An In-Depth Analysis of the Lockout Situation

Originally posted at House Of Spears

CAUTION. I wrote this essay for my college writing class as my professor was interested in finding out more about the lockout. By the time I was done, I had spent seven hours of my life researching, writing ,and editing this thing and the whole article used fourteen sources and was about eight pages double spaced. Its a pretty comprehensive look but I warn you: its LONG.

If you’re a diehard fan of the NFL, this has probably been the worst offseason for you. It doesn’t matter whether you are fan of the defending Super Bowl champion Green Bay Packers or a fan of the Raiders or Panthers. It always sucks when there is no football, and it sucks even worse when there is no free agency either. In essence, this so-called battle of greed between the millionaire players versus the billionaire owners has put the greatest sport in America in limbo. There have been a lot of explanations for the lockout by experts, analysts and of course the two sides of this debate themselves, but I have yet to find one that properly explain all of the issues to my liking, which is why I am writing this post (and because I had to write an essay for my English class). By now, most fans of the NFL know the key issues at hand, but I plan to comprehensively go over each issue, explain them to the fullest of my abilities.

The National Football League is a business of about nine billion dollars, which easily makes it the most profitable league in the world. That’s right: the NFL is not only the most profitable league in North America, but it is the most profitable league in the world, and by a massive margin too according to Overall, the NFL made a profit of about 984.5 million dollars in 2005 and has grown 212 percent since 1998The next biggest league in the world? The English Premier League with a projected revenue of about 513 million big ones.

In case you’re curious, the NBA made about 207 million in 2006 and the MLB made 496 million in the same year. That means the NFL out earned the two other major sports league in North America by itself, which is why this lockout is so hard to digest for so many fans of this game.  In a time where people are barely getting by and so many people are sitting at home during the weekdays, the NFL, its owners, and its players have had it better than arguably anyone in the United States. To me, what makes this lockout hard to swallow isn’t the fact that they are making boat loads of cash. It’s the fact that these people are making boat loads of cash by playing a sport or simply by owning a team, yet they cannot settle what is pretty small difference in revenue sharing.

What makes this lockout even harder to swallow is how little accountability is expected by fans and people from these gluttonous owners and players. We are living in an era where our political leaders and CEOs of big corporations are under a microscope at all times, yet here stand one of the biggest icons and businesses of the country doing whatever it pleases and whenever it please without any real consequence. We, as fans of this sport and as citizens of this country, should expect and deserve better from the NFL just as we expected and demanded better from Citigroup, Fannie Mae and Freddie Mac, and General Motors. In a future post, I will discuss how and what we need to do to make the NFL listen, but this post is simply about explaining the NFL lockout and its issues.

So, by now I have explained to you exactly how big and profitable the NFL is and exactly how greedy and disregarding this lockout looks. Now, I will get into some of the nitty gritty details about the lockout itself, and I used Adam Oestmann’s NFL Lockout for Dummies as a major source for this part. Like many of you may already know, the collective bargaining agreement (CBA), which is an agreement reached between the NFL owners and the NFL Players Association (NFLPA), outlines the major aspects of the game. For the most part, it includes details like how free agency will work, what the salary cap will be, how player safety will be handled, how many games will be played, and things of that nature. Basically, it is the constitution of the NFL and both players and owners agreed upon it and also agreed upon when to come up with a new one or extend the current one.

In 2006, the current CBA was extended by the players and owners, who at the time extended the CBA by a margin of 30-2. Two years later, the same owners unanimously voted to opt out of the CBA in March of 2011. Yeah, that’s a heck of a mood swing in two years and it is not like there was a drastic change in the NFL landscape between those two years. That being said, the biggest reason the NFL is in a lockout right now is because neither side could agree to how the NFL would split up its annual revenue. In the previous CBA, one billion dollars would be taken off the revenue and shared amongst the owners for expenditure purposes and the rest of the money was shared between the owners and the players. In the sharing, players would receive 59.6% of the remaining revenue via the salary cap, while owners would get the rest.

What the owners were initially proposing for the new CBA is that 2.4 billion dollars be taken off for expenditure purposes and then the rest of the money is shared by the same margins as the previous CBA.  This would mean that the player’s portion of the share would be decreased by about 18% compared to the previous CBA and they plan to incorporate the 18% decrease by including a rookie salary cap amongst other more complicated and less public means. Now, that doesn’t mean that any player under contract in the NFL right now will make a penny less as all of the current contracts would be upheld. What the 18% decrease in revenue share principally means is that future NFL draft picks for sure will make less money and free agents would have somewhat of a tougher time getting larger paydays.

I wrote a post back in February explaining how the NFL salary cap has increased in a year by year basis since 2005. That means that the amount of money that a team can spend on free agents players has increased because the NFL has gotten more profitable over the years, and this trend will continue if the NFL continues to bring in more money each year than they did the year before. Remember, the salary cap, which decides the amount of money players make, is decided by a percentage not an exact number, so if the NFL brings in nine billion like they did the year in 2010, then the players would have about eight billion to share between the owners and players, and end up receiving about 4.8 billion (59.6% of 8 billion) of the revenue. If there was to be a 2.4 billion off the top of the nine billion instead of the one billion, then teams are left with about 3.9 billion dollars to spend on players.

Essentially, each team would have about 150 million dollars (4.8 divided by 32) in salary cap in 2011 if they were to adhere to the old CBA.  If they were to agree to the initial offer by the owners, they would have about 122 million (3.9 divided by 32). That 28 million dollar gap would be counteracted by imposing a rookie salary cap amongst a few other things, which was being discussed by the owners and players before the lockout. By agreeing to the new deal, the owners altogether would then receive an extra 1.4 billion, which would mean that each owner/team would receive an extra 44 million dollars. The owner are asking for the extra 44 million to help pay for operational expenses like building and maintaining a stadium amongst other things.

I do believe the owners have somewhat of an argument with the stadium building issue. We are no longer living in a world, where local governments and the people will agree to pay the majority of the portion to build a billion dollar stadium, so the owners will have share a larger burden of building a new stadium than ever before. In addition, building a new stadium is something that will also help players in the long run as more people will want to visit a new stadium, thus driving profit, which in essence will increase the salary cap. Still, I think we need to look at whether or not building a new stadium is imperative of every city and every NFL team.

Right now, thirteen of the thirty two NFL stadiums were built after the turn of the century. Basically, this means that these thirteen stadiums are good to go for at least another two decades assuming a team uses a stadium for about 30 years, which seems like a reasonable amount of time for a stadium to me. In addition, another nine NFL stadiums were built between 1989 and 1999, which means they are good to go for at least another decade. That leaves ten stadiums that were built before 1989, which are Lambeau Field (1957), Soldier Field (1924), Oakland-Alameda County Collesium (1966), Mall Of America Filed/MetroDome (1982), Candlestick Park (1960), Qualcomm Stadium (1967), Ralph Wilson Stadium (1973), Sun Life Stadium (1987), Louisiana Superdome (1975), and Arrowhead Stadium (1972). Out of that list of ten stadiums, a few of them have received major renovations recently to the point that they are serviceable for a while to come, and they are Lambeau Field in 2003, Soldier Field in 2001, Arrowhead between 2007 and 2010, and the Superdome in 2006.

By the way, when talking about major renovations, I mean renovations of upwards of 200 million dollars. The Superdome received a 260 million dollar renovation, Arrowhead received a 375 million dollar renovation, Lambeau received a 295 million dollar renovation, and Soldier Field received a 632 million dollar renovation. With major renovations to those four stadiums, we are left with only six stadiums are need of either replacement or major renovations. Of those six, a new stadium is set to be built to replace Candlestick Park, but the rest of the five are in dire need of replacement, but that just means that only 15% of current NFL stadiums need replacement/renovation. Is that a good enough reason to cut 1.4 billion dollars especially considering that 44 million a year for each owner probably won’t be enough to majorly renovate (forget building a new stadium) a stadium? I do not think so.

The owners are also claiming that inflation and increased utility costs as a reason for the extra 44 million dollars, which I find to be a pretty interesting argument. Basically, the owners want more money because they price of goods has up, but has it gone up enough to warrant an extra 44 mil? The inflation rate only increased 1.64% between 2009 and 2010 and actually fell a 0.34% between 2008 and 2009, so is that really a believable argument? Nope, but the part about increased energy cost seems to be pretty legit one.

According to USA Today, utility bills increased nearly 30% between 2003 and 2008, and I bet it has increased even more between 2008 and 2010. Still, does that mean that NFL teams and owners are spending an extra 44 million per year? Not really, but the 2.4 billion they were asking for off the top for the new CBA was the amount they initially asked knowing that they would have to agree to a lesser amount once negotiations with the NFLPA started. It’s basically the same approach you or I would take if we were to sell our cars. We would start off high knowing that we would have to settle for a lower amount, while the buyer would start off at a considerably lower amount knowing that he would have to pay more than that to get the car. In the case of the NFL, no one really knows what the NFLPA and the owners were willing to give up during negotiations, but National Football Post had reported that the owners and player were about 600 million dollars apart in their deals.

Personally, I do believe the NFL owners need more money to cover their expenses. The approximate 31 million they receive to run their businesses doesn’t seem to be enough to pay all of the costs associated with running a team. After all, the owners are the ones paying the majority of the costs for the cross country flights, hotel stays, utility bills for the massive stadiums and practice facilities, and they also pay the salaries of personnel such as coaches, scouts, front office people, even the vendors at the stadiums. Nevertheless, I do not believe the owners need to be given an extra 44 million, which would give them a total budget of 75 million dollars plus their profits from the revenue sharing. Still, they do deserve more money and the players should sacrifice a little more since they are the ones getting the bulk of the revenue anyways.

Think of it this way: the owners are the ones that have invested billions of dollars into this business, granted that they get millions back each year from their businesses. If the owners did not invest the money, then there would not be an NFL where a twenty-one year old could make ten million a year just for playing a sport. What the owners are proposing will not make the players a whole lot less richer than they are now, and it’s not like the owners initial proposal would be paying next generation of NFL free agents minimum wage. Players would still get paid what they deserve, except they would just have to prove their values more to their team and the rookies receiving a much smaller, fairer sum of money for their first contracts until they prove that they are worthy investments to their team and the NFL.  Of course, all of this makes sense and both sides do acknowledge that the owners need to be compensated better, but we are in a lockout because neither side can agree upon how much that is.

All in all, this is still a battle between the rich and richer. The NFL is the world’s most profitable sports league and NFL players and owners are handsomely rewarded for their efforts and investments. The owners do have a proper claim as to why they want more money to run their businesses. They are the ones that initially invested in the business and they are the ones paying the bills, promoting the sport, and building new stadiums. The players still deserve to get the fair share of the of the revenue since they are the ones that play the sport and the ones the people pay ever growing sums of money to watch. 

I think of this relationship between the NFL owners and its players as a relationship between a working husband and a stay at home wife. The owners are playing the role of the working husband, who gets to work every day, bought the house, the car, and invested money into the family, but it’s the wife that cooks the food, cleans the dishes, and takes care of the kids. All of which allows the husband to go to work every morning in the first place. Both roles are critical to running a family and both have done their parts exceptionally well over the years. Right now, they have having a very public fight. Let’s just hope this doesn’t end in a divorce.


This is a FanPost and does not necessarily reflect the views of Pride Of Detroit or its writers.

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