savour tonight’s NFL kick off celebration, fans; it could be the league’s last season-starting party for a while.NFL owners and players have no agreement in place to play football in 2011.
You might ask how this could happen to the most popular and profitable sports league in America.
Why can’t they agree to play the games that generated nearly $9 billion in revenue last season?
How can they abandon the record-shattering audiences that tune in to the Super Bowl each season?
Good questions. In fact, NFL players are asking them too.
In 2008 the players voted to renew their collective bargaining agreement (CBA) with the owners for a sixth time, and thereby maintain the business model first agreed upon in 1993.
NFL owners, however opted out, and effectively voided the agreement past the 2010 season.
Now it’s 2010 and the two sides have yet to reach a new agreement.
The players insist the current model is fine. The owners want significant adjustments. We reached out to both sides to find what the points of contention are.
Current Agreement: Players are allotted 59 per cent of Total Revenue. However, 'Total Revenue' is slightly misleading. In 2009, the NFL had $8.5B in revenue. The owners keep the first billion dollars to cover costs for growth (stadium construction, international games, and new media ventures), and 59% of the remaining $7.5B--the Total Revenue--goes to player contracts. That translated to $4.43B.
If the owners' proposal was in place in 2009, NFL players would keep $3.63B, about $800M less than actually received.
Despite the recession revenues were at an all-time high in 2009.
What's Going to Happen: The two sides will probably reach a compromise closer to the owners' proposal.
The owners' claim that increasing player costs are cutting into operating profits proved correct when the league's lone public team, the Green Bay Packers, released their financial documents in July.
Each team spends some of its revenue to invest in the game and increase revenues, nearly 60 per cent of which goes to the players. Under the current model owners merely break even on that investment and could lose incentive to grow the game. Commissioner Roger Goodell has stated that the proposal will help triple revenues over the next two decades, and eventually reward the players handsomely.
Current Agreement: The current NFL season has 16 regular season games and 4 preseason games, although the CBA allows for the owners to expand the season by two games at their discretion. Still, the owners have agreed to work this issue out with the players.
The average career length of an NFL players is 3-4 years, and it takes three years of service to guarantee health care for five years after retirement. More games might make it more difficult for fringe players to earn those benefits.
Fans have no interest in the preseason, and the league will adjust to the physical demands of the elongated schedule with extra bye weeks and expanded rosters. Plus, two more games means two more opportunities to generate revenue, and that benefits the players, too.
Current Agreement: Strict drug testing for steroids and narcotics, where players who fail incur multi-game suspensions. No testing for human growth hormone.
While the players agreed to strengthen drug testing policy in 2007, they're worried that blood tests--the best available option--will prove too invasive.
There is already a strict drug policy in place that suspends steroid users four games for first time offenses. Enacting a blood test against the players' wishes is too controversial for the owners to take an unwavering stance.
Current Agreement: Rookie contracts must be at least four years in length at any price above the rookie minimum ($325,000). In 2010 rookies combined to earn more than $650M in guaranteed salaries.
That way, first year players aren't consistently among the highest paid in the league. They want to put the first $100M in savings towards the retired players' fund.
Players agree that NFL draft spending should be capped, but they want a guaranteed portion of the savings to go to veteran players, in addition to the $100M allotted for their retired predecessors. Also, in return for smaller rookie contracts, the players want to reduce the contract length to a minimum of three years.
What's Going to Happen: The players and owners appear close here – but contract lengths aren't changing
Both sides agree that something must be done to contain rookie salaries---after all, five of Sports Illustrated's 50 highest paid athletes in 2009-2010 were NFL rookies---and they'll likely come to some compromise that will shift the savings to retired and proven players. Just don't count on the league budging on the four-year minimum--it's crucial to roster stability.
Current Agreement: Players signing bonuses are guaranteed under all circumstances. When the league tried to recoup bonuses of jailed superstars Plaxico Burress and Mike Vick, the U.S. courts ruled in favour of the players' union.
The NFL is the only major American professional league that doesn't fully guarantee their players' contracts. The signing bonuses represent the players' only protection against getting cut and not earning all the money laid out for them in contracts.
Owners already have the advantage of non-guaranteed contracts, and players won't easily relinquish the protection signing bonuses offer. Plus, the vague language in the owners proposal ('violating contracts') will scare players away from inadvertently opening a loophole that allows owners to void contracts at their discretion.
Business Insider Emails & Alerts
Site highlights each day to your inbox.