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SBJ/20081208/This Week's News
NFLPA earns a record $35 million
Published December 8, 2008
The NFL Players Association earned $181 million on revenue of $955 million during the last decade, far and away the most revenue of any other sports union, according to a financial report disclosed in the punitive stage of a recent lawsuit against the association.
For the 12 months ended Feb. 29, the union earned a record $34.85 million on revenue of $160 million, according to the union’s 2008 report.
The figures are the most complete financial information ever publicly revealed for America’s top sports union. The numbers underscore the financial surge the NFLPA has had since taking licensing in-house in the mid-1990s, a move made with an eye on building a war chest for potential labor disturbances.
“Our player reps have been continually reminded that our last labor fight [from 1987 to 1993] cost tens of millions of dollars and took almost six years to resolve,” said Richard Berthelsen, the NFLPA’s interim executive director. “They also realize that the owners are all billionaires and that the next fight could be a lot more costly if the owners bring it to that. That is why we are building these substantial reserves. As we have always said, the only way to avoid a fight is to be prepared for one.”
The NFL opted out of the current labor deal in May, making 2010 the last year of the contract. The owners contend that the current deal is too favorable for the players.
The NFLPA formed its licensing subsidiary, Players Inc. (now known as NFL Players), in 1994, taking group player licensing away from the league. In fiscal 2008, licensing revenue represented 51 percent of total NFLPA revenue, while player dues, the traditional cash source of a union, stood at 12 percent. The remaining revenue came from player appearances, agent dues, investment and rental income. The union in fiscal 2008 booked a $15 million gain on the sale of its old building, as well.
The report also details financials related to the labor tension between the union and the league. According to the financial report, the union had $122 million in designated strike funds on Feb. 29 and $98 million in a reserve that, while not specified for a labor battle, could be used for that, as well. The union’s assets stood at $298 million.
Exact comparisons of the NFLPA’s figures with those of the baseball and basketball unions are difficult because the only public information from those entities comes from reports filed with the Department of Labor and tax returns. The NHL Players’ Association is based in Canada and does not file in the United States.
Before its annual report became public as part of the lawsuit, the NFLPA disclosed figures only through labor department filings and tax returns, as well. The labor filings, however, use cash accounting, not the audited, accrual accounting found in the annual financial report, and tax returns provide only a minimal amount of information compared with an audited financial report.
Nonetheless, the labor department filings show a significant gap between the unions. In the most recent labor filings, the National Basketball Players Association had $51 million of receipts, and the MLB Players Association had $136 million, according to their federal filings. The NFLPA had $203 million of receipts, according to its comparable labor filing.
The baseball union also handles licensing in-house, while the NBPA receives a fee from the league for access to the rights.
The NFLPA 2008 annual report was entered into the trial as an exhibit on Nov. 10, when a jury ruled against the union and for a class of retired players seeking unpaid licensing income. After the decision, the case went to the punitive stage, and the 2008 report became evidence. The jury awarded the class $28.1 million, though the NFLPA is seeking to overturn the decision.
The report also contains other details never publicly revealed. For example, the $5 million fee the league pays the union annually as part of the 1993 labor settlement expires on Feb. 28, 2013. In addition, the NFL in 2007 extended, through Feb. 28, 2013, an Internet agreement with the union allowing for the use of player images. The fees paid to the union increased with the extension from a range of $2 million to $3.5 million to a range of $6 million to $10 million.
Terms of the NFL sponsorship agreement with the union, which grants NFL sponsors rights to union marks and player images, is also included in the union report. The union had been guaranteed between $4.5 million and $9 million annually, plus 6 percent to 12.5 percent of all league sponsorship revenue. In fiscal 2007, the terms were changed to a guaranteed minimum of $9 million and guaranteed royalties of 12.5 percent. The union received in fiscal years 2008 and 2007 $24.6 million and $23.3 million, respectively.