Expanded season revenue: The NFL's math problem

Recently, we detailed the concerns of Ray Lewis and Tom Brady when it came to the idea of an 18-game regular season. Obviously, the players and the NFL Players Association are very concerned about increased injury risks and fair financial compensation should an expanded season become a reality. Unfortunately, in the most recent public statements about how these problems would be solved, the NFL neglected to do a bit of simple math. In a recent conference call with the media, Green Bay Packers team president (and ad hoc league spokesperson) Mark Murphy had this to say:

I think [the union] may well raise that issue [of enhanced player pay], but at the end of the day you've got a pot of money and the players get nearly 60 percent of that. We compared the NFL to other professional sports leagues. Right now we're significantly shorter than the NBA, Major League Baseball by about eight weeks. Obviously, the injury rate in the NFL is higher than those other sports ... with the partnership that we have with the players, they're going to get X-percent of whatever revenue comes in. I think that's how we would view it.

The problem with that view is that the ongoing percentage of revenue provided to the players is very much up in the air. The primary reason that the players and owners are so far apart in the current CBA negotiations is what I might call the "middle 20" — the 20 percent of overall revenue between the 40 percent that each side is willing to concede. Under the current CBA, the league is obligated to give 58 percent of revenue to the players in league years 2010 and 2011. After that, things get a little weird. The league's most recent revenue proposal starts at that same 58 percent, but back-end deductions reduce that revenue in a major way. On their site, the NFLPA has an analysis by longtime offensive lineman and player rep Pete Kendall, which includes this poison pill:

The NFL's current proposal would keep the player's percentage of Total Revenue at 58%, but importantly, it would reduce the amount of money that is included in the definition of TR by 18%, to allow for certain additional expense deductions. These additional expenses would be on top of the already existing $1.0 billion in expense deductions. If the 18% expense deduction were applied to the 2008 league year revenue, it would result in an additional expense credit of more than $1.3 billion. The obvious effect of this 18% expense deduction is that the players would get the same percentage of a much smaller revenue pie. Instead of each dollar of Total Revenue being included in the cap calculation, only 82 cents of each Total Revenue dollar would be included. That translates into an 18% reduction in the total amount of money included in the cap.

Expressed another way, the NFL owners are asking that the players reduce their percentage of TR, as it is currently defined, from 58% to 47.56% of TR. This lowering of the cap by 10.44 points represents an 18% reduction in the applicable percentage. Expressed in dollars, a cap of $116 million per club as calculated under the existing definition of TR, would be reduced to $95.12 million under the NFL's proposal. Thus, if the impact of the proposal were to be spread evenly over all player salaries and benefits across the league, each player would have to take a cut of 18% in salary and benefits.

You would have to turn back the clock to the early 1980's, in the days before free agency, to find a season in which the players' share of football revenue was as low as that being proposed by the NFL owners for 2010 and beyond.

And that's the untold story behind the league's insistence that the players would get "X-percent of whatever revenue comes in." If the owners get their way, the league's elite players would, in fact, be playing more games and encountering more injury risks for far less money as their gross revenue gets chopped at the top to compensate owners for outlays like practice facilities and travel costs. (The NFLPA has proposed compensation credits for revenue-generating expanses, like stadium construction costs). Problem is, the players aren't shareholders in their teams and in those facilities. In fact, if you combine the increased schedule and devalued revenue stream, the players become much more like very highly paid sharecroppers. Think I'm exaggerating? Let's take a look at the dictionary definition of "sharecropper":

n. A tenant farmer who gives a share of the crops raised to the landlord in lieu of rent.

How is it different if the players are now required to give back up to 18 percent of their revenue to cover costs, when they will not share in the benefits established by the fruits of those costs? What's next — will the players be forced to pay rent for their lockers? Monthly fees for the gym? And here's the worst part; as Kendall outlined, the owners already have expense deduction built in to the current CBA.

This is at the heart of the current labor unrest, and it's why the owners are quite possibly willing to play "chicken" with an entire NFL season to break the union and force the players to bend to their will. They see an opportunity to reverse the great benefits gained by the players in an era when the NFL has become a virtual license to print money. That the league seems to endorse statements like Murphy's, which ignore the real issue of gross versus net revenue, tells you just how far the league is willing to take this — and perhaps why Roger Goodell is pushing so hard for an 18-game season in the first place.

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