Think the owners are being the stubborn ones? Think again

[Ring 6]

You ask your employees to take a share of your revenues?

Many, many companies do. Any company involved in selling a product at least partially pays employees based upon revenues, many pay 100% based upon revenues.
Your Realtor, Mortgage Broker, the guy who sold you your car, TV, suits and insurance were all paid at least in part based on the revenue generated from the transaction, many were 100% based on the revenue.

 

[lamafist]

I'm not sure I entirely understand the relevance of the debate over whether the players are "partners" or commissioned employees or not.

The old CBA stipulates that a certain percentage of revenues (minus $1 billion off the top for owners' operating costs) is to be spent on player salary and benefits. Whether this makes them quasi-limited partners, pseudo-independent contractors, or the rightful heirs to a magical kingdom is all entirely semantic. What you choose call it doesn't influence what they are - that's defined entirely by the terms of the CBA.

 

[townes]

Many, many companies do. Any company involved in selling a product at least partially pays employees based upon revenues, many pay 100% based upon revenues.
Your Realtor, Mortgage Broker, the guy who sold you your car, TV, suits and insurance were all paid at least in part based on the revenue generated from the transaction, many were 100% based on the revenue.

Again those are examples of commission and not of overall revenue sharing, although i'm sure there are examples of that as well, however in those cases you will hard pressed to find the clear anti-trust violations that exist in this situation. Realtors, brokers etc... all have the option of taking their services elsewhere, that option really doesn't exist in this situation.

 

[Ring 6]

The players are asking to see where the increased expenses and losses are because that is the justification the owners are using to ask for a great deal of money back in the next agreement. If the expenses are tied to making the product stronger, e.g.. new stadiums, infrastructure, improved facilities etc... then those numbers would bolster their case for a different financial agreement, however if they are being used to pad salaries for family members or funnel money to other enterprises then the numbers would show that the problem is how owners are using their cut and not expenses incurred by reinvestment in their product. As an example it is hard to see how Mike Brown can argue about the costs associated with reinvesting in the Bengals when in truth he doesn't, and hasn't even built them an indoor practice facility, he takes his cut from the owners pie and sticks it in his pocket, so a claim by him that he needs more falls on deaf ears imo.

1) Do you dispute that in this economy the expenses of all businesses have risen over the last 3-4 years?
2) This is a negotiation. You seem stuck on tying the owners proposal to proof that the reason they have given is correct, and then determining for them what level is acceptable. The owners can do whatever they want with their 40%. Why would the union be allowed to judge them on that?
If the owners said they negotiated a bad deal last time and feel they deserve a higher profit margin, what then? That is just an explanation of their negotiating position.

3) What do you expect to come of turning over financials?
Here are a few possibilities
-The union looks at them and says the owners made X and that is too much, we need more money, and the owners say OK
-The union looks at them and says wow you guys have it tough we give and accept your proposal
-The union looks at them, manipulate the numbers to their own negotiating benefit and the sides wind up even further apart, now needing to debate analysis of the financials before they can move further
-The union gets the financials says thank you for helping with our law suit, decertifies and files Brady v NFL-with-pants-down

If you believe either of the first 2, I have a bridge......
The last 2 are reality.

By the way, if the players get 60% and the owners get 40% why cant the owners "stick it in their pocket"? You seem to think they are acting irresponsibly if they make a profit on their investment in their business.

 

[Ring 6]

Again those are examples of commission and not of overall revenue sharing, although i'm sure there are examples of that as well, however in those cases you will hard pressed to find the clear anti-trust violations that exist in this situation. Realtors, brokers etc... all have the option of taking their services elsewhere, that option really doesn't exist in this situation.

You asked for people paid based on revenue.
What does anti-trust have to do with it?
By the way, the union BARGAINED the free agency issue.
If you don't get that allowing exemptions to anti-trust is done because it makes more money for the players as well as the owners, you aren't keeping up.
You are acting as if the NFL forced the structure upon the players. It was bargained. The only reason to give up theright to be a free agent is that you make more money under the CBA system.

 

[bucky]

I'm not sure I entirely understand the relevance of the debate over whether the players are "partners" or commissioned employees or not.

The old CBA stipulates that a certain percentage of revenues (minus $1 billion off the top for owners' operating costs) is to be spent on player salary and benefits. Whether this makes them quasi-limited partners, pseudo-independent contractors, or the rightful heirs to a magical kingdom is all entirely semantic. What you choose call it doesn't influence what they are - that's defined entirely by the terms of the CBA.

The players claim they're entitled to see the full financials because they're 2 partners. That's where the argument comes from. They're not really true partners. If anything, the players are responsible for the product on the field and the owners are responsible for growing the finances, marketing, etc.

 

[townes]

"The books" are not black and white, they are subject to interpretation.
The books will give no information that they don't already have other than how profitably the owners are able to operate on their 40%.

The union is asking to be allowed to define what level of profit should be acceptable to the owners. Do you really think they will say anything more than their worst year is OK?

The profit margin of the franchises are not part of the CBA. And the players have a lot to do with revenue but nothing to do with how much profit results from that revenue. What exactly are they looking for.

As it is when you pay $100 for a ticket, $60 of it goes to player payroll.
$40 go to ownership who then have to pay all other expenses from it.
The only reason to look at the financials is to determine how much of that $40 is left after running the franchise.
Do you really feel it is reasonable for the union to tell ownership with $5,$10 or $15 of that $100 is fair profit?
THAT is the issue at hand.

Since the owners are claiming expenses are forcing them to make the players take less they have a responsibility to back that claim up with facts, and if they use that justification then it is on them to demonstrate they are using the revenues to reinvest in the product, which again is their claim and position, and that's why how they spend their cut is relevant, because they are the ones making the argument that is the issue.

 

[PatsWickedPissah]

Those who recall 1987 will remember that the premier QB of his era, Joe Montana, crossed the picket line and worked with the replacement players in 1987.

By getting Brady and Manning on the lawsuit, the union is saying that won't happen again.

Then does that make Brady > Montana or Brady < Montana. I's so confused

 

[townes]

You asked for people paid based on revenue.
What does anti-trust have to do with it?
By the way, the union BARGAINED the free agency issue.
If you don't get that allowing exemptions to anti-trust is done because it makes more money for the players as well as the owners, you aren't keeping up.
You are acting as if the NFL forced the structure upon the players. It was bargained. The only reason to give up theright to be a free agent is that you make more money under the CBA system.

The reason for a CBA was to play, it wouldn't have happened without it.

I didn't ask for any examples i responded to a post conflating commission with agreed upon share of overall revenue, which is clearly a different matter.

What anti-trust has to do with is that the players right to work is being abridged by the owners and that is a rare situation, and one the players are now challenging, realtors and mortgage brokers face no such situation, so comparing salesman to this situation makes no sense to me.

 

[townes]

The players claim they're entitled to see the full financials because they're 2 partners. That's where the argument comes from. They're not really true partners. If anything, the players are responsible for the product on the field and the owners are responsible for growing the finances, marketing, etc.

The players want the financials because the owners cited their costs as the reason for locking out and asking for big money back in a new deal. If someone makes that claim they are responsible for backing it up.

 

[Ring 6]

I'm not sure I entirely understand the relevance of the debate over whether the players are "partners" or commissioned employees or not.

The old CBA stipulates that a certain percentage of revenues (minus $1 billion off the top for owners' operating costs) is to be spent on player salary and benefits. Whether this makes them quasi-limited partners, pseudo-independent contractors, or the rightful heirs to a magical kingdom is all entirely semantic. What you choose call it doesn't influence what they are - that's defined entirely by the terms of the CBA.

I dont think there is any relevance at all.
It just became an argument, probably because someone tried to use the term to help make their case.
It has turned into a battle of rhetoric. Everyone knows the players are not in a partnership with the owners, but they do share in each others success, however, do not share liability.


I think the commissioned salesperson analogy fits best in the discussion because the commissioned salesperson is responsible for generating revenue and therefore is paid based upon revenue. He is not responsible for managing that revenue into profit, so that end of the equation is irrelevant to his pay.
Companies that operate under such a structure have fixed costs that their piece of the pie need to cover before they make any profit. If those costs increase, if the pie does not get larger, the company SOLELY bears that burden.

Here is an example.

Company generates $1,000,000 of revenue.
Salesforce is paid $500,000
Expenses are $400,000
Owner shows profit of $100,000

If revenue stays the same, but expenses increase every penny of expense coes out of the owners cut.
If revenue increases, each share equally.

We all know that expenses increase, that is just life.
So, in this example, if revenue increases by 200,000 and expenses increase by 100,000, then you now have:

Company generates $1,100,000
Salesforce is paid $550,000 a $50,000 Increase
Expenses are $500,000
Ownership shows profit of $50,000 a $50,000 Decrease

So unless revenue increase at twice the rate of expense, the salesman make more money and the owner makes less. Thats a 50/50 split, the NFL is 60/40.

To apply the request for financials to this example, the union would request the financials in order to judge whether the owner should be satisfied with $50,000 or $100,000 and the justification floated on this board is that the owners have stated costs are increasing, so therefore their assesment of what level of profit is acceptable to them now should be part of the negotiations.

 

[bucky]

The players want the financials because the owners cited their costs as the reason for locking out and asking for big money back in a new deal. If someone makes that claim they are responsible for backing it up.

The owners have done that, just not to the extent that the players have asked. Trust is a 2-way street and perhaps a mutually agreeable disclosure could be agreed upon. But it seems as though the NFLPA is unwilling to budge on this issue. D Smith says he has no reason to trust the owners. But does he have a specific reason to distrust them?

 

[upstater1]

I recognize that MANY employees in MANY companies are paid based upon results, I myself am.
The analogy is not to a partner who has ownership in the company but to a commissioned employee.
The fact that people have sued over whether they were compensated correctly has nothing to with whether they partners.

The pertinent question is if company X loses 1,000,000 this year, who's money pays that.
If I own a company and it loses money, that means its expenses exceed its income. To pay the bills, I must dip into my personal assets. I am paying for the right to run the business, and have negative income. If the company fails and has contracts to be paid, I am personally liable (yes I know there are corporate protections but we are talking about a partnership which wouldn't have them and would require a personal guarantee of indebtness anyway) and my personal assets are at stake.

Having your income based on performance and having the risk of ownership are not even in the same ballpark.

In a small business, you're probably right. In corporate America, you're probably wrong. You get a big parachute and you fly away free. Some of these guys have had their skins saved by the Gov't, after all. Should I list the owners who have had a bedrock of support beneath them?

These are the owners who are pure football guys with longevity, football is the main business, AND/OR they inherited their team from parents whose business was football:

1. Wilson
2. Bidwill
3. McCaskey
4. Brown
5. Bowlen
6. Irsay
7. Hunt
8. Davis
9. Rooney
10. Mara

When you realize that the inflationary rise in the value of the franchises over years is largely a result of both their hardwork, but also the taxpayer, it's really hard to say they had their skins in the game. Every one of these guys except for the Mara's owes a portion of their net worth to a taxpaying public that gave them a stadium. So, I sometimes feel like they shouldn't get that much credit for putting their hide on the line. They are supported by taxpayers.

Owners who became fabulously wealthy as CEOs or in Finance:

1. Blank--Home Depot, all the venture capital for the start of HD was put up by Ken Rangone
2. Lerner--MBNA Exec
3. Allen--Venture capital launched 100% of his business
4. Adams--CEO Phillips Petroleum
5. Lurie--Hollywood Producer, ace at raising cash for movies and making a bundle

Self-Made, invested their own money

1. Richardson--Hardee's
2. Jones--Oil
3. Kraft--IFP
4. Bisciotti
5. Weaver--9 West Shoes
6. Benson--Car Dealership
7. Spanos--Construction
8. Snyder--Advertising
9. Wulf--Apartment Homes
10. Glazer--Conglomerate

Mixed bags:

1. Ross--Made his money at Bear Stearns, Real Estate
2. Ford--Old Family Biz, been public now since forever, CEO of Ford until 2005, Gov't bailout
3. Kroenke--Married into Walton Family, then started company that builds WalMarts
4. DeBartolo--Won 49ers in family lawsuit, father owned malls
5. Johnson--J&J Heir, trust fund turned into Johnson Investing (hedge fund), caught bilking the gov't of $300 million in taxes--lucky he didn't go to jail
6. McNair--Ran Public Utilities, part of Enron

There are certainly several owners who have have their own hides at risk. But they entered this biz that relies on the performance of athletes. I don't see those athletes as expendable. Guys like Brady and Manning are practically irreplaceable icons. But the rest of the guys have been totally buoyed by taxpayers, and their valuations are based on a whole host of questionable factors, such as the business entertainment deduction. The point is, I don't think the contention that they have their own cash at stake holds for many of them.

 

[Ring 6]

The reason for a CBA was to play, it wouldn't have happened without it.

I didn't ask for any examples i responded to a post conflating commission with agreed upon share of overall revenue, which is clearly a different matter.

What anti-trust has to do with is that the players right to work is being abridged by the owners and that is a rare situation, and one the players are now challenging, realtors and mortgage brokers face no such situation, so comparing salesman to this situation makes no sense to me.

Now you are all over the place.
What does the players right to change teams have to do with the total compensation of all players that is collectively bargained?

I dont know how paid from revenue is different than paid from reveue. It appears the only difference is you want them to be different.
Commissioned employees agree to a share of overall revenue, the exact thing you just said they dont

 

[upstater1]

The whole disclosure thing is a canard from both sides.

The owners want to offload the Supplemental Revenue Plan onto the players, so they came up with a convenient excuse: expenses have risen.

Naturally the players say, they have? Show us. That too could be seen as a bad faith request from the players since they know exactly why the owners are hurting (some of the big guys can't afford to share their revs with the small market teams).

If this weren't the case, then the players wouldn't have said, "We'll give you $150 million, no questions asked. don't need to see your expenses."

 

[townes]

The owners have done that, just not to the extent that the players have asked. Trust is a 2-way street and perhaps a mutually agreeable disclosure could be agreed upon. But it seems as though the NFLPA is unwilling to budge on this issue. D Smith says he has no reason to trust the owners. But does he have a specific reason to distrust them?

Yes--The Direct TV deal.



BTW-I'm fine with any neutral arbitor reviewing the books with agreed upon criteria for analyzing whether the owners claim of increased costs is accurate or not. If the money goes to improving their NFL product they have a case and the players should support them in it, but if the money goes elsewhere then it's not a related expense and the claim they are using to justify a different deal is invalid.

 

[lamafist]

If we're looking for analogous employment situations to the NFL players, I think it's best to stay within the entertainment industry.

The NFL players are "talent," like the actors, writers and directors in cinema and television. They are able to command high prices because of their ability to draw and audience. For a while now, it has been standard practice for stars and filmmakers to take points off the back end of a movie in lieu of upfront salary, which makes their earnings dependent on profit.

This is somewhat different from the players, whose earnings are based on revenue, though with the $1 billion already taken off the top, it's safe to say - and the owners don't argue otherwise - that their cut is more or less out of profits.

Now, in the entertainment industry, the past several years have been rife with lawsuits in which parties promised percentages of profits have been told that wildly successful movies and TV shows did not make any profit, despite their well known gaudy grosses. Turns out the studios were using sweetheart deals and creative accounting to artificially lower revenue.

In one of the few cases that wasn't eventually settled out of court, it was found that Disney had bought the rights to a TV show from its creators, and then re-sold syndication rights to a Disney subsidiary for next to nothing, allowing Disney to claim that they had actually lost money on that show, when in reality the show - Who Wants to Be a Millionaire - had been ABC's ratings savior. The courts ruled in favor of the show's creators, to the tune of $319 million dollars.

This is relevant to the NFL in that the courts ruled that Disney had not operated in good faith when they conspicuously failed to maximize revenues to which the show's creators were entitled. The courts found that a party owed a percentage of revenue has a right to ensure that those revenues are being maximized in good faith.

 

[Ring 6]

Since the owners are claiming expenses are forcing them to make the players take less they have a responsibility to back that claim up with facts, and if they use that justification then it is on them to demonstrate they are using the revenues to reinvest in the product, which again is their claim and position, and that's why how they spend their cut is relevant, because they are the ones making the argument that is the issue.

Totally wrong. They are negotiating a deal. They opted out of the CBA, which was their right. They cited that exepnses increased so they require a decrease in payroll or they do not wish to operate the league. They are under no obligation to prove their bargaining stance. They could say we are making zillions, but we want more, give us more or don't play, and they have every right to do that.
If your argument is that they need to show the financials to make you feel good about their bargaining position, OK and good luck, but if its anything more than that you simply have no justification.

 

[townes]

Now you are all over the place.
What does the players right to change teams have to do with the total compensation of all players that is collectively bargained?

I dont know how paid from revenue is different than paid from reveue. It appears the only difference is you want them to be different.
Commissioned employees agree to a share of overall revenue, the exact thing you just said they dont

I'm not all over the place you are making an invalid analogy by comparing salespeople who can take their practice anywhere and who make their money off of commission with NFL players who are restricted in their right to work and who get a cut from an overall revenue base. There is no "hard cap" in real life, only in sports.

My point is very straightforward, the owners opted out claiming costs and now they need to back that up with facts. The onus is on them. You are saying they can make that claim and shouldn't have to support it, that's pretty odd imo.

 

[Ring 6]

The players want the financials because the owners cited their costs as the reason for locking out and asking for big money back in a new deal. If someone makes that claim they are responsible for backing it up.

I totally disagree.
The union wants the financials because they will be able to interpret them (regardless of what they look like) in a way that will improve they bargainning power.

It is just naive to think that the league turning over financials would result in agreement on what they say, what they mean, and how that should affect the proposals.