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SBJ/November 10 - 16, 2003/OpinionPrint All
The much-anticipated NFL Network launched last week, and the evolution of the start-up will be one of the most closely watched stories in sports. We're anxious to see what this launch, like NBA TV, Speed, The Golf Channel and others before it, delivers to viewers — and how it does so.The league is in position to deliver unfiltered access to the game. But with access comes responsibility.
However, with access and distribution come responsibility. Responsibility to and respect for the viewers. We know these league-owned networks will have a PR-friendly perspective, but the moment they present their news and information through a heavy filter, we hope viewers flip the remote. NFL Network's Howard Katz was quoted as saying, "We're not going to go out of our way to break stories, but in order to have any credibility, we'll have to deal with issues as they arise." OK, we don't anticipate reruns of "Playmakers" on the NFL Network, but we trust it won't ignore some of the pressing and controversial issues facing the game, because credibility with viewers is essential to the business success of the network.
The network is still locked in negotiations with a number of operators over carriage, and we are not using this space to comment again on the dispute between operators and programmers. So, while the debate continues over the business model on the league-owned network landscape, we pare it back and look at the potential of these offerings — expert production, never-before-experienced access, state-of-the-art visuals, to go along with objective news and analysis. All while being a "complementary medium" to their business partners. The NFL Network and networks affiliated with other sports and leagues have set high standards. We hope they live up to them.
The NHL's collective-bargaining agreement runs out after this year. Contrary to the tough rhetoric out of the commissioner's office, the league can ill afford a work stoppage, let alone a protracted one.
With the very real prospect of a smaller national TV contract, lower sponsorship agreements and growing competition from the broader entertainment industry, a lockout could have devastating effects.
The good news is that, despite the escalating war of words between Gary Bettman and Bill Daly on the owners' side and Bob Goodenow and Ted Saskin from the players association, a lockout is eminently avoidable.NHL player salaries have grown considerably more rapidly than league revenues — though not so much as the owners would have you think.
In his new book, "Money Players," Bruce Dowbiggin comes to the same conclusion. He argues that the current collective-bargaining agreement can be modified to give owners protection from their own spending habits and keep the industry financially sound. Only the desire to break the players union — and turn the clock back to Alan Eagleson days — can provoke a sustained work stoppage, according to Dowbiggin.
Let's begin by clearing the recent, multilayered smoke blowing over the league's financial status.
Layer one is the debate about how much faster salaries have grown than revenues during the course of the present collective-bargaining agreement, dating back to the 1994-95 season when 32 of 82 games were lost due to the lockout. As with all time-series data, the growth rate you get depends on the years you pick to start and end your period.
The union picked 1994-95 as the starting point, arguing that it was the first year of the agreement. True enough, but it was also an atypical year.
Salaries were disproportionately higher because the size of prorated signing bonuses was not diminished by the work stoppage and because injured players generally continued to be paid.
So, if you start with 1994-95 when the salary share was artificially inflated, you get very little difference in the growth of salaries and revenues through 2002-03.
The proper statistical procedure is to "smooth out" the start and finish by taking the average of two or three years at each end. If we average the player-cost share in revenues for 1993-94 and 1995-96 (leaving out the distorted year) and compare it with the average player-cost share during 2001-02 and 2002-03, the player cost increases from 62 percent to 73.8 percent of reported revenues.
Thus, by reasonable standards, salaries have been growing considerably more rapidly than revenues — though perhaps not so much as originally portrayed by the owners.
One further caveat is important here. Player cost can be defined in various ways (depending on, for instance, the discount rate used for deferred salaries, the treatment of amateur signing bonuses or the drafting rights fees paid to international organizations). The 73.8 percent share above uses a very inclusive definition of salaries.Gary Bettman reaches for cost certainty, but risk is a given under capitalism.
The next layer of dispute concerns revenues. The union asserts that because teams sometimes own the arenas, media companies or other businesses connected to the team, they can arrange to have the team underpaid for its rights or services. Such contracts are called related-party transactions.
The union, in fact, was given access to the books of four teams of its choice. The union selected these four teams because it expected them to be more heavily engaged in related-party transactions. The union says it found $50 million in hidden revenue in just these four teams — or $12.5 million per team.
For argument's sake, let us assume that the other 26 teams (less suspected by the union) together hid an additional $100 million in revenues. If we added the $50 million and $100 million to the revenue figures from the commissioner's office, the share of player costs in total revenues would fall to 68.4 percent — still well above the 62 percent share at the beginning of the period and well above the roughly 60 percent player-cost shares in the NBA, MLB and NFL.
Similarly, the league figures suggest losses last year of $300 million. If we add back $150 million in hidden revenues, the league still lost $150 million — suggesting the likelihood of an overall financial problem (even allowing for some manipulation of reported franchise costs).
In any event, the union seems to recognize that there is a structural, financial problem. Reportedly, the union has proposed to the league: (a) an across-the-board 5 percent cut in salaries, (b) increased revenue sharing and (c) luxury taxes on high team payrolls.
So, the debate is not about whether something needs to be done to restrain salaries; rather, it is about how best to achieve the restraint.
NHL Commissioner Bettman has repeated over and over the mantra of cost certainty. He says that other businesses have it.
Perhaps he is referring to businesses in the former Soviet Union. Under capitalism, there is risk and neither cost certainty nor revenue certainty.
In the NHL's "Collective Bargaining Agreement Backgrounder" report, the league states that cost certainty is "a sensible and enforceable relationship between revenues and expenses." It goes on to state that "there are numerous ways to achieve cost certainty."
Taken at its word, the league is saying that it does not need a hard salary cap.
That's a start. After all, the two U.S. sports leagues that have a cap system, the NFL and NBA, each have loopholes so teams have some room to maneuver in setting their yearly payroll.
Andrew Zimbalist is Robert A. Woods professor of economics at Smith College and adjunct professor in sports management at the University of Massachusetts.
Editor’s note: This is the first of two columns examining the NHL’s collective-bargaining status. Today: Sorting through the rhetoric. Next week: Crafting a new agreement.
Rush Limbaugh made national headlines when he asserted on ESPN that Philadelphia Eagles all-star Donovan McNabb is overrated, because "the media has been very desirous that a black quarterback do well."
Just a week later, on another pregame show, Tampa Bay Buccaneers defensive lineman Warren Sapp called the National Football League a "slave system" because officials had fined him for bumping a referee. "Make no mistake about it," Sapp added, "slave master say you can't do it, don't do it. They'll make an example out of you."
Both statements were baseless and irresponsibly inserted race into a situation where it was irrelevant. Limbaugh's remark ignited a media firestorm, and he was forced to resign from ESPN. Sapp's comment not only was largely ignored by the mainstream press, but the new NFL Network went ahead with plans to hire him as a host of one of its programs.
The widely divergent reactions highlight the double standard involved when it comes to the public discussion of race. They also show the continued inability of society to address this issue forthrightly. That is apparently true even in the sports world, which has always been thought to be a trailblazer in dealing with the subject.
Both cases should have been treated more similarly and less at the extremes of the discipline spectrum. The networks, the public and the rest of society should not always overreact in a knee-jerk manner to racial remarks made by a member of the majority. And they should not totally give a pass to comparable comments from those in the minority.
Corporate exile should not be the automatic punishment for a highly controversial — and even highly misguided — statement about race. In fact, the best way to rebut Limbaugh's misguided idea would have been to have him defend it to the others on the ESPN set, not to banish him completely.
Instead, the network took the path of least resistance. But by going into crisis management mode to protect its corporate image, ESPN lost an opportunity to provide the public with a real case study on race relations and sports. The decision to cut and run sends a message that ESPN doesn't think its audience can handle such a conversation.
Most viewers would accept that there should be some kind of double standard for members of a majority and minority. The challenge, of course, is demarcating that fine line. But isn't wrong to not even try?
For example, how difficult is it to figure out what side of the line Sapp's comments were on? So, why aren't the media holding Sapp, who by the way earns $6 million a year in that "slave system," as accountable as they are Limbaugh? Throwing around loaded racial words so recklessly can only compromise efforts to address real race relations problems in the country.
Last year, former-player-turned-television-commentator Charles Barkley charged that organizers of the Masters golf tournament had lengthened the fairways of its Augusta course in an attempt to keep an African-American, Tiger Woods, from winning another title.
It was an unsubstantiated and inflammatory statement that should have provoked a public outcry and at the least a strong condemnation from Barkley's employers at TNT. Neither occurred. It was dismissed as just "outspoken Charles Barkley being Charles Barkley." But that's as silly as ignoring Limbaugh's contention about McNabb as just "Rush being Rush."
The sports world has often been a leader in helping society address race relations. And it therefore is missing an important opportunity by continuing to take a pass in dealing consistently and clearly with irresponsible comments made by some of its most high-profile members.
John D. Solomon, a New York-based journalist, writes frequently about sports and society.
We are pleased to fill our pages this week with some of the leading young executives in our industry. Our fifth annual Forty Under 40 report shows an industry rich with talent and long on achievement. This group represents significant accomplishment, intellect, vision and passion. These pages are filled with stories about unique people and we are proud to introduce — or re-introduce — them to you. We salute them.
We also challenge them — and ourselves. In five years of compiling this list, we have made 200 selections; 167 of them have been white males. This is not by design. We wish there were more women and minorities on our lists, that the faces were more representative of society. We challenge ourselves to do a better job of finding the best and sharing their stories of success.
At the same time, we ask that the industry, and particularly our honorees, commit to a more diverse work force and target dynamic talent from all over the world. We hope, and trust, our winners are up to the challenge of bringing about change.