Remember how football fans worried that the 2011 NFL season could be lost, thanks to the decision of the NFLPA to reject the league’s offer for a new collective bargaining agreement? The players argued that the offer on the table was insufficient, and that they needed to guarantee more revenue for players as their executive director DeMaurice Smith led them into a work action and a threat of antitrust lawsuits that resulted in a lockout before a new agreement was reached. The NFLPA declared victory, but as the Boston Globe reports, it turned out to be a victory that may have cost players over a half-billion dollars:
But the question that continues to loom – and likely will for some time – is, did the game even need the lockout, which was triggered when the NFL Players Association walked out of federal mediation March 11, 2011?
Because the way things are going, the players look like they didn’t gain anything. In fact, it appears they’re losing money – some $652 million over the next three seasons.
What happened? Smith and the NFLPA wanted a fixed percentage of revenues from the NFL, and rejected the salary cap cuts for 2011 in the original league offer. They got both — but as the saying goes, be careful what you wish for. The new collective bargaining agreement raised the cap back up on 2011 to nearly $121 million, which means the players potentially gained over $204 million across all 32 teams last season.
So far, so good, right? However, the caps are now fixed at $121 million over the life of the CBA unless the league can increase revenue substantially. In the original league proposal without the fixed revenue share, the league escalated team caps in the following four seasons up to $134 million. That will result in a net loss of income opportunity for players of about $652 million during the life of the new CBA that Smith negotiated.
This could change, of course, if the NFL can find new ways to substantially increase its revenue — but interest in the game is about as high as it will probably get, relative to other sports. The league tried explaining that to the NFLPA and showed them their projections, which turned out to be much closer to eventual outcomes than those from the NFLPA. Unless the league escalates ticket prices at a much higher rate than we’ve already seen and demands higher TV revenues, the revenues won’t move much outside of normal inflation over the next few years. And new TV revenues would have to be dependent on drawing a lot more viewers to the games.
Looks like the players tried a gimmick play and lost a lot of yardage on that scrimmage, not to mention the damage done to the league from the threats of a lost season. They may want to look for a new playcaller in the next round of CBA bargaining.
Update: Twitter follower MarioC points out that the new CBA did indirectly result in an increase in TV revenues from the NFL’s partners in December, which the Globe may have missed:
Rights fees for all three networks will increase by about 6 percent or 7 percent a year, according to three people with knowledge of the talks who were granted anonymity because they weren’t authorized to disclose the terms. The NFL currently receives about $4 billion a year in television rights fees from companies including Walt Disney Co. (DIS)’s ESPN and DirecTV. (DTV) …
NFL Commissioner Roger Goodell — who along with the three broadcast networks declined to reveal financial terms — said the 32-team league’s new decade-long labor agreement signed after a four-month offseason lockout helped it to negotiate the longest television deals in league history.
“That kind of stability gave us the ability to get these contract extensions,” Goodell told reporters yesterday. “The players deserve great credit.”
Under the terms of the new collective bargaining agreement, the players’ share of broadcast revenue climbs to about 55 percent from around 50-51 percent under the prior deal, Ganis said. The NFL has annual revenue in excess of $9 billion.
Well, that means that the players will get 4-5% more of the 6-7% annual increase than they otherwise would have received, presumably in incremental cap increases. That doesn’t appear to make up for the amount the players passed up, although I haven’t crunched the numbers entirely to determine that.