Owners may lose TV money

[Guiness]

A judge has decided that the league can not have access to the TV money during the lockout.


http://eye-on-football.blogs.cbssports.com/mcc/blogs/entry/22475988/27711270

http://www.cbssports.com/mcc/blogs/entry/6315047/27713392

huge sway in the balance of power. I think the owners were counting on bringing the players to their financial knees...but they're not going to be comfortable either without their billions.

[prime311]

Teams are, quite literally, businesses though. The owners aren't necessarily going to be losing all that much here since the losses are the teams and the owners don't have to be liable for that. It all depends on how much money the owners are really getting out of it. I suspect this varies a lot from team to team, but my general impression is that team ownership is about status and equity moreso then actual cash in hand. Granted an operating loss on the year will reduce the equity of the team, but thats the kind of thing that tends to rebound pretty quickly. The real losers here are the employees of the teams that won't be able to get paid. Of course, that does open some interesting scenarios like a team in breach of contract with some or all of their coaches.

[Guiness]

Teams are, quite literally, businesses though. The owners aren't necessarily going to be losing all that much here since the losses are the teams and the owners don't have to be liable for that. It all depends on how much money the owners are really getting out of it. I suspect this varies a lot from team to team, but my general impression is that team ownership is about status and equity moreso then actual cash in hand. Granted an operating loss on the year will reduce the equity of the team, but thats the kind of thing that tends to rebound pretty quickly. The real losers here are the employees of the teams that won't be able to get paid. Of course, that does open some interesting scenarios like a team in breach of contract with some or all of their coaches.

Depends on the team.

Snyder is independently wealthy. Jones, on the other hand might be in trouble. At the least, it could cause dissention in the owner's ranks.

[Patler]

Teams are, quite literally, businesses though. The owners aren't necessarily going to be losing all that much here since the losses are the teams and the owners don't have to be liable for that. It all depends on how much money the owners are really getting out of it. I suspect this varies a lot from team to team, but my general impression is that team ownership is about status and equity moreso then actual cash in hand. Granted an operating loss on the year will reduce the equity of the team, but thats the kind of thing that tends to rebound pretty quickly. The real losers here are the employees of the teams that won't be able to get paid. Of course, that does open some interesting scenarios like a team in breach of contract with some or all of their coaches.

Breach of contract? Why would teams put themselves into breach of contract conditions? Teams have other sources of income as well as cash reserves. If needed, I'm sure lines of credit would be available. They would be foolish to put themselves into breach of contract. Besides, many of the assistant coaches' contracts have provisions for work stoppage by players, which, per recent stories, provide reduced salaries during the work stoppage. The Packers are said to have one of the more generous provisions for the assistant coaches.

[prime311]

I'm not privy to the actual contracts of the coaches or the reserves of every NFL team, but its not out of the realm of possibility that a team could choose not to pay certain coaches should they find themselves in a financial bind. Perhaps its status quo to have verbage in every coachs contract at every level to take serious pay cuts in the event of a work stoppage and I'd be interested in seeing some of the data on that.

[Patler]

I'm not privy to the actual contracts of the coaches or the reserves of every NFL team, but its not out of the realm of possibility that a team could choose not to pay certain coaches should they find themselves in a financial bind. Perhaps its status quo to have verbage in every coachs contract at every level to take serious pay cuts in the event of a work stoppage and I'd be interested in seeing some of the data on that.

What would be gained by breaching contract provisions? These are not businesses on the verge of bankruptcy, scraping for cash to stay afloat. These are big, profitable businesses, most owned by people with even bigger businesses. What little cash it would take to honor coaches contracts shouldn't be difficult to get a hold of. Its a very small amount of their operating budgets. Besides, the owners have been planning for this possibility for several years. Many reduced player costs a lot last year, and probably increased cash reserves as a result. I suspect all have cash reserves or sources of cash so as not to jeopardize their operations after the CBA is signed.

Short-term operating loans from commercial lenders, increased capital contributions from owners, loans from related businesses, league loans, etc. would all make more sense than breaching contracts. This will be a short-term, temporary condition.

[prime311]

What would be gained by breaching contract provisions? These are not businesses on the verge of bankruptcy, scraping for cash to stay afloat. These are big, profitable businesses, most owned by people with even bigger businesses. What little cash it would take to honor coaches contracts shouldn't be difficult to get a hold of. Its a very small amount of their operating budgets. Besides, the owners have been planning for this possibility for several years. Many reduced player costs a lot last year, and probably increased cash reserves as a result. I suspect all have cash reserves or sources of cash so as not to jeopardize their operations after the CBA is signed.

Short-term operating loans from commercial lenders, increased capital contributions from owners, loans from related businesses, league loans, etc. would all make more sense than breaching contracts. This will be a short-term, temporary condition.

Teams claim to have been operating on losses. Miami and Detroit come to mind of late. Other teams are just cheap, like Cincinnati. Jacksonville and Buffalo have often lamented their financial condition. I don't claim to be privy to the internal finances of each team, and considering the difficulty the NFLPA has had in getting teams to relinquish their financial statements I'm not sure anyone can state anything with absolute certainty. As to what would be gained, it could be as simple as it wouldn't behoove the coaches to complain about it anyway. While reports have stated that the majority of assistant coaches have lockout provisions written in, we don't know what the details of the provisions are.

[Guiness]

I for one, 311, don't believe a word of some teams claiming to lose money. The tight wraps they keep the books under, there's no reason to believe them. I think some of the other stuff we've seen, that they're just not making enough money, and want a better return on investment is more true. Notice I didn't say true, I said 'more true.' I think there are varying degrees of truth through all of this.

I wonder if the owners expected this money to be taken from them. Patler's right, they've been saving for a rainy day, but this is a big chunk, when you expected to have $4billion to break into 32 chunks, and that's gone, it has to hurt.

[pbmax]

This doesn't hurt teams that failed to get alternate rates of pay for employees as much as it hurts team with large debt services to maintain. Far and away the biggest employee cost are the players who will be relieved of the burden of cashing those large checks. Coaches and then Admin would be next and many of these have agreed to a lower salary during a work stoppage.

But renegotiating debt will be tougher and complex. For instance, the Cowboys were on the hook for some of the bonds issued to finance their stadium. The bulk of those bonds were to be paid off with Personal Seat License income. But if that didn't clear the debt, and if tax revenues decrease with no games/hotels (there are usually specific taxes on events, tickets and hospitality to cover stadium construction) then the teams need to deal with bankers, investors and politicians.

Of course, all this was a known entity when they truncated the length of the CBA deal. So the costs are well known to them. TV revenue during a work stoppage was Plan A. I am sure there is a Plan B.

[Patler]

Teams claim to have been operating on losses. Miami and Detroit come to mind of late. Other teams are just cheap, like Cincinnati. Jacksonville and Buffalo have often lamented their financial condition. I don't claim to be privy to the internal finances of each team, and considering the difficulty the NFLPA has had in getting teams to relinquish their financial statements I'm not sure anyone can state anything with absolute certainty. As to what would be gained, it could be as simple as it wouldn't behoove the coaches to complain about it anyway. While reports have stated that the majority of assistant coaches have lockout provisions written in, we don't know what the details of the provisions are.

You aren't suggesting that by breaching their coaches' contracts they would never have to pay that money, are you? The coaches wouldn't stand for it, the other teams wouldn't stand for it and the league wouldn't stand for it. Pressure would come from all sides. Besides, how could they ever hope to resume any kind of normal operations after the CBA is signed if a team willfully violated the terms of their coaches' contracts?

If a lockout drags on, some coaches aren't going to be happy as it is, because according to reports many will receive only half-pay. I expect teams will follow the letter of the contracts, paying no more and no less than required. But intentionally breach their contracts? Not very likely in my opinion.

[Patler]

This doesn't hurt teams that failed to get alternate rates of pay for employees as much as it hurts team with large debt services to maintain. Far and away the biggest employee cost are the players who will be relieved of the burden of cashing those large checks. Coaches and then Admin would be next and many of these have agreed to a lower salary during a work stoppage.

But renegotiating debt will be tougher and complex. For instance, the Cowboys were on the hook for some of the bonds issued to finance their stadium. The bulk of those bonds were to be paid off with Personal Seat License income. But if that didn't clear the debt, and if tax revenues decrease with no games/hotels (there are usually specific taxes on events, tickets and hospitality to cover stadium construction) then the teams need to deal with bankers, investors and politicians.

Of course, all this was a known entity when they truncated the length of the CBA deal. So the costs are well known to them. TV revenue during a work stoppage was Plan A. I am sure there is a Plan B.

Just like the NFLPA has been urging players to prepare financially for a work stoppage the last two seasons, the owners were doing the same. Since the owners are all successful businessmen in other fields, I suspect for the most part they were more disciplined about preparing their businesses than many players were with their personal finances.

[Scott Campbell]

Just like the NFLPA has been urging players to prepare financially for a work stoppage the last two seasons, the owners were doing the same. Since the owners are all successful businessmen in other fields, I suspect for the most part they were more disciplined about preparing their businesses than many players were with their personal finances.


I imagine at least part of that preparation included guaranteeing their TV money revenue stream during a work stoppage. The books aren't open, so were all speculating somewhat. But I'd guess that most teams operating costs drop to nearly nothing during a work stoppage. My guess is that any real financial pressure on an owner during a stoppage would come from debt service.

[RashanGary]

Maybe 20% of the players are in their last two or three years in the league. They're fighting for a deal that will hardly help them (they're contracts are already signed). For them to miss time, it hurts them with no opportunity for it to pay off. That's a big disadvantage too, even if 50% or more of the players planned for this.

[pbmax]

I would think the veterans are most prepared, even if the potential benefit to them is slight. The younger players will likely be the ones who have failed to prepare adequately.

One player in Philly has talked about after a contract he signed, he had two teammates approach him about a loan (from memory, its not clear if this was work stoppage related or just normal course of business - I tend to think the latter). He stated the number of players living paycheck to paycheck is pretty high.

[prime311]

Well maybe it depends on whether you consider layoffs a breach or not or what the wording of the contract is. What I was getting at about the contract breaches is that assistants could be out of job or leaving teams at this point and thats being reported by a lot more people then just me. It could lead to some interesting coaching developments. I suspect that college coaching jobs are looking more attractive then ever.

[Patler]

If they do something the contract allows them to do, like pay a reduced salary or even no salary during a lockout, its not a breach of contract. Breach of contract occurs when you do something or fail to do something (generally significant, not inconsequential) in violation of an agreement.

But ya, an assistant who has a college offer might think hard about it this year. There was a minor exodus of assistants to the college ranks a couple years ago when there was a change in retirement and benefits required from the teams. Again, the Packers did right by their coaches by providing more than the required minimums.

[pbmax]

Standard and Poor's has reduced their estimate of the owner's financial ability to carry on without games from 2 years to 1. This change relfects their estimation if the Court restricts the ability of the NFL from receiving TV money during a lockout.

http://profootballtalk.nbcsports.com/2011/03/03/standard-poors-revisits-nfls-situation-after-lockout-insurance-ruling/

[Joemailman]

Players and owners have agreed to a 24 hour extension on CBA talks. Has there been more progress than most expected?
http://www.nfl.com/news/story/09000d5d81e95bf8/article/league-players-union-agree-to-24hour-extension-in-labor-talks?module=HP_headlines