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Volume 23 No. 29

Leagues and Governing Bodies

Editor’s note: This story has been revised from the print edition.

During Roger Goodell’s terrible, horrible, no good, very bad season, it seemed that almost every critique of his performance included a mention of how much he earned: $44.2 million, according to the league’s tax return filed in early 2014. Even presumed presidential candidate Jeb Bush brought up Goodell’s pay during a speech as recently as last week. When asked about being considered several years ago for the commissioner job, Bush said, according to published reports: “I saw Roger’s pay package. Wow.”

So it should come as no surprise that the release last week of Goodell’s latest annual pay figure — $35 million, reported in the league’s newly released tax return — would also attract attention, even though the pay period does not cover the months of uproar that shaded the NFL commissioner’s season last year. The pay period, instead, covers calendar year 2013 and was disclosed as part of the NFL’s 2014 fiscal year, which ended March 31, months before Goodell handed down the ill-fated two-game suspension of Ray Rice and a season of turmoil followed for the league.

Roger Goodell was paid $35M for fiscal 2014.
Photo by: GETTY IMAGES
Noting that his pay is less than he received in the prior pay period also likely will do little to cover the spotlight. In fact, Goodell’s compensation is flat from the prior year, given that the higher figure included $9 million of deferred pay.

So why does Goodell’s pay draw such attention? At his recent Super Bowl press conference, no one blinked when The New York Times asked if he would be getting a pay cut, given how storylines played out for Goodell and for the league in 2014.

“One of the things is, in the NFL, you don’t have player contracts like other leagues,” said Jed Hughes, who runs the sports practice at Korn/Ferry, a frequent adviser to NFL teams in their head coach and executive recruitment. “Criticism is deflected from players and goes to the commissioner.” Hughes was referring to the fact that the top players in leagues other than the NFL can be paid close to, or even more than, their

{podcast}

SBJ Podcast Archive:
From Sept. 15, 2014: NFL writer Daniel Kaplan and Executive Editor Abraham Madkour discuss the Ray Rice situation and Roger Goodell's handling of it.

commissioners.

Former MLB Commissioner Bud Selig earned in the range of $30 million a year, sources said, not much more than some top MLB stars. Ryan Howard and Cliff Lee, for example, were each guaranteed a league-high $25 million last year. In the NFL, Aaron Rodgers carries the biggest contract in league history, but that five-year, $110 million deal still averages out to $22 million annually.

Ross Tucker, a former NFL player who now writes about and comments on the sport, said, “People are not happy in life when anyone makes a lot of money. They are more inclined to look at it negatively.”

But the Occupy Wall Street explanation doesn’t cover everything. Walt Disney CEO Bob Iger earned $46 million last year; Les Moonves, the CEO of CBS, earned $62 million, according to their companies’ most recent proxy filings. Social media is not aflame with calls for their heads, even though the NFL does also position itself as a media brand.

“The NFL is the No. 1-rated program in America,” said sports compensation consultant Cathy Griffin, explaining her take on the scrutiny. “The public is overwhelmed with the issue.”

In other words, like anything to do with the NFL, Goodell’s pay is one more piece of grist.

To be sure, Goodell’s compensation does stand as a serious amount of money. When considering the 50 top companies in the country and their executives, Goodell ranks among the highest-compensated executives, said Steven Hall, who founded executive compensation advisory firm Steven Hall and Partners and has worked in the field 37 years.

“In looking at some work that we did related to the Fortune 50 companies, 11 earned over $22 million and the median was $13 million,” he said.

Hall pointed to the former CEO of Wal-Mart, the now-retired Michael Duke. At Wal-Mart, a $475 billion company, Hall earned $5.6 million in fiscal 2014 after earning $20.7 million the year before, according to the company’s proxy filed in April 2014. The NFL is an $11.5 billion-a-year business.

Of course, as Marc Ganis, a sports consultant with close ties to the NFL, points out, it is the owners’ money that’s being spent on the commissioner’s compensation. They are free to pay Goodell what they wish. So while the directors who set the Wal-Mart CEO’s pay have to answer to shareholders, in the case of the NFL, the directors and the shareholders are one and the same: the owners.

The league’s three-member compensation committee comprises Atlanta Falcons owner Arthur Blank, the committee chairman, New England Patriots owner Robert Kraft and Carolina Panthers owner Jerry Richardson. The trio typically meets during the league’s annual meetings in March to set Goodell’s bonus for the preceding season. The bonus is the majority of his pay.

For the most recent pay period, the $35 million compensation represents $4 million in salary and $31 million in bonus pay.

Another factor to consider when assessing the commissioner’s compensation, Hall said, is how irreplaceable the owners consider Goodell. While the commissioner’s critics might scoff at that thought, Goodell is viewed internally in a favorable light in that regard. He has spent more than three decades at the league and knows the ins and outs of the NFL like no outsider could.

The business metrics of the league also are stronger than ever, from a solid labor deal to high TV ratings. Of course, the league’s gains are notwithstanding the botched response to the Rice case and the season of criticism that defined the NFL’s last year.

“If the owners were happy paying him $200 million, it’s up to them,” Griffin said.

There is one way for the NFL to end the annual public discussion and scrutiny of the commissioner’s compensation: change the league’s tax status. The NFL’s tax return, which contains the compensation information, is public because the league’s headquarters is structured as a nonprofit trade group. As such, the disclosure is required by IRS rules. The league has considered changing that status, as MLB did successfully several years ago, but it has yet to make that move.

The NBA has never filed as a nonprofit and so has never had to disclose its commissioner’s pay.

One day, in the not-so-distant future, quarterbacks attending the NFL combine may not step onto the field to throw. Instead, they’ll step into a simulator to test their ability to read defenses.

“It will be a ‘Madden’-like video game,” said New Orleans Saints head coach Sean Payton, who has discussed the concept with Zebra Technologies, the company that this past season tracked players during games. “The Air Force trains their pilots in these simulators; you can train a quarterback.”

“The Air Force trains their pilots in these simulators; you can train a quarterback.”

Sean Payton
Head Coach,
New Orleans Saints

Photo by: GETTY IMAGES
This year’s combine, which starts this week, is likely the last that will not have Zebra’s tracking technology. The company’s tracking devices could soon supplement, if not outright displace, the kinds of data popularized at the NFL’s yearly gathering in Indianapolis and tracked by teams in scouting, like 40-yard dash times and weight lifts. (The technology is expected to be in place for both the NFL regional combines and the Indianapolis event next year.)

The NFL went into business with Zebra in July, signing a deal with the company whose business is making radio frequency identification tags that track products. A bar code on a sales sticker affixed to a consumer good very well could be from Zebra, a Nasdaq-listed company with $1 billion in annual revenue.

Sports are a relatively new area for the company. Its sports office in New York is located in an office share, with the front-desk receptionist taking calls and directing visitors for each of several companies.

Zebra hired veteran media and marketing executive Eric Petrosinelli last fall to oversee the rollout. The first iteration was used by the league’s broadcasters of what Zebra and the NFL dub “next-generation stats.” The broadcasters, with the exception of Fox, used the new stats this past season showing how fast players ran, how far they ran, their separation speed — all tracked by small RFID discs in the player uniforms. (Fox officials say they continue to evaluate whether to use the stats.)

“That’s just the tip of the iceberg,” Petrosinelli said recently.

The next big rollout for Zebra is signing teams to use its offerings at practices. This past season, three NFL clubs used the technology at practices — New Orleans, Detroit and San Francisco — and Petrosinelli expects nine more to join them this offseason, with some of those clubs expected to sign their deals this week at the combine.

Payton used the technology to log how much time players spent practicing, information that gave him insight to know which players needed time off.

“It is impossible for us to track 80 players on the field and their work loads,” said Payton, who noted that soft-tissue injuries were down this past season for the Saints, something he attributed to knowing when to ease up on practice.

The NFL deal with Zebra does not require clubs to use the technology, but it clearly sends a strong signal.

“It is the NFL seal of approval,” said Jon Dykema, staff counsel for player administration at the Lions.

Zebra’s main competitor is Catapult Sports, an Australian company that uses GPS trackers and whose website touts 12 NFL teams as using its technology. Catapult officials did not reply for comment.

Zebra clearly expects to become the dominant player in the space, with its technology soon to be in all NFL stadiums alongside its relationships with the league and broadcasters. At the combine specifically, Payton’s forecast of a simulator may be many years away still — creation of such a product will take years of tracking data not yet available — but other changes may come more quickly.

Consider the 40-yard dash.

What may be more important than that full-span run time is the acceleration speed at certain points of the dash. If Zebra can track successful players with acceleration speeds, scouts would have a different metric by which to measure players.

So say over five years the successful cornerbacks that came out of the combine all have great acceleration between 10 and 20 yards: That is something that could overtake the actual, full dash time.

“We will see some of this at the combine [in future years]” Payton said. “Wide receiver separation releases, how fast they get into routes.”

And one day, perhaps, a simulator.