Think the owners are being the stubborn ones? Think again

[MoLewisrocks]

I understand that the $1B off the top isn't a pegged amount, but the product of a number of credits deducted from TR that has amounted to around $1 billion at the present amount of revenue, representing 11% of gross revenue. Set deductions of fixed percentages account for 6.8% of gross revenue off the top, meaning that over 60% of the off-the-top money is not subject to independent auditing.

The rest of the credits are included as deductions in revenue reports, and are reviewed by the independent accountants only to the extent the type of expense being deducted is in accordance with provisions in the CBA delineating what expenses are deductible from TR. The reports of these deductions are made in confidence, and not subject to NFLPA review. The only oversight the NFLPA has on the deduction process is if the NFL wants to add a whole new category of deduction.



It wasn't the owners who were the visionaries behind the revenue-sharing plan, it was Pete Rozelle. The owners were only convinced because at that point, TV revenue wasn't really a big part of their revenues. The purpose wasn't competitive parity, either -- it was bargaining leverage with the TV networks. If the networks wanted the rights to NY, Chicago and Dallas teams, they'd have to pay for the rights to the smaller market teams' games, too. Not only did this secure for the NFL more total money than teams would have been able to negotiate individually, but it also ensured that all the franchises would be able to get on TV at all, which was key in terms of helping new and struggling franchises grow their fanbase.

But all that history is kind of besides the point, anyway -- who is responsible for coming up with the best ways of maximizing revenue is an entirely academic question, because without the performance of players on the football field, there is simply no product to be sold. The players' contribution to their team goes beyond determining who wins the game -- their performance is what people pay to see. That's why all of the revenues comprising TR in the CBA are considered, by definition, to be those "arising from the performance of players in NFL football games."

As for the transient nature of the "talent" in football - that's why the owners aren't interested in any plan that compensates the players with equity in the league or teams, the way Google and Apple attract talented programers and designers by offering shares in the company in addition to salary. This was suggested during negotiations as means of geting the players to agree to more deductions from their share of revenue for league growth, promptly rejected by the owners, and dropped by the players.

So, you're correct, Forbes doesn't factor talent into its valuation of NFL franchises because that talent, as you point out, is transient. Nobody buying an NFL franchise is going to consider how good the players are that particular season, because that will fluctuate from season to season. But while the value of the individual franchises isn't derived from the talent of its players, the value of the NFL's product as a whole is, entirely. And as a franchise only derives its value from being part of the NFL, all of its other assets are derived from the performance of the NFL's players in football games.



I'll have to get back to you on this, when I've been able to track down where I read this, and check the math.

Revenue sharing was the brainchild of the rival AFL, the league NFL owners opened merger talks with behind Rozelle's back. Rozelle, who rose out of the GM ranks, saw the value in revenue sharing and collective negotiation of TV deals and sold that to some owners who didn't. It was also something Bert Bell instituted on a more limited basis as a means to provide a fledgling league some semblance of stability back in the 30's...He knew he needed teams in major markets, but he also knew he needed them in lesser ones like Green Bay where support was ingrained so the haves would have someone to play...

A lot more went into building this league into what is is today than mere athletic talent. Today's stats driven fantasy fans don't always get that. A lot of the players who helped build this league couldn't get on the field let alone be competitive today. But then again, many of those whom fans faun over today lack the sheer determination that generations who came before them exhibited often in lieu of elite talent. There are still players who fit that mold, they are affectionately dubbed (although at times summarily dismissed) as throwbacks. There are also some present day owners who would fit that mold.

 

[JFK]

Can't the NFL players put their money together and start their own league and have things their way?

 

[Joker]

heh..yeah, right....Cromartie cant put two nickels together and LaDuncington Toelickerson can't form a three word sentence but THEY would be part of forming a new league?

 

[cmasspatsfan]

Can't the NFL players put their money together and start their own league and have things their way?

Where would they play? You think Kraft would let them use Gillette? It costs more to run a league than you think. If that was possible it would have been done a long time ago.

 

[Frezo]

Where would they play? You think Kraft would let them use Gillette? It costs more to run a league than you think. If that was possible it would have been done a long time ago.

Not only that but the majority of the money belongs to 15 or 20% of the players. Do you think the Mannings and Bradys of the league are going to invest their money in a new league unless they get giant cuts? Before you know it the rookies would go on strike and then where would we be?

 

[BPF]

Good read w/analysis: NFL Labor Mess: Open Forum With DeMaurice Smith Raises Questions, Lessens Hope - Mile High Report

 

[lamafist]

Revenue sharing was the brainchild of the rival AFL, the league NFL owners opened merger talks with behind Rozelle's back. Rozelle, who rose out of the GM ranks, saw the value in revenue sharing and collective negotiation of TV deals and sold that to some owners who didn't. It was also something Bert Bell instituted on a more limited basis as a means to provide a fledgling league some semblance of stability back in the 30's...He knew he needed teams in major markets, but he also knew he needed them in lesser ones like Green Bay where support was ingrained so the haves would have someone to play...

A lot more went into building this league into what is is today than mere athletic talent. Today's stats driven fantasy fans don't always get that. A lot of the players who helped build this league couldn't get on the field let alone be competitive today. But then again, many of those whom fans faun over today lack the sheer determination that generations who came before them exhibited often in lieu of elite talent. There are still players who fit that mold, they are affectionately dubbed (although at times summarily dismissed) as throwbacks. There are also some present day owners who would fit that mold.

Rozelle started lobbying for revenue sharing upon assuming the office of commissioner in Jan. of 1960, before the AFL had played a game, and had won over the NFL's owners and instituted revenue sharing by 1961, years before anyone started plotting the merger, which wouldn't happen until 1970. Rozelle may have been inspired by the AFL's revenue sharing policy, he was certainly the architect behind its installation in the NFL, and the entire "League-think" strategy it was a part of.

I'm not entirely sure I follow your argument in your second paragraph. I mean, I agree completely with your assertion that the players of the NFL's early days couldn't compete in today's NFL, considering the increases in size, speed, strength and conditioning over time, not to mention how much more complex and sophisticated the game has gotten in terms of strategy. Can't really blame the players back then, though - they weren't paid nearly well enough to make football their only source of income, and the NFL wasn't big enough to attract the best athletes of its day, then. But that's all pretty much irrelevant to the business of the NFL of today, an NFL that happens to be more competitive, more popular, and more lucrative than at any point in league history.

 

[lamafist]

On the fact that payroll costs can rise faster than the cap.

Not sure how this relates to what I was saying.

 

[Ring 6]

Not sure how this relates to what I was saying.

Because of this post by you:

Quote:
Originally Posted by billdog3484
Im fairly confident in saying that revenues have been increasing in past years. Im sure the players want their increase in their share of the revenue to increase in line with how it has increased in past years, and to continue to increase at whatever rate revenue has grown over the past five years. This is fine, however, what if revenue all of a sudden dips for a five year period. the owners will still be paying the players as if the revenues are going up. this is why many businesses have failed. this, im sure, is part of the reason the owners will not agree.

The salary cap is tied to revenues. If they decrease, so does the cap -- and floor.

And, as we all know, player contracts in the NFL are highly mutable. Every season, many players choose to renegotiate more team-friendly contracts rather than be cut altogether, the latter of which is always an option for teams that need to dump salary.


While the cap is tied to revenues, payroll expenses are not.

 

[lamafist]

Because of this post by you:

Quote:
Originally Posted by billdog3484
Im fairly confident in saying that revenues have been increasing in past years. Im sure the players want their increase in their share of the revenue to increase in line with how it has increased in past years, and to continue to increase at whatever rate revenue has grown over the past five years. This is fine, however, what if revenue all of a sudden dips for a five year period. the owners will still be paying the players as if the revenues are going up. this is why many businesses have failed. this, im sure, is part of the reason the owners will not agree.

The salary cap is tied to revenues. If they decrease, so does the cap -- and floor.

And, as we all know, player contracts in the NFL are highly mutable. Every season, many players choose to renegotiate more team-friendly contracts rather than be cut altogether, the latter of which is always an option for teams that need to dump salary.


While the cap is tied to revenues, payroll expenses are not.

Teams have some flexibility to go cash-over-cap or cash-under-cap, for sure. But I Still don't see how this relates to my point.

Salary is always easy to dump in the NFL, and between dead money from prior signing bonuses and a lowered cash/cap floor, NFL teams have plenty of flexibility to deal with a decline in revenues.

 

[Ring 6]

Teams have some flexibility to go cash-over-cap or cash-under-cap, for sure. But I Still don't see how this relates to my point.

Salary is always easy to dump in the NFL, and between dead money from prior signing bonuses and a lowered cash/cap floor, NFL teams have plenty of flexibility to deal with a decline in revenues.

The poster stated the risk of declining revenues and you brushed it off by saying the cap is tied to revenues. The fact is that payroll expense and the cap are not the same thing, and payroll expense is not directly tied to revenues.
The dramatically increasing signing bonusses are creating a bigger gap between cash and cap, and if revenues were to decrease it would be very difficult to reduce payroll correspondingly and remain competitive. After all the purpose of the cap is to keep the teams competitive.

 

[townes]

It's obvious you hate billionaire Kraft who supports the owners' position. Sad.

Actually I like the Kraft's and believe that if it were up to them the current deal would still be in place, unfortunately they are in a club with some unbelievably greedy people and are standing with them, so I absolutely fault them for that stand.

What is "sad" is people who support the greed of the owners and their willingness to completely screw everyone who is involved with football and everyone who supports the teams so they can add billions to their already grossly overstuffed wallets. Contrary to the idiotic mindset of many in this country greed is a bad thing, not a good thing, and supporting greed is disgraceful.

 

[TruthSeeker]

...But all that history is kind of besides the point, anyway -- who is responsible for coming up with the best ways of maximizing revenue is an entirely academic question, because without the performance of players on the football field, there is simply no product to be sold.

Tell that to the top racquetball, ping pong and curling players in the world that the marketing of their sport is just an "academic question" since they are the ones who truly drive the revenue.

Oh, that's right. The revenue for these sports is essentially non-existent.

This is what I call a major disconnect and a primary reason that you don't appreciate what the owners have done. Yes, it's a symbiotic relationship. But both sides are really, really important in order for there to be success. We need to appreciate both the great management and the great players. Your post clearly doesn't.

 

[lamafist]

The poster stated the risk of declining revenues and you brushed it off by saying the cap is tied to revenues. The fact is that payroll expense and the cap are not the same thing, and payroll expense is not directly tied to revenues.
The dramatically increasing signing bonusses are creating a bigger gap between cash and cap, and if revenues were to decrease it would be very difficult to reduce payroll correspondingly and remain competitive. After all the purpose of the cap is to keep the teams competitive.

But cash-over-cap amounts haven't been increasing, and in the past 10 years, only once have a majority of teams had actual player payroll expenditures higher than that year's cap. What generally has happened is a cycle in which more teams start spending cash-over-cap in anticipation of predictable jumps in the salary cap - so in the year before each TV contract renewal and every cap extension year, teams are more willing to pay more cash-over cap because they're anticipating more cap space the following year.

The thing about cash over cap expenditures is that they do all count against the cap eventually. The more cash-over-cap a team spends, the more annual dead cap space they build up, and eventually, will have to either tighten their belts in free agency and/or trade down in the draft in the future, or hope to get bailed out by a big jump in the cap, which is unlikely now that there aren't new revenue streams for the NFLPA to go after.

So there's an automatic limit built in to how much teams can spend beyond their cap means, even if teams were continuously pushing the envelope with it, which they're overwhelmingly not.

 

[lamafist]

Tell that to the top racquetball, ping pong and curling players in the world that the marketing of their sport is just an "academic question" since they are the ones who truly drive the revenue.

Oh, that's right. The revenue for these sports is essentially non-existent.

This is what I call a major disconnect and a primary reason that you don't appreciate what the owners have done. Yes, it's a symbiotic relationship. But both sides are really, really important in order for there to be success. We need to appreciate both the great management and the great players. Your post clearly doesn't.

I think your characterization of my argument as discounting the role of management in the success of the NFL is a -- perhaps unintentional -- straw man argument. My argument is that what the then-owners and commissioners' office did in the 60's and 70's is academic to the argument over today's labor situation. Nobody deserves to get paid today for what they or their successors were responsible for.

I'm happy to grant your supposition that the league's marketing savvy, as well as that of some of the owners' operations, is equally critical to the contribution of the players' talent in determining the NFL's future profitability, but that's only one factor in determining proper compensation in a free enterprise economy. The players are irreplaceable; they represent the fraction of a percent of people who are capable of playing football at the level they do. There are many, many more times as many capable people capable of marketing just as well as those employed by the NFL. What's more, the success of the Packers organization in managing one of the most popular brands in the NFL, and field a Super Bowl winning team, all as a public non-profit organization would argue that owners aren't even strictly necessary.

Which is largely why the rest of the NFL's owners have since banned teams from being public, non-profit, or owned by any number of people in which one does not have at least a 30% controlling interest.

 

[townes]

The owners banned communities from owning their teams?


The list of scumbaggery grows longer by the minute.

 

[townes]

Now that I think of it that would be the best solution, make all teams community property and non-profit. If it worked for the Super Bowl champs there is no reason it can't work for all of them. Given the bad faith in which current ownership operates stripping them of their franchises by public domain would be a fantastic solution. Since teams would be non-profit the money saved could go back to the fans by lowering ticket and parking prices.


Community owned teams, can't get better than that.

 

[lamafist]

Now that I think of it that would be the best solution, make all teams community property and non-profit. If it worked for the Super Bowl champs there is no reason it can't work for all of them. Given the bad faith in which current ownership operates stripping them of their franchises by public domain would be a fantastic solution. Since teams would be non-profit the money saved could go back to the fans by lowering ticket and parking prices.


Community owned teams, can't get better than that.

George Groves, a former Sports Law professor, former tax judge and attorney, and current contributor to Forbes, agrees with you: Make The Fans The Owners: A Long-Term Solution For The NFL.

 

[townes]

George Groves, a former Sports Law professor, former tax judge and attorney, and current contributor to Forbes, agrees with you: Make The Fans The Owners: A Long-Term Solution For The NFL.

It would be hard not to, after all I am eminently reasonable, just ask anyone.

 

[townes]

Given the investment fans and communities have made in their teams in every way I would love to see a class action suit joined by fans from all NFL cities and communities that charges the owners with abrogating the trust their stewardship of their franchises entrusts them with and turning all into publically operated companies with the current owners getting paid off by public offerings for the value of their franchises.


Works for me, we own the teams and football returns for all. Greed factor gone and it benefits everyone but the 32 owners too greedy to make it work for themselves.

Now that i think about it this also helps those 32 owners by relieving them off the costly burdens their teams have become for them and it allows them to use their money for endeavors where they can make some good money, not the pittance they receive from their NFL team's.