A Few Words on the CBA Negotiations

Well, now that the Super Bowl’s over (and the Green Bay Packers have killed that awful “can Roethlisberger redeem his off-the-field crimes by winning a football game” media narrative), it’s time to focus on the next big thing on the NFL calendar.  Most years that would be the NFL Draft, but most years the NFL and the NFL Players’ Association (NFLPA) aren’t trying to hammer out a new collective bargaining agreement with less than a month to go before the old one expires.

Negotiations should have started on the CBA long before now, but no one was expecting Gene Upshaw, the NFLPA’s president and chief labor negotiator on pretty much every CBA talk ever held, to die in mid-2008.  The search for Upshaw’s successor was a long and painful one that dragged on for nine months before DeMaurice Smith was selected.  Even so, that was almost a year ago.  For whatever reason — posturing, stubborness, pride — CBA talks didn’t start in earnest until a few days ago.

Also more or less new to the job is NFL commissioner Roger Goodell, who succeeded Paul Tagliabue in 2006.  Goodell was working for the NFL during the two seasons the NFLPA went on strike in 1982 and 1987, but only as an intern and PR guy, respectively.  This will be the first collective bargaining agreement negotiation that will involve neither Upshaw nor Tagliabue, who hammered out the first CBA in the early 90s.  Which isn’t to say that Goodell and Smith aren’t qualified to handle the talks, but both men have little or no history with this particular process, and that should be enough to give anyone pause.

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They aren’t the only ones new to this process, either.  Only eleven owners were around during the replacement player season in ’87, and only seven owned teams during the strike-shortened ’82 season.  That means just a third of the owners even know what it was like to face serious labor problems, and the number’s only that high if you count the city of Green Bay and what’s left of Al Davis.  Sure, a much higher percentage were around for the various CBA extension talks that’ve occurred every couple years, but slightly renegotiating a CBA already in place isn’t exactly the same thing.

The current CBA was supposed to run through 2012 or thereabouts, but the owners took advantage of an opt-out clause in 2008, just two years after the last extension had been approved.  The renegotiated CBA wasn’t that much different from what it had been prior to 2006, but one of the few changes made proved to be too much for the owners to take.  Here, I’ll let Brian Billick explain (from his book More Than a Game, which was an invaluable source for this article):

“In the previous deal, the players received 64.25 percent of defined gross revenues (DGR), based solely on broadcast revenues, ticket sales, and merchandise sales.  The new agreement gave the players just 59.5 percent, but that was of total revenue, not just of DGR.  With that, the owners’ profit margins began to diminish.”

Like most of you, my first response to this was well, so what?  The NFL is a $7 billion a year industry — as in billion, with a B.  There’s plenty of money to go around.  Well, yes and no.  The league’s revenue sharing program helps keep smaller teams financially stable, and the salary cap makes sure no one can outspend everyone else, but prior to 2006 the salary cap was based on DGR.  Basing it on total revenue meant that the disgustingly large piles of non-shared revenue made by teams in bigger markets was now part of the salary cap equation.  For teams like the Buffalo Bills and Jacksonville Jaguars, who don’t make nearly that much money on the side, that meant having to spend a much greater percentage of their total revenues than the Dallas Cowboys or Washington Redskins did.

That’s even more significant when you consider how heavily in debt many teams are after building new facilities and stadiums — the Giants and Jets alone are roughly $1.5 billion in the hole after building the new Meadowlands facility.  Newer, bigger stadiums means more revenue (much more than moving to a larger market, as Al Davis eventually discovered after a few years in the run-down LA coliseum), but if ticket sales and so forth are disrupted or diminished by a long labor battle, well, that debt becomes a dangerous liability.

Running a professional sports team can be quite lucrative, but it’s also a high overhead business — you can make a ton of money, but only after you spend a four-fifths of a ton first.  The additional labor costs brought on by the ’06 agreement not only cut in to profit margins, especially for smaller market teams, but also removed funds that in years past had been used for facility upgrages and coaches’ salaries.

There are a lot of other sticking points in this negotiation — an eighteen game schedule, increased health benefits for retired players, etc. — but the financial bottom line is chief among them.  I wish I had a pleasant way of wrapping up this article, but at this point I see no reason to hope that a new CBA will be in place before the old one expires in early March and the players get locked out of all team facilities.  As talks stretch on past that deadline, the league will begin to lose money, and the prospect of dividing up an ever-shrinking revenue stream is not going to help a deal get done.  I’m hopeful, but not optimistic.