What is a fair profit for an NFL owner?

[Zool]

I think the players trying to decide what is fair for the owners is a load of crap. What is fair for the players? Should the nfl review the personal assets and tax returns of the players and determine whether it is fair for Player X to have a 12 million dollar house and ten sports cars.

Its not like the players have another option other than playing in the NFL at the current rate of pay, so it's also a load of crap to say they shouldn't try to get as much money as possible. Next time you're up for a raise tell your boss you're not interested. You're paid fairly enough.

Both sides are greedy pricks, but everyone in here to the person would try to get as much as they can while they can if put in either side of this situation.

[Deputy Nutz]

I am going to chime in, in my opinion a fair profit for the owners is what ever they can get. This a capitalist economy the last time I checked, and if they can make a billion dollars a year so be it. Unfortunately for them they are in a way business partners with the players. If the players don't play then in theory they don't make jack shit. The owners will get paid their TV contracts regardless of a Strike or a Lock out, but that is it. Their profits won't be maximized without the players.

[Tony Oday]

Its not like the players have another option other than playing in the NFL at the current rate of pay, so it's also a load of crap to say they shouldn't try to get as much money as possible. Next time you're up for a raise tell your boss you're not interested. You're paid fairly enough.

Both sides are greedy pricks, but everyone in here to the person would try to get as much as they can while they can if put in either side of this situation.

They can get paid to play football at a lot of other places. the NFL is just the most lucrative. You can computer program at a bunch of places as well but I bet you get paid a hell of a lot more at Google than some start up.

I dont know why they locked out the players seems dumb to me. I would have locked out the UNION players but that union is gone so no reason to lock them out.

[Zool]

They can get paid to play football at a lot of other places. the NFL is just the most lucrative. You can computer program at a bunch of places as well but I bet you get paid a hell of a lot more at Google than some start up.

I dont know why they locked out the players seems dumb to me. I would have locked out the UNION players but that union is gone so no reason to lock them out.

I agree with you that they could play for the CFL or the arena league, but honestly the difference in pay grade is astronomical. I can't think of another industry outside of professional sports where the pay difference is so large. I'm saying neither side is more wrong in my opinion. They are both trying to get as much as they can. Isn't that capitalism at its core?

[Smeefers]

I've read all the posts, and I can honestly say that i agree with everyone here.

[Patler]

PB;

I agree with all your comments about company value, appreciation, etc. But in many ways that is irrelevant to a situation that will soon arise. At some point in the near future the players will be getting their noses into the teams finances, and will see what the owners have taken out for their own use on a yearly basis. How much the owners have paid themselves. The players should recognize that it is fair for the owners to take some money from ongoing operations. If the owners average $2 million/year, I doubt players will find fault in that. If they find the owners "take" is $100 M/year, I suspect they will scream long and loud that more of that should be given to the players.

It's a very practical issue that will surface soon. It doesn't have to be made more complicated than it is (or will be).

[rbaloha1]

Players do not, have not, and will not receive a share of NFL profits. Players are paid for their services, and they are entitled to as much as they can convince any NFL team that they are worth. This is, of course subject to external considerations like "the salary cap" (when there is one) or "nobody can pay you more money than they actually have." Profits are simply the total revenue a team receives above all costs incurred; costs like paying players, stadium upkeep and renovation, paying staff, etc.

The salary cap (and floor) are the determining factors in how much of the 9 billion and change goes to the players. The cap has been calculated on a formula based on total revenue minus offsets built into the CBA. So the total amount that the players receive has nothing to do with the profits that individual teams make, it is simply a function of the total revenue that the league brings in. Individual teams may reap large profits, or losses depending on things like unshared revenue, level of compensation to coaches and executives, miscellaneous market forces, etc.

The point has been raised by the owners that their profits have been shrinking to the point that they feel uncertain about their ability to continue to grow the game. This is a statement essentially saying that "our profits are not big enough." The solutions examined include such things are "growing the total pot" (e.g. the proposed 18-game season) as well as "reducing the fraction that the players get" (which is the main point of contention in the labor strife.)

The question at hand is not how should we split the total gross income of the league between the players and the owners in an equitable fashion. The question at hand is, at what level of profit should we consider a team's profits to be acceptable and any requests to increase those profits that come at the expense of others to be unreasonable.

From the perspective of the union, the players do not ordinarily care whether teams make large profits or any profits at all. The amount of money they receive individually is determined by their negotiated contracts and the amount of money that they receive collectively is determined by the terms of a collective bargaining agreement that disregards the profitability of individual teams and only considers the total amount of money brought in by the league as a whole. The only reason that the players have to care about the owner's profits in this situation is that ownership is claiming "our profits are insufficient." So the question raised by Patler is "at what point would a reasonable person conclude that the owner's profits are sufficient."

To answer this question, one does not need to know what the actual profits are. The actual profits are not relevant to questions of the form "If the profits were $X, instead of what they actually are, would that be sufficient? Would that be excessive?"

If you think you need to know what the profits actually are to figure out what it would be reasonable/unreasonable for them to be, then you're simply wrong. I do not need to know the actual cost of a sandwich to know that $.25 is too little to charge for the sandwich and $250 is too much. The same is true of NFL team profits. If each team is losing $250 million dollars a year, then we can all agree that profits are too large. If each team is making $250 million in profit every then we can agree that profits do not actually need to be increased further (given that $250m x 32 teams is $8b, which would mean only around 11% of the gate is actually spent.) The actual profit number that around which "that's probably enough" occurs is somewhere between -$250,000,000 and $250,000,000. All anybody is asking here is "given the facts about the value of teams, and the total revenue of the league, where between -$250m and +$250m does the 'that's just about enough' line fall?"

And giving an estimate to the answer to that question does not require any additional facts.

This tirade means nothing. Do you understand profit margin?

Lets look at numbers according to Murphy:

$9 billion in revenue. Owners want $1.32 billion credit. The remaining number to be split is $7.68 billion. A proposed split is 60% players, 40% owners. The players receive $4.6billion. This is 51% of $9 billion. According to Murphy this was not an actual proposal but numbers to keep the negotiating going.

IMO this is somewhat reasonable but it would nice to know other details.

[Lurker64]

This tirade means nothing. Do you understand profit margin?

Lets look at numbers according to Murphy:

$9 billion in revenue. Owners want $1.32 billion credit. The remaining number to be split is $7.68 billion. A proposed split is 60% players, 40% owners. The players receive $4.6billion. This is 51% of $9 billion. According to Murphy this was not an actual proposal but numbers to keep the negotiating going.

IMO this is somewhat reasonable but it would nice to know other details.

I'm getting the feeling you're not functionally literate, or you're just not choosing to understand the question that is being asked.

Nobody in this thread, except possibly you, is asking "how should we split the money between the owners and players.

People are asking, if we take the owners at face value, that their profits are insufficient... what would be a sufficient profit.

Profit margin (defined as the net profits as a percentage of revenue) has absolutely nothing to do with the discussion. Nor does the actual split of money.

[sharpe1027]

The teams set the players salaries. Sure there is a minimum amount that must go to the players, but most, if not all, teams exceed this minimum and many go right up to the maximum. If teams were worried about their bottom line, the could pay their players less. Why don't they? They think that the players are worth that much to them. The owners want to suppress the true value they themselves put on the players so they can make more money. Is that fair?

[Guiness]

Thats what I mean. If they dont like making 10's of millions then f them and now you are capped EVERYONE makes $1 Million a year base salary and $100,000 per win for every player. Dont like it? Want to see the books? Start your own damn league and look all you want.

And where does the rest of the money go? If the total salary comes down to half of their current level, do you think the owners will drop prices?

I would guess you're purposely overstating the salaries as well in an attempt to make a point. They don't make $10 million - a select few do.

A ballpark average salary is pretty easy to figure out if you look at 2009. 59 players count against the cap of $130 million cap gives you $2.2 million/player. But that's too high, subtract the big hitters for 2009:
(source http://www.jsonline.com/sports/packers/62145597.html)

Aaron Rodgers, QB     $9.653M     
Greg Jennings, WR     $8.149M     
Chad Clifton, T       $8.040M     
Charles Woodson, CB   $7.300M     
Donald Driver, WR     $6.400M     
Aaron Kampman, OLB    $6.005M     
A.J. Hawk, ILB        $5.902M     
Al Harris, CB         $4.775M     
Nick Barnett, ILB     $4.684M     
Ryan Grant, RB        $4.400M

So, top ten earners make $65.44M, leaving $64.6M for the remaining 49 players - or $1.3million per. So given that the average number of wins/year is 8, your plan would actually be a raise for a lot of players.

Still as astronomical sum of money for most of the rest of us, but certainly not $10million per season.

[Guiness]

I'm pretty sure it was you, and your second statement makes me think so even more.

The discussion was about how players wanted full disclosure, and you said you'd been involved in negotiations, and no one would ever think of asking a private business to reveal it's books.

I asked a fairly simple question at that time: how many people worked for privately owned businesses, and if they new exactly how much the private owners made. But I don't see how that makes me defensive, or shows me to be struggling with this issue. In fact, I think I saw through the players position quite clearly.

My point at the time was that the players were demanding detail that they weren't likely to get, nor did I think they were entitled to it. Some information, sure; but their own accountants auditing (for want of a better description) the teams' books? No way. If that had been a starting point, no problem. But, they never backed off it. Reportedly, they didn't even look at what WAS offered by the owners to see if it helped bridge the gap at all. Then they even seemed to up the demand at the last minute. All this leads me to believe they never had an interest in settling short of de-certification and the inevitable lawsuit.

During a negotiation it is necessary to try and determine what the other side is really after if they won't tell you. The union wants something, but I'm not sure what it is. It's not the teams' books. That's the front. It's something more important to them than that. Perhaps getting rid of the various franchise tags and RFA designations for a true free agency after a brief rookie contract. Perhaps abolishing the salary cap. Perhaps all of the above. Those may have changed during a negotiated settlement, but would likely have continued in some form or another. The real threat of an antitrust lawsuit could hasten those changes.

Somewhere in that hodgepodge is the real target of the NFLPA. Its not the teams books and the few million $/team that might be in dispute. It's power and control.

Damn the quoting system on this board.

I tried to answer both of your questions, but the reply about you being defensive got nested in the quote box. I'm usually pretty good about previewing my posts, but it was late and I was tired

Your comment about how many people knew exactly how much their private owners made was what I meant about you drawing parallels to 'regular' businesses. The answer is no, I haven't seen audited books of my employers, but that has nothing to do with what is going on here.

I actually have seen the 'full' books of a company (albeit not audited, AFAIK) when the company I was working for hit some dire straights, and asked everyone to take a pay cut, as well as soliciting loans from us.

[Smeefers]

I've read all the posts, and I can honestly say that i agree with everyone here.

Gee Smeefers, I really appreciate your attempt to inject a bit of humor into this heated debate. You sir, are a comedic Genius. Lol sir, lol.

[mngolf19]

I wouldn't have locked out if I was an owner. But now that this has happened, open up the draft to everyone (no age min) and add in more rounds. Tell each draftee that he has a max salary he can make per season, each contract is on a 1 year basis and that the owners as a group will not make any attempt to go after another teams FA's until given permission to by the releasing team. Within 5 years you are back to the a reasonable level of play again. And, to get the public on my side I immediately cut ticket prices drastically and renegotiate tv contracts.

I'm sure you'll tell me how this won't work but... works for me.

[sharpe1027]

Unless the salary cap is removed, arguments of "whatever money the players can get is fair" go out the window. If it was a free market, players could command whatever money owners thought they were worth and bad owners would lose money. The owners use the salary cap to protect themselves from their own stupidity. I see no reason for them to complain about the fairness when they are the source of the problem.

Therefore my answer to the question is: whatever profit the owners are able to make is fair and if they lose money they likely should be blaming themselves first.

[rbaloha1]

Unless the salary cap is removed, arguments of "whatever money the players can get is fair" go out the window. If it was a free market, players could command whatever money owners thought they were worth and bad owners would lose money. The owners use the salary cap to protect themselves from their own stupidity. I see no reason for them to complain about the fairness when they are the source of the problem.

Well said. Its the same in the NBA with the age limit. Its the owners that did not want to risk big money on high schoolers.