SBJ/July 9 - 15, 2007/This Weeks News

Upshaw’s compensation at least $6.7M

NFLPA Executive Director Gene Upshaw earned at least $6.7 million in compensation in the year ended Feb. 28, 2007, according to the union’s annual report filed with the U.S. Department of Labor. That amount was more than double the prior year’s pay for Upshaw, who ranks consistently as sports’ highest-paid union chief.

NFLPA Executive Director Gene Upshaw

The increased compensation came as the union negotiated a player-friendly labor deal with team owners. At the same time, however, the union and the executive director personally have been under tremendous public fire from retired players on issues ranging from pensions and disability benefits to licensing income.

“His pay is certainly significant if you compare it with his peers,” said Ron Katz, the Manatt, Phelps & Phillips partner leading a class-action lawsuit against the NFLPA’s licensing and merchandising arm, Players Inc., for failing to pay commercial benefits to retired players.

In a recent amendment to that lawsuit, the retired players allege that, “Players Inc. has ... diverted millions of dollars from Players Inc. to the NFLPA in order to support the overhead, substantial salaries and perquisites of NFLPA management and employees.”

Richard Berthelsen, the NFLPA’s general counsel said, “If anything, he is underpaid. … He is paid out of the revenues generated by active players.”

Upshaw’s pay is set by a 10-player committee, Berthelsen said, which considers how much the NFL commissioner earns. Roger Goodell’s pay has not been disclosed, but predecessor Paul Tagliabue regularly earned more than $10 million a year.

According to the union report, known in labor circles as a Form LM-2, during the fiscal year ended Feb. 28, 2007, Upshaw signed a new employment contract that ends in 2010. It marked the third time since 2003 the NFLPA extended the executive director’s contract before its expiration.

Gene Upshaw compensation
2007 At least $6.7 million
2006 $3.3 million
2005 $3.4 million

* Fiscal years closing on last day of February
** Includes public information for NFLPA and Players Inc. compensation, though the fiscal year 2007 NFLPA tax return is not yet available. That means only Upshaw’s Players Inc. bonus, which is disclosed in the LM-2, is included in the 2007 figure, not any additional Players Inc. pay he may have received. The tax return discloses the full Players Inc. pay and is included in the Upshaw compensation figures for 2005 and 2006. The tax return, unlike the LM-2, also discloses NFLPA benefits, which are also then not available for inclusion in the 2007 figure.
Sources: NFLPA LM-2s, NFLPA Form 990s

Upshaw earned $4.3 million in salary and bonus from the NFLPA in the 12-month period ended Feb. 28, 2007, and a $2.4 million bonus through Players Inc., according to the LM-2. His Players Inc. income is paid into a benefits account called the Grantor Trust.

He may have earned even more from Players Inc. In the two prior years, the Grantor Trust bonuses disclosed in the NFLPA’s annual report were less than the total benefit Upshaw received that was disclosed in the union’s tax return. For example, in the fiscal year ended Feb. 28, 2006, the LM-2 noted that he got a Players Inc. bonus of $560,000, but the tax return showed for the same period his Players Inc. benefit as more than $1.3 million. The tax return that corresponds to the most recent LM-2 is not yet available.

The LM-2 also does not show benefits received through the NFLPA, but the tax return does. In fiscal year 2006, for example, Upshaw earned $112,145 in benefits.

Upshaw is easily the highest-paid union chief in sports. Billy Hunter, the National Basketball Players Association executive director, earned $2.1 million in the 12 months ended June 30, 2006, according to the NBPA’s most recent LM-2. MLB Players Association boss Donald Fehr takes in the same $1 million salary every year. Neither union has a licensing subsidiary comparable to Players Inc. that supplements executive income.

The NHL Players’ Association does not file an LM-2 with the Labor Department nor a Form 990 tax return with the IRS because the hockey group is structured as a Canadian entity. Ted Saskin, before he was fired as executive director, was reportedly paid a salary of about $2.1 million.

Among other employees, departed Players Inc. head Doug Allen earned $1.9 million, according to the NFLPA’s LM-2, a huge jump over his $446,281 compensation the previous year. His wife, Pat Allen, the now-retired Players Inc. chief operating officer, saw her pay more than double, to $633,534.

Players Inc., meanwhile, saw its strong growth in licensing and sponsorship slow. In the 12-month period ending Feb. 28, 2006, income from licensing, sponsorship and player appearance fees rose 20 percent to $108 million, according to an analysis of the union’s annual reports. In the year ended Feb. 28, 2007, the revenue rose 6.5 percent, to $115 million. Much of the increase derived from an increase in sponsorship money delivered to the union through the NFL.

Several categories, including fantasy sports (see story below) and video games saw decreases. Electronic Arts, the largest single source of revenue, paid $28 million in licensing and sponsorship fees, down 16 percent from $33.5 million the year before, according to the LM-2s. The drop was largely related to when payments are made, said Andy Feffer, executive vice president and chief operating officer of Players Inc.

Trading card revenue jumped 20 percent to $24.6 million.

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