The biggest NFL bad-news dump of Memorial Day weekend relates to one team’s failed effort to profit from a distant environmental catastrophe.
The ruling denying the Tampa Bay Buccaneers’ request for $19.5 million in compensation for the 2010 Deepwater Horizon oil spill never comes right out and says it, but the message oozing between the lines of the eight-page decision is clear: The federal appeals court that resolved the issue believes the Buccaneers engaged in creative accounting in order to qualify for payment.
Because the Buccaneers fell in the group of allegedly impacted business that were the farthest away from the site of the spill (Tampa’s stadium is roughly 360 miles from the site of the spill), the Buccaneers could obtain compensation only according to a formula that requires proof of a financial loss in the months following the spill followed by a financial rebound in those same months the next year. Specifically, the Buccaneers had to locate on their books a three-month window from May through December 2010 that showed a 15-percent drop in revenue from the same three months in 2009, and a 10-percent increase in revenue during that same three-month period in 2011.
Under this “V-Shaped Test,” the Bucs found a three-month window that revealed a 15-percent loss from 2009 to 2010: May through July. The problem came from proving a rebound in the team’s financial fortunes from May 2011 through July 2011.
As noted in the post from earlier today based on the bare-bones, minimal-analysis, completely-missed-the-broader-point AP story and not the full text of the ruling, the 2011 lockout seemed to be the biggest impediment in providing an uptick in revenue during the 2011 offseason. But that didn’t stop the Buccaneers from trying.
The Buccaneers recorded on their books during the key three-month window in 2011 a major payment from NFL Ventures, the mechanism for sharing league-wide revenue. In 2010, the Buccaneers had recorded those payments in January and then in August through December — not in the months of May, June, or July. The change in accounting practices resulted in a 500 percent increase in revenue during the key three-month period, qualifying the team for benefits under the V-Shaped Test.
The Buccaneers claimed that they made the change in accounting practices at the behest of the league, but there was no evidence that the Buccaneers actually put the NFL Ventures payment on the books in 2011. Which means the payments may have been recorded at a later date, after the organization understood that a clear financial incentive existed for doing so.
“The team . . . never submitted financial statements or other evidence showing that it made and implemented this accounting decision during 2011 (as opposed to later when it learned of the requirements for a Deepwater Horizon claim),” the court writes. “The only dated financial statements have an ‘as of’ date of October 2014.”
Though the court never comes out and says it, the message is that the court believes the Buccaneers tried to manipulate the compensation system.
“So the dispute comes down to the legitimacy of the lockout justification,” the court writes. “The Buccaneers fail to support it as a valid reason to deviate from its prior practice. The team relies solely on the affidavit of its controller and repeatedly misrepresents it as recounting a directive from the NFL that teams should book NFL Ventures revenue during the offseason.” (Emphasis added.)
That’s an indirect way of saying, “Hey, Buccaneers. We know what you’re up to. You specifically recorded a massive payment from NFL Ventures during the months of May through July 2011 in an effort to qualify for something that you otherwise didn’t deserve. And we’re not stupid enough to fall for it.”
While the Buccaneers would surely disagree (a request for comment has been made to the team), three federal appeals court judges (one of whom was appointed by President Reagan, one of whom was appointed by President Obama, and one of whom was appointed by President Trump) unanimously found that the Bucs were essentially trying to pull a fast one in seeking $19.5 million from the Deepwater Horizon compensation fund.
And while it can be argued that there’s no harm in rolling the dice on payment, the end result necessarily constitutes a blow to the organization’s credibility and, all in all, a bad look for the NFL.