Blog Entry

Labor elephant in the room

Posted on: March 9, 2011 6:01 pm
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It was in 2006 when Paul Tagliabue was commissioner of the NFL and he approached the late Gene Upshaw with a request. He wanted Upshaw to push as hard for revenue sharing among the owners as Tagliabue was doing at the time. Tagliabue was having difficulty getting all of the owners to believe in the revenue sharing principle.

Revenue sharing became an important part of those negotiations but now, five years later, revenue sharing has all been dropped during the current talks, multiple sources confirm. It remains the big, fat hairy elephant in the room. But it's important. It's critically important. Here's why.

Basically, a significant chunk of revenue isn't shared which has led to a war between small and large markets. If one team (normally a big market one) sells naming rights for a large sum of cash they get to keep that money. But the overall effect can be a raising of the floor of the salary cap. So smaller market teams get squeezed. Thus, a big market team makes a great deal, and expenses go up for the entire league.

In many ways complete revenue sharing in the NFL is more legend than actuality meaning the problem of income disparity among the teams remains. Jerry Jones doesn't want to share his revenue with a Jacksonville and conversely a Jacksonville can't compete with a Jones.

The crux of this current labor argument -- the fat ass elephant -- is that owners want to take back from players so they can solve their revenue sharing problems. The owners, theoretically, want to take that extra few billion or so (what's a few billion between friends) and make sure smaller markets don't suffocate under the weight of their big brothers.

So this is why these talks are painstaking and the odds of an agreement this week - or soon -- remain remote. Basically, the owners need to fix the revenue sharing problems on their own before even sitting down with the players. But that of course didn't happen and isn't happening.

The stalemate continues because (from the player perspective) the players refuse to fix the owners' revenue sharing issues and (from the owner perspective) the players need to give up more money to correct the revenue imbalance.

So the two sides argue about other things -- and those things are important -- but there's truth to the fact the owner's need to repair the revenue sharing model before doing anything.

When the two sides do reach an agreement on this CBA and it doesn't include a revenue sharing fix we'll be having this fight again after the new CBA expires.

Because elephants, it turns out, are tough.


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Category: NFL
Tags: Labor
 
Comments

Since: Dec 2, 2011
Posted on: January 9, 2012 4:53 pm
 

Labor elephant in the room

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Since: Dec 2, 2011
Posted on: December 5, 2011 7:05 pm
 

Labor elephant in the room

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Since: Jun 2, 2008
Posted on: March 10, 2011 6:38 pm
 

Labor elephant in the room

Holy Bonehead.  Are you serious?  Your grade school analysis of an immense issue is frightening.  Players have no right to a privately owned stadium's generation of revenue.  Do they have the right to money made by that stadium during the offseason, with concerts, races, hockey games.  Hell no.  Just as an owner cannot count the money a player makes through public appearances, car dealerships, shilling for another major coroporation in TV ads, radio shows, etc., an owner cannot count the money a player makes doing that, against their salary.  Hypothetical example:  Peyton Manning, 17 million a year contract, makes another 5 million a year in extra revenue generated without the assistance of the Colts, should the colts pay him 12 million a year, because he made 5 million from the fame he has generated by playing in the sport, or should the NFL add 5 million to his cap cost, jumping it to 22 million.  No.  Just like stadium ads, naming rights, alternative events, should not be counted into the overall revenue. 

By the way, Jerry Jones went into Revenue Sharing, kicking and screaming, he was and still is completely against it.  He wants to be the Yankees.  Buy everyone, and let the rest of the teams fall where they may.  Tagliabue, Upshaw, Harlan, Mara, Rooney, Chiefs owners, and a select few, fought for it, and explained the future.  And won, against the wishes of Jones and a select few.



Since: Dec 1, 2009
Posted on: March 10, 2011 6:54 am
 

Labor elephant in the room

Those would be the same upright CPA firms who "audited" the mortgage banking industry and the investment firms who raped and pillaged peoples and governments the world over, right? How very trusting of you, in your little yellow bus.



Since: Dec 1, 2009
Posted on: March 10, 2011 6:50 am
 

Labor elephant in the room

Freeman's argument is not only valid but controlling. The entire MOTIVATION for the league going to the mat is their own unwillingness to share with one another. It's NONSENSE to claim that these are "independent" businesses. They are a legal monopoly that is allowed to behave in collusive ways that could and has put other businessmen in jail. (Seven executives of ALCOA and Michael Milken and friends, for a regrettably short list.) If they insist on wrapping themselves in the American flag, then the owners should be collectively burned to death in it. Old Glory should not remain soiled by their putrescence.



Since: Dec 5, 2006
Posted on: March 9, 2011 9:15 pm
 

Labor elephant in the room

In respect to a $9B reported revenue total the amount not shared (naming might get $10-20M oer year) might not actually be significant. The union should not be in the business of managing the businesses but in asking for fair practices in working conditions and treatment of employees and in achieving the maximum sustainable salaries for those employees. In this regard the actual club-by-club revenue is not relevant but the total revenue of the league, provided by audited financial statements to the union does detail the costs and revenues of the league. The union is not negotiating with each club but with one entity - the NFL.

I find it likely that the statements by the union of wanting independent examination of the NFL books after receiving the audited financial statements to be made for public consumption. Audited financial statements, as you likely know, are audited by independent Certified Public Accountants. Revenue sharing was promoted by Jerry Jones and under his guidance the revenues for the league have multiplied again and again with proper marketing practices. To single out Jerry Jones as someone who does not want to share revenue with Jacksonville misses that point entirely. These negotiations seem somehow contrived to enhance the attention of the country on the sport during its slow time (relatively speaking). If they are resolved before the draft it might well be confirmation of such a marketing strategy. Fearing the loss of something we love causes us an even closer allegiance to that something when the fear is removed.


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