New revenue sharing plan features tax on highest-earning teams

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When the NFL approved a labor deal to which the NFLPA* hadn’t, and still hasn’t, agreed, the league surprisingly announced a new supplemental revenue sharing plan.

In hindsight, it shouldn’t be much of a surprise.  With the salary floor rising to unprecedented heights, supplemental revenue sharing becomes more important than ever, given that all revenue — including unshared revenue — drives up the per-team salary cap.  This necessarily forces low-revenue teams to devote a larger piece of their already lower earnings to player costs.

Per a source with knowledge of the details of the arrangement, the new supplemental revenue sharing plan includes a 10-percent tax on the “local revenue” of the highest-revenue teams.  The money will be distributed to the lowest-revenue teams.

We haven’t yet gotten our eyeballs on the formula that determines the teams who’ll pay the tax — or the teams who’ll get the second half of the Robin Hood treatment.

We also haven’t seen the definition of “local revenue,” but it likely includes luxury suites, parking, and pretty much anything and everything other than ticket sales, TV money, all national sponsorships and media deals, and any sources of shared revenue.

The previous supplemental revenue sharing plan was funded by taking 40 percent of each team’s club seat sales and putting the money into a fund that serviced league-incurred stadium debt.  The excess was distributed to low-revenue teams based on need.

The NFLPA* has objected, sort of, to the decision of the NFL to include revenue sharing in the approved deal.  However, the NFLPA* had every opportunity to focus on this issue during negotiations, and the NFLPA* chose not to do so.

63 responses to “New revenue sharing plan features tax on highest-earning teams

  1. tax dan synder, maybe he will sell the skins. Until than I will be supporting the raiders because the skins have become an unwatchable circus

    and where the story about Mike Shanahan announcing he bringing back Fat Al

    yes you heard me right Shanahan guaranteed it the redskins are getting ready for the circus

  2. Well if your going to tax the high earners for maximizing profits you should damn well fine the bottom feeders if they are not doing enough to gernerate profits.
    Example: Naming rights on Ralph Wilson Stadium and Paul Brown Stadium.

  3. Why should the NFLPA* have a voice in how revenue is split among the teams? They need to worry about issues that concern them, not issues that have no effect on them. If they were as “Smart” as they claim to be, they would understand that.

  4. Good to see that the rich billionaires are ok with redistribution of wealth to the poor ones.

  5. Takeo Spikes alluded to this 2 days ago one TV ……….and this may be one of the things Al Davis disagreed with…He may have wanted more………..

  6. Revenue given to the “need based” teams should have strings attached which require those owners (Cincinnati’s Mike Brown for example) to increase their own efforts to improve their own revenue streams instead just sitting back collecting the welfare and crying “poor mouth” all the time.

  7. Perhaps the most surprising development since the owners ratified the deal is that the NFLPA* is upset at this supplemental revenue breakout amongst the teams. I’m still not sure why they care how the owners split their 52%. But then again nobody knows since the NFLPA* isn’t talking. They are leaving it up to the players (who aren’t even player reps) to tweet their disagreement.

  8. I was on the players’ side of most lockout disputes, but undoubtedly disagree with them about this. In order for a team in Buffalo, Cincinnati or Jacksonville to compete with teams tapping the New York, Los Angeles or Chicago markets for the best players there will need to be substantial revenue sharing. I doubt 10% is enough.

  9. I think the players need to listen to something we were all taught when we were young (most of us anyway). “Think before you speak.” This would prevent many of these uninformed comments that players have been making throughout these negotiations.

  10. It’s nice to see the newer owners and Goodell haven’t completely abandoned Rozelle and the previous owners’ philosophy that when everyone has a chance, the league is better than every other league in America.

    This is why the NFL lockout was about splitting profits and the NBA lockout is about survival of half the teams.

  11. Oh, Danny Boy, I hear you whining. You pathetic, little midget. Oh, Danny Boy, you can kiss it. Kiss it goodbye, you deserve it. (Kinda catchy. Sing it to the tune of Shenandoah).

  12. So Bob Kraft builds Patriot’s Place with his own money, and he has to share the profits with the parasites? What we’ve got here is a tax on being smart and ambitious.

  13. Why would De Man care what the owners do with their cut? They could spend it on reducing the deficit or hookers or whatever and it ain’t none of his beeswax……..

  14. Another example of the incompetence of those who were ostensibly representing the players’ interests. I don’t believe this was a “last minute add in” as D Smith tried to claim since he had a 90-minute phone conversation with Roger Goodell just prior to the owners’ vote. Either D Smith:
    a) is totally incompetent;
    b) misunderstood Goodell’s words
    c) is lying
    or d) has done a horrible job for the players

    Doesn’t really matter which version is the truth. The fact is that the players have no business now jamming is completely extraneous junk such as their inane proposal for a 7-year opt out.

    Just put the damned agreement in front of them and let them vote on it. Period.

  15. PFT wrote: “When the NFL approved a labor deal to which the NFLPA* hadn’t, and still hasn’t, agreed, …”
    —————————

    Didn’t D. Smith and the players negotiate with the owners? If they did, why does PFT, the players, ESPN, and other media act as if the agreement that the owners voted on was merely something that the owners came up with?

    Clearly, the players should know and understand what D. Smith and others negotiated for them, but it really is a proposed “agreement” agreed to by the players’ representatives as well as the owners’ representatives. It is not a “deal” that the owners came up with themselves.

  16. The Raiders? Really? you couldnt find a better team to follow? why go from circus to circus? Hey all I can say is good luck with that

  17. why do the players careas long as they get there $.48 on the $1? oh roght caise kevin mwae wont get any of it

  18. If owners feel the need to share revenue , what does that tell you players ? …… That money is tight and you did a hell of job negotiating CBA….you can’t squeeze any more , sign the mf

  19. I respectfully request that all future posts about the lockout be filed under Turd Watch.

  20. WOAH WOAH WOAH, rich, wealthy Americans ACTUALLY agree on making the wealthiest teams pay a tax so that the entire league can actually have a fair and balanced chance to compete?

    Wow, the players need to get their head out of their asses and take this deal.

  21. bigvinnyinjax says: Jul 23, 2011 5:48 PM

    I respectfully request that all future posts about the lockout be filed under Turd Watch.

    ————————————-

    Kudos Big Vinny – I loved it!

    ——————————————–

    This got edited before, but….
    ESPN’s Chris Mortensen reports “major progress” has been made in Saturday’s CBA negotiations, and that the NFLPA* Executive Committee will meet on Monday and likely recommend ratification of the agreement.
    As we’ve learned the hard way in recent days, it’s best not to get too excited until the deal is actually done, but the finish line is as close as it has ever been. NFL Network’s Jason La Canfora reports free agency could begin “around” Wednesday, with training camps following on Friday.

  22. If they’d been willing to help the smaller market teams like this four years ago, like those teams wanted them to at the time, then all of this bull could have been avoided. Instead the larger markets assured the smaller market teams they would opt out of the CBA they passed back then, , voting it through at 30-2, at the first opportunity and take what the smaller market teams needed from the players instead. Their miscalculations as to how easy it would be to push this on the NFLPA has lead us here. So go ahead logo fans keep sucking the collective asses of the owners. A group of people that don’t even negotiate in good faith with each other unless it’s absolutely necessary. And even then they attempt to payoff on their backroom dealings by taking it from the third party that made no such promises to the small market teams.

  23. as a fan im sick of this fight over millions of dollars for a kids game…im sorry..its just a kids game..the players should be happy that they are gettin millions at all for playin a “GAME”..if i was an owner i would be like if they dont sign..screw them..we can find scabs on the street or the ufl..or cfl..its easy to replace football players we see it all the time every year..different faces but same results..i dont care who the qb is of my team is as long as they win..hell it could be some midget that can run like vick and throw like manning..i could care less..just spoiled brat adults that need to be brought back down the reality..its a kids game..and be lucky you can make a career out of it..with crazy money..

  24. So a part of my out of control Cable bill in NY goes to help the Bengals? I think I will get rid of my out of control cable bill.

  25. I just feel the need to point out to some commenters that how a private business (i.e., the NFL) chooses to distribute its revenue among its divisions (i.e., teams) has nothing to do with the right way to run a country. In the NFL, all teams need to be on a level playing field or else the ones that can’t make it on their own will fold and the ones that can will become stronger. This would make for a better product, but you would only have 10-12 teams in the league and it wouldn’t be as interesting to watch, creating less revenue. I think we would agree that this is not good. In life, eliminating incentive to do better stagnates productivity and makes everyone equally miserable. (Note that this has nothing to do with helping people who can’t take care of themselves; it’s about redistribution of wealth.)

    In other words, it ain’t socialism if a private business determines that revenue can be maximized if one team shares with another. It’s socialism if a government puts a gun to your head and takes money away from those who produce and gives it to those who don’t.

  26. so the folks that pay $75 to park in foxboro cover the free parking in Cincy…sounds about right…except…SOMEONE IS MAKING MILLIONS OFF THIS!!!

  27. Why the players would choose to complain about revenue sharing……. Greed.

    You see the players only care about one thing….more money. They don’t care about small market teams and they don’t want big market teams to help them out. What they would like is for those small market teams to have to move cities to big market areas where there is more money.

    This way the players 48% is more. The NFL (while almost as greedy as the players) understands about the importance of tradition.

    So if you live in Buffalo, Jacksonville, Carolina, ect. …..you should consider yourself on notice, the players want you out.

  28. And with my first post after reading this site for a year, as football nears close. Will the Cowboys try to play football this year or should I buy season tickets to a local highschool team? I heard the highschool teams practice in pads every day and twice on Saturday. I would hate to have to turn off of a pro game this year because the team playing isn’t even trying to win, ie Cowboys.

  29. thephantomstranger says:
    Jul 23, 2011 6:28 PM
    I just feel the need to point out to some commenters that how a private business (i.e., the NFL) chooses to distribute its revenue among its divisions (i.e., teams) has nothing to do with the right way to run a country. In the NFL, all teams need to be on a level playing field or else the ones that can’t make it on their own will fold and the ones that can will become stronger. This would make for a better product, but you would only have 10-12 teams in the league and it wouldn’t be as interesting to watch, creating less revenue. I think we would agree that this is not good. In life, eliminating incentive to do better stagnates productivity and makes everyone equally miserable. (Note that this has nothing to do with helping people who can’t take care of themselves; it’s about redistribution of wealth.)

    In other words, it ain’t socialism if a private business determines that revenue can be maximized if one team shares with another. It’s socialism if a government puts a gun to your head and takes money away from those who produce and gives it to those who don’t.
    ==================================
    VERY well stated.

    It doesn’t matter what form of “Government” a business chooses to establish within itself. Why people keep harping on this is beyond me, but it’s flat nonsense. The business model the NFL chooses to embrace simply does not apply to real life.

    Take a look at Portugal, Spain and Greece. Look at the devastating economic problems they are having, thanks in large part to socialist governments. For good measure, look at California, and the economic woes facing that state. Socialism simply does not work as a government model. It does, however, work as a business model, especially for a business with as few moving parts as the NFL.

    By the way, almost every single business out there has some form of socialism in the form of benefits, 401k matching and profit sharing. This works in business. It does not work in government.

  30. Whoa, Mike Brown might splurge and get an extra side of toast to go with his Grand Slam since he’ll rolling in the dough with this plan.

    -QG

  31. “Well if your going to tax the high earners for maximizing profits you should damn well fine the bottom feeders if they are not doing enough to gernerate profits.”

    Why do you think they are doing this now? Because thankfuly, those bottom feeders now have to spend at least 90% of all salary cap,and maybe up to 99% this year

  32. The problem with the socialist philosophy is that somebody in charge is always gonna want to “redistribute” some of the wealth into his own pocket. That’s the problem with Mike Brown and Ralph Wilson. They’re only pocketing 10-15 million a year and they want to pocket 20-25 million a year. You suckers that think that this tax will get put back into their teams are in for a rude awakening like the one you got when you believed Mike Brown when he said that he needed a new stadium so the Bengals could be competitive. If you want those teams to be competitive you have to change the culture of the organization, and that means change the ownership. The business has passed them by. You’ve got people that aren’t fit to manage a McDonalds trying to run billion dollar franchises.

  33. Why do you think they are doing this now? Because thankfuly, those bottom feeders now have to spend at least 90% of all salary cap,and maybe up to 99% this year

    ————————————————————

    The 2009 cap floor was 87.5%, I believe. 90% is not that huge of a jump. $105 million vs. $108 million on a $120 million cap.

  34. “The NFLPA* has objected, sort of, to the decision of the NFL to include revenue sharing in the approved deal. However, the NFLPA* had every opportunity to focus on this issue during negotiations, and the NFLPA* chose not to do so.”

    Because there was a gag order in place during the negotiations, the author has no basis to make the above claim. The details of what was discussed during the negotiations will not truley be known until after the CBA is signed.

  35. NFL should watch out for “unintended consequences.” Why should I try to “maximize my revenue” if maximizing it only will get me taxed? Perhaps it’s still in my best interested, but perhaps there is a ‘sweet spot’ where it’s better for me to make a bit less, avoid the tax, and end up further in the black.

    Personally, I hope this makes Dan Snyder STOP trying to make as much money as possible.

    For the NFL, though, having folks stop making as much as they can would hurt the whole league by lowering overall revenue.

    Odd…

  36. h8dansnyder says: Jul 23, 2011 4:51 PM

    Oh, Danny Boy, I hear you whining. You pathetic, little midget. Oh, Danny Boy, you can kiss it. Kiss it goodbye, you deserve it. (Kinda catchy. Sing it to the tune of Shenandoah).

    This is a strange post. Didn’t Dan Snyder vote for this policy with the other owners?

  37. “NFL should watch out for “unintended consequences.” Why should I try to “maximize my revenue” if maximizing it only will get me taxed? Perhaps it’s still in my best interested, but perhaps there is a ‘sweet spot’ where it’s better for me to make a bit less, avoid the tax, and end up further in the black.”

    =========================

    The unintended consequences of previous CBAs was having small market teams unable to compete with large market teams. Not every franchise can land a new stadium with luxury suites. This tax, as reported above is 10% of “local revenue”. I don’t imagine Jerry Jones would turn down a chance to get an extra 10 million if 1 million of that goes to help small market teams. The revenue sharing model of the 70s and 80s was the best one the league has ever had and it was during that time frame that the NFL surpassed MLB as America’s favorite sport. During the 90s and 00s the league has simply increased it’s lead over the other major pro sports. All of that is threatened if franchises start closing down because the smallest markets couldn’t compete with Dallas, Washington, and New York. The owners somehow finally understood this basic idea and made a move back to helping preserve the profitability of ALL 32 franchises.

  38. If these podunk towns can’t support a team without welfare payments, they shouldn’t have a team.

    Now, let the welfare recipient team’s fans hit the thumbs down in droves. Moochers.

  39. Not every franchise can land a new stadium with luxury suites.

    —————————————————————–

    Not every franchise can get a stadium financed 100% by the public, either.

  40. If these podunk towns can’t support a team without welfare payments, they shouldn’t have a team.

    ———————————————————-

    It’s not the towns. It’s the owners.

  41. melonnhead says:
    Jul 23, 2011 9:58 PM

    The 2009 cap floor was 87.5%, I believe. 90% is not that huge of a jump. $105 million vs. $108 million on a $120 million cap.
    ____________________________
    Figures I have read: 09 salary cap 128 mill. Floor 107.7 mill, so appx. 84%.

    ==================================
    goawayeverybody says:
    Jul 24, 2011 1:21 AM
    I love it. A bunch of Republican owners instituting a tax on the highest-earning franchises.

    What a truly upside-down world we sometimes live in.
    ________________________________
    It does seem weird…but I think you’d be surprised at how many owners are Dems. 😀

  42. billygoat says:Jul 23, 2011 4:21 PM

    Well if your going to tax the high earners for maximizing profits you should damn well fine the bottom feeders if they are not doing enough to gernerate profits.
    Example: Naming rights on Ralph Wilson Stadium and Paul Brown Stadium.
    _________________________________
    Can’t Speak for Cleaveland, but Ralph Wilson Stadium is wholy owned by the County….
    the Bills are just TENANTS!!!!!
    Erie County changed the name to the current Ralph Willson Stadium(from RICH STADUIM)
    as a thank you for the 50 years that Ralph has kept the team in Buffalo…
    Any Revenue from stadium Naming Rights goes to Erie County Tax Payers….
    Ths Bills Have Sought out other Revenue Streams Like the Bills in Toronto Series which Netted the Bills 78 Million $ over 5 Years.

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