SBJ/20100607/This Week's News
Commercial revenue drops again at NFLPA
Published June 7, 2010
The NFL Players Association’s commercial business continued to suffer in its most recent fiscal year, with revenue having now dropped 15 percent in the last two years, to $115 million, according to an analysis of the union’s most recent annual report, or LM-2, filed with the Department of Labor. That decline in commercial business in turn led to a drop in payouts to players.
Hit by declines in fantasy sports and trading card revenue, total commercial revenue fell by around $10 million, or 8 percent, in the most recent year. That follows a comparable decline the previous year, when revenue fell from $135 million to $125.6 million.
Total assets, meanwhile, rose 6 percent over the two-year span, increasing to $311 million from $293.2 million, and signaling that the union is steadily building a warchest for an expected labor disturbance next year.
Assets as of the end of the union’s 2009 fiscal year had dropped to $276.7 million, but the union previously attributed that decline in part to a deferred compensation payout to late executive director Gene Upshaw’s estate.
The most recent figures were disclosed in the union’s fiscal 2010 LM-2, filed late last month with the labor department. The filing covers the 12 months ending Feb. 28, 2010.
The most recent LM-2 also provides the first glimpse at the compensation of DeMaurice Smith, the union’s new executive director. Smith was elected to his post in mid-March 2009, so while the document shows him earning a salary of $1.6 million, his annual take is likely a bit more because he started about a month into the covered period. His compensation is far below the more than $6 million that Upshaw earned in his full final year but comparable to what other sports union chiefs earn.
Smith’s salary is not surprising, said Cathy Griffin, a senior level executive search consultant who specializes in the sports and entertainment industries. “Given that [the NFL] is the No. 1 sport in the United States and it is a major entertainment property … it is reasonable that it is a high-priced job.”
The NFLPA has made no secret that it is building a warchest with the collective-bargaining agreement set to expire next year. In anticipation of a labor disturbance, the union has ceased rebating union dues as it customarily does during less turbulent times. It further appears that the union increased its dues, with the amount brought in from dues and agency fees rising 43 percent to $27.6 million, according to the annual filings. The union also enjoyed the benefits of a market rise in 2009, with its investments and Treasuries rising a collective $19 million.
An NFLPA spokesman did not reply for comment by deadline. In the past, the NFLPA has noted that the LM-2s use cash accounting, as required by the federal government, whereas most businesses prefer to track their fortunes using accrual accounting.
The drop in revenue for the licensing and merchandising unit, NFL Players, was led in principal by trading cards. That revenue sum fell 32 percent, to $18.2 million, from $26.9 million the prior year, according to the LM-2s.
The overall decline in revenue made income from the NFL an even larger share of NFLPA cash. Under an agreement with NFL Ventures, the union receives cuts of league sponsorships, to the tune of $43.8 million in fiscal 2010, according to the LM-2, or 38 percent of NFL Players’ total $115 million in revenue. When adding in Electronic Arts’ $31.1 million in licensing fees, the largest amount from a single outside licensee, the two areas represent 65 percent of the NFL Players revenue.
As for the effect on players, who receive group licensing income from their union’s commercial unit, the number of active players who received at least $100,000 from NFL Players dropped to 63 in fiscal 2010 from 95 in 2009 and 114 in 2008. This income represents revenue to players from licensing deals involving six or more players, such as jersey and video game deals, and not individual deals.
The top NFLPA earner was New York Giants quarterback Eli Manning, at $1.4 million.