July 18, 2010
The Green Bay Packers franchise's recent financial disclosure was an interesting gambit in the ongoing labor wars. Ostensibly, the move was taken to prove that a.) teams are losing profits in the current economy; and b.) player costs are far too high. From NFLLabor.com:
In the team's latest financial report, a preview of which was released to the media this week, the Packers' operating profit for the 2010 fiscal year (ending March 31, 2010), was $9.8 million, down from $20.1 million the year prior. The primary reason for the decline, despite a $10.1 million increase in overall revenue, was a $22.1 million jump in player costs, which increased 15.9 percent from $138.7 million to $160.8 million. It marked the third consecutive year that operating profits declined, from $34.2 million (2007) to $21.4 million (2008) to $20.1 million (2009) to $9.8 million (2010).
But the players aren't convinced that the Packers' report is representative of the entire league. "It's 1/32nd of the financial information we've requested in response to their demand that we give back $1 billion and increase our risk of injury by playing two additional games," said NFLPA president Kevin Mawae.
Vikings defensive end (and recently-minted MMA golf promoter) Jared Allen(notes) spoke up as well. "I agree with Kevin Mawae(notes). First it was [an] 18 percent [giveback], then it was 18 games. I can't believe that a CBA couldn't be done quickly if teams gave us the same information that Green Bay just did."
There's a pretty good reason that some teams won't. While the owners are trying to cry poverty in an era when their sport is a literal license to print money, player costs are tied to revenue. So while the Packers or Buffalo Bills or Jacksonville Jaguars may be able to say that their net profits are going down, that isn't necessarily tied to player costs. The most recent CBA, ratified before the 2006 season, called for the salary cap to reflect specific per-year percentages of overall revenue. And it's not the players' fault that the Packers have a lower profit than major-market teams; in fact, the players are just as responsible for recent jumps in revenue in the first place. That's why tying player costs to revenue is fair.
And this is the constant tug-of-war between the NFL and the NFLPA - the league wants people to believe that player costs are spiraling out of control at the same time that the owners are trying to expand the regular-season schedule and take an 18 percent chunk out of the players' profit percentage. If the Packers are facing declining operating profits from year to year, it's just as likely that bad investments, or fuel costs, or training camp costs, or stadium renovations, or the difference in sales between Brett Favre(notes) jerseys and Aaron Rodgers(notes) jerseys, could be at fault.
What the NFL does not want to do is to open the books of the Washington Redskins, or the Dallas Cowboys, or either of the major New York teams. The league knows that a cry of declining profits would not have the same effect from Jerry Jones or Dan Snyder ("Wah! We used to make $300 million per year, and now we're only making $250 million!) as it would from a Packers franchise that still has a perceived mom-and-pop feel due to its small-town location and public ownership. Jones, who has tried to bend the league to his wishes whenever possible, and Snyder, who tries to make a buck on anything that isn't nailed down, make far less sympathetic figures.
The players are well within their rights to ask for full financial disclosure when the league is demanding enormous givebacks to offset dings in profit. The 1/32 response was fairly transparent, and not terribly effective. Especially when Packers president Mark Murphy was the one who first tried to pull the wool over America's eyes on the revenue model 18-game schedule. And it isn't as if the NFL is doing anyone any favors here -- as the league's only publicly held corporation, the Packers are required to release annual financial statements.
The new Players' Association is far more skilled at getting its message out there in order to capture hearts and minds. The NFL will have to respond with more global financial honesty at some point.
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