Judge Nelson rules in favor of the players

[Ring 6]

Er...no, that isn't what I said at all. I have no idea how you got that from what I wrote.

Again you said:



When in fact value is a direct result of profitability. The idea that a labor deal couldn't effect the value of the franchise simply ignores how valuations are derived.

And as far as your comments regarding sustained growth go, look at the values this year. They've gone down from last and were flat the previous year and this is with record viewership. True, values are up tremendously over the last 15-20 years, but the value growth has been much more modest since 2006. There is an argument to be made that the value growth curve is flattening as revenue streams are being maxed out.

That is the reality, whether you chose to believe it or not.

Tripling in value in 15 years reperesents an annualized appreciation of about 7.35%.
Hardly something to consider making money hand over fist.

 

[BSR]

The problem w/ your argument is that it only works when you look at only those two variabled in complete isolation. When you look at the real-world big picture, it becomes apparent that modestly cutting player costs isn't going to significantly affect a franchise's market value. A team's value is a measure of how much a potential buyer would be willing to pay for it. As such, potential profitability matters a lot more than what the current owner is getting from it.

For franchises like the Cowboys, Redskins, Patriots and Texans, making between $420 and $272 million in revenues in a year, the change in salary cap isn't going to end up changing their bottom line all that significantly, and these franchises establish the profit potential of the bottom-dwellers. What will matter to a potential buyer is how much he'll have to invest in order to make over a team like the Lions or Raiders into a money-maker like the Texans or Patriots.

When you're eyeing revenus soon approaching half a billion annually, cutting $18 million a year in labor costs isn't really going to sweeten the pot all that much.

An NFL franchise isn't a risky investment because it's not based on arbitrarily inflated valuation, like the debt-fueled housing market, it's based on the marketing of a quality product that has been time-tested and proven to be in ever-increasing demand. This is why it's still increasing in revenues and profits despite the economic crisis. What's more, as the chart I posted demonstrates, even the supposedly player-friendly 2006 CBA didn't prevent the NFL from seeing an unprecedented boom in profitability.

Of course I am talking about potential profitability! A new labor deal factors directly into that. And I have no idea how you think $18million is a modest amount. That would be over a 50% increase to the average NFL team's bottom line! Even to the Cowboys it would be an over 10% increase. Any new investor is going to have a huge debt service and will need to consider further reinvestment of profits to raise the top line. This is a huge annual addition to their budget.

And as for the rest, there is no such thing as "ever-increasing demand". Eventually every market reaches its saturation point. Is the NFL there yet? Who knows, but once that happens you are going to see a drop in the spread between profitability and value.

And again, I don't think your chart shows what you think it does. All it shows is that there was an outlier in 2006 for some unknown reason. Throw that one year out and profitability is relatively flat since 2004 despite revenue growth. Until you know what caused the drop in 2006 the chart is basically meaningless. This is the problem of reviewing summary data without the understanding of underlying drivers. Overall trends are somewhat meaningful but individual data points can be misleading.

 

[lamafist]

Of course I am talking about potential profitability! A new labor deal factors directly into that. And I have no idea how you think $18million is a modest amount. That would be over a 50% increase to the average NFL team's bottom line! Even to the Cowboys it would be an over 10% increase. Any new investor is going to have a huge debt service and will need to consider further reinvestment of profits to raise the top line. This is a huge annual addition to their budget.

And as for the rest, there is no such thing as "ever-increasing demand". Eventually every market reaches its saturation point. Is the NFL there yet? Who knows, but once that happens you are going to see a drop in the spread between profitability and value.

And again, I don't think your chart shows what you think it does. All it shows is that there was an outlier in 2006 for some unknown reason. Throw that one year out and profitability is relatively flat since 2004 despite revenue growth. Until you know what caused the drop in 2006 the chart is basically meaningless. This is the problem of reviewing summary data without the understanding of underlying drivers. Overall trends are somewhat meaningful but individual data points can be misleading.

You're a little confused about what the chart is meant to convey. If you want a clear picture of long-term trends in the NFL's profitability, you'll have to look at a wider time frame. The purpose of this chart, both in my use of it, and in its context on Forbes.com, is to counter the assertion that the putatively player-friendly and unsustainable 2006 CBA hamstrung league profits. That there was robust year-to-year growth in operating income during every year under the '06 CBA thus far is some inarguable evidence to that effect. If the 2006 CBA did have a negative affect on league profitability, it was clearly not potent enough to prevent gains over its tenure.

This shouldn't actually come as a surprise, however, as a writer for a Cowboys website demonstrated, using Forbes' numbers, that player compensation as a percentage of the NFL's unadjusted revenue stayed almost exactly the same under the '06 CBA as it had been since 2000. (It actually was around 1.5% lower, post '06 CBA.)

This is hardly an accident. The NFLPA went from getting a larger share of a smaller number of revenue sources to getting a smaller percentage of all but a few of the NFL's revenue sources, and the exact figures that were settled on were calculated to keep the percent of revenues going to player compensation stable, as opposed to steadily decreasing, as they would had the players' compensation still been tied to only league-shared revenues, which every year represent a smaller percentage of the NFL's TR.

Meanwhile, you keep raising this boogeyman of a sudden and spontaneous market saturation and decline in growth, as if just because it's possible, we have to consider it somehow likely. The problem is, there's just no evidence to suggest that this limit actually exists. Sports, in general, have never been more popular, available and profitable, than they are today, and all of the biggest ones have been around for over a century. It would be a sociological anomaly of historical proportions for people to suddenly lose interest in spectator sports.

Now, what makes the NFL's continued rise in profitability so likely, though, are the rapid developments in media and information technology creating so many more diverse ways of repackaging selling anew the NFL's product. The NFL still has enormous room for growth in terms of live online broadcasting, online supplemental broadcasting, interactive program broadcasting, etc. There are also myriad opportunities outside of game days -- fans clearly want a more and more immersive NFL experience, and there are lucrative ways of providing that. At the moment, many NFL franchises discourage their players from tweeting. Soon enough, they'll probably be contractually obligated to, which will be aggregated and filterable on NFL.com.

And if all this wasn't enough, the NFL still has plenty of room for growth internationally, where it's only just starting to get a foothold.

 

[PatsFaninAZ]

Shefter just said he had spoken with a number of legal experts and the consensus was that the decision was "appeal proof."
.

Sorry -- couldn't resist reprising this. So are we all getting a nice civics lesson? . Seriously, though, don't take crap guys like Shefter say about legal matters seriously no matter what experts they claim to have spoken to. Leave the heavy lifting to the pros.

 

[DaBruinz]

This is hardly an accident. The NFLPA went from getting a larger share of a smaller number of revenue sources to getting a smaller percentage of all but a few of the NFL's revenue sources, and the exact figures that were settled on were calculated to keep the percent of revenues going to player compensation stable, as opposed to steadily decreasing, as they would had the players' compensation still been tied to only league-shared revenues, which every year represent a smaller percentage of the NFL's TR.

Clearly you don't know what you are talking about. The NFLPA went from getting a set % of very few revenue sources, to getting a set % of all the revenue streams directly related to football revenue.

The percentage that the NFLPA got changed by very little (if at all) from the the end of the 2002 CBA to the 2006 CBA. Why do you think that the Salary Cap jumped over 15 Million from 2005 to 2006? In 2008 and 2009, that % was 57.5% of the "Total Revenue".

The other thing you fail to realize is that chart is NOT a Forbes chart. It is from a FAN BLOG. And it's based on projected numbers by Forbes, not the actual numbers since Forbes would have no way of getting the information on how much each team truly spent, how much was carried over from the year before, and how much of it was additional revenue earned above the projected cap.

 

[DaBruinz]

Sorry, but no.

Per the 2006 NFL CBA, Subsection 1(a)(xiv), there is a set cost deductions of 5% and an additional 1.8% set deduction from TR for private contributions to stadium construction. This generally forms the majority of the annual deductions, with the rest coming in the form of credits for a list of deductible expenses as delineated in the above-referenced section of the CBA.

As you can see, all of those figures are per se relative to either revenue or costs.

Your scribded link doesn't work. If you are going to quote something, quote it.. If you did, you'd see that the 1.8% can become 2.3%.

http://www.vanderbilt.edu/Econ/faculty/Vrooman/CBA_Amended_2006.pdf

Article XXIV, Section 1, Subsection (a), item (xiv)
(xiv) Expense Deductions
(1) The only expense deductions permitted to be taken in calculating Total Revenue are:
(A) a set deduction of five percent (5%) of TR (which set deduction is already reflected in the
amounts defining and percentages prescribing the Salary Cap in Section 4(a) below) which includes Youth
Football, NFL Europe, Players Inc. payments, NFL Charities, all team operating and day-of-game expenses, and
any other category of expenses not previously netted against specific revenues). Set 5% percentage for TR Cost
Deduction (i.e., both ceiling and floor);
(B) the set deduction of one and eight-tenths percent (1.8%) of TR described in Section 4(e) below
(which set deduction is already reflected in the amounts defining and percentages prescribing the Salary Cap in
Section 4(a) below, and is intended to account for private contributions to stadium construction qualifying for
support under the G-3 program or any similar successor program, as well as for stadium security expenses), the
amount of which set deduction may be increased with the express approval of the NFLPA to up to two and
three-tenths percent (2.3%) of TR if private contributions to stadium construction that are approved by the
NFLPA shall so justify (i.e., up to an additional one-half of one percent (.5%) of TR may be deducted from the
amounts defining and percentages prescribing the Salary Cap in Section 4(a) below, if approved by the NFLPA,
as provided in Section 4(e) below);
(C) expense deductions allowed to be netted against related revenues before inclusion of such
revenues in TR, as follows: 56
(i) with respect to Club revenue items set forth in Section 1(a)(i)(3) above, the deduction of only
those direct expenses allowed by the NFLPA to be netted against specific revenues of the foregoing types prior
to the 2006 League Year (see Appendix H.3 for a non-exclusive list of such deductions, and Section F of
Appendix H.3 for the list of deductions applicable to Club Internet operations (including merchandise sales))
and any other deductions specifically approved by the NFLPA after the date hereof; and
(ii) with respect to NFL Ventures and/or its subsidiaries, only those expenses of NFL Ventures
and/or its subsidiaries previously allowed by the NFLPA to be netted against specific revenue items of such
entities prior to the 2006 League Year (see Appendix H.3 for a non-exclusive list of such deductions and
Section F of Appendix H.3 for the list of deductions applicable to NFL Ventures Internet operations (including
merchandise sales)), and any other deductions specifically approved by the NFLPA after the date hereof;
(D) expense deductions not referenced in Section 1(a)(xiv)(1)(C) above that were allowed by the
NFLPA to be netted against related revenues before inclusion of such revenues in DGR or EDGR prior to the
2006 League Year, including but not limited to such deductions and exclusions relating to PSLs and premium
seats as described in Subsections 1(a)(x)-(xi) above, for qualifying projects prior to the 2006 League Year (see
Appendix M for examples as to the treatment of such PSLs), and such deductions as are set forth in Appendix
H.3 (which provides a non-exclusive list and descriptions of other deductions allowed by the NFLPA prior to
the 2006 League Year);
(E) deductions for expenses on additional “new nets” subject to NFLPA approval; and
(F) any other deductions specifically approved by the NFLPA after the 2005 League Year
(2) Otherwise allowable expenses may only be deducted against the revenues to which they directly
relate, and only up to the amount of such directly related revenues. If the result of expense netting with respect
to a particular revenue item is a negative number, the TR count for such revenue item shall be zero and such
negative number may not be used for any purpose.

Yes, I was wrong. It happens. Let us know when you actually admit to being wrong about something. Especially since you've been wrong on many things in this thread.. Including the difference between profits and valuation.

 

[DaBruinz]

The Appeals court has just agreed to hear the expedited appeal on June 3, 2011. That's inside the 2 month window I'd mentioned.

The 8th Circuit also upheld that the lockout was legal and could stay in place until the hearing. They also had some pretty harsh words for Judge Nelson.

 

[Shelterdog]

The 8th Circuit also upheld that the lockout was legal and could stay in place until the hearing. They also had some pretty harsh words for Judge Nelson.

More or less. It was a pretty scathing opinion and it would now be shocking if the NFL lost the appeal.

 

[AzPatsFan]

I don't see any way they go down. The lion's share of NFL revenue comes from the TV contracts and ratings are through the roof. The networks will just be giving the league some blank checks when the next negotiation period comes due.

You sound like the guys who said housing prices can only continue to climb forever, back in 2007...

 

[BSR]

You're a little confused about what the chart is meant to convey. If you want a clear picture of long-term trends in the NFL's profitability, you'll have to look at a wider time frame. The purpose of this chart, both in my use of it, and in its context on Forbes.com, is to counter the assertion that the putatively player-friendly and unsustainable 2006 CBA hamstrung league profits. That there was robust year-to-year growth in operating income during every year under the '06 CBA thus far is some inarguable evidence to that effect. If the 2006 CBA did have a negative affect on league profitability, it was clearly not potent enough to prevent gains over its tenure.

1. That is not an assertion I made so why would you post a chart that counters it.

2. The chart doesn't have enough information on it to effectively counter the assertion you think it addresses. In order to do so it would need to show the relative impact the 2006 CBA had on profitability as compared to a different CBA structure. It doesn't do that.

I think the link you posted shows that better but again, I don't care, it wasn't what I was arguing. What I took issue with from the beginning is your wild claims that a player friendly deal can't effect valuation and that there is no difference between annual profits and franchise appreciation. Those two notions you put forth just plain make no sense.

Meanwhile, you keep raising this boogeyman of a sudden and spontaneous market saturation and decline in growth, as if just because it's possible, we have to consider it somehow likely. The problem is, there's just no evidence to suggest that this limit actually exists. Sports, in general, have never been more popular, available and profitable, than they are today, and all of the biggest ones have been around for over a century. It would be a sociological anomaly of historical proportions for people to suddenly lose interest in spectator sports.

Now, what makes the NFL's continued rise in profitability so likely, though, are the rapid developments in media and information technology creating so many more diverse ways of repackaging selling anew the NFL's product. The NFL still has enormous room for growth in terms of live online broadcasting, online supplemental broadcasting, interactive program broadcasting, etc. There are also myriad opportunities outside of game days -- fans clearly want a more and more immersive NFL experience, and there are lucrative ways of providing that. At the moment, many NFL franchises discourage their players from tweeting. Soon enough, they'll probably be contractually obligated to, which will be aggregated and filterable on NFL.com.

And if all this wasn't enough, the NFL still has plenty of room for growth internationally, where it's only just starting to get a foothold.

There is nothing sudden nor spontaneous about it. As the Forbes valuation charts already show valuation growth has already slowed, despite being in a period of uncharted popularity. How much more popular do you really think its going to get? Would you really want to bank your billions on international markets where they have failed before?

 

[townes]

Sorry -- couldn't resist reprising this. So are we all getting a nice civics lesson? . Seriously, though, don't take crap guys like Shefter say about legal matters seriously no matter what experts they claim to have spoken to. Leave the heavy lifting to the pros.

I don't think this has anything to do with the law, simply politics, the federal judiciary has been stacked with pro business judges who set the law aside consistently to screw workers, communities, and the environment, and the owners knew they were getting such a panel in the 8th circuit, just as lawyers know when they are going to the 9th circuit that they are dealing with a liberal bias. The entire justice system in this country is compromised and rules politically, it is broken beyond repair. In fact the reason Bush named Alito and Roberts had nothing to do with social issues and everything to do with their views on business and willingness to take the side of management and ownership on every issue.


I'm sick of it all and have taken my head out of politics because of it.

 

[MoLewisrocks]

I don't think this has anything to do with the law, simply politics, the federal judiciary has been stacked with pro business judges who set the law aside consistently to screw workers, communities, and the environment, and the owners knew they were getting such a panel in the 8th circuit, just as lawyers know when they are going to the 9th circuit that they are dealing with a liberal bias. The entire justice system in this country is compromised and rules politically, it is broken beyond repair. In fact the reason Bush named Alito and Roberts had nothing to do with social issues and everything to do with their views on business and willingness to take the side of management and ownership on every issue.


I'm sick of it all and have taken my head out of politics because of it.

No you haven't. Instead you've injected politics into fooball message board discussion concerning a decision you personally disagree with.

 

[townes]

No you haven't. Instead you've injected politics into fooball message board discussion concerning a decision you personally disagree with.

I'm talking politics as a whole, and yes i have, and the political talk about it has come mostly from the rightwingers here who crapped all over Nelson's ruling, a fact you ignore. let me know when you can support your argument with some facts, so far it has been devoid of it, you simply claim the owners should get whatever they want, which is as biased and unbalanced as it gets. At least i said the players should force their reps to make a fair deal even if they win completely in court, you simply stick to your pro owner bias.


Why did the owners refuse to negotiate under the owner friendly rules of 2010-FACTS PLEASE. Show how they would have been hurt by this. They wanted a lockout to crush the players, and that is garbage.

 

[PATSNUTme]

Am I alone in that every time I see or hear "Judge Nelson",the image of this guy pops into my head.

Sorry to bring that up. Please continue with the serious discussion on the subject.

 

[PATSNUTme]

I'm talking politics as a whole, and yes i have, and the political talk about it has come mostly from the rightwingers here who crapped all over Nelson's ruling, a fact you ignore. let me know when you can support your argument with some facts, so far it has been devoid of it, you simply claim the owners should get whatever they want, which is as biased and unbalanced as it gets. At least i said the players should force their reps to make a fair deal even if they win completely in court, you simply stick to your pro owner bias.


Why did the owners refuse to negotiate under the owner friendly rules of 2010-FACTS PLEASE. Show how they would have been hurt by this. They wanted a lockout to crush the players, and that is garbage.

Stike 2, on bringing politics to this thead. There will not be a stike 3.

Breaking News: All Federal judges are political appointees, even Judd Nelson, I mean Judge Nelson. So, there is no need to bring up politics or using the terms "right wingers" or "left wingers".

 

[blackglass3]

Stike 2, on bringing politics to this thead. There will not be a stike 3.

Breaking News: All Federal judges are political appointees, even Judd Nelson, I mean Judge Nelson. So, there is no need to bring up politics or using the terms "right wingers" or "left wingers".

What about Judge Dredd?

 

[Shelterdog]

Sorry -- couldn't resist reprising this. So are we all getting a nice civics lesson? . Seriously, though, don't take crap guys like Shefter say about legal matters seriously no matter what experts they claim to have spoken to. Leave the heavy lifting to the pros.

You're being cruel but you're completely right. No good lawyer would ever say that a decision is appeal proof, particularly not on very complex questions. There isn't an easy or obvious answer to a question like whether the NFL's "sham" defense is valid.

This is especially true becase the talking heads are saying this "appeal-proof" stuff like 15 minutes after the decision came down. There wasn't enough time to read it let alone research whether the judge was right, etc.

 

[PATSNUTme]

What about Judge Dredd?

Now you have me thinking about Judge Reinhold and that gets me thinking about Phoebe Cates.

 

[Rob0729]

Am I alone in that every time I see or hear "Judge Nelson",the image of this guy pops into my head.

Sorry to bring that up. Please continue with the serious discussion on the subject.

I think they could get this whole thing solved if they they brought this in front of a three judge panel of Judge Nelson, Judge Reinhold, and Mike Judge.

 

[Joker]

Thyere's only ONE judge west of the Pecos...Judge Roy Bean..