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SBD/March 9, 2011/Leagues and Governing Bodies
NFL Labor Watch: Sources Say Union Retains UBS To Help Review Finances
Published March 9, 2011
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The investment bank the NFLPA has hired to analyze NFL financial information is UBS, sources said. The NFL and NFLPA declined to comment. News emerged yesterday that the NFLPA had tapped a firm, but the union has had UBS on retainer for several months. In fact, it had some trouble securing an investment bank as many did not want to run afoul of the NFL, investment banking sources said. UBS, which is not known to be active in sport, declined to comment. One source questioned whether UBS’ powerful wealth management division might have some NFL owners as clients who would be unhappy with UBS’ new assignment. That said, the hire could be seen as how serious the NFLPA takes the claims of the NFL. The NFL’s argument is not simple, such as the NBA’s that it is just losing too much money. Instead, the NFL is contending it needs to earn more money to afford capital investment that will generate more revenue. The NFL already makes all revenues available for union audit, and the NFLPA knows the bulk of the expenses: player costs plus audits of the more than $1B the league shaves off the top as an expense credit, plus audits of money held back from the salary cap as part of the stadium funding program the union and league had agreed to. The NFLPA wants to see team-specific information in order to verify that profit margins have been declining, and that if true, it is for the reasons the league maintains. The union yesterday turned down additional offers from the league of cumulative profit info. That info would not have been the detailed team by team audit the union is insisting on. There is deep concern within league circles that much of this information would come out during a potential antitrust trial anyway, so its unclear why the league is still not pushing all the information to the center of the table at this point, with the CBA set to expire Friday (Daniel Kaplan, SportsBusiness Journal).
TRANSPARENCY CONTINUES TO BE A KEY: Multiple sources over the past several days have said that financial transparency has become a key issue in the talks, in which the NFL originally asked that the players’ share of revenue be shifted by 18%, or $1B, to the owners' side. The NFL and the NFLPA have narrowed that $1B gap to $750M in the past week, but it is not clear exactly how much of that narrowing was due to movement by either the players or the owners off their original positions. Browns LB and NFLPA Exec Committee member Scott Fujita did not name UBS as the bank yesterday, but he said, "They are going to help us understand what kind of information we need and what kinds of questions we need to ask." The NFLPA's request and the NFL's refusal to provide the union with audited financial statements has been a sticking point in the negotiations for two years. Fujita described the information that has been provided by the NFL over the last few years as "a brief summary or snapshot and doesn't satisfy what any competent business person would want to see" when negotiating a deal the magnitude of the NFL CBA. The NFL declined to comment on reports which began surfacing this week that the league was willing to share financial information with the NFLPA (Liz Mullen, SportsBusiness Journal). Colts C and NFLPA Exec Committee member Jeff Saturday last night said having the bank involved "was to help judge how helpful the material they were offering to give us -- how worthwhile it was in helping us make a decision" (NFL.com, 3/8).
KEEP IT COMING: In N.Y., Judy Battista reports NFLPA officials yesterday "rejected an offer from the owners to turn over audited profitability data from all 32 teams for the past several years." That offer, made Monday night, was the "first time the owners indicated a willingness to share financial information with the players beyond what is required" by the CBA. Sources indicated that union leaders "told the owners’ negotiating committee that they wanted each club’s audited full financial statements." Battista notes the "standoff could significantly hamper negotiations because union officials have indicated they will not make any more financial concessions without receiving fully audited financial statements." But one source involved in negotiations called full financial disclosure a potential "silver bullet" in the negotiations (N.Y. TIMES, 3/9). Also in N.Y., Bart Hubbuch reports the NFL labor negotiations "took a dispiriting turn last night." It "wasn't enough to stop the talks completely, but the owners' unwillingness to open their team-by-team financial books to the players appeared to increase the odds of a lockout and an antitrust lawsuit by the union that would quickly follow" (N.Y. POST, 3/9). Patriots OT and player rep Matt Light in an interview with WAAF-FM yesterday said, "At the end of the day, the biggest battle is in the overall salary cap and what that number should be. Obviously they wanted to cut about $1 billion off the overall pie. That number obviously would have been drastically reduced from where it is today" (ESPNBOSTON.com, 3/8).
offices before today's session
TODAY'S MEDIATION "MOST CRITICAL YET": ESPN.com’s Chris Mortensen cites a source as saying that today’s mediation talks may be the “most critical yet in the collective bargaining process.” Federal mediator George Cohen is “meeting with smaller group of negotiators while the larger groups await word.” The financial disclosures that “remain the major stumbling block in the negotiations is believed to be Cohen's focus in mediation Wednesday.” Mediation resumed around 9:30am ET this morning, starting the 14th day of CBA negotiations overseen by Cohen. A source indicated that Steelers President Art Rooney II was scheduled to join the NFL’s team for today’s bargaining session. Chiefs Owner Clark Hunt and Giants President & CEO John Mara also are in attendance (ESPN.com, 3/9). NFL Network's Albert Breer reported on Twitter, “I sense growing frustration on the players' side. This was always about the money, so transparency issue is critical. Today's a big day” (TWITTER.com, 3/9). Newark Star-Ledger reporter Mike Garafolo said Mara "is a calming presence" at the CBA negotiations, and "his ability to stay level-headed in negotiations like this I know is big for the league" ("Loud Mouths," SNY, 3/8).
DIFFERING VIEWPOINTS: ESPN's Andrew Brandt, who was the Packers VP/Player Finance from '99-'08, said, "I think the owners are not saying we're losing money, and that's what the players are thinking they're going to see. If the owners open up documents, they're not going to show a lot of losses. This is about the owners protecting the future. Player costs are outpacing revenues, so we're trying to protect 2015" ("SportsCenter," ESPN, 3/9). But ESPN's Tim Hasselbeck, who played in the NFL from '02-07, said if NFL owners opened their books to the NFLPA, "it would be embarrassing for the owners." Hasselbeck: "What people would see is they'd see relatives on private jets. They'd see relatives on payrolls at salaries that quite honestly would probably disgust a lot of the fans" ("NFL Live," ESPN, 3/8).
IT'S SHOWTIME: YAHOO SPORTS' Michael Silver writes now is the "time for the owners to open their books, or to acknowledge that doing so is not an option and lower their financial demands accordingly." The NFLPA has "no divine right to the financial information it seeks." Nothing can "force the owners to stop stonewalling the union on this issue -- but there are strategic reasons why continuing to do so may not be such a great idea." If the union elects to decertify, an "antitrust lawsuit will follow" and the owners "will almost certainly be forced to open their books during discovery proceedings." The NFLPA also can "make a reasonable case, both in the bargaining room and in the court of public opinion, for the importance of receiving such information." Silver notes "there may be some very logical reasons why the owners are resisting this revelation." The financial statements "could contain embarrassing information that could be used against them if made public, or even shady dealings that might attract outside attention from authorities" (SPORTS.YAHOO.com, 3/9).