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Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look like

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  1. MoLewisrocks

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    Some pretty interesting insights from talking to his league sources including agents...whom he thinks may ultimately play a roll in resolving the impass since they have relationships with all sides. The concensus seems to be that ultimately players will fold first, and as part of that will begin listening to their agents and not the union. Agents have a stake in what happens short as well as long term and will ultimately be pragmatic and help their clients understand that holding out for long term status quo goals that are likely largely unattainable (like maintaining the current % split and refusing to decipher the compromise point that will get an equitable deal done simply because it will require givebacks and/or concessions) at the expense of their limited ability to maximize earnings in the present isn't a smart strategy. They will be hurt by either a lockout or a decertification, and while someone may ultimately gain 4-5 years down the road if and when courts rule in their favor or the sides finally decide to come to a compromise agreement to put an end to the endless lawsuits, it won't be them. And whatever they manage to secure or retain over time vs. compromising now may not be worth the sacrifice they are being asked to make in the present whether due to lockout or due to ownership controlled workplace rules that represent even greater short term player losses - such as no $$$ if a lockout occurs and no union support via grievance in the interim if decertification happens.

    Sounds like the agents aren't terribly impressed with DeMaurice, either... Think he's pretty naive. Cited his attempt to get the rookies (via their agents) to boycott the Combine...as nonsensical.

    Read more: NFL labor, CBA*negotiations ultimately will result in fair deal - Don Banks - SI.com
  2. BPF

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Good find, thanks for the read.
  3. upstater1

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    "Sounds like the agents aren't terribly impressed with DeMaurice, either... Think he's pretty naive. Cited his attempt to get the rookies (via their agents) to boycott the Combine...as nonsensical."

    ROFL, the agents said that?

    I wonder what they think about the rookie salary scale? And 18 games?

    FOR 18 games, against the rookie salary scale.

    LOL.
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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    That's the crux of the players' problem. Holding out and missing a year of an all too brief career for concessions that will benefit mostly players after their own careers have sunset makes reaching agreement urgent. Add in the factor that a fraction of the players haven't accumulated financial resources, having lived the lifestyle to the max, or beyond, and there's bound to be dissension in the player ranks.

    As to the owners, they're their own worst enemies. Huge conflict in revenue sharing between the big market and small market teams exacerbated by some cheapskate owners like Ralph Wilson who don't even sell naming rights to their stadia. Finally the greed for double digit percentage revenue growth per annum via market expansion leading to product damaging moves like European games and the 18 game regular season.
  5. Mike the Brit

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    The numbers mentioned are really eye-popping -- the owners want an extra billion in expenses and a drop from 60 to 50 per cent of the residue. Taking the figures Banks gives, that goes from $4.8 billion down to $3.5 billion available for salary!

    OK, let's accept for the sake of the argument that the owners actually need that much more. Then how could they have been so dumb as to have accepted the last deal? It's ten times tougher to get people to give up a benefit they've been given as it is to forgo a prospective increase.

    If you're so rich, how come you ain't smart?
  6. BPF

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    I don't believe it has anything to do with the owners being dumb for accepting the last deal in 2006, because they were smart enough to have the option to pull out of the deal. The economic climate is much different now vs 2006, I don't think the owners are greedy either because what they want is a deal which allows them to plan ahead and that allows them to get a return worthy of the risk they lay out. A 1% return is not worth the multi-millions they risk, a lot better places to risk their money for much greater returns.

    They are multiple issues with current deal:

    1.) Tax $$ have dried up so how will new stadiums be built going forward, not with tax payer money and the owners won't take on million dollar loans if they can't better control other expenses.

    2.) Ticket revenue is maxed at an avg price of $76 per, how can the fans be asked to pay a higher price when options like hd tv and Sunday ticket are out there. This number can not be squeezed for more revenue.

    3.) TV deal revenue had flattened and might actually be headed downwards.

    So my take is that he owners are being proactive so they don't find themselves in the same position as NBA owners with lots of clubs losing big $$. I think of both sides give a little a deal can be had. Both sides have valid concerns but in order to keep the league healthy they need to be fair to the other side.
  7. Mike the Brit

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Apart from the fact that anyone who thinks that a boom is going to go on forever is certainly dumb (but there are plenty of other folks out there who did the same) that isn't my point.

    My point is that it really isn't "smart" to go into a deal because you have the option of tearing it up and starting again.

    In a world in which both sides need the other but each can wreck a deal it's very hard to come to a point of agreement. Once you've reached an agreement then that itself sets expectations and changes the negotiation.

    It's just like the way that "free" negotiation between clubs and rookies has led to an inflation of 1st-round salaries. Rookies (more precisely, their agents) set their expectations by previous years and will hold out rather than accept less.

    It connects with what psychologists and behavioural economists call "the endowment effect" Endowment effect - Wikipedia, the free encyclopedia. Anyone who knows anything about negotiation is a fool to ignore it.
  8. BPF

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    In any case my first question to the NFLPA in another thread matches up to what Don Banks quoted an NFL exec saying: http://www.patsfans.com/new-england...please-submit-one-here-page2.html#post2484629

    This has been my belief all along, actually posted the same comment on NFP on 2/16.
  9. BPF

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Wow the Brit using an American economist to make his point.

    It has nothing to do with that though. NFL's business fundamentals are similar to those of other successful businesses. Incentives must be pointed in the right direction; good leadership must be in place and lastly you must follow a sensible growth strategy. With the current CBA and the different elements that have changed in the economy and local state governments since that last deal was struck the owners need more help in growing revenue which in the end will grow the players shares even if their % decreases. In the real world you can't operate in a vacuum and things are always changing and you either adapt or you fail. That's why CBA deals do not go into infinity and expire so the issues can be re-examined.

    The fact that teams' share roughly 70-75% of their revenues and the salary cap make the NFL the league that it is on the field and that also works magic for profits, by giving all 32 teams and owners a chance to field teams that are both financially viable and athletically competitive despite the market size. You should know the vast difference with the Premier League. No salary cap there and very limited revenue sharing make that league one that is dominated by the same teams over and over again. Poorer teams there and the less successful teams lose fan support and can not compete on the field and financially and have zero hope of ever doing so. We don't want that here because if the Bills, Panthers, Jaguars, Vikings, etc can't compete on the field they won't be able to compete off the field and that will mean the NFL will cease to be the financial success it is. Stadium debt for new stadiums which most of these teams need to compete and growing the game costs will doom these teams under the current system and that needs to be altered to help these teams/owners compete financially so they can then compete competitively.
    Last edited: Feb 21, 2011
  10. sbpatfan

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    It won't be a fair deal because the two sides aren't based around fairness. One side is writing the checks and the other side is earning them. Nothing will ever be fair in that situation. The new deal will be biased towards the owners as it should be. The players need the owners but I don't think the owners necessarily need the players. Would Tom Brady be successful without football? Would Robert Kraft be successful without football?
    Last edited: Feb 21, 2011
  11. upstater1

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    70-75% to the players? Uh, only 60% goes to the players, and even then, the owners get a $1 billion cut of the revenue pie before the 60% is given. And even then we are ONLY talking about NFL/TV revenues and ticket sales. The total pie doesn't even include all the extra revenue the owners make from luxury boxes, etc.

    Most of these guys have bought these franchises at considerably less of a value than they are worth today even with the correction is asset values. Think about it--who is the last owner to buy into the NFL. What stadiums in the league are outmoded? The Metrodome? San Diego? I can't think of any others. Buffalo, Jax, Oakland, GB and KC are fine for their limited markets since they can barely sell the lux boxes they have anyway. All other franchises have new stadiums. The owners are making huge coin off the money sunk in by taxpayers.

    Don't be fooled by profit declarations of $20 million. First off, you're measuring it against asset valuations, and the price of each franchise has inflated tremendously. Heck, a one time sale for a new franchise in the LA area will easily yield 1.2 to 1.5 billion split among 32 clubs. You have to take into account all the ancillary revenue from things like luxury boxes, etc. that the owners do NOT report publicly.

    I wish GB were in a much bigger market because as a publicly owned team, we might get an excellent sense of how much they make.
  12. Rob0729

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    I think the NFLPA miscalculated one thing. There is an expected record number of free agents this offseason. These guy will get nervous especially as the draft approaches. Many of these guys know that post draft their stock plummets because teams with strong needs at positions they play may fill those needs in the draft. This won't affect the marque free agents, but many second tier and below free agents will be affected. Agents know this and will push them to settle for a deal before then.

    For some reason the owners blinked last time, but this time around they have far more leverage. There are literally hundreds of players who don't have a contract this upcoming season, many of whom want to get security even if it hurts other players in the future.
  13. Rob0729

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Actually, I am pretty sure that the CBA done in 2006 added luxury boxes and club seats to the revenue pool that goes to the players. Prior to that, those revenues went to the owners only. Now the players get 60% of it.

    Also, the problem for the owners is not what they got in the past, it is the future for keeping the upkeep and building new stadiums. States are no longer publically funding new stadiums (or most of the cost) in most cases (the Colts being the exception). That is why the Giants and Jets have trouble selling season tickets and PSLs since they funded their stadium by themselves at a price tag of about $750 million each team. Jerry Jones spent $800 million of his own money to build his stadium. Many of the stadiums are getting up there in age and will be needed for upgrades or replacements over the next 5-10 years.

    Not to defend the owners, but people want to make it seem like the owners are greedy and the players are just hard working employees getting the shaft. Not the case. Both sides have a bit of greed. Both sides have legitimate points to get a deal done in their favor.
  14. Mike the Brit

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    ..........
  15. convertedpatsfan

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Thanks for the link, solid reading and very in-depth. I also hadn't thought of the agents angle in helping a deal come together.

    I don't think Goodell or Smith are the right guys to make this work in time for the season unfortunately. Both are too confrontational, egotistical, and in a bit over their heads. Bryant Gumbel was clearly off-base when he called Gene Upshaw the owners pet. Upshaw negotiated a great deal for the players last time without the rhetoric and threats that Smith has had to resort to.

    Things don't look good for 2011. Of course they can change quite quickly once some of the key components are settled. But when I think of Goodell and Smith being responsible for working things out, I get very depressed.
  16. Rob0729

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    I totally disagree. I think there will be football in 2011. Things look very good considering both sides are having around the clock mediation for seven days straight and both sides are adhering to the media blackout agreement. Just like the deal in 2006 where people were calling for a long work stoppage and neither side budging, I expect this to get done well before the season. I don't know how you can't be encouraged about what has happened over the last few days.

    This could end up being a long holdout, but both sides have agreed to aggressive negotiations and both sides have stopped the rhetoric. That is a sign that both sides are somewhat committed to getting a deal done.
  17. MoLewisrocks

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    You apparently slept through the CBA of 2006. There was a paradigm change effected with that agreement whereby because owners changed the definition of total revenue for their own internal revenue sharing formula to include things like luxury boxes, etc. And the union threatened to strike unless their percentage remained essentially in tact while based on that new definition of total revenue. Owners undershot the mark in exempting $1B from the calculation. Turns out in this economy they need closer to $2B exempted in order to cover all their costs beyond player salaries and still have capital to improve facilities and potentially expand markets. That is why the cap went from $85M in 2005 to $128M in 2009...while revenues flattened out.

    There won't be a "new" franchise for LA unless the CBA gets retooled. There may be a franchise sold off to someone who can manage to get a stadium built in LA, but that money will go to the owner who opts out of a small market because he can't make a profit.

    I believe the most recent franchise sales topped the $800K valuation and most didn't include stadiums. Snyder's did although he had to assume an additional $190M in debt service to acquire what then was the a recently completed 90K seat facility. And he added $55M in improvements to that facility in just the first year he operated it. Few NFL teams actually have any assets, their "valuations" are a house of cards based primarily on the popularity of their product as marketed by the 32 team league entity. And in fact there are only a handful of teams still owned by founding families and many of those are in deep financial trouble that will only be exacerbated when guys like Ralph pass and his heirs have to sell out because they can't afford to pay the inheritence tax to remain in control of them.

    Just before selling the Doofins to Ross, Wayne made $250M in improvements to the stadium he was also selling along with the team. Ross is paying for those on top of what he paid for the team. His present debt is greater than his present teams Forbes valuation... Heck, even Lerner paid $540M for the Browns just a ago. And McNair is paying off $700M he paid to acquire the expansion Texans. Most of these teams - with the exception of the top 3-4 - are working off a revenue stream in the $230M vacinity. Pay the cap $128M and then fund upwards of $30-40M in cash over cap (bonus $) and pay for coaching and administrative help and travel and practice facilities and scouting staff and benefits for everyone and then pay the debt service on your stadium if you own one or the money you borrowed to buy the team and make necessary capital improvements to your facilities and then if you're in the top 16 kick in a chunk to help carry those who aren't and tell me you wouldn't hope to make some sort of return on your investment beyond the house of cards paper valuation some magazine bestows on it...

    The Giants and JETS franchises are valued at roughly $1.1B. Each ownership just borrowed almost $700M EACH to finance their share of a new stadium that at least one of them can't sell the PSL's to...and neither of them has found a naming rights sponsor for... And for the first time in a long time Forbes team valuations were either flat or down for the vast majority of franchises in 2009. They may not all be losing money just yet, but they see the potential to as growing payroll costs outstrip revenue growth and that is what they are trying to avoid (because of the tenuous house of cards nature of the league's franchise values being closely tied to the perception it is basically a license to print $$$). The NBA is losing money, and will possibly go out on strike next season as a result.

    All it would take for the house of cards to come tumbling down is one or two franchises to go under and either sell at fire sale prices or fail to find any takers and values for all the other franchises would begin to plummet across the board. The haves can't exist unless the have nots can stay in business.
    Last edited: Feb 21, 2011
  18. MoLewisrocks

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Oh, there was plenty of rhetoric from Gene last time, not to mention from that pit bull lawyer who was attached to his hip and remains involved in this negotiation. You seem to have forgotten Gene winging around the country at the 11th hour threatening a strike unless he got a number starting with a 6...and his admonition that if the cap went away it would NEVER be back. Owners were infighting at the time and not remotely prepared to withstand a strike and fans were pleading for anything but a work stoppage. Polian was threatening to sue the league if he couldn't restructure Paymeaton's deal... Sometimes it's better to bite the bullitt and get it right. They didn't do that last time. The owners opted to buy time. This time they may have to bite that bullitt.
  19. convertedpatsfan

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    Good points. Looking back on that time, I never really took Upshaw seriously on those things though, and I never felt the season was at-risk. And when the owners approved that deal 30-2, it felt like they really got what they wanted so didn't think much of it.

    But you're right, Gene wasn't so pleasant during that round. And it's clear he took the owners to town in that deal. But Gene had a good working relationship with Tagliabue, which is definitely missing between Smith and Goodell. Maybe that's why it felt less acrimonious at the time.
  20. upstater1

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    Re: Don Banks: Behind the rhetoric...what a fair deal in NFL labor debate will look l

    The union is claiming that the NFL is hiding revenues. They keep asking the NFL to show us the books, and the NFL trots out Green Bay. Why do they want to see the books if all revs are included?

    Lastly, I can't think of what older stadiums need to be rebuilt. Which ones are you talking about? I mentioned San Diego and Minnesota, can't think of any others. The entire Midwest is brand new. The only old stadiums I can think of are Oakland, Buffalo, KC, and those stadiums are in limited markets. no point in redoing them since you're not going to attract more luxury box seating there.

    Lastly, the owners are at fault if they believe this is an industry that needs constant expansion. They should be happy with increases in yearly revenues and TV shares. They need to think more like Coca-Cola than Google. The frontiers are limited. Do what you do well and shut up about it. Don't destroy the game for more $$$. That's exactly what they are doing. Why?

    What's going on right now is similar to what has happened in the housing market. With the financial crunch, and there being less money to lend out, owners have seen the values of their franchises implode. Those values were given a premium because year-over-year NFL revenues were increasing. Now, with limits not only on the amount someone can borrow to buy a franchise, but limits on potential revenues, and furthermore a limit taxpayers subsidizing football either directly (as in the case of Buffalo and Indianapolis and I'm sure countless other places) or through public bonds for stadiums, the owners realize that they have a cap over their heads and they don't like it. But these guys are actually raking in more money than they ever have before in their businesses and in their personal income--yet it's their net worth that they are concerned about (i.e. the value of their franchises).

    I'm not sympathetic at all. In fact, I'm more concerned that they want to ruin the game with your 18 week seasons and other bogus rules just so you can get the next sucker to buy your bloated sense of your bloated self-worth.

    They run the league badly with their go-go mergers&acquisitions mentality. They should stop and think of Warren Buffett and Coca-Cola. Focus on the bottom line. Do what you do well. This is a sport. Not a conglomerate.

    Part of me wishes the owners would crash and burn on this. Another part of me wants the IRS tax code that allows business entertainment expenses to eliminate those deductions, because let's face it, bringing business partners to your luxury box is for pure pleasure. The idea that you need to conduct business there rather than in your corporate suite is a total fantasy.
    Last edited: Feb 21, 2011
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