The players get 59.5 percent of all revenue; the owners 40.5. When the owners negotiate a deal with an entity — like selling rights to TV broadcasts of NFL games — they are negotiating on behalf of themselves and the players. Collective bargaining. They are compelled to get as much as they can, period, because both sides are sharing the money in that 59.5-40.5 split.
Yet when the owners cut their most recent deal with the TV networks, they got the networks to agree to pay the owners in the event of a work stoppage.
Kinda rotten. Why?
Because there had to be a monetary concession on the owners’ behalf to get that kind of caveat. As in, “Pay us during a work stoppage and we’ll cut a few million from the purchase price.” And that’s taking money out of the players’ pockets to keep the owners afloat if/when they lock out the players.
The money that would keep coming in to the owners would allow them to pay their mortgage and upkeep on their stadiums, pay their non-playing employees, collect their own salaries, fuel up the G-5, etc.
But U.S. District Court Judge David Doty handed down a ruling Tuesday that keeps the $4 billion the owners stood to collect in event of a work stoppage out of the owners hands. He’ll decide at a later hearing whether the owners are ultimately fined (they were already fined $7 million by a lower court for this move) or the money is just put in escrow where they can’t touch it.
Without access to that money, the owners are up the creek a little bit financially. Or as up the creek as billionaires can be.
What’s interesting about this locally is how condescending Robert Kraft was about the players taking this issue to court.
In criticizing the NFLPA for legal wrangling instead of business dealing, Kraft hammered the players for spending $15 million (Kraft’s number) on lawyers to prove the owners backdoored them on the TV deal.
“[Lawyers] collected $15 million in fees that the players paid, think about that!” Kraft raged. “If it’s coming out of our pockets, and I’m managing our lawyers, if they’re not adding value, tell them to zip it. I need [lawyers] to keep, to protect me from myself, but business people do business deals, not lawyers.”
I asked Kraft point-blank about the fact the players did win a $7 million award in the case at that point because the owners, it was found, did try to backdoor them.
In response, Kraft said, “The irony. I worked very hard with the commissioner to extend these contracts when the financial world was falling apart and we realized the main source of our revenue was these media contracts. We went out in a very difficult environment and were able to conclude extensions of these contracts to protect the players income and the owners income. For them to sue over something like that, it just shows you how out of touch . . . there are so many things we can do to create new partnership opportunities and grow and we have to get the lawyers away from the table and get business leaders on both sides.”
By his facial expression and tone, it’s clear Kraft was outraged the players would question what happened with the TV deals in 2008.
But the fact remains that the owners covered their financial backsides and left the players’ exposed. Even though monies paid out to the owners during the lockout were loans and had to be paid back, Doty found that $421 million would not have to be paid back. That’s more than $10 million per team being fronted during the lockout that wouldn’t need to be reimbursed when football returned.
Further, according to Doty, “NFL characterized network opposition to lockout provisions to be a deal breaker.”
The owners weren’t leaving the table until they’d taken care of themselves when the cash cow that is NFL football went into a coma, even if the players would go without.
The prevailing thought today is that the owners cannot now afford a lockout. The scary thought is, they probably can. And they’ll just start cutting costs and throwing workaday employees out of the offices because they’re so irritated at Doty’s ruling and the players in general.
NFL owners aren’t accustomed to losing in business. They got killed in the 2006 CBA negotiation. This setback from Doty may make them dig in even harder.