ECHL to take digital rights to market In The Office: MKTG NFL to review primary ticketing options Lower ratings? NFL pulls election lever Toronto FC president sees upticks BDA gets into NBA game Licensees prep for campaigns Big 12 stands pat; will see new money League Pass keeps mobile in mind ESPN starts anew on ‘Countdown’
SBJ/Nov. 22-28, 2010/This Week's Issue
Smith grim as clock ticks
Published November 22, 2010
With about 100 days left until the expiration of the NFL collective-bargaining agreement, the head of the NFL Players Association finds little reason for optimism.
Players around the league are angry that the NFL may lock them out when the CBA expires March 3, NFLPA Executive Director DeMaurice Smith said in a wide-ranging interview with SportsBusiness Journal staff writer Liz Mullen.
Smith was in Pittsburgh last week talking to local union leaders as well as some football Steelers, after meeting with virtually all of the union’s members in the 32 locker rooms this fall. During his NFL tour he explained to players the NFL’s proposal, which includes expanding the regular season to 18 games, instituting a rookie wage scale and taking an additional 18 percent off the top of revenue that makes up the salary cap, a statement that the league has said misrepresents its proposal.
Pittsburgh Steelers safety and player representative Ryan Clark said players are “very upset” and “disappointed” with the owners’ stance. “They are definitely trying to back us into a corner,” he said.
“It’s a situation where they are basically trying to make us rent our lockers, pay for stadium costs. They want us to pay for the overhead of running a football team.”
One hundred days to go before the expiration of the CBA. How do you feel about where things are?
SMITH: We are still headed towards the lockout.
It’s not any better?
SMITH: No. The league proposed an 18 percent reduction in the first negotiation session that we had. They haven’t moved off of their request for an additional billion dollars from the players.
Is that the main issue in these negotiations? Do they have to move off of it?
SMITH: It’s obviously a critical piece. Because the players, we have not seen any financial justification for such a drastic change in the economics between players and owners.
What is happening in the negotiation sessions? Has the league provided you with any more financial information about why this should happen?
SMITH: We continue to review financial information. But we have seen no profit numbers and no loss numbers from any team [other than the Green Bay Packers, which are publicly held]. That contrasts with, well, look at the financial information that was turned over by the NBA. Nothing close to that has happened with the NFL.
Do you ask them about why they are not providing financial disclosure like the NBA is to the National Basketball Players Association? What do they say?
SMITH: What they have told us is: It wouldn’t make a difference anyway. And our response to that is: How would you know and how can it be any worse? It seems to me the best thing for our sport is a level of transparency so that both sides can see the economic picture and neither side needs to guess. You eliminate the uncertainty that is costing us potential revenue.
You have gone to almost every team meeting so far. How have players responded?
SMITH: What we are seeing is a number of players who are personally invested in this fight. They understand that they didn’t ask for this fight and that the owners appear to be very aggressive and hostile to the players’ position. We continue to have player leaders like Drew Brees and Tom Brady and DeMarcus Ware. But we have had a number of young players who have stood up, like DeMeco Ryans and Aaron Rodgers and Matt Schaub, who want to step up and are ready to be leaders in this union. The players recognize a certain hypocrisy between the league trying to fine players because of health and safety issues, but then, in the same number of days, telling the players their health insurance will be canceled in March if we don’t accept an 18 percent rollback.
How have the players been informed of that? Did they get a letter?
SMITH: Roger Goodell announced it in a press report. So, you know, we have a number of players who have children in need of critical care, of heart transplants, of kidney dialysis. The NFL sees a couple of bad hits on a Sunday and decides to fine players in the cause of player safety. But then you have players who have done nothing but play and work as employees and they have to go home and tell their wives and children they are going to have their health insurance canceled in March. [The league says that under federal COBRA law, players will be able to continue their coverage either at their own or the union’s expense.]
There have been press reports that the 18-game schedule the league has proposed could be a way to get a deal done, a panacea, so to speak. That it would grow revenue so much that players would not have to take a hit. What is their proposal and what is your counterproposal?
SMITH: I have not heard it is a panacea. They put a proposal on the table and we countered. We raised some issues with roster size, offseason workouts, training camp, injured reserve, bye weeks and vesting for health care. I have made a promise to the league not to talk about the proposals back and forth with the press. But suffice it to say, they made a proposal about 18 games. We were concerned about those … issues. That was our response.
Can you characterize the negotiations and where they are right now?
SMITH: What I can say is this: I’ve read people from the league or Roger saying they would like more progress or more speed. You know, everything we have seen about the league, whether it’s ad revenue or Super Bowl revenue, game ratings, game ratings versus other sports, increased percentages of viewers across the board, every number is trending towards confirming that this will be a record-setting year for the National Football League. We’ve seen no justification for a rollback. Players can’t make more money without the revenue going up. And the reality is we are receiving about 49 percent of all revenue, not 60.
Is that true? Is that because of the uncapped season?
SMITH: No. We were always receiving about 50 percent of all revenue. But it’s actually gone down because of the cost credits owners are taking off the top. In 2006, we were getting about 50.1 percent. Today it is about 48.7 percent of all revenue. The league keeps saying that the players are getting 60 percent. The league likes to tout that 60 percent number in order to tell people players are getting more than the owners. Total revenue is all revenue, minus cost credits off the top. So what has happened since ’06 is the cost credits to owners have gone up.
Why is that? Why have they gone up so much?
SMITH: There are cost credits for things like stadium upgrades and stadium construction, league office [expenses], things like NFL Network. What happens is this: We give them credit if they want to upgrade the suites in one of their stadiums. Players give the owners credits. But they are category improvements, not dollar improvements. It is just that if you want to upgrade a stadium, it would have cost you $20 million in ’06 and the same upgrade costs $30 million in ’09.
What do the players think about this?
SMITH: If you want to talk about the mood, what has got the players apoplectic is that they know when we signed the agreement in ’06, it included the G3 stadium plan. Well, that G3 stadium plan has committed $3 billion for construction and improvements for the last six to eight stadiums. So, for example, the Jets-Giants stadium alone, through the G3 program, was granted $800 million for 15 years from when that stadium goes online. [The Jets-Giants project received a $300 million grant from the G3 program, but the NFLPA agreed to cut the salary cap by $800 million over 15 years, which serves to minimize the effect the stadium’s additional revenue production has on the cap.]
Players are apoplectic about that? Why? Didn’t they understand that?
SMITH: They are apoplectic because the owners keep saying they are the only ones who are investing financially. So if you are a player, who plays for three years, your contracts are not guaranteed, the NFL canceled your health insurance, and you know that you and your fellow teammates have committed $3 billion that would ordinarily go to an increased cap for the construction of stadiums. And your reward for that is that you are going to be locked out. You would be apoplectic.
What happens in team meetings?
SMITH: I show them what the league and the owners say and then I show them the facts. So when they read that the owners are the only ones to take a financial risk and the players see that [cost credits against the salary cap have paid for] $3 billion for the last six to eight stadiums, they know America is not being told the truth.
How likely is it that players decertify? How likely is a lockout?
SMITH: Well, we would only decertify if we get locked out or if the deal expires. So, I would put it this way: Nothing has changed.
Is there a way to get a deal done?
SMITH: I believe we should have an exchange of the right information. The profits over the last 10 years either justifies an 18 percent rollback or it doesn’t. If it does, well, we have already pledged to fix the CBA. If it doesn’t, then what are we talking about? Right now, not knowing, doesn’t get a deal done.
Is that basically it? That there is no way the players can give back that kind of money without seeing what their profits are?
SMITH: The players are not going to take that without justification. I just keep going back to 10 years of profit numbers justifies an 18 percent rollback or it doesn’t.
Are the players prepared for the lockout, financially or otherwise?
SMITH: Our players are ready. Our players understand exactly what is at stake.