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Volume 20 No. 42
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NFLPA posts $36M loss for lockout year

The labor strife that nearly interrupted the 2011 football season appeared to take a toll on the finances of the NFL Players Association, leaving it with a deficit of $36 million for the fiscal year that encompassed that year’s lockout, according to the group’s tax return covering the period.

The return was filed with the IRS earlier this month.

NFLPA Executive Director DeMaurice Smith was the union’s top-paid executive at $3.5 million for the fiscal year ending Feb. 29, 2012.
Combined with a $20.8 million loss in the year leading up to the owner-imposed lockout — a reflection of work-stoppage insurance the union bought — the NFLPA’s deficit is $57 million in those two years, according to the tax returns. In that stretch, ending Feb. 29, 2012, NFLPA net assets fell nearly $50 million, to $166.8 million, a 23 percent dip and resulting in the lowest level in six years.

“These numbers reflect the Goliath-like position of the NFL and the difficulties that the lockout weapon poses for the union,” said Bill Gould, a former chairman of the National Labor Relations Board in the 1990s and now a Stanford law professor.

The NFLPA, which made the tax return available as required under federal disclosure rules for tax-exempt groups, declined to comment on the figures contained in the document. The disclosure rules do not obligate organizations to comment on the returns.

The NFLPA faced a significantly better-funded NFL, the task of keeping its players united, and the challenge of funding a legal battle both during and before the lockout, which began in March 2011. Legal expenses for the fiscal year ended Feb. 29, 2012, were more than $11 million, and the five top outside contractors the union was required to list on its tax return were all law firms, the recent return shows.

With labor peace assured until 2021, the union clearly has time now to build its reserves back up. It has historically done so by holding back royalty payments owed players and through annual dues.

While the loss for the most recent return may have been fueled in part through repaying players for those royalty payments that had been held back in past years to build the lockout fund, that would not have been the only reason. Revenue dropped to $82.3 million from $92.8 million, while compensation costs rose by $5 million, to $20 million, according to the last two years’ returns.

NFLPA Executive Director DeMaurice Smith was the union’s top-paid executive in the period, receiving nearly $3.5 million, an amount that includes payment from the union’s for-profit merchandise and licensing arm, NFL Players, the former Players Inc.

Ira Fishman, a former executive at Smith’s old firm, Patton Boggs, who joined the NFLPA as managing director in 2009, earned $1.46 million, according to the tax return. Richard Berthelsen, the now-former general counsel of the union, earned just more than $1 million in his last full fiscal year at the NFLPA.