Friday, February 11, 2011
NFL Player's Association vs. The NFL: A Breakdown of What's at Stake and Which Side is Right or Wrong about Critical Labor Issues
Representatives of the NFL Player's Associations and the NFL met in a secret location in Washington on Wednesday, February 9th but discontinued talks the following day because both sides are so far apart. Each said that a meeting between them in Dallas over Super Bowl week was productive. NFL commissioner, Roger Goodell said he felt the meetings in Dallas were "beneficial" and that "it's always a positive when both parties are talking." He continued, "My focus is on the next three or four weeks. I've often said, our agreement expires on March 4. We have to use that period of time to reach an agreement that's fair for the players, fair for the clubs, and allows our great game to grow for our fans."
Union Executive Director, DeMaurice Smith, who represents the players in the negotiations, said it was a "good meeting" in Dallas but added, "I don't think anyone went into the meeting with the idea that we were going to build Rome in one day."
The main issues that are at play for both sides are how the $9 billion in annual revenue will be divided amongst the owners and players and the disagreement between them on the idea of expanding the regular season an additional two games from 16 to 18 and reduce the preseason by two games from 4 to 2. Other burning issue are the rookie wage scale and benefits for retired players.
NFL financial estimations state that there would be a loss in gross revenue of $120 million if the current agreement expires on March 4th. If there is still no new deal by August it will cost the NFL $350 million and in a doomsday scenario, regular season games missed, $1 billion in collective losses through September and an additional $400 million for every Sunday stadiums are empty. The current deal was agreed to in 2006 and was to be in place until 2012, but NFL owners exercised a clause to opt-out of the deal in 2008.
When you look at this by the issue, both sides are right on different issues. What will determine how and when a new deal will be in place is whether the sides are willing to rescind greedy positions on differing issues. The players have every reason to be upset with some of what the NFL owners want in the new deal and players are being unfair to the owners in others. Lets take a look at the breakdown of each issue.
As it is, of the $9 billion in revenue that the NFL creates on an annual basis, owners get a billion of that pie first and the rest goes to players, administration, staff, etc... What the owners want is to get $2 billion of the pie before costs leaving the players and staff a $7 billion dollar pie instead of $8 billion. The players want to keep revenue sharing as it is and continue to get their larger piece of the pie.
Who is right? The Owners
As hard as it may be to believe, the owners have this one right. The asset profiles of the individual owners in the NFL are unknown as NFL franchises are private companies that do not share their financial statements, but an example to site, is the Green Bay Packers because they are the NFL's lone publicly traded franchise. Financial statements show that the Packers' operating costs have risen dramatically and their profit and revenue have reduced by more than half since the start of the current CBA between the players and owners agreed to in 2006. There are too many overpaid athletes in the NFL to warrant franchises having to accept major reductions in revenues. In fact, some owners that are heavily leveraged, still paying off newly built stadiums, are in dire need of an increase in company revenue. Negotiating more of the pie into ownership ensures the security of franchises that are under financial duress, like the Jacksonville Jaguars, who are at major risk of going bankrupt and having to relocate to Los Angeles. It's important to protect the establishment(the franchises) in order to have the product. Without owners being able to reinvest into their teams, they have to be able to operate on a sufficient profit. It only makes the league richer as a whole and the money created from it will benefit the player's pocketbooks in the end anyway. Owners can take a larger piece of the pie and use it to make a bigger pie.
18 Game Schedule:
As it is, the NFL regular season schedule begins with 4 preseason exhibition games, continues into 16 regular season games and into the playoffs. What the owners are proposing is that the preseason be reduced from 4 exhibition games to 2 and extend the regular season to 18 games. The players want to keep the season exactly as it is with 4 preseason games and 16 regular season games.
Who is right? The Players
The players have the biggest beef with this specific proposal and for good reason. It's already hard enough to get a team through 20 games(4 preseason and 16 regular season) without lots of injuries to the team's 53-man roster, especially the team's largest statistical contributors. The NFL has done two, two-game regular season expansions in the past going from 12 games to 14 in '61 and 14 to 16 in '78. The NFL tries to play a PR game with the public trying to suggest that adding two regular season games and subtracting two preseason games still adds up to twenty games, so no games are being added to the schedule at all. They also add that the reason they want to do this is because fans have expressed a dislike for preseason games.
Though their argument is semantically true, it is not true by nature. Yes, fans don't care about preseason and they would not care if it was done away with, but to suggest that playing two extra regular season games and two less preseason games is the same thing is insulting to the players and to anyone that has any common sense. Even fans know that a player's risk of injury is greatly exacerbated in a regular season game, more so than in a preseason game. An extension of the regular season will increase the extent of player injuries, such as concussions, an issue that the NFL claims to be sensitive to, but looks disingenuous in their position by demanding players put themselves at risk 140 to180 extra regular season snaps per season.
It's no wonder that the NFL has started to really crackdown hard on illegal and helmet-to-helmet hits. They are trying to legislate more safety into the game so their play for a longer season can be realized. Players getting concussions every week would likley result in leverage for players to keep the season shorter; something the NFL does not want to happen. The reality is that they can legislate hits all they'd like, but no one's chance of injury will decrease. As a wise Michael Wilbon, of ESPN's Pardon the Interruption, said, "The problem with football is football." What he means is, football is what it is and nothing can change that. When you play a game where men are paid to hit each other as hard they can, people are going to get hurt. Period.
It's because of the inevitability of injury, especially in today's game of football where evolved and freakish athletes are running faster and creating more explosive collisions with each other, that going to an 18 game regular season is a really bad idea. Football will become less a war of talent and more a war of attrition. People like the game because it is a 16 game sprint. Eighteen games turns it into more of a marathon. Football fans like a sprint more than a marathon. Owners are being greedy for two extra games of additional revenue at the expense of the player's collective health. What's unfortunate about this issue is it appears the owners have the leverage on this issue and will win this one. Eighteen games will likely be in place by 2012.
Rookie Wage Scale
As it is, rookies that are drafted in the NFL at a 1st round pick almost always become the highest paid player on the team that has selected them. This is because the rise of rookie contracts has perpetually expanded exponentially to numbers greater than what most proven veterans make. If a franchise has a high 1st round pick, they are obligated to trade it away or use it on a player that will command tens of millions of dollars in guaranteed money before they ever step foot on a pro football field. Sometimes it's a sound investment, but most times it ends in money completely wasted.
Who is Right? The Owners
There are too many high first round pick busts to speak off, but most notably in recent years was the 2007 NFL draft where the Oakland Raiders took quarterback JaMarcus Russell with the first overall pick. He negotiated $32 million in guaranteed money for merely signing and earned another $32 million in three years of play(made only one start his rookie year). He went for 18 touchdowns and 23 interceptions with just over 4,000 yards and a 65.2 QB rating in those three years. The Raiders spent over $62 million on him and got almost literally nothing in return. Meanwhile, star veterans like James Harrison, who is a key centerpiece of the Steelers vaunted defense and annual candidate for NFL Defensive Player of the Year was an undrafted free agent a few years ago and still plays under that contract where he made under $1 million in base salary in 2010.
What the owners are arguing, is that when they are forced to pay such high dollar amounts for unproven and far from guaranteed investments, when they bust and get no return on the huge investment, which many of them end up doing, it cripples an organization financially for several years. It gives them little room to seek the services of other quality players because they take a huge hit on their salary cap for the season and have little funds left over to even afford better players.
I know the NFLPA wants to keep rookie salaries high because it just means that it increases the amount of money players continue to make each year, but this is a greedy position. Many owners have been given a royal shaft on highly paid first round picks that cave under the pressure of the NFL. Rookies should be compensated fairly when they come into the NFL but their contracts should be more incentive based than guaranteed. This issue will play a part in leveraging the previous issues so I'm not sure who will come out on top with this one. One side or the other may cave on this to gain leverage on a more important issue.
Player Retirement Benefits
As it is, of the $9 billion dollar industry that is NFL football, only 2% of that revenue is paid to all of the living NFL retirees for their pensions. Players currently receive benefits based on years played and not on salary. Many revisions of the NFL player retirement pension plan have been made over the decades, but in the current CBA, players receive only $470 per month for each credited year they played in the NFL; a figure that has not been updated since 1998.
Who is right? The Players
This is an issue that is truly the black eye of the NFL that no one really knows or talks about. The reason it is so overlooked is that obviously, the NFL would prefer to keep retirement pensions as low as possible. No one wants to have to pay a person who no longer works for their business any more than they have to for their retirement, so naturally the NFL doesn't have an obligation to make sure retired players are fully taken care of, though I'd argue they have a moral obligation to take better care of former players better than the current program provides. The even bigger hurdle to jump for increasing NFL player retirement benefits is that current players make so much money, it's not an issue that is as important to them as other issues because they can all well afford their medical expenses with the voluminous salaries that today's player make. Retirement benefits are more used as a bartering chip than it is an issue at the fore-front of the player's agendas. Who gets screwed in the end? The retired player who played several decades ago.
Back in the 60's and 70's, players made a fraction of what they do today because football was not the money generating machine like it is today. The popularity of the sport has grown exponentially and so have revenues. Unfortunately for the players that played in the NFL that many years ago, the pay was a fraction of today's salaries, but the pain inflicted on them was as much or more than players experience today. This means that those players, who are in their 60's and 70's today, have just as many, or more, medical expenses due to a career in the NFL as the younger players do, but have only a fraction of the money to pay for medical procedures and medicines that their younger counterparts easily pay for with their large sums of money they earned in their careers.
With the pension plan as it is, a player only earns $470 per month pension payments in retirement for every season they played in the NFL. The average NFL career, due to it's violent nature, is only 3.6 years. This means that the average NFL retiree receives between $1,410 and $1,880 per month from their pensions. For players of the last twenty years, who reaped the benefits of booming salaries in the last couple of decades are less reliant on retirement pensions for their healthcare needs. Most have plenty of money to cover their needs. It is the players of 40 and 50 years ago, who made next to nothing to get their heads smashed on a daily basis that are in such dire need of NFL pension help.
Players of the 40's - 60's decades who are still alive today often have mounting health issues because of their years in the NFL and the NFL owes a great deal of respect to them for being the foundation that created a sport that is now worth nearly $10 billion. Many of these players who only played a few seasons but sustained major life-altering injuries in the NFL have medical bills that far outweigh their monthly pension benefits. Few of these elderly retirees have very much money because they played in the days when football players were paid no more than your average retail manager but went home every weekend with concussions and permanently damaging conditions on their body that cost them sometimes over $500,000 in medical bills throughout their lifetime after football. When you're piling medical bills that are in the thousands per month, $1,880 doesn't get you very far to cover that and everything else that needs to be paid for.
This is an issue where the NFL certainly does not have to step up it's generosity and the current players don't have to fight for it because they already know that they will have the means to pay for their own medical because the average NFL salary in 2010 is $1.1 million. The older and much less wealthy retired players do not have a strong voice in the negotiations though NFLPA Executive Director, DeMaurice Smith has claimed he will include NFL retirement pensions as a big part of the negotiations to bring much needed financial relief to those who were paid so poorly in those decades and have medical bills that they cannot afford.
The NFL should really step up and improve the living conditions of the players that made NFL football the most popular(and highest revenue earning) sport in America. To allow these retired players to suffer from long-term, chronic injuries they sustained giving their heart and soul to the NFL is embarrassing. An industry that produces nearly $10 billion a year can't take care of the elderly players that built it up to what it is? It's deplorable. This is an issue that the NFL has more wrong than any. Old players that the NFL chewed up and spit out, at no discernibly good wage, who can't afford to live in comfort from the damage they subjected themselves to playing for the NFL, deserve much, much more from the cash cow that is the NFL.
Because the player turnover rate in the NFL is so high and players have such a limited time in their career to make money, my best guess is that the players will cave before the NFL does. Players are not rich enough to miss game checks and uphold the expensive lifestyles they live. Meanwhile, the NFL is a fat, cash-filled entity that can survive an extended season drought without missing the money like the players will. Plan on an eighteen game schedule in 2012 and expect that the players will give up an extra $500 million to the owners in revenue sharing. The rookie wage scale and retirement benefits are more of a toss-up. The NFL will likely give in on those less important issues to satisfy the players in a compromise for increasing the number of games played and a larger cut of the NFL revenue sharing pie. The players will hold on to their demands through the summer because players hate training camp and OTA's and see no rush to get back to work for summer drills, but when push comes to shove in August, they will give in to be sure none of their game checks are missed.
These issues and other minor issues, such as how and when drug testing is performed and the legislation of health and safety, must be worked out and agreed to before September or we will experience the first work-stoppage since the 1987 player strike. It is a shame that so many millions of fans may have to suffer missing out on their favorite experience, NFL football games, all because 32 billionaires and a thousand or so millionaires cannot agree on a suitable agreement that can work for both sides.