Did the Players Make the Right Move?
My opinion on the Players actions over the past month
Most reports in the media and on the internet blogs are written in favor of the players and portray the owners as greedy billionaires. As much as I side with the players and the sacrifices they make on the field with their bodies, dedication, and time; they may not end up much better than the deal they left on the table.
The last CBA was in favor of the players, and was likely due to the fact that the owners were doing very well at the time and were continuing to make good money despite giving the players a much bigger percentage of profits. In the last couple of years, cities have not funded stadiums the way they used to, rookie contracts have continued to increase and the owners have not seen as much of a revenue stream that they were used to. In no way does this mean in any way that they are losing money, but they exercised the option in the old CBA to opt out this year. It may not have been good thing for the players, and I don’t feel sorry for the owners in the least, but they executed an option they had. They did not break any rules or breach the previous contract.
Negotiations were progressing just prior to the players walking out and filing suit, and there are a couple reports of what the owners last offer was in general. What most of these reports say is that the 18 game season was scrapped, a rookie wage scale would be put in place, less OTAs, more benefits for retired players, and more of the annual profits would go towards the owners. The amount of the overall profits which would shift from the players to the owners was somewhere between half to three quarters of a billion dollars. As with most negotiations, the money was the big sticking point.
From what I have read, I believe that the players could have gotten the owners down to the half billion dollar mark. This would mean that the owners would get 1.5 billion of the profits off the top and the rest of the profits would be divided between the owners and players evenly. Under the old CBA, the owners got the first billion, so this new agreement would decrease the players share by about a quarter million. (It is a quarter billion because the half billion under the old CBA would be split evenly between the players and the owners)
So how much would the players actually lose in this new agreement? I was unable to find a number of how many players are represented by the players union, there are about 75 to 85 players on each NFL roster right now. I will take the average of about 80 per team. Eighty players per team and 32 total teams makes 2560 players total. This means that the loss would be about $97,000 per player. I will ignore the fact that taxes will decrease the actual money received to about half that after taxes. While this is a lot of money to you and me, this may not be near as much to the average player in the NFL.
Businessweek lists the average player salary at about $1.9 million in 2009, so this means that the players on average would make about 5% less. No one wants to take a 5% pay cut, but this is probably around the average for what most of us pay towards a retirement or pension plan, and the owners have promised some of the profits towards retired players. Also, keep in mind that Tom Brady (one of the players initiating the lawsuit) makes about $100,000 in about four days under his current contract if it is spread out over the entire year.
The other aspect the players need to think about is that the profits of the league will very likely go down as this gets drug out in court. If anyone thinks that the league will not suffer if the labor battle starts to affect the season, they need to look at Major League Baseball. In the mid 90’s baseball was quite profitable, but then got caught up in a labor dispute which eliminated over half a season. They felt the effects of this for over 10 years and some people feel they are still not as profitable as they could be if the dispute had not occurred.
I have heard a couple of people at my work talk about how they are disgusted with the millionaires versus billionaires, and how they will not be watching the NFL due to this dispute. A couple have related it to why they didn’t watch the NBA for about a decade until the last couple of years. A decline in 5% of the profits is very likely if any games are missed.
Also keep in mind that most of the likely pay-cuts would be lost for the high end contracts. The NFL minimum would not change and obviously the current contracts would be unaffected. The players who would see the biggest reduction would be the rookies (in part due to the new wage scale) and the highest paid players. I think that players like Brady, Manning, and Brees would get less on the large dollar contract extensions and the average NFL player would be largely unaffected
I understand that the players are upset about losing a portion of their share of the pie, but was this risk worth it? Only time will tell, but I think they made the wrong move by walking away from the table, looking at the risk the lawsuit incurs. If the profitability of the league goes down because people stop watching, they may loose more than a quarter billion dollars.