NFL Players preparing for a lockout

[Scott Campbell]

I also have a hard time believing that football percentage of player costs is the highest in all sport.

I read it here:

http://sports.yahoo.com/nfl/news?slug=jc-cbaandowners051908&prov=yhoo&type=lgns

"Under the guidance of Upshaw, NFL players now make the largest percentage of gross revenues (59) compared to their counterparts in Major League Baseball (53), the National Basketball Association (57) and National Hockey League (55.6), according to figures provided by the NFL, an NFLPA source and an article in Sports Business Journal."

[pbmax]

I also have a hard time believing that football percentage of player costs is the highest in all sport.

I read it here:

http://sports.yahoo.com/nfl/news?slug=jc-cbaandowners051908&prov=yhoo&type=lgns

"Under the guidance of Upshaw, NFL players now make the largest percentage of gross revenues (59) compared to their counterparts in Major League Baseball (53), the National Basketball Association (57) and National Hockey League (55.6), according to figures provided by the NFL, an NFLPA source and an article in Sports Business Journal."

Well, that is the reverse of what I would expect, but it does raise one question. However, it is wrong on one fact. The NFL players receive a percentage on Total Revenues now, not gross. So we might be comparing apples to oranges here.

And no NFL team can be over the cap, but many are under the cap by a significant amount, even at the end of the year. So the players are likely not seeing their 59.x percent of total revenues in cash.

Without knowing whether those figures are revenue and cap targets or actual cash spent, this may not be the entire story.

[Scott Campbell]

I also have a hard time believing that football percentage of player costs is the highest in all sport.

I read it here:

http://sports.yahoo.com/nfl/news?slug=jc-cbaandowners051908&prov=yhoo&type=lgns

"Under the guidance of Upshaw, NFL players now make the largest percentage of gross revenues (59) compared to their counterparts in Major League Baseball (53), the National Basketball Association (57) and National Hockey League (55.6), according to figures provided by the NFL, an NFLPA source and an article in Sports Business Journal."

Well, that is the reverse of what I would expect, but it does raise one question. However, it is wrong on one fact. The NFL players receive a percentage on Total Revenues now, not gross. So we might be comparing apples to oranges here.

And no NFL team can be over the cap, but many are under the cap by a significant amount, even at the end of the year. So the players are likely not seeing their 59.x percent of total revenues in cash.

Without knowing whether those figures are revenue and cap targets or actual cash spent, this may not be the entire story.

True. As I understand it the NFL CBA doesn't include merchandise sales or licensing in the revenue number. Not sure about the other sports.

[vince]

Gross Revenue = Total Revenue - at least in my business.

Here's a definition.

http://management.about.com/cs/adminaccounting/g/grossrevenue.htm

Gross Revenue

Definition: Gross Revenue is money generated by all of a company's operations, before deductions for expenses.
Also Known As: Revenue

[MichiganPackerFan]

Gross Revenue = Total Revenue - at least in my business.

Here's a definition.

http://management.about.com/cs/adminaccounting/g/grossrevenue.htm

Gross Revenue

Definition: Gross Revenue is money generated by all of a company's operations, before deductions for expenses.
Also Known As: Revenue

That is the general rule. However, not all incoming dollars are classified as "Revenue" for financial reporting. Revenues generated from ordinary operations are classified as Revenue. Items that are not in the ordinary course of business are often moved to a section below expenses for "Extraordinary Items". Interest Income is often seen in this section. I am not sure how the NFL reports their financials, but it would not seem unreasonable to report merchandise sales or licensing separately as these certainly could be seen as activities separate from the product of football.

[sharpe1027]

And no NFL team can be over the cap, but many are under the cap by a significant amount, even at the end of the year. So the players are likely not seeing their 59.x percent of total revenues in cash.

The CBA is pretty good about making sure the players get their fair share. Teams are required to have salaries within a certain range, that is to say they have a minimum cap amount that is almost 90% of the maximum.

The cap was introduced for the 1994 season and was initially $34.6 million. Both the cap and the floor are adjusted annually based on the league's revenues, and they have increased each year. In 2009, the cap will be $128 million per team, while the floor will be 87.6% of the cap, using the formula provided in the league's collective bargaining agreement, the floor will be $112.1 million; the salary floor percentage will increase 1.2% per year until it reaches 90% of the cap in 2011.

http://en.wikipedia.org/wiki/Salary_cap

[mraynrand]

Does Ahmad Carroll have enough money saved to survive a lockout?

[CaptainKickass]

I'll take a quick stab at it.

Who makes the call and says "Ok boys, time for a lockout"?

The owners.

And what happens operationally from a player perspective?

They are being told to put money away to survive for a while without paychecks, and unions often pay small amounts out of strike fund to help guys get by. Picketing would be ridiculous. They sit around waiting for union leadership to negotiate a deal, and then would have to vote to ratify it.

What happens from an organization perspective?

Last time we saw replacement players. Hard core fans like us might enjoy that, but casual fans just find other things to do on Sunday. The owners through Goodell would continue to negotiate a new CBA with the union.



In general, I believe that ownership is far better suited to survive a work stoppage. However, this thing is a golden goose, and both sides would be leaving tremendous amounts of money on the table by allowing it to go that far.

Thanks for the input Scott. More questions:

So do the owners vote? Or does the "leader" of the owners (is there such a thing?) Make the call to have a lockout? And what is the trigger? The lack of CBA at the deadline? When is that?

So then if the call is made to Lockout - then it's essentially a strike like any other Union where the employees just don't show up to work? Employees being the players only? Or does this include coaches and other operational/admin type employees?

Being the Packers are the only "publicly owned" team in the NFL. Are there any issues that could affect us differently than any other NFL team?

Inquiring minds wanna know.....

[sharpe1027]

Thanks for the input Scott. More questions:

So do the owners vote? Or does the "leader" of the owners (is there such a thing?) Make the call to have a lockout? And what is the trigger? The lack of CBA at the deadline? When is that?

So then if the call is made to Lockout - then it's essentially a strike like any other Union where the employees just don't show up to work? Employees being the players only? Or does this include coaches and other operational/admin type employees?

Being the Packers are the only "publicly owned" team in the NFL. Are there any issues that could affect us differently than any other NFL team?

Inquiring minds wanna know.....

Owners do vote and they would probably vote for a lockout after the CBA expires and no agreement can be reached, but I suppose that it could play out differently.

I think the difference between a lockout and a strike is just a matter what side you are on. The Owner's can lockout the players and the players can strike. Not sure if there is any real difference in the end though.

There is a separate NFL coaches assocation, but it is not a union. However, the players association often represents coaches in grievances against the NFL. I guess it is sort of an enemy of my enemy type of thing. I think the coaches and staffs stayed on during the '82 strike.

The Packers were part of the previous strike/lockout, so I assume there isn't much different for them vs. other teams.

[Scott Campbell]

Patler's a lot better at this stuff, but here goes:

Thanks for the input Scott. More questions:

So do the owners vote? Or does the "leader" of the owners (is there such a thing?) Make the call to have a lockout? And what is the trigger? The lack of CBA at the deadline? When is that?

So then if the call is made to Lockout - then it's essentially a strike like any other Union where the employees just don't show up to work? Employees being the players only? Or does this include coaches and other operational/admin type employees?

Being the Packers are the only "publicly owned" team in the NFL. Are there any issues that could affect us differently than any other NFL team?

Inquiring minds wanna know.....

I'm not sure the exact mechanism to initiate the lockout. My guess is that Goodell would recommend it, and the owners would vote to ratify it. Not sure it's a simple majority, of if they have to have a higher majority like 2/3rds.

A lockout is a work stoppage initiated by the owners. A strike is a work stoppage initiated by the players. You're hearing a lot about the lockout now because the owners are much more likely to initiate the work stoppage than the players are. The uncapped year comes into play if they haven't agreed to a new CBA prior to the 2011 season, yet both sides go on with the season anyway.

I'm not aware of any differences between our publicly owned situation, and that of other teams.

This is my understanding anyway. Feel free to correct any of my mistakes here.

[vince]

Gross Revenue = Total Revenue - at least in my business.

Here's a definition.

http://management.about.com/cs/adminaccounting/g/grossrevenue.htm

Gross Revenue

Definition: Gross Revenue is money generated by all of a company's operations, before deductions for expenses.
Also Known As: Revenue

That is the general rule. However, not all incoming dollars are classified as "Revenue" for financial reporting. Revenues generated from ordinary operations are classified as Revenue. Items that are not in the ordinary course of business are often moved to a section below expenses for "Extraordinary Items". Interest Income is often seen in this section. I am not sure how the NFL reports their financials, but it would not seem unreasonable to report merchandise sales or licensing separately as these certainly could be seen as activities separate from the product of football.

I with ya. Unless you're an accountant (which I'm not, and I'm not about to insist on adhering to such standards for this purpose on this board - at least unless Ty steps in), it's semantics that probably aren't worth getting bogged down in anyway...

Here's some information about how the salary cap is calculated and what it includes - regardless of how you want to categorize it.

http://www.askthecommish.com/salarycap/faq.asp

How is the NFL Salary Cap determined?
Answer:The Cap is determined through a complicated calculation system, which has changed with the latest extension of the CBA. The Cap is based on income that the teams earn during a League Year. Originally that "pot" was limited to what was known as Defined Gross Revenues (DGR), which consisted of the money earned from the national televison contract, ticket sales, and NFL merchandise sales. Under the new agreement the "pot" has been expanded to include total revenue. Thus, other sources of revenue, including such other items as naming rights and local advertising, have been added. As was the case with the original DGR, the expanded revenue is divided equally amongst all 32 teams for purposes of claculating the salary cap.

For all of you nerds out there, here is the actual mathematical calculation:

Projected revenue x CBA Percentage = Players Share Total Revenue

Players Share minus Projected League wide Benefits =
Amount Available for Player Salaries

Amount Available for Player Salaries / Number of Teams =
Unadjusted Salary Cap per Team

Under the old DGR model, the CBA Percentages were as follows:

1998-2001 63%
2002 64%
2003 64.25%
2004 64.75%
2005 65.5%
2006 64.5%
2007 Uncapped Year

However, when the model was changed and the DGR expanded, the players and owners agreed to a smaller set percentage of the larger pot. The $102 M figure in 2006 was based on a 57% share of the 2006 projected Total Revenues as was the $109 M figure for 2007. In 2008, the percentage jumps to 57.5%, and the same percentage applies to 2009 as well. In 2010 and 2011 the percentage will be 58%. Note that if the projections see a shortfall in 2006 or 2007, when the dollar amounts were hard-coded in the CBA, then the 2008 and 2009 caps would be adjusted accordingly.

Note: The actual dollar amount of the Salary Cap can not be less than the actual dollar amount of any Salary Cap for the preceding year. So, for example, if Total Revenues should decline from one year to the next, the players are protected against a smaller associated Salary Cap. However, the Projected Benefits, plus the amount of the Salary Cap multiplied by the number of Teams in the NFL, can not exceed 61.68% of
Projected Total Revenues.

As we have seen, even though the percentage is lower, the expansion of the revenue "pot" still allows the players to come away from the table with more money in their pockets. Again, under the original DGR model, the salary cap was set at $94.5 Million in 2006 with the players receiving 64.5% of the DGR. Under the expanded revenue system, the cap increased to $102 Million with the players receiving 57% of the total revenue. That is an increase of almost 8%.

[Scott Campbell]

Ok, that really took me by surprise. I did not expect to see merchandise and licensing in there, as that's one of the reasons the Cowboys always so much better than average teams. I thought they got to keep all the Cowboy merchandise revenue rather than tossing it into the kitty. Though maybe I'm just confusing the splitting of monies with players, vs. the splitting of monies with other teams.

[vince]

I believe that each team gets a portion of revenues from merchandising sales for their team, and each player also gets a portion of sales for their individual jerseys, etc. None of that would be included in the cap. The only portion of merchandising sales would be the NFL's piece, the size of which I don't know.

[CaptainKickass]

Whoa.

This sentence stood out to me - the casual observer.

Note: The actual dollar amount of the Salary Cap can not be less than the actual dollar amount of any Salary Cap for the preceding year.

So if we had an even worse economy, perhaps even depression-like and the NFL revenue took a huge dive, the salary cap can never go down? I assume this is all up for debate with having to create a new CBA - but still. Doesn't this kind of tie the hands of the NFL regarding players salaries?

[sharpe1027]

Ok, that really took me by surprise. I did not expect to see merchandise and licensing in there, as that's one of the reasons the Cowboys always so much better than average teams. I thought they got to keep all the Cowboy merchandise revenue rather than tossing it into the kitty. Though maybe I'm just confusing the splitting of monies with players, vs. the splitting of monies with other teams.

Licensing rights for NFL appareal are shared, but I think other profits in the sale can be kept. Also, corporate box seats, non-football events at a stadium and random sources of income are not shared.

The Cowboys always try to skirt the rules. For example, they licensing Pepsi products even though Coke is the official brand of the NFL and kept all the money.