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Volume 21 No. 1
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Expenses drop, creating surplus for NFLPA

The NFL Players Association significantly cut expenses in its fiscal year 2013 compared with the prior 12-month period, but it also recorded a sharp decline in revenue for that time, according to an analysis of the union’s recently filed tax return.

The period covered in the return is the 12 months ending Feb. 28, 2013.

The $40.7 million in reported expenses is the lowest recorded sum in the last seven years of returns, and the $60.5 million in revenue is a shade higher than the level reached in that same fiscal 2007 return — suggesting a streamlining at the organization in the first full year removed from the NFL lockout, which ended in August 2011.

A union official declined to comment on the financials.

“Thanks for your ongoing interest in our organization,” NFLPA general counsel Tom DePaso wrote in an email responding to questions about the return. “At this time, we have no further comment.”

DeMaurice Smith earned $2.82M in compensation, down from $3.5M the year before.
The return provides a separate accounting for the NFLPA’s for-profit licensing and merchandise arm, NFL Players (the former Players Inc.). According to the return, revenue for NFL Players for fiscal 2013 was $90.6 million, up from $77.4 million the year earlier — a period that included the lockout.

The union’s revenue dipped sharply from the prior year in part because players’ dues were halved, accounting for $19.1 million of the $60.5 million total. Most of the remaining revenue came from category royalties, accounting for $31.6 million. Traditional licensing categories for the union include trading cards and jerseys.

Expenses dropped sharply primarily as a result of a large payout to players the previous year of licensing income that had been held back prior to and during the lockout. But there were other contributors as well, including a 27 percent drop in employee compensation, to $15.2 million. Legal fees also were down, to $7.8 million from $11.1 million.

The lower expenses allowed the NFLPA to book a $20 million surplus and start replenishing asset reserves that had diminished in the years before and during the lockout. Assets had fallen from $215 million on March 1, 2010, to $166 million two years later, according to the group’s returns. As of March 1, 2013, assets were $190 million.

One expense the union reported in the most recent return that appears to have increased is for investigative services. The NFLPA since fiscal 2009 has listed its top five outside contractors on its returns, and those contractors have been either accountants, consultants or lawyers. The latest return shows the NFLPA paying Hillard Heintze of Chicago $1.8 million, the second-highest amount paid to an outside contractor. (The highest is to outside counsel Winston & Strawn at $3.6 million.)

A source familiar with the union said Hillard Heintze does the background checks on agents applying for certification with the union, though the amount cited in the return suggests other duties as well.

The return also shows NFLPA Executive Director DeMaurice Smith earned $2.8 million in compensation, down from the $3.45 million he received the year before.