Experts suggest NFL, players union aren't widely split on financial issue
Written by Pete Dougherty
Green Bay Post Gazette
9:54 PM, Mar. 9, 2011
(apologies for the format but I'm not gonna restructure it)

Though negotiations for the NFL’s collective
bargaining agreement hit a roadblock on
how much of their finances NFL owners
should disclose, three sports economists
see good reason to think the sides will
reach a new CBA sooner rather than later,
and likely in the next few weeks.
The rhetoric on financial disclosure
Wednesday suggested emotions are raw on
both sides, but all three economists —
Rodney Fort of the Universityof, Andrew
Zimbalist of Smith College and Brian Goff of
Western Kentucky — said the fundamental
issue is how to split money in a profitable
league. That suggests the sides aren’t as
far apart as they might seem.
The issue is whether the owners should
take $1.8 billion off the top of the league’s
$9 billion in gross revenues, instead of
their current $1 billion credit, before
paying the players 60 percent of the
remaining money. The owners say they
need the extra $800 million — they were
asking for $1 billion, but the players union
said Wednesday the league has dropped
that to $800 million — to cover the i
ncreased debt from upgrading and
building stadiums the past few years that
increase revenue to the benefit of both
parties.
“It seems to me they’re not really arguing
over the fundamental survival of teams in
theNationalFootball,” said Fort, who teaches
sports economics and sports law at
Michigan and has written and consulted
extensively on both subjects.
“They’re not really arguing over some
inalienable belief about a right they have,
like players in free agency. Just like two
kids with a Popsicle. They’ll eventually
realize the Popsicle’s melting and it’s time
to split it and get on with it.”
If the cost credit is the essence of the
negotiations, though, the issue to help get
there is how much financial information the
players need before agreeing to the extra
$800 million, or whatever final figure, for
debt management.
Based on reports on ProFootballTalk.com,
NFL.com, CNBC.com and
NationaFootballPost.com, the owners had
agreed to share the league’s annual profit
figure from the last five years, and this
week agreed also to identify the number of
teams with declining profits, with all
information verified by a neutral party
chosen by both sides.
The players, who have hired an investment
bank to advise them on the matter,
rejected the offer. They say they need
audited financial reports, not simply profit-
loss statements, from the 32 teams
individually that include details such as
money spent on salaries for owners and
their families; marketing and administrative
expenses; and income before and after
taxes.
Fort said the players need more financial
information than the owners have offered
but less than they’re requesting. He said
they could accurately determine the
owners’ debt position by having an agreed
upon third party examine the audited
financial report of every team.
“Literally, the independent investigator can
go in, look it up, add it up,” Fort said, “and
walk out with a number written on a post-it
note and hand it to the players and say,
‘That’s what I think their debt position is
over the next six years.’ And it’s either a
billion bucks a year (more) or isn’t.”
The owners are loathe to share the
detailed financial information the players
are requesting for a couple of reasons.
Most obviously, embarrassing information
could become public, such as an owner
paying himself or family members large
salaries or loans that reduce profits on
paper. However, Fort said those abuses,
while bad for public relations, are
inconsequential in the big picture of a $9
billion business.
The owners also don’t want to share
detailed information on individual teams
because players would gain bargaining
leverage over specific clubs. So if the
owners haven’t shared the information by
now, they probably aren’t going to.
“This isn’t just, ‘We (owners) like secrecy,’”
said Goff, who contributes to the blog
TheSportsEconomist.com. “There’s a real
advantage to holding onto that information.
So I can’t see (the owners) handing out
much. And the players, I don’t know what it
is other than the total disclosure that would
cause the players to say, ‘OK, we’ll go with
(the $1.8 billion) now.’ I don’t know how
much players are gaining from looking at
the books. To some degree that’s a
negotiating ploy to take away the owners’
information advantage.”
This is where the players gain leverage
from threat of antitrust litigation. If the
union decertifies and sues, the NFL will
have to share relatively detailed financial
information in the discovery process, which
becomes available to the public unless the
league convinces the judge to subject it to
confidentiality rules. That’s a big risk.
The owners also lost leverage when a
judge recently placed an injunction on $4
billion in TV payments the owners had
bargained for even if there’s a lockout.
That would have provided badly needed
cash to pay major operating costs such as
stadium debts.
“It’s hard to see the owners going to a full-
blown lockout of the (regular) season,” Goff
said, “they’re making too much money, that
would be killing the goose that laid the
golden egg. But I could see them, had they
won that (TV case), ‘OK, we’re going to put
some pressure on the players, we’re going
to hold out for two months, or we’re going
to hold out through the beginning of
training camp, and we’ll see, maybe even
hold out near the beginning of the season.’
“That (injunction) changes things. When you
get people arguing about that extra piece
of pie, occasionally people cut off their
neck just to win that extra piece. But
usually when it’s about the extras there’s a
strong motive to eventually give in.”
The talks have stalled on sharing financial
information in large part because of
mistrust between the sides. The owners
are suspicious that the players are asking f
or detailed financial information not
because they need it, but because they
want to litigate. They know the owners
won’t give what they’re requesting, and that will
give them the excuse to go to court.
The players are suspicious because the
owners bargained a de facto lockout fund
into the TV deal at the expense of the
players. They had to go to court to prevent
that from happening.
Talks could blow up by Friday’s deadline
because of that mistrust, but both sides
also have professional negotiators and a
highly respected mediator to buffer
emotions. So despite gloomy reports,
there’s reason to think that over the next
few weeks the players will accommodate
the owners to some degree for the stadium
debt that’s grown revenue in which they all
share, and the owners will compromise to
avoid revealing financial details in court.
“It makes sense for that ($1 billion cost
credit) to go up,” said Zimbalist, who’s a
prolific author and consultant on sports
economics. “So there are areas where the p
layers should be compromising, and the
rookie salary cap should be hardened, it’s g
ot too many loopholes now to be
meaningful. But I just think it’s very obvious h
ere that there’s a bargain to be struck,
there are compromises that can be made
and need to be made. I think they will be
made, it’s just that with what we’re getting
so far is a lot of bluster and a lot of
rhetoric, and that’s what you get in these
things until push comes to shove.”
Said Fort: “I think (the owners) already
know the number they’ll take (for the cost
credit), and as soon as they hit they’ll stand u
p, shake hands and leave the room. I
don’t know what that number is, and
nobody can, which is why they’re holding
the debt information so close to the chest.”