A Second Helping of…A lockout in 2011

No matter how the Broncos finish, next year you’re not going to have Josh McDaniels to kick around anymore.  It’s not that he’s going anywhere.  It’s simply that no one is likely to be playing football.  

Instead, you’re going to have to choose between Pat Bowlen and the players' union.
Today is Black Friday; we’re late into the football season.  However, the idea that we’re going to be without NFL football still seems to be a secret to most fans.  According to Mike Silver, the players' union estimates that only about 33% of the most hardcore NFL fans have even thought about the impending lockout, its possibility, and most importantly, its effects.

Broncos fans are some of the most hardcore out there, but the closest most of them have come to considering the impending lockout occurred during a brief period in October in which the Broncos suddenly pulled out of contract negotiations with Champ Bailey.  As Mike Klis wrote at the time:

Negotiations were "85 percent done," a source said, when the Broncos decided to stop talking. Apparently, Bowlen and Ellis believe the league's possible shutdown is real enough to scuttle a contract that would allocate a guaranteed expenditure against revenue uncertainty.

Bowlen and Ellis ought to know.  Bowlen (and by default Ellis, the former league insider) are, according to Silver, among a core group of owners who are pushing the hardest for the elimination of the concessions the owners gave up during 2006:

The owners, particularly a faction of aggressive, entrepreneurial Goodell confidants (Jerry Jones, Robert Kraft, Pat Bowlen, Jerry Richardson) who want a CBA that accounts for the high-risk investments they’ve made on new stadiums and other capital expenditures.

In other words, Pat Bowlen is a shrewd businessman; if a lockout is what it takes to bring costs in line with his world view of the NFL, so be it.  Remember, Bowlen isn’t stupid: in 1998 he spent over $2 million so Denver voters would approve over $250 million in tax subsidies for Invesco Field.   In Bowlen’s defense, however, he took on a significant amount of debt himself.

Just what are these CBA concessions the owners gave up in 2006?  Brian Billick summarized the main grievance well in his recent book, More Than a Game:

In the previous deal, the players received 64.25 percent of defined gross revenues (DGR), based solely on broadcast revenues, ticket sales, and merchandise sales.  The new agreement gave the players just 59.5 percent, but that was of total revenue, not just DGR.  With that the owners’ profit margins began to diminish.

This may not seem like a lot to the average fan, but it’s an insane amount of money.  Billick estimated the number that the owners gave up in the new deal is about $280 million, based on NFL revenues of $7 billion.  

In 2009, the NFL’s revenues were $9 billion.  If we take out the $1 billion expense credit (how convenient)  the owners are allowed to take before calculating total revenues, we are left with $8 billion.  So the number the owners are giving up as a result of the 2006 CBA’s definition could be well over $300 million annually.

The owners want this money back.  They are offering 60% of total revenues, but they want to cleverly increase their expense credit to about $2.4 billion.  In other words, the players get a similar percentage of a smaller pie.  It doesn’t take a degree in cap management to understand that the players simply get less.  

The small-market owners have their own reasons for opposing the CBA of 2006.  As Billick points out:

The 2006 deal also had a powerful unintended effect on smaller-market teams.  The salary cap, for the first time, was calculated as a percentage of all team revenues, including most stadium revenues, in the income item in which there is the greatest disparity among club, and which is largely unshared.  When the salary cap had been determined by DGR, the money that big-market, new-stadium teams such as Washington and new England were making on stadium revenue had no direct bearing on the salary cap.  But with all revenue going into figuring the cap now, smaller-market teams were put at an additional disadvantage.  Revenue from new stadiums, which wasn’t being shared equally among the thirty-two teams, was being used to calculate a growing league-wide salary cap level that they still had to pay.  Put differently, small-market teams had to spend a much greater percentage of their total revenue (at times more than 65 percent) than big-market teams to put a competitive team on the field. 

The owners as a whole have started to play hardball.  Several weeks ago, Roger Goodell announced that come March 2011,  the players will no longer be receiving healthcare benefits from the NFL:

"It's been dealt with in other circumstances and other negotiating positions, where unions have arranged to pay for their COBRA care," Goodell said. "That's the issue. They'll continue to get medical care. It's just that the burden of paying for that will no longer be on the clubs, it would be on the individuals or on the union." 

The players' union, as you might imagine, isn’t taking all of this lying down.  This is a public opinion war of epic proportions.  Aside from public displays on the field and apocalyptic warnings from players like Kyle Orton and Brian Dawkins, DeMaurice Smith, executive director of the players union, played the sympathy card soon after Goodell’s statement:

“We have several players who have children who are on kidney dialysis. We will have over 100 players who will have children who are born in the March, April, May timeframe. Right now all of those players need health insurance."

The players' union and Smith, who has contacts in the Obama administration, have also recently  begun their own PR blitzkrieg on the US Congress in an attempt to begin to exert political (and PR) pressure on the NFL.  But the NFL is no stranger to politics.  As the Associated Press points out:   

Under Smith, the union has also ramped up lobbying spending, but it's still vastly outspent by the league. As of Sept. 30 [2010], the league had spent around $1.1 million this year to influence the federal government, more than triple the union's $340,000. And unlike the union, the NFL also has a political action committee, which made almost $600,000 in campaign donations in this year's elections, mostly to incumbents.”

Goodell and the owners, it appears, know what they are doing.  If the proverbial money talks, don’t expect much action out of Congress.

The owners have also begun to shift the conversation away from lockouts and healthcare to players’ safety.  Suddenly, the owners are doing everything they can to keep concussions in the minds of every man, woman and child.   

The players' union sees this as a ploy. Not only have they continued to press the healthcare issue, they have brought into the debate worker’s comp and retirement insurance.   In this November 23rd NPR article, Smith had this to say:

"Our players risk everything on the field.  There's been a lot of media coverage of the helmet to helmet hits, over the last few weeks, and the cover of Sports Illustrated is about concussions...There has been recently a great deal of concern expressed by ownership about it. The thing that we wanted to point out to our fans is that the NFL, right now as we speak, has sued 262 players over their workers comp.  It still takes at least a three year NFL career to get any health care after you retire. We had to fight legislation from a team last year to take away workers comp from the players who play the game, being notified in March that their health insurance will be canceled.  The players, and likely their families, are saying 'How can you express a concern about health and safety, after watching four hits on Sunday, and then snap your fingers and say that health care is over in March?' It seems both hypocritical and misleading... They put out a press release about larger fines, larger punishments, perhaps suspensions, but oh by the way, ignore the fact that we're going to cancel the health insurance for people who have kids, at least two players whose kids are in need of heart transplants.”

Expect this sort of rhetoric--from both sides--to intensify as we get closer and closer to March 3rd, 2011 (the current CBA’s expiration date). 

For fans, it’s almost impossible to take sides because, like the players, fans don’t have access to the owners’ financial statements--something the owners have said they won’t disclose. Perhaps the owners are indeed struggling with stadium maintenance, practice-facility upkeep, and debt loads.  Perhaps they can’t continue at the current pace.  Or perhaps, as the players assert, the owners are simply being greedy and expecting the players to pay for their overhead.

Recently, the Green Bay Packers became the first team to open their books.  However, as Doug Farrar pointed out here, it really proved nothing given the Packers’ status as a small market team.  Farrar further pointed out:

...this is the constant tug-of-war between the NFL and the NFLPA [player’s union] - 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.

It seems that the owners, this time around, are not winning in the court of public opinion.  It will be interesting to see if some of the larger market teams end up disclosing more as we approach the point of no return.

The truth is, there really is no blame to go around.  The owners are within their rights to opt out of the agreement.  The players are within their rights to withhold their services.  And, as gruesome as it seems, the owners are within their rights to use replacements.  Technically, the two parties are working through contract negotiations--except these negotiations happen to involve America’s most popular sport.

Of course, none of this matters to the average NFL fan.  The average fan just wants his/her football--nothing more.  They could care less about a fight between millionaires and billionaires.  They could care less about the intricacies of the collective bargaining agreement.  And really, when it comes down to it, they probably could care less about the healthcare package of players.

They just want football.

Unfortunately, it’s not that simple.  While you may bleed orange and blue, the Broncos (and the NFL) bleed green.

Get used to it now.  Perhaps the crash won’t be so hard in March.    Maybe you’ll even want to start finding your own special UFL team.


I’m glad we had this talk.  Now, vaya con Dios, Brah.

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Second Helpings