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NFL Labor: The Battle We Aren't Talking About

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NFL Labor: The Battle We Aren't Talking About

I can imagine right about now you all are tired of the Labor posts. Rest assured, I am too and I'm desperately hoping there is some non-courtroom football to talk about soon. I'm optimistic especially in light of Tuesday's new round of super-secret meetings.

So hopefully soon I can get started with breaking down some divisions.

However, I was thinking about the labor impasse (and how awesome the Alamo Drafthouse is) last night and it occurred to me there is one aspect of this battle we haven't talked about.

While we've focused on labor vs management, gross vs net profit, players vs owners, there's another battle being waged which to my mind is really what this CBA dispute is about.

Revenue sharing.

I have long thought that this CBA issue comes down to Owners vs Owners more than Owners vs Players. Or I should clarify really: Big Market Owners vs Small Market Owners.

My feeling is the real reason the owners are trying to roll back the player percentage of the profit is that they are desperately trying to avoid dealing with a broken revenue sharing system.

Far easier to go after the players money since everyone knows the last CBA was heavily in the players' favor.

The truth of the matter is that even if they do get a significant amount of money from the players, this problem will not go away, nor will this invisible war.

Here's why it's a problem.

Let's jump into the TARDIS (or Way-Back Machine or DeLorean - whatever your flavor) and head back to the year 1961 when Pete Rozelle convinced the burgeoning league to forgo local TV revenue instead getting a national television deal which all teams split evenly (the guy who gave up most, by the way, was NY Giants owner Wellington Mara whose family has also been the classiest owners to their fans and staff during this labor dispute).

The following year, each team began the season with $332,000 which was a remarkably large sum for the time.

The revenue sharing has been expanded to include things like NFL Properties income. As time has gone on, the revenue sharing has had cracks appear in the armor, so the NFL and NFLPA decided to add a supplemental revenue sharing element into the 2006 CBA.

The NFL tried to get rid of the supplemental element last year but failed. So somewhere between eight and twelve of the lower rung teams shared money from a pool which was valued at about $220 million.

Small wonder Jerry Jones hates this whole set-up.

I mean, imagine you're the Dallas Cowboys' owner and you—who owns one of the most lucrative sports businesses on the planet—have to send portions of your revenue to Buffalo.

Seriously?

This would be why, in the 1990's, Jerry Jones cut deals with Pepsi and Nike for the Cowboys which angered a league which already had deals in place with Coke and Players, Inc. While Jones and the league settled (after suing each other), the acrimony remains. Certainly the distance between the big and small market teams has widened.

Teams like Dallas or either New York franchise will make far more money on local revenue than a team like Jacksonville or Tampa Bay.

It's the revenue sharing which helps the smaller market teams survive and with good management, flourish. It's why we have a championship in Green Bay and New Orleans the last few years because otherwise perhaps those franchises don't survive the lean years.

Beyond the odd smaller market team winning the Big Game, a good amount of the overall success of the whole NFL comes from that revenue sharing Jones' and many (not all) of his fellow big market owners dislike.

I'm not sure exactly why the owners won't fight this out among themselves. It could be that the bigger owners are worried they would look like mean misers. It could be that not all the big owners are on board. Mara probably isn't. As of 2007 Rooney sure as hell isn't.

It's important to note that the Rooneys and Maras have been amongst the truest visionaries in the history of the league. Honestly, I'm sure they'd love to keep more money but long term, I believe they know that there has to be some form of revenue sharing to keep the league vital as a whole.

The question is, is it really worth it to support teams who cannot pull a profit themselves?

I might ask Saints and Packers fans. I'd question Bucs fans. I might even throw that question to the Bills fans. All have had varying levels of success as well as struggles and all are smaller market teams. Some are run better than others at the moment, but all have benefited from the revenue sharing which allowed them to survive long enough to have that success.

It's completely understandable that the bigger teams—whose jersey sales and TV ratings bring in the majority of the money—want to get more of what they are ostensibly earning for everyone else.

I wonder if they realize that the short term financial gains might be outweighed by the long term impact of having less competitive balance.

Without revenue sharing it's likely we'd have far less parity and a few dominant large market teams - like we have Major League Baseball. In baseball, if you don't spend huge amounts of money, you have nearly no chance of winning a championship.

Thinking I'm just hating on baseball? Check these numbers out.

Here are the World Series Champions and their payrolls for last ten years.

2010 - SF Giants - 10th in league with 97.8 mil payroll
2009 - Yankees - 1st - 200+ mil
2008 - Phillies - 12th - 98.2 mil
2007 - Red Sox - 2nd - 143 mil
2006 - Cards - 11th - 88.8 mil
2005 - White Sox - 13th - 75.2 mil
2004 - Red Sox - 2nd - 125 mil
2003 - Marlins 25th - 49 mil
2002 - Angels - 15th - 61.7 mil
2001 - Arizona Diamondbacks - 8th - 81.2 mil
2000 - Yankees - 1st - 92.5 mil

I bolded the 2003 World Champion Marlins because they are the exception, the only team outside the top 15 payrolls to win a Championship.

So that's one winner out of ten, or more importantly, one out of thirty.

You might say, 'Andrew, surely there have been more small payroll teams who have at least played in the World Series but didn't win...'.

So here's the losers bracket:

2010 - Texas - 13th - 92.2 mil
2009 - Phillies - 7th  - 113 mil
2008 - Tampa - 29th - 43.8 mil
2007 - Colorado -  25th - 54.4 mil

2006 - Detroit - 14th - 82.6 mil
2005 - Astros - 12th - 76.7 mil
2004 - Cards - 11th - 75.6  mil
2003 - Yankees- 1st - 152 mil
2002 - Giants - 10th - 78.2  mil
2001 - Yankees - 1st - 109 mil

2000 - Mets - 6th - 79.5  mil

Again, bolded the teams from the lower half of the payroll world. Just two out of ten. Which makes the total of three out of twenty small payroll teams have seen the World Series or three out of thirty leaguewide.

That's what? Ten percent? Pretty lousy if you ask me.

There are also some consistent names on the list and some consistent names absent. Boston, the Yanks and the Phillies are in the World Series frequently. Pittsburgh? The Washington Nationals? Nowhere to be seen.

It's not an absolute formula; trust me, the Mets will tell you money doesn't buy you a ring. You need good management.

However, money makes a big difference if you aren't inept.

I find it a disturbing trend in baseball. How much does it suck to be a Pirates fan who knows that year in and year out they have almost no shot at a title?

How much would it suck to start the football season the same way, every year?

This afternoon we'll bring it back to football, the NFL and how this could affect both.

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Fan friendly comments only: off Comments (14) This filter will hide comments which have ratio of 5 to 1 down-vote to up-vote.

MarkinMadison's picture

Nice piece Andrew. You're working with 11 years, not 10, which only strenghtens your argument. The Brewers are a great case in point, and likely what would become of the Packers without robust revenue sharing. This is shaping up to be a good year - meaning they MIGHT make the playoffs.

Don't get me wrong Antannasio is trying to win. He's putting the money out there for the team to be competitive, and he deserves fan support in the form of buying tickets, etc. But the Brewer's payroll this year is $85 million, or 17th in the league. None of the top 12 payrolls are less than $100 million. The top three teams' payrolls are nearly double the Brewers'. And the Brewers' roster is heavily dependent on guys who have a limited horizon with the organization, like aging pitchers and guys like Fielder, who we all know will be playing for someone else next year - to make more money than the Brewers can afford to pay. He is roughly the Packers' equivalent of CM3.

We all know now that the Packers had one of the top payrolls in the NFL last year. But we all also know that this would not be sustainable without robust revenue sharing. We don't want to be in a situation where a good year for the Packers is maybe making the playoffs.

andrewgarda's picture

Good point with the 11 years. I should have just called it a decade or something and left it at that. :)

I believe the coaches of the smaller market MLB teams do the best with what they have - as do the players. But they fight an uphill battle, IMO.

I would also say that while the Packers now have a high amount of payroll and profitability, it's revenue sharing that helped them survive leaner years where they might not have been able to. I debated whether to throw them in there but the reality is - no disrespect to Wisconsin - but Dallas, NY, New England (aka Boston) are markets that dwarf Green Bay's. New Orleans' revenue has certainly gone up the last few years but it's still not a large market either.

I also think that GB might be an outlier - that they bring in money despite their market. But it's hard to say for sure.

bryce's picture

Good thought. However, I'm pretty sure that the Packers are considered a large market team in terms of the revenue that they are bringing in. I could be wrong though.

packeraaron's picture

They are a small market team. Yes, they are traditionally in the top half when it comes to revenue, but that only happened after the Lambeau renovation, which at the time catapulted them into the Top 5. But in the ensuing near-decade, they have steadily slipped back toward the middle of the pack, mostly due to teams building bigger and better stadiums.

This is the main reason the Packers have spent the last few years buying up the land around Lambeau for their "Titletown" expansion. All the revenue generated from Titletown will be revenue the team doesn't need to share with the league.

PackersRS's picture

Lambeau renovation which, coincidentally, happened during the internet era.

We're not talking about local television and people who can only see games and buy stuff in Wisconsin.

I'm in Brazil, watch every game, and spend my money on Packers items.

Globalization completely changed the notion of small and big markets. The Packers have one of the biggest and most active fanbases in all football. Moreso, the Packers are a respected brand. People make it a life goal to go to Lambeau and experience the Packers tradition, regardless if they're fans or not.

andrewgarda's picture

Very true - and likely has made some owners with bigger world brand recognition *COUGHCOWBOYSCOUGH* more interested in changing things.

PackersRS's picture

I agree.

And though IMHO with the "new" definition of big and small markets, the Packers fit into the big markets category, and would probably benefit from the change in shared revenue, the proponents are absolutely clueless.

While it may help them short term, and that's probably their goal, if it impacts the long term of franchises such as the Bills and Bucs, the NFL will suffer. The bigger picture is that it'll ultimately decrease their revenue if there's a change in the shared revenue, for the worse.

Just look at the MLB. How much space has it lost to the NFL? Big part of that is the disparity between teams, and that is caused by the financial system (no salary cap or floor, no shared revenue).

If there's change in the shared revenue by the new CBA, we may very well be looking at the NFL as the #2 or even #3 sport in America in the future.

andrewgarda's picture

In terms of current income, I don't doubt it - coming off a SB, with several VERY good years and a young team. But it's a smaller market overall - and I believe during the leaner years, the team faced challenges that a big market team - the Cowboys for example - won't. I mean I could be wrong - this is certainly the place to find out. ;)

MarkinMadison's picture

You have to think long-term on this question. I don't think that the Packers ever come out of the doldrums of the 70s and 80s without revenue sharing. They never would have had the money to lure a Reggie White & Co., or to keep a Brent Ferver.

andrewgarda's picture

YES, exactly. And hey the Bills were great for a while and probably made a ton of money. Not the case now. Might never have been the case without revenue sharing.

Chad Toporski's picture

"How much does it suck to be a Pirates fan who knows that year in and year out they have almost no shot at a title?"

We make it a running joke. It's better when you can laugh at yourself. ;-)

It was actually quite amusing to go downtown this weekend and see FAR more red Phillies shirts roaming around than black and gold Pirates gear. In fact, Saturday's crowd was the largest ever in PNC Park history.

http://mlb.mlb.com/news/article.jsp?ymd=20110604&content_id=20026726...

I'm just glad the Pirates kicked their butts 6-3 in front of all those Phillies fans. :-D

andrewgarda's picture

That's always very gratifying. Come to our stadium expecting a win - go home disappointed.

bomdad's picture

There's a couple points you dont make

Small market teams that are successful in selling out stadiums have no reason to increase ticket prices. The gate is shared across the league, so the extra money just goes into a pool to be split up. Increasing ticket prices only angers fans.

The other way to increase in-stadium revenue without raising ticket prices is to add luxury seating and other amenities which you can make money off of without having to share. But you have to have working capital to make those improvements. Small market teams dont have access to that kind of capital except through municipal bonding. That requires bringing in another "partner" that gets a cut on those amenities (parking for example). It also makes the owners look bad to dip into the taxpayers pocket to get those stadium deals and then price tickets out of reach of most of those taxpayers.

So to make profit sharing work, and build new stadiums and make more money, the players have to allow the poorer owners to make more money. Or start financing stadiums out of their players pension fund. So far, they seem more interested in short term gains and dont look at the whole picture. The owners need to make money, and they need to make a ton of it, to keep this profit sharing model going.

Abraham's picture

Here is the information from the NFL Champs and runners up for the same time frame.

ChampRank
2001Baltimore13
2002New England24
2003Tampa Bay16
2004New England9
2005New England24
2006Pittsburgh10
2007Indianapolis1
2008New York Giants32
2009Pittsburgh6
2010New Orleans4

Runner-UpRank
2001New York Giants23
2002St. Louis3
2003Oakland4
2004Panthers22
2005Philadelphia2
2006Seattle1
2007Chicago24
2008New England2
2009Arizona8
2010Indianapolis19

35% made your bottom half qualification as opposed to 15%. But New York Giants, Colts and Patriots make up 6 of these outcomes in the bottom half. Not statistically valid to throw them out, but fair to say their payrolls have trended high over the time frame.

http://content.usatoday.com/sportsdata/football/nfl/salaries/team/2008

Important to note that the Packers were #1 during the 2011 Super Bowl year. No info on the Steelers.

But I appreciate the noting of revenue sharing. The salary cap really has nothing to do with the success of the NFL. And MLB is getting better on that front. Really the only glaring weakness is in regional networks like YES and NESN (Yankee Entertainment Station and North Eastern Sports Network (Red Sox). But while the NFL has the TV contract and revenue sharing to help with parity, the scheduling, the dominance of one position (QB) and randomness that just a 16 game schedule brings are also huge advantages over basketball and baseball that artificially promote parity.

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