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Rule of 1/32

Discussion in 'PatsFans.com - Patriots Fan Forum' started by arrellbee, Mar 7, 2006.

  1. arrellbee

    arrellbee Rookie

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    As everyone tries to guess whether a deal will be reached or not, there are a few things that it is interesting to keep in mind.

    Regular seating is put into the common revenue pool and split 32 ways. If the low market team (Cardinals) raise their regular seating prices, they get to keep 1/32 of the increase. That doesn't give them much compelling incentive to increase prices. If the Patriots tickets cost 'more' than many other teams, you can ponder on the fact that the Patriots only get to keep 1/.32 of the 'more' price. So 31/32 of the extra money you pay goes to other teams. How's that for heartburn.

    If 'other' revenues were shared into a common revenue pool split 32 ways, then if a team like the Cardinals really worked hard to increase their own 'other ' revenues, they get rewarded by getting to keep 1/32 of the revenue they worked hard to increase. Not much of an incentive is it ? As it is now, without revenue sharing, they get to keep 100% of that 'other' revenue. So why on earth would the owners who already have 'other' income think it would help the NFL to share 'other' income.

    Unions pretty much universally demand more and more up to the point where the employers go out of business if the employers are in an industry where that can't just raise their product pricing. I am not making a judgment, good or bad, just making an observation. Reflect on what happend to textiles in New England, light manufacturing in Ohio, and the auto industry in Detroit and Michigan.

    Now for the NFL, there isn't much opportunity to raise the currently shared revenues. TV revenue is pretty much fixed for a number of years. I doubt that ticket prices can be raised all that much - and ticket revenue is not that big a part of the revenue stream anyway. So increased money to the players cannot just be offset by the NFL 'raising prices'. Not only that, but something that doesn't seem to be discussed much is the fact that the way the CBA is structured, the players get a PERCENTAGE. So a large contract for the players doesn't get diminished in impact on the business because their salaries go up right along with the revenues.

    So the NFL is a situation where, if the players succeed in getting the owners to agree to too much of the 'pie', the whole business enterprize may be unviable. Of course, the ultra-fascinating question for us is - is the current NFLPA percentage getting to that point or are the owners just being greedy and trying to deprive the players of their 'fair' share while they have plenty of profit.

    The first big clue, which we will probably get find out FINALLY by tomorrow is whether the owners will agree to a higher percentage. There is a LOT of incentive for them to agree to a contract if they possibly can because their business is much more controlled and predictable with a new CBA similar to the current one. So if they don't agree, it's probably a pretty good indication that the players have finally asked for 'too much'.

    Another clue comes in looking at the percentages themselves. Everybody would agree that if the players got 100% of the total revenues that it absolutely wouldn't work - duhhh. So what is the percentage that becomes the straw that breaks the camel's back ?? No way we can know. But each of us can make their own judgement by looking at the percentages as they are now and as they are being proposed.

    One thing that gets mentioned here and there but doesn't seem to get a whole lot of emphasis is that, in addition to the cap number of 94.5M or whatever, the clubs pay out of gross revenue 15M additional for all of the player benefits. So the player piece in reality is more than 94.5M - it's 109.5M. And the owner's proposal is 103.5M plus 15M is 118.5M. Upshaw is asking for 60% which is a cap of 109.9M plus 15M is 124.9M total player package. How's that for a number ?

    So what does this look like for a team like the Cardinals ? It means that the deal the owner's have already agreed to means that the Cardinals pay out 77.45% of GROSS revenues to the players. And the percentage that Upshaw want would have the Cardinals paying 81.63% of gross revenue. Everybody will have to figure for themselves if this might be getting to the point of 'breaking' the system for a team at the bottom of the league.

    So a deal has to be approved of by at least 24 of the owners. So what do the percentages look like for the bottom 9 teams on average ? Of course, they are better than for the Cardinals. But they are still pretty high. Deal offered by the owners would be an average for the nine teams of 71.3% of overall gross revenue and as requested by the players, 75%. Less, but still a very large percent of the teams' revenues.

    Interesting to ponder.
  2. PatsSteve1

    PatsSteve1 Rookie

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    I don't believe that is how ticket money is shared. It doesn't all get put together and then split up in 32 shares.


    Currently 40 percent of the gate receipts from NFL games go into a pool that is eventually divided equally among the teams. This took effect in 2002. Previously the league had earmarked the 40 percent of gate revenues for the visiting team.

    Source:

    http://www.andrewsstarspage.com/12-14cba.htm

    The NFL's complicated economics works like this: Every owner starts out with nearly $100 million a year each from national television and radio contracts, national sponsorships and one-third of ticket revenue from each game played, which is pooled and redistributed equally among all teams.

    Source:

    http://www.washingtonpost.com/ac2/wp-dyn/A57668-2005Jan7?language=printer

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