans for stadiums and original purchase of a team.

 

Truly the NFL owners have NOTHING to gain by opening the books. It's numbers the average fan wouldn't be able to comprehend and would either scream look at those greet bastards or OMG my teams going bankrupt and there going to have to move to LA. There is nothing that could even be remotely construed as positive coming from opening the books to fans.

 

You are right that the owners might have nothing to be gained by opening them up their books to scrutiny because it might undercut their bogus claims. They are making the claim that under the current CBA structure their businesses are in financial peril. What if that isn't the case?

 

If the labor conflict between the players' union and the owners were sent to an arbitrator how would the arbitrator react if the owners told the arbitrator that we can't give you all the relevant information because you won't understand it or we are not going to hand over the material because it is not in our best interest?

[JohnC]

You are correct, and you have no idea how close to correct you are.

I've been at a table where 1 or 2 billion dollar deals were being discussed. Bottom line here is they cannot actually expect me to believe that at an average of 33 million annually league wide, there would be some nut willing to finance that, especially give the current state of the economy and the fiscal sector. People need to except the fact that high risk investment has officially gone the way of the doodoo, and for a good long while I might add.

There is no inflationary factor built in that's realistically flexible enough to curve itself on a sliding scale outside of the roughly 2% annual range. We all know (or atleast you better dam well know if you plan to make some money in the next 10 years) that inflation is coming, and coming hard. There has never been a successfully controlled deflationary period then inflationary period to equate out to a balance sheet. It doesn't work, it can't work.

 

Your position on this matter doesn't make sense. You are basically saying (the same thing as No Saint) that the owners' position can't be exposed to examination because the opposite party isn't capable of understanding the complexity of our position. That is the type of argument that autocracies use against their people. If that isn't a condescending and arrogant approach to take, then I don't what is.

 

Can you imagine a business involved in a legal dispute telling the judge that it can't provide the relevant documentation to you because you won't be able to understand the meaning of it? As I stated in my response to No Saint maybe the reason the owners are so reluctant to open their books is because it demonstrably undercuts their case?

Edited January 16, 2011 by JohnC

[Bills(70)]

Your position on this matter doesn't make sense. You are basically saying (the same thing as No Saint) that the owners' position can't be exposed to examination because the opposite party isn't capable of understanding the complexity of our position. That is the type of argument that autocracies use against their people. If that isn't a condescending and arrogant approach to take, then I don't what is.

 

Can you imagine a business involved in a legal dispute telling the judge that it can't provide the relevant documentation to you because you won't be able to understand the meaning of it? As I stated in my response to No Saint maybe the reason the owners are so reluctant to open their books is because it demonstrably undercuts their case?

I'm not stating that they shouldn't be exposed, I am stating I do not believe the owners (outside of GB) have any responsibility to do so.

I do agree they should negotiate from a position of integrity, but at the same time, it's the owners who should be making the most money, not the players.

 

If I look at the NFL as a business (which it is), then I would have to include all expenses as liabilities, including the players contracts, stadium expenses...etc....etc.....

I cannot subscribe to the average of 33 million on 32 NFL teams. That makes no sense what so ever given the overall net worth of the NFL product.

I do believe in price controlling in the current economic environment given the affects it has on the overall product. Football being the number 1 sport in America currently, the owners have no motivation to show the records/books.

Like I said, the owners are in the drivers seat now, and the players can fully expect a "hold the line" or "reduce expenses" mentality from ownership given the reduced purchasing power within the market. As ticket prices, concessions and merchandise pricing go up, there has to be an off setting cost somewhere else to maintain a cash flowing business. The owners or the players? Thats the question, and as I stated, the owners control the overall product, they are now in the drivers seat.

[l< j]

 

So should a team, which is assuming all of the business risk, make only a few million more than an average quarterback in the league?

 

There are other, significant risks involved that are all on the players' side. And I know you are aware of those, don't want to come off as lecturing. But surely that should be part of this discussion, even if they are difficult to quantify.

 

In addition to the question of TV contracts that someone was smart enough to raise, the significance of public subsidy to the rise in value of the franchises is important. (Where would the Browns be without the taxpayer-built stadium in Cleveland? Answer: Either worth a lot less money, or in Baltimore.) And even the Patriots, where Kraft and co. built their own stadium (I believe I have that right) have gained from the public financing of stadiums nearly everywhere else.

 

Jones got $300 million+ in direct subsidies and tax-preferred debt for his cathedral in Dallas; the Bills, Pittsburgh, Ravens, San Diego, Oakland, and more have all had some sort of public support of their stadiums. Some for big amounts.

 

This support or subsidy is off the table for at least the near future. How does that factor into the effort to craft a business model for the NFL and its players moving forward? I don't know.

 

kj

[Doc]

There are other, significant risks involved that are all on the players' side. And I know you are aware of those, don't want to come off as lecturing. But surely that should be part of this discussion, even if they are difficult to quantify.

 

In addition to the question of TV contracts that someone was smart enough to raise, the significance of public subsidy to the rise in value of the franchises is important. (Where would the Browns be without the taxpayer-built stadium in Cleveland? Answer: Either worth a lot less money, or in Baltimore.) And even the Patriots, where Kraft and co. built their own stadium (I believe I have that right) have gained from the public financing of stadiums nearly everywhere else.

 

Jones got $300 million+ in direct subsidies and tax-preferred debt for his cathedral in Dallas; the Bills, Pittsburgh, Ravens, San Diego, Oakland, and more have all had some sort of public support of their stadiums. Some for big amounts.

 

This support or subsidy is off the table for at least the near future. How does that factor into the effort to craft a business model for the NFL and its players moving forward? I don't know.

 

kj

The players know the risks involved in crashing their over-sized bodies into other over-sized human beings. Moreover, they've never been more protected than they are right now. Way back when, on the field, the old-timers used to commit what would otherwise be felonies anywhere else, and got paid nothing. And the rates of players dying or getting paralyzed are no greater than any other line of work.

 

What I'd like to know is how much do companies pay their work force as a percentage of total revenue? Is it on the order of what the NFL pays players?

[Pine Barrens Mafia]

Forbes writing a pro-union puff piece? I don't think so. It seems pretty clear to me that it's a power grab by the people who run the most profitable sports league in America. Asking for pay cuts despite overall mammoth profitability (which will increase when the new ESPN contract gets worked out) is rich.

 

 

Poor millionaire players. How EVER will they survive when they have to...you know...get REAL jobs.

[JohnC]

I'm not stating that they shouldn't be exposed, I am stating I do not believe the owners (outside of GB) have any responsibility to do so.

 

The owners are making the claim that they needed to re-open the CBA agreement based on the changing economic environment. What if the reality of the situation is that they are actually making more money than they have ever made? How is their claim going to be proved or disproved? It is going to be done by one way only. That is by an examination of their books. There is no other way. What's the Reagan saying: Trust, but verify.

 

I do agree they should negotiate from a position of integrity, but at the same time, it's the owners who should be making the most money, not the players.[/font]

 

The only way to negotiate from a position of integrity is to have a real accounting of the financial status of the teams. There is no other way. If you know of another way then so state it. As to the issue of who should be making the most money that is simply a matter of negotiation between labor and management. The owners are astute businessmen. They are tough SOBs who are going to look out for their interests. There is no need to worry about them being outmaneuvered by labor. As you accurately noted they have the leverage in the negotiation and rest assured they will use that leverage to the maximum level.

 

I cannot subscribe to the average of 33 million on 32 NFL teams.[/font]

 

I agree with you that taking an average to evaluate the financial status of the league distorts the reality of the financial status of the different franchises and of the league. There is a simple solution. Open up the books or have them reviewed by a credible neutral party to get an accurate financial picture. The owners want to make dire claims yet they adamantly refuse to provide the evidence for what I believe to be are bogus claims. Any fair-minded person would have to conclude that the owners are simply being disingenuous in this matter. My response to them is simple: Put up or shut up!

 

Football being the number 1 sport in America currently, the owners have no motivation to show the records/books.

Like I said, the owners are in the drivers seat now, and the players can fully expect a "hold the line" or "reduce expenses" mentality from ownership given the reduced purchasing power within the market. As ticket prices, concessions and merchandise pricing go up, there has to be an off setting cost somewhere else to maintain a cash flowing business. The owners or the players? Thats the question, and as I stated, the owners control the overall product, they are now in the drivers seat.

 

There is no doubt that the owners can out-muscle the players in the CBA negotiation. One way to kill the golden goose which has richly benefited the owners and players is to be captivated by one's own excessive arrogance and insatiable greed. Professional football is a currently a thriving business. It doesn't have to always be that way.

[Malazan]

The article is formatted well and covers many of the topics on the table, but it has too many assumptions.

 

Did Free Agent spending dramatically increase in the uncapped season?

 

In an uncapped season, there was concern that spending would go spinning wildly out of control. But, clubs in the NFL did the opposite, with spending on FAs growing at less than half the pace that it did in the last year of the capped season.

 

This type of writing kills the credibility. It ignores outright that a big reason for the decreased spending was the looming lockout itself.

 

It's heavily slanted towards the players for some reason. I'm certainly not sympathetic to the owners, but I'd like to see a more objective article.

[Pine Barrens Mafia]

It's heavily slanted towards the players for some reason. I'm certainly not sympathetic to the owners, but I'd like to see a more objective article.

 

I hope the owners break the players union for the sake of small-market teams. Any Bills fan that's FOR the players is against the team's future in Buffalo. Unions destroyed industry in WNY, See: Steel, Bethlehem. Let's not let a union destroy the only joy in that godforsaken place.

Edited January 16, 2011 by joesixpack