In contrast to recent events in Japan, talking about a labor dispute in US Professional Football seems almost criminal. I'm sure the fans at DBN have their thoughts with those suffering in Japan at the forefront of their minds--I know I do. But this is a football blog and the events at the NFL talks yesterday make talking about anything else in the football world sort of trivial. As I watched the events surrounding the NFLPA de-certification and the subsequent lockout by the NFL, I started having a lot of questions come into my mind and most of those questions involved the NFLPA position and statements. I've spent quite a bit of time trying to find answers to those questions but we are now moving into the "propaganda" phase of the saga and it is difficult to sort the rhetoric from any concrete facts. But I'll try anyway.
The Events So Far
We know that for the past 11 days or so the NFL owners, the NFLPA and their various negotiators and lawyers have been meeting with federal mediators. All along, the point of these meetings has been to negotiate a new agreement. The NFL league's position, which started this whole process, is that they wanted more money off the top of NFL annual revenues. Namely a billion dollars. Below, I'll attempt to analyze what that number means. The league wanted several other things but the two most important were: to replace 2 preseason games with real games and to impose some kind of rookie salary structure like that in the NBA to control rookie salary inflation.
The NFLPA wanted a few things too but not enough to opt out of the current agreement so they wanted things just to stay as they are at least for the next two years.
The League's offers
There have been a lot of proposals made by the league. Since they are the ones trying to make a change, they have been making the proposals. Their reasoning all along has been that capital and other costs to do business are going up. They started with a lot on the table and a pretty high dollar amount. This is pretty standard in negotiation to start a lot higher than you really want so that you can end up where you really want to be and everyone can say they "got a good deal". If you've ever sold a home you've probably done this yourself. As time passed the league modified its position and this is where they ended up yesterday. I'm adding some of my own comments at the end of every item.
- Though the owners originally asked for $1 billion more off the top of annual revenue the offer they made on the 11th was for $325 million. The players reportedly put on the table at some point $550 million over the first 4 years of the agreement or $137.5 million. More on these numbers later. Do the owners need this money? That is a big contention with the union--that the owners have to prove they need the money. By why should the owners have to show "need"? Do the players have to prove that they need their salaries which by normal standards are quite high? Isn't it enough to assume that both sides want more money? I can't see why the player's union made proof of this need such a deal breaker unless they really didn't want a deal. Reportedly, the owners were actually in a conference call talking about agreeing to the player's demands for full disclosure at the time the NFLPA decertified.
- The league originally wanted to change 2 preseason games into 2 regular season games. They basically deferred this for 2 years in their final offer and made it a matter of negotiation at that future date. In other words, the NFLPA would have to agree to this change and the league could not unilaterally impose this. So this, in effect, took the 18 game season off the table for this deal.
- The league would institute a rookie wage scale with all savings going to veterans and retired players. This method of redistribution is something many players have indicated is an issue in the past. Many veteran players have commented about how unproven players are given so much more than established players. Though this does not increase the size of the pie for players, it does more fairly distribute the pie to some of those who "deserve it more".
- There were a lot of detailed changes to be made to when the players have to report, practice and attend meetings all of which were less than before. I don't see this as anything other than a concession to the players. I can't see where the owners would benefit from this at all.
- The league would establish a fund for retired players with the owners contributing $84 million over the next two years. Again, I can't see how this is anything but a concession to players.
- The league offered financial disclosure of audited league and club profitability information that isn't even shared with the teams. I believe this is the NFLPAs main point of contention. They want a complete look at the books of all 32 clubs. I think the owners would be fools to allow this as there are bound to be strange-sounding and inefficient entries that the player's can use as propaganda. What could the owners do in response? Claim that Peyton Manning paid too much for his house? Say that JaMarcus Russell gambles too much? It is a no-win for the league to completely open their books and I doubt they ever will.
After the negotiations, the league council, Jeff Pash, made a statement that outlined the above and a few more items in great detail. He, and the owners, repetadly said that any agreement that occurs at a future date will happen through negotiation. I believe this is a true statement. The league's statement contained a lot of detail and, in my opinion, gave quite a few concessions to the players. The chief problem remains the division of money.
The Numbers
If the numbers above are to be believed, and the division of the pie at the team level is as I reported in my previous story here, the following is an analysis of those numbers based on those assumptions. This is how the division of the cash pie would change for the players under the NFL proposal.
Total revenue for the NFL for the past season is estimated to be around $8 billion. Shaving $1 billion off the top lowers this amount to be split between the teams by 12.5%. Since the players receive 60% of the team revenue, this could be said to lower the amount of the share they receive by 7.5% (this is 60% of 12.5%). Now if the first proposal that the owners suggested of an additional $1 billion were put into effect, skimming $2 billion off of revenue before distribution would double the the total reduction for the players share to 15%. The actual number the owners proposed yesterday ($325 million) would bring the player's reduction due to skimming to 10%. The player's proposal of $137.5 million of additional skimming would make the total player's reduction 8.5%. When looked at this way, it is evident that the sides are not that far apart and that the owners have moved considerably from their original position.
Also, it must be taken into consideration that the "whole pie" of revenue for the NFL stands to increase every year as long as they keep playing football and keep the league competitive. So the actual dollar amounts for both sides are increasing year-to-year. This is all about the division of that increasingly bounteous pie and at this point the deal breaker is that tiny sliver of pie that your grandma always wanted.
The Players Respond
Overall, I found the player's response to the owner's proposals to be inaccurate and also to be lacking in detail and substance. After the negotiations broke down yesterday, the league made a statement outlining its proposals in very specific detail. The immediate response from the NFLPA was from an attorney Jim Quinn who started by by saying this about Pash's statement:
"I hate to say this, but he has not told the truth to our players and our fans. Nothing has changed in the last two weeks and two years. He has lied to you with what happened."
Looking at what the league position was two weeks ago versus what it was yesterday plus looking at the written details today, I find this statement outrageous. The league did not lie about their offer and their position has definitely changed in the past two weeks. Quinn also stated:
"The proposal wanted the players to give them a $5 billion gift without showing a single document that they are in financial distress."
I do not see where he gets the $5 billion number. It was not proposed on the final day and the players could have taken a much smaller number along with several concessions beneficial to themselves.
Following Quinn, DeMaurice Smith made a statement which contained little substance and lots of rhetoric.
"I will tell you this: Any business, where two partners don't trust each other, any business, where one party says: 'You need to do x, y, and z because I told you', is a business that is not only not run well, is a business that can never be as successful as it can be."
So in what successful business do the employees have full access to accounting records? Does IBM do this? Microsoft? Has any professional sports league completely opened its books to the players? And why does trust between "business partners" have to be one way in favor of the players? The players are demanding justification which to me shows that they do not trust the owners at all. So any talk of trust between business partners is just posturing. Smith then said:
"The National Football League made a proposal to us starting off at asking for $1 billion a year. And now with a great deal of fervor, and pride almost, they wanted to announce that our differences were only $650 million, and wouldn't it be a great thing if we just split the difference. Well it is with a great deal of pride that the members and the players of the National Football League said 'No...We are going to demand as your business partners that you meet us halfway and justify taking any money from us'."
So how is this meeting the league half way? If you were trying to buy a $100,000 home and offered $80,000 would you consider a counter of $100,000 as "meeting you half way?" This is not negotiation. It is OK to think that the owners are giving you a raw deal but to claim that you are negotiating by taking a completely inflexible position is disingenuous.
Smith's final statement should really upset fans.
"So I'll tell you what. We're going to go back to work. We're going to do our best to save football. But right now, football is in good hands. It's in the hands of the people who love our game. It's in the hands of the people who play, it's in the hands of the fans who dig everything we do. And on their behalf, I'm sorry that we're here, but we'll be back."
As far as I can tell, football is now in the hands of a single man--a judge in Minneapolis named Doty. I don't think anyone knows, including the NFLPA, what might come out of the courts so how can Smith say that "football is in good hands" and make any claim that it is in the hands of the fans? Fans are the big losers in this process as any agreement will most likely involve extracting more money from them regardless either through increased ticket prices or increased advertising costs reflected in products we buy. And let's not forget stadium vendors, restaurant workers and the other legions of workers associated with football who do not make the 6 and 7 figure salaries that players and owners bring home. They stand to lose the most because of this impasse. The players try to cast themselves in the same category with members of other unions whose average income is more like $30,000 rather than $300,000. As a fan, this does not sway me to their side. I think player greed is just as much of a factor as owner greed. I don't think any NFL player is having trouble putting food on the table--it is more like they have an issue putting gas in the Ferrari. To me, all these guys, the players and the owners, are living a fantasy life that I can only dream about so claims of feeling sorry for the fans are pretty meaningless.
The Future
There is no doubt that in the near future, this whole thing will be solved at the negotiation table. So why did the NFLPA leave the table? I do not believe it was for any of their stated reasons. Do I believe that the owners need more money for capital expenditure? Well there is definitely going to be more of a problem extracting money from state or local governments with the current fiscal crisis in tax revenue and overspending. But even if they don't need the money, is it incumbent on them to prove need when no player has to prove need for their salary? Should this be a show stopper at the negotiation table? Would I ask a home seller to prove to me that she needs the money before I make an offer? I think the player's have got to make a better case as to why they will not negotiate rather than take this to the courts. In the end the players and the owners will meet across a table, decide on a figure and some rules and shake hands. If they really cared about the fans they would stay at the table and get it done now.
A Note About Comments
I've staked out my opinion on this pretty clearly. I do not, however, side with the owners over the players in all things. My main point is that the players have not convinced me of their position and reasoning for leaving the negotiations. I think the owners, at this point, have made a much better case and seem more willing to continue to negotiate until there can be an agreement. I know that this kind of discussion can rapidly get political and degrade into name calling and bad feelings. I hope that the good folks here at DBN will remember to respect one another and keep the discussion from getting too personal or nasty. There are definitely a lot of people on this site whose opinions I value. If not, I would not have posted this story.