Think the owners are being the stubborn ones? Think again

[Miguel]

You are calling it to 'grow the business'.

Was the $1 billion deduction for the inclusion of all revenues in the formula, or was it an agreement that $1 billion be set aside and earmarked for reinvestment in the growth of the league?

I am calling it "to grow the business" because that it is what both the owners and players call it.

Page 64 of the CBA
http://www.patscap.com/cba.pdf
starts listing "The only expense deductions permitted to be taken in calculating Total Revenue"

 

[Ring 6]

You linked to avg. gas prices. I was referencing oil per barrel. We're still 40 cents below the historic highs of 1.40 in late 2007. Apparently that indicates the price of oil precedes the rise in the price of gas by several months since the gas high was in early 2008. We're still not anywhere near the average of 2007 and 2008 however. if you take 2009 and 2010, it was well below the previous years.

I was responding to you saying you paid 4.50 for gas in 2006.

In any event, here are oil prices. Again, your memory appears off.
The point of the comparison when the CBA was agreed to and since.
In 2006 oil prices ranged from abou 50 to about 66.
In 2010 they ranged from 66 to 81.
The timeframe you are referring to where they topped out was summer of 2008. That would indicate that owners have experience higher oil prices after the CBA than existed at the time.

HISTORY OF CRUDE OIL PRICES

 

[Ring 6]

I am calling it "to grow the business" because that it is what both the owners and players call it.

Page 64 of the CBA
http://www.patscap.com/cba.pdf
starts listing "The only expense deductions permitted to be taken in calculating Total Revenue"

Thank you, but I do not see it on page 64 of what you linked. Am I missing something?

 

[Miguel]

The 2009 cap figure isn't a good measuring stick because the owners opted out of the deal well before they even knew what that figure would be.

When the CBA was extended in 2006 the press release said that that the "2009 cap to be agreed upon after 2007 season, with any outstanding prior adjustments incorporated then". I am pretty sure therefore that the owners had an idea of what the 2009 cap would be when they opted out in 2008.

See http://www.patscap.com/cbaextension.pdf

 

[Miguel]

Thank you, but I do not see it on page 64 of what you linked. Am I missing something?

If you go by the number at the bottom of the page it is page number 55.

 

[Ring 6]

If you go by the number at the bottom of the page it is page number 55.

I think the applicable part is (D). I could be wrong.


I do not see where it references growing the game, but I also expected to see a flat deduction of $1billion as has been reported.

Maybe we are talking about 2 different things.

My understanding was that the $1billion that is being mentioned was a set amount excluded from revenues, which was established when addition sources of revenue (PSLs etc) became included in the calculations.

 

[Ring 6]

I think the applicable part is (D). I could be wrong.


I do not see where it references growing the game, but I also expected to see a flat deduction of $1billion as has been reported.

Maybe we are talking about 2 different things.

My understanding was that the $1billion that is being mentioned was a set amount excluded from revenues, which was established when addition sources of revenue (PSLs etc) became included in the calculations.

The item I am referring to is called
The off the top expense credit that the NFL is trying to increase from 1 billion to 2 billion, in Florios article that was just posted.

 

[upstater1]

I was responding to you saying you paid 4.50 for gas in 2006.

In any event, here are oil prices. Again, your memory appears off.
The point of the comparison when the CBA was agreed to and since.
In 2006 oil prices ranged from abou 50 to about 66.
In 2010 they ranged from 66 to 81.
The timeframe you are referring to where they topped out was summer of 2008. That would indicate that owners have experience higher oil prices after the CBA than existed at the time.

HISTORY OF CRUDE OIL PRICES

Well, I got 2006 wrong. I did pay 4.50 though.

The chart I sent you shows oil per barrel being 40% higher than it is now in the Fall of 2007.

From the Fall of 2007 until now, there was a drop.

 

[upstater1]

I did the math in my head.

If TV is 1/3 of revenue and TV increase 50% and the players get 60% of revenue:

Before
Rev 100
TV 33
Players get 60
Owners get 40

AFTER...TV increase by 16.5
Rev 116.5
TV 46.5
Players get 69.9
Owners get 46.6

Owner kept revenue increase from 40 to 46.6 which is 16.5%.

So the share owners retain increased by 16.5% but player costs jumped by much, much more.

Again the point of this part of the discussion was it is wrong to conclude that 50% increase in TV money would increase profit margins, and in fact it seems that it lagged well behind the increase in player cost.

Isn't the $1 billion off the top of the 9. Players and owners split 8 bill 60/40. So an increase of 2 billion is 25% of revenues.

120 billion more to the players, 80 billion more to the owners. The increase in player costs is paid for by the increase in total revenues, as agreed to in the CBA. EVERYBODY WINS.

 

[upstater1]

None of that can happen though.
The players are no longer represented by the union. There is no one to have a CBA with.

Lawyers. Who filed the lawsuit? They can play an advisory role, get a deal in place, recertify.

 

[upstater1]

Thats what I mean, if revenues are divided equally the Packers should illustrate your claim.
But they do not.
I am using tevenue directly from their financials.
Reviewing them is very interesting because they conflict with the popular perception that is being posted here.
And it would encompass those things because I looked at 05,06,07,08 and there was no appreciable change.

All I can tell you is what has been reported about the NFL's TV package. That's widely reported. It's as ubiquitous as the $9 billion figure that gets tossed around.

 

[upstater1]

I listed several specifics which have increased. You cited oil which I don;t believe is a major expense for the NEP.

That's why I was asking about costs.

Look, a Cadillac health insurance policy is 15k these days.

15k x 800 players - say, 7.5k in the previous CBA = $6 million. Not a very big number.

What other expenses?

 

[Ring 6]

Isn't the $1 billion off the top of the 9. Players and owners split 8 bill 60/40. So an increase of 2 billion is 25% of revenues.

120 billion more to the players, 80 billion more to the owners. The increase in player costs is paid for by the increase in total revenues, as agreed to in the CBA. EVERYBODY WINS.

What we were discussing was your comment that profit margins were rising and you 'proved' it by a 50% increase in the TV contracts.
The math wasn't desgined to get an exact answer, but to show that increase in TV revenues is not sufficient to conclude profit margins are increasing.
Of course the Packers appear to have never realized that 50% increase anyway.

 

[Metaphors]

The 2009 cap figure isn't a good measuring stick because the owners opted out of the deal well before they even knew what that figure would be. They opted out before the 2008 season started, when the cap went from $109M to $116M. That was enough to unanimously vote to opt out. The 2009 cap figure was just like salt on a wound.

I factored in $27M based on the numbers from DeMaurice Smith. The owners figure was stunningly low, I agree, though the "final" figures showed them coming up quite a bit to $114M. However, that compares with the 2007 cap, when revenues were in the $6B range, not $9B+.

In 2005, the year before the previous CBA was negotiated, the cap was $84M. But the CBA deal changed the revenue formula, included all sorts of new revenue to split, and the cap went from a projected $94M to $102M in 2006, an increase of over 20%, and almost a 10% jump from what the previous CBA had forecast.

Which makes me think the owners were trying to reject all of the gains from the previous CBA, to pretend it never happened and start over. As a rough projection of 65% of TV/ticket revenues like in the old CBA, the 2009 cap would have been around $105 to $110M (with a zillion assumptions) compared to the $123M. Meanwhile, the players were offering a starting point that looked like the 2008 cap that made them opt out. It was lower than 2009 and what we would have seen in 2011 had the owners not opted out, but it wasn't about the 2009 figure so much as the owners hating the entire last CBA.

PFT paints a much different picture. I don't know if they are correct, but the ballpark they are playing in is much more reasonable than what you are talking about.

We’re told that, for 2011, the NFL had offered a per-team cap of $131 million and the players had asked for $151 million. The $20 million cap represented the $640 million difference that existed before Friday.

The "split the difference" on Friday was between these 2 figures. The rest of the article explains the real hangup. The salary cap figures are based on projections. They are haggling on how to divide the money if those projections turn out to be too low.

So the last offer on the table for the players was a $141M salary cap for 2011 growing to $161 in 2014. Plus those numbers would grow if circumstances are positive...like the next round of TV talks brings even huger benjamins.

So I guess people may be dyslexic ($114, $141, $411, ...). I obviously don't know if PFT is correct, but it sure makes more sense than the "going back to 2007" verbal diarrhea coming out of the mouths of the players.

 

[Ring 6]

Lawyers. Who filed the lawsuit? They can play an advisory role, get a deal in place, recertify.

They chose lawsuit over collective bargaining. Why would the owners sit in a negotiation with the former union that turned negotiation into a lawsuit? That would be foolhardy, especially after the plaintiffs included as part of their claim the comments made by the NFL during negotations in order to hold it against them and use it as proof of their claim.

 

[Ring 6]

Well, I got 2006 wrong. I did pay 4.50 though.

The chart I sent you shows oil per barrel being 40% higher than it is now in the Fall of 2007.

From the Fall of 2007 until now, there was a drop.

Reasonably mistake, but that mistake invalidates your point that the cost at the time of the CBA was higher than it has been since.

 

[TooL]

Yes, the owners are being the stubborn ones. They could have gotten an extension just by agreeing to audited reviews of their finances.

For the pure sake of argument, has there been another business model under a CBA that has done this?

If they have, where they a profitable model or a loss?

 

[BradyFTW!]

For the pure sake of argument, has there been another business model under a CBA that has done this?

If they have, where they a profitable model or a loss?

Has there been another instance of the owners opting out of a CBA and demanding substantial concessions from the players while claiming financial hardship?

 

[Miguel]

101 ESPN/Post: For Now, Only the Lawyers Benefit

 

[Miguel]

NFL lockout is bad, but resolution closer than it appears - Peter King - SI.com

So it is now Rapoport, Clayton, Balzer, and King who have reported that the owners' final offer for the 2011 season was a 114 million cap plus benefits.

If we take Jeff Pash at his word that the owners significantly improved their offer for the 2011 season it means that prior offers were offering the players an even smaller cap for the 2011 season.

Please remember that the 2009 cap was $128 million plus benefits. Please also remember that the owners failed to maximize the 2009 cap.