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League attacks source of potential player lockout revenue

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With the NFLPA transforming from a full-blown union into an asterisked trade association, the NFL believes that the group no longer has the ability to negotiate marketing deals on behalf of its constituents, according to Daniel Kaplan of SportsBusiness Journal.

“We don’t understand the source of their rights,” NFL senior V.P. of business affairs Gary Gertzog told Kaplan.  “In the CBA, it states group licensing rights are designed to support the objective of the union.  If the union no longer exists, there is certainly a question whether those rights are valid, and people who do business [with the NFLPA*] should be looking into those questions.”

And the league has decided to help its partners realize the potential problem.

“We have communicated to our sponsors who were relying on these rights [that] if they are still interested in group players they will have to find out how to access those benefits, whether through some other entity the former union has or going directly to the agents or players.”

Let’s call this what it really is.  The league hopes to make it harder for the NFLPA* to generate revenue that the players would use to survive a lengthy lockout.  Why else would or should the NFL care?  Sure, the league can pull an Eddie Haskell routine, claiming that it’s merely helping its business partners find their way through presently uncharted waters, even though the only thing that the league typically wants to help its business partners find is their wallet.

So this is about putting even more pressure on the players to accept what the players continue to unreasonably call “the worst deal in the history of sports,” or something close to it.

UPDATE:  This article was from last week’s issue of SBJ.  There’s an update in the new issue.  We’ll get to it after PFT Live.

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25 Responses to “League attacks source of potential player lockout revenue”
  1. jonscoit says: Mar 28, 2011 10:08 AM

    This is pretty cheeky coming from the league that got themselves lockout insurance…

  2. chapnastier says: Mar 28, 2011 10:11 AM

    Good job owners. Keep saying what all of us are thinking.

  3. chucka2 says: Mar 28, 2011 10:16 AM

    This was the players’ choice…

    Chuck A

  4. bfridley says: Mar 28, 2011 10:17 AM

    ANYTHING the league or players are doing right now is about leverage and gaining ground? I’m shocked.

  5. joshuavkidd says: Mar 28, 2011 10:18 AM

    Good!!! I am sick and tired of people trying to tell me the union decertified when everyone realizes that its been an absolute joke… At least this makes it more official in my eyes.

  6. santolonius says: Mar 28, 2011 10:19 AM

    hard to begrudge the owners for wanting to disrupt marketing deals in the same way it’s hard to begrudge the players for wanting to disrupt the draft. the two sides are playing hard ball. it only stands to reason each group is trying to make life very uncomfortable for the other. but when this court hearing in april is over and there’s a new lay of the land, i hope they will be able to get over the bad feelings they’ve created and do a deal.

  7. tednancy says: Mar 28, 2011 10:20 AM

    Good for the owners. They are merely providing the players a glimpse into the future of the NFL without a CBA, should the players prevail in their legal assault on the goose that lays the golden egg.

    File this under “be careful what you wish for.”

  8. myspaceyourface says: Mar 28, 2011 10:25 AM

    If this gets ugly, and it may before it gets resolved, the owners will win the longer the standoff goes.

    They have more money to throw around and they know they got robbed on the last deal.

    The player representation is a piece of crap. He doesn’t need to know everything he is asking for.

    If ownership of an NFL team isn’t profitable the owners will sell and move on to another investment. If this happens the NFL will never return.

  9. realpetereally says: Mar 28, 2011 10:32 AM

    Good. If you don’t want to be a union, don’t act like one. I hope these guys get crushed.

  10. medtxpack says: Mar 28, 2011 10:37 AM

    DeMaruice Smith has no idea what he got himself into…(cue that stupid duckface with a fedora)

  11. realitypolice says: Mar 28, 2011 10:55 AM

    Smart play by the owners.

  12. 2011to2020lions says: Mar 28, 2011 11:11 AM

    The players can’t have it both ways, either you are a union or you are not. You need to make a choice, and be very very careful what you choose because the wrong choice could be dreadful for you and those to follow you

  13. mdh67 says: Mar 28, 2011 11:15 AM

    The right to collectively bargain as a union with an employer has nothing to do with bargaining as a group for marketing deals. It’s just a bad faith argument put forward by the owners. It’s likely not going to play well before the judge when they argue out of the other side of their mouth that the union cannot de-certify.

  14. 12strikes says: Mar 28, 2011 11:25 AM

    I can’t wait for the HBO movie about this whole strike/lockout thing.

    I hope they make it in the “Barbarians at the Gate” and “Weapons of Mass Distraction” form.

  15. mikea311 says: Mar 28, 2011 12:04 PM

    So the real question is did EA lose its exclusivity rights for Madden???

  16. obamaczarofussa says: Mar 28, 2011 12:21 PM

    I hope the league does everything they can to bankrupt the players before they retire instead of it happening 4 years after by their own accord.

    Players are glorified overpaid employees, and have no right to demand a salary based on their employers income.

    If they want to be owners themselves, they can save all their money and buy their own team, instead of spending it on rims and gold teeth.

  17. zaggs says: Mar 28, 2011 12:32 PM

    If the Union planned on decertifying, yet to continue to negotiate with businesses, how is this any different then the lockout insurance? Would this not mean the the union purposefully not sign multi-year deals with companies knowing that they would need a source of income after they decertified?

  18. chris1982 says: Mar 28, 2011 1:15 PM

    obamaczarofussa says: Mar 28, 2011 12:21 PM

    I hope the league does everything they can to bankrupt the players before they retire instead of it happening 4 years after by their own accord.

    Players are glorified overpaid employees, and have no right to demand a salary based on their employers income.

    If they want to be owners themselves, they can save all their money and buy their own team, instead of spending it on rims and gold teeth.

    you’re an idiot, you clearly have no idea about anything relating to the CBA or negotiations. the players have all the right in the world to see the books because their pay is tied to the profits of the NFL.

  19. nfl52 says: Mar 28, 2011 2:25 PM

    kind of how the players are trying to get the rookies not to go to the draft? same thing

  20. blantoncollier says: Mar 28, 2011 2:29 PM

    I dont like to call out other posters..But chris1982 you are incorrect.

    The players salaries are tied to REVENUE which is different from profits.

  21. chris1982 says: Mar 28, 2011 2:50 PM

    Sorry i misspoke, but it doesnt change the fact that the players compensation is directly tied to what the nfl brings in, therefore they have the right to demand to see the books when the owners want to cry poor

  22. edgy says: Mar 28, 2011 4:12 PM

    BTW, here’s a little something from Football 101’s Salary Cap section (For those who keep believing the owners are telling the truth when they’re crying poor – please get out your reading glasses and if you still believe that after reading this then you’re issue is that you’re jealous of the players and nothing will allow you to see their side of the story):

    In the NFL there is revenue sharing and a salary cap. What does this mean?

    Revenue sharing

    About 2/3 of the NFL’s money comes from the TV deal. The players get about 2/3 of team revenue. So, more or less, the TV contract goes to pay the players. These contracts are typically for about 5 years, and every time they are renegotiated the price goes up. So do player’s salaries.

    The money from the TV contract is share and share alike – the Redskins, Cowboys, Bills, and Packers get identical checks. This money is key to the success of the smaller franchises. Without the TV contract money, there is simply no way on earth that Green Bay could ever field a competitive team.

    There are a lot of other sources for NFL money. NFL licensed jerseys, for example that Randy Moss jersey you put on your kid last Halloween when you dressed him up as a demon, result in license fees going to the NFL. This money is also equally shared.

    When the teams play, there is a “gate,” the money people pay for seats. This is in the neighborhood of about $2.5M per game. This money is split 60-40, with the visiting team getting 40% of the gate. Because of this teams like Jacksonville and Arizona just love it when the Packers or Cowboys come to play. These are the two or three games each year these teams can count on selling out, and the money they get is very welcome. Sometimes you will find that to buy a ticket to see the Packers on the road you have to buy a package of two or three tickets. This is nothing more or less than a device to get money from Packers fans into the pockets of the other teams owners.

    Unshared money

    The newer stadiums have large box seats which are leased to corporations. This money is not currently shared, which gives individual teams a big incentive to get a new stadium with fewer normal seats and more corporate seats.

    Some teams (read: Cowboys) are starting to make their own licensed products and refuse to share the money. They theory is that Jerry Jones is a brilliant marketer (who just happens to live next to half the country’s oil wells) so why should he share his hard-earned money with a slacker like Art Rooney (who just happens to live next to a bunch of shut-down steel mills in a solidly blue-collar town). The box seat and license money is a subject of great debate at this instant, and is the big holdup in renewing the NFL labor contract: the owners cannot sign a labor contract until they know how much money they’re taking in, and until the new revenue agreement is signed they don’t know that.

    Finally, a well designed stadium can bring in other money for events like concerts, weddings, a pro shop, and the sale of $12 hot dogs. This money is not shared, again giving teams a huge incentive for a new stadium. The Packer’s stadium is a model of efficiency, and does a league-leading job of extracting money from the local residents. If Green Bay were in the Spy / Defense / Government business like Washington, or the oil business like Dallas, the Packers would almost certainly lead the league in revenue. In fact Green Bay makes placemats, napkins and toilet paper, so the Packers are about #12 in the league in revenue.

    In 2005 teams will make about $110M – $140M per year in gross revenue, and the players get about $85M of that. The $85M number is the salary cap. This is an agreed upon percentage of total league revenue divided by 32. Each team may spend $85M on players, no more. Each team must spend at least 80% of the salary cap, it’s not allowed to be a complete cheapskate. However, things are much more complicated than that simple statement. First, the TV contract has escalator clauses. This has nothing to do with shopping malls and elevators, it means the contract payments increase each year. In ’06 the salary cap is likely to be over $100M, about a 20% increase. This means that the top contracts are continually going up in value, and a contract signed a couple years ago is suddenly looking pretty thin. Although the US as a whole has almost no inflation, the NFL lives in an artificial world with about a 10% inflation rate. The idea of salary indexing has not really happened in the NFL, with the result that you see people sign very competitive contracts and two or three years later comparable players are making twice as much. This promotes a lot of hard feelings and contract problems. Appendix 1 shows the historic salary cap.

    All 53 team players and the 8 players on the practice squad count towards the salary cap. A team may not exceed the salary cap. If a team does exceed the cap, the NFL can waive players from the team, starting with those earning the lowest salaries, until the team’s payroll has fallen under the cap. In addition, the NFL may fine a team up to $1 million per day for exceeding the cap. In practice this doesn’t come up because if a proposed contract would put the team over the salary cap, the NFL won’t approve the contract.

    Player benefits are currently capped at $12,156,000 per club above the salary cap.

    The NFL Labor Contract

    The NFL players have a union, the NFL Players Association, the NFLPA. These guys negotiate a labor contract every five to seven years. The contract specifies the percentage of total NFL revenue that goes to the players (currently roughly 2/3), and also specifies certain minimum salaries for players. There is a minimum salary you can pay a guy who is in his first year, which is just over $200k. For each year the player has in the NFL, the minimum salary goes up, until a 10 year veteran has a minimum salary of just over $750k. These numbers change each year with the salary cap, so it’s a bit of work to keep up on the exact number each guy has for his minimum salary. Minimum salaries shown in appendix 2.

    The NFLPA was worried about veterans being cut for cheaper young guys, so if a player is signed to a one year contract, paid the minimum salary and given a signing bonus no larger than $25,000, then he only counts $450,000 against your cap. Better yet, the money he is paid above the $450,000 amount comes out of a league- wide “player benefit pool” and not from your team’s checkbook. Other player benefits include the league retirement plan. Player benefits amount to another approximately $13M over the $85.5M cap in 2005.

    The labor contract also specifies what sorts of contracts you may sign with a player. When you read that a player has signed his contract, it’s not actually a done deal. The contract is then forwarded to the NFL and NFLPA legal offices, where it is reviewed and either accepted as legal or rejected. Each year a few contracts are sent back for a re-work because the NFL or NFLPA lawyers say it’s not a legal contract under the labor agreement.

    Some (most) teams perceive themselves to be very close to a superbowl, and therefore the idea of somehow stealing a bit of next year’s salary cap for use this year can be very compelling. Especially because of the salary cap inflation, which means the money you steal from next year is a bigger fraction of this year’s cap than of next year’s, and in any case next year you can do it again. How do you steal cap room from the future? Easy, it’s all laid out in the labor agreement.

  23. realfann says: Mar 28, 2011 6:31 PM

    @edgy

    Not complete or totally accurate.

  24. edgy says: Mar 29, 2011 9:08 AM

    So, this is the game that you play. I answer a question and you delete it and make it seem like I’m not willing to talk. Really mature.

  25. edgy says: Mar 29, 2011 9:42 AM

    Let’s try this again: realfann, what’s inaccurate about what I posted?

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