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Labor Pains of the NFL


DeMaurice Smith was on the Mike and Mike show the other day and had some interesting thing to say.  The effects of 2011 are already upon us.  Contracts, business decisions, who teams will offer, and much more is being influenced at the possibility of there being a lock out in 2011.  I just wanted to offer up some thoughts on what Mr. Smith said and my thoughts on what the future of the NFL will look like.

Mr. Smith noted that if any of the owners are having financial troubles to let him know.  Now we all know that this is political talk, Mr. Smith wants the public on his side so I do take what he says with a grain of salt and the same should be done with any owners.  Mr. Smith came out had used numbers from forbes and the billion dollar values of these franchises today.  Forbes also listed the net profits that the average NFL team pulled in.  This thing gets real tricky especially sense the courts just ruled in the NFL's favor in identifying the league as one big company instead of 32 individual companies.  So I'm not even sure that anyone knows what kind of effect this has on the teams, especially the numbers.  We also know that the NFL itself is a non-profit organization.  Which means the NFL enjoy's tax exempt status from the government.  The NFL earns almost 7 billion dollars a year and has no real competitor in the marketplace.  Source Here

So if you want to look at it from the NFL as one entity stand point the owners have a hard case to make.  The NFL itself doesn't pay taxes and makes 7 billion dollars a year with no competition which means they can charge what they want, they can do what they want, customers have no other real options.  So should the players - the ones who are actually putting their future, their bodies, their minds at stake - should take a pay cut for an organization that is growing and not declining?

Mr. Smith also mentioned that it is a misnomer that the players get 60% of the revenue.  He claims they actually get around 53% because the owners take a billion dollars off the top of the revenue and the players get 60% of what is left.  Now this sounds like some kind of manipulation of the figures but I'm not sure either way.  All I know is that the owners will use the 60% and say they want the players to make 53% of the revenue and the players association/union will say that the players currently get 53% and the owners wants to push them down to about 47%.  

We all know that the NFL had its first black out in a while this year.  But because they didn't sell out a couple of games am I suppose to believe that this is causing such financial woes?  People are tightening up the belt everywhere but the sheer fact that there were no more than 2 or 3 instances of blackouts out of a total of 512 NFL games this year shows that people are still willing to spend money on football.  

To me its clear that the NFL wants it both ways.  Both sides, the union and the owners, want to make more money; that is what America is about.  But the NFL wants to be basically a monopoly, have tax-exemptions, grow their revenue (one reason why you see games in England now), be considered one entity and yet have the owners argue on a 32 team bases that they have these financial troubles.  Honestly it is hard to imagine owners having financial woes and what those financial woes mean.  I can't say that they are lying but when you are throwing around millions of dollars, its just hard for the common american to relate to the financial woes of billionaires.  Both sides are playing hard ball right now and will do anything they can to get what they want.  I believe that each side has too much to lose to not come out with some type of agreement, which they are on somethings such has a rookie salary slate.  But the first thing they need to do is get on the same page as to what numbers they are going to use before they can start negotiating.  The problem is the owners have the upper hand because they can make money without the NFL but the players won't make the type of money their making now without the NFL.  I still don't believe the players should take a pay cut when the league has increased it's revenue in a recession.  I wouldn't expect anything to get done before this time next year.  

 

***Update***

So some more information has been obtained thats not too promising.  In an Espn article Smith says that the league would get 5 billion dollars from TV in a lockout year.  That sounds absurd but so far from following this story like a good lawyer everything Smith has said has some form of truth to them even if he does twist it for his own benefit.  It also delves into the 1 billion the owners take off top which they said goes to things like the NFL.com and NFL network - which if I'm not mistaken those entities rake in profit for themselves so why would they need an extra billion dollars for a website that makes money off adds and a tv station that makes money off ads.  It also goes into putting games overseas - so the NFL is not making a profit off of putting games overseas?  Whats the point, how is that good business to begrudge your customers and lose money at the same time?  I understand they may want to start a league in Europe but that was tried already.  It just all sounds funny like the NFL picked a bad time to expand globally and are trying to compensate for their mistake.  While refusing to admit that its a mistake.  

I don't think American football will work globally.  You would have to knock off the sport giant that is soccer and that is not happening.  This may be a case of the NFL trying to bite off more than it can chew.  So now Jeff Saturday and Kevin Mawae are getting into the war of words also with Mawae saying the owners are lying when they say they haven't asked for the players to take an 18% cut across the board which amounts to 340,000 on average.  For player who make the league minimum thats a hard hit.  Saturday had told players to save their money.  

I found it interesting in the article that the league used the Green Bay packers as an example of financial woes saying they have had a 40% decline in profits.  Are these a 40% decline in projected profits?  I looked up the  forbes value of the Green Bay packers and found that they have a 56 million dollar net profits (net meaning after expenses).  I'm not sure what the total revenue includes in these numbers but all the NFL needs to do is open their books to the public and they could solve this debate but they won't do that.  This sucks.

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