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The NFL Labor Dispute
Posted By ChiefsWarpath.com On January 21, 2011 @ 12:30 pm In Commentary | Comments Disabled
As it has been reported, there may not be any games played in the 2011-2012 NFL season. An NFL work stoppage would cause enormous financial losses for many entities, and would affect not only the NFL players, who will lose their pay and health benefits, but the owners, television stations, fans, cities and states, and the country as a whole. The NFL is a $9 billion a year enterprise (topping MLB’s $7 billion, the NBA’s $4 billion, and the NHL’s $3 billion) and its tentacles reach far into the pockets of various industries within the United States.
For the past two years, NFL owners and the National Football League Players Association (NFLPA) have been at odds over labor disputes. Disputes such as revenue sharing, team salary caps, rookie salaries, and the extension of the NFL regular season to 18 games have made the most successful sporting industry in the world seem so fragile.
Since 2006, labor negotiations have been a constant since the owners made the mistake of signing a bad Collective Bargaining Agreement (CBA). The 2006 deal failed to address the exorbitant compensation of rookies, and as a result the NFL owners have seen their cash flow decline by a staggering $200 million. The deal raised players’ pay more than was healthy for the league, and left owners with insufficient cash to invest in their product. For example, the owners don’t have enough capital to invest in new stadiums. Although the New York Jets/Giants and the Dallas Cowboys have new stadiums, which were under construction prior to the 2006 season, no new stadiums have been constructed in the past four years.
In 2009, NFL clubs contracted a record $1.2 billion to 256 drafted rookies with approximately $585 million guaranteed before they even stepped on an NFL field. This brings to mind contracts like the one given to JaMarcus Russell, the quarterback drafted first overall by the Oakland Raiders in 2007, in which he was guaranteed $31 million. And after three disappointing years he was no longer playing in the NFL. Unlike the National Basketball Association (NBA), the NFL doesn’t have a salary cap for its rookies. This issue, along with many others, has brought the NFL to its knees. However, many of the problems that the NFL is currently experiencing are not new. Off and on since 1982, when the NFL had its first strike, these problems have been lingering.
The 1982 NFL strike began on September 21, 1982 and lasted 57 days until November 16, 1982. The essential cause of the strike was over a dispute over the percentage of gross revenues that the league gave to its players, as is the problem today. And in 1987 there was another strike which led to the NFL hastily assembling replacement teams, who employed replacement players for a handy $1,000 per game. That year, 89 players crossed the picket line including players such as New York Jets defensive end Mark Gastineau, Dallas Cowboys defensive tackle Randy White, San Francisco 49ers quarterback Joe Montana, and Seahawks wide receiver Steve Largent.
For the next decade the NFL and its owners found themselves in a number of court proceedings that eventually led to a new CBA being reached in 1993. This 1993 CBA was extended five times over the next 13 years, most recently in March 2006 when it was extended through the 2011-2012 NFL season. However, in May 2008 the owners decided to opt out of this agreement and play the 2010-11 season without a CBA in place. This meant that the 2010-11 season would be played without a team salary cap. Unlike Major League Baseball (MLB), the NFL has a team salary cap. Introduced in 1994, the salary cap places a limit on the amount of money a team can spend on player salaries. Without a cap, teams like the New York Yankees of big league baseball have become head and shoulders above the rest of league, and parity has becomes non-existent. The NFL has prided itself on parity. In the NFL, any team can go from worst to first in just one year.
In 1994, the NFL salary cap was a mere $34.6 million, and by 2009 it had risen to an astounding $128 million per team, an increase of 300% over a 15 year period.
Another issue that is plaguing the NFL is the dispute over revenue sharing. The T.V. networks pay the NFL nearly $400 million a year in licensing rights (the T.V money is guaranteed regardless if football is played or not), which is shared evenly to its 32 teams. As it stands, NFL players get 60% of this revenue, and the owners would like for this number to decrease. If you talk to the owners, they want the players to take a 9% pay cut, and if you talk to the players, the owners want them to take an 18% pay cut. This, in a nutshell, is the core problem that is preventing the NFL from reaching a new CBA.
If a new deal isn’t reached by March 3, 2011, the work stoppage will begin. The NFL stands to lose $400 million in March alone, and could lose as much as $1 billion by August.
I know that the pioneers of the league such as Pete Rozelle, commissioner of the NFL from 1960-1989, and Gene Upshaw, Executive Director of the NFLPA from 1983-2008, are rolling over in their graves.
In my opinion, this situation is like corporate America trying to stick it to the “middle class.” For instance, when corporate America needed money to maintain their businesses, they demanded a bail-out and expected the tax payers to pay for it. Likewise, in this case, the owners are in need of a bail-out and they are expecting the players to pay for it via substantial pay cuts. It’s ridiculous enough that a 30-second Super Bowl commercial will cost advertisers nearly $3 million, that’s $100,000 per-second. In addition to this, the league’s desire to extend the NFL season to an 18-game season, by shortening the pre-season to two games, could generate $500 million in additional revenue.
And you mean to tell me that there’s not enough money to go around?
The situation is so bad that the NFLPA has issued a memo to all players not to buy a new boat, or a new car, and to pay off all outstanding debt as soon as possible. This is a real indication that we may not have any football in 2011. However, the 2011 NFL Draft will take place from April 28-30, but teams are not permitted to sign any players until a new CBA has been completed. And they can’t sign undrafted players either.
In closing, I believe that the players make the league, and without them you have nothing. The players are the ones who put their lives on the line every week, and for that they should be given more than a fair share of the revenues. I think that the owners are being greedy, and their greed will ultimately ruin the NFL. The owners signed the 2006 CBA; therefore they should adhere to that agreement, just as they expect their players to adhere to the contracts that they sign. Recently, the NFLPA have taken their grievances to a new playing field, Capitol Hill.
To all NFL owners, think about the players’ families, and the fans, and the country and settle this dispute immediately. Adhere to what was agreed upon in 2006, which was to play football through 2011, and give everyone involved an additional 12 months to negotiate a new deal. Be the bigger person, and set the example for your employees.
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