Haves and have nots

A few NFL owners want bigger share of local revenue in new CBA

Negotiations over a new collective bargaining agreement (CBA) between the NFL and the NFL Players Association are moving along at a snail's pace. However, before the players and owners can agree on how to split up the billions of dollars the league will take in during upcoming seasons, the owners must decide how to split it up among themselves, and that could prove to be a considerably trickier task.

One of the biggest issues the NFL and players will have to settle is local revenue and unshared revenue. Some teams, like the Redskins, Cowboys, and Patriots take in a lot of it. Others like the Bills and Jaguars do not. After renovating Lambeau Field in 2004, the publicly-owned Packers have drastically increased their unshared revenue to rank them in the upper half of NFL teams in total revenue, but playing in Green Bay always presents a challenge to keep up with big-city teams.

The battle lines are drawn. The higher-revenue owners want to be able to keep what they have in terms of income from luxury seating, stadium naming rights, concessions and parking. The less-wealthy owners want their cut and the players don't really care how the owners split the money up as long as they get their share of it.

NFL teams currently share ticket revenue with the home team keeping 60% of the gate and the other 40% going into a pool that the 32 teams split up equally. They also divide up the massive pool of TV rights fees. That income alone will bring each team in the neighborhood of $100 million in 2006.

That means that the "little guys" still aren't doing too badly. With the salary cap at around $95 million, their player salaries are paid for before they sell a single ticket. Most business owners would love to have their payroll covered before opening up business for the year.

Still, the "little guys" are complaining that the high-revenue teams have a competitive advantage over them. This is difficult to understand since the reigning champion Pittsburgh Steelers are among the teams complaining that the big bullies are going after them. Their owner Dan Rooney said last spring (following a 15-1 season):

"There's about eight or 10 of the high-revenue clubs that seem to be united in a bloc," Rooney said. "They want to keep the disparity. They want to knock us down and have us get up at the count of nine, so they can have another fight and knock us down again."

If what Rooney's team has been through the last couple of years is getting beaten down for the count, others, like the Packers, would like to get into the ring and get knocked silly a few times as well.

Even if you buy the argument that higher revenues create a competitive imbalance, that does not make a case for local revenue sharing. How much is enough to field a competitive team? Are all teams entitled to equal profits? Along those lines, should this money be shared is there any guarantee that the owners who would be net takers from the pool would spend it on their teams rather than sticking it into their pockets?

Many NFL owners are paying off debt on their teams. Some, like Washington's Dan Snyder, also is paying debt on the stadium his team plays in and improvements to that structure. Brown County taxpayers are gradually paying off stadium bonds that helped fund the $295 million renovation of Lambeau Field. Loans made by financiers to NFL owners, aside from the Packers, are on the premise that there will be a certain amount of money generated through the local revenue streams. If those streams are slowed to a trickle by mandated sharing, the bankers will not be happy. A financial crisis could well ensue.

It would appear that the higher-revenue teams have the advantage over the mere high revenue teams when it comes to determining what, if anything, will be done. It would take a ¾ majority to enact any new proposal to split revenues. That means it takes only nine votes to prevent a change to the status quo. Reports are that seven teams are adamantly opposed to any changes in the current setup—the Redskins, Cowboys, Eagles, Giants, Jets, Patriots, and Texans. That means that they have to recruit just two more votes from a group that may include teams like the Bears, Seahawks, Bucs, and Chiefs to block any money grab by the Bengals and Jaguars of the NFL world.

Indications are that the higher-revenue teams are willing to share some of the local income, just not in the form of direct payments to the other owners. One possible plan is for the cut of the money to go into a fund that would pay for expenses such as player benefits. Small-market teams, like the Packers, could then put the money they're spending on that into other areas such as scouting or coaches.

The "have-nots" would be wise to take the best deal they can get and soon. If there is not a CBA by the start of the free agency period March 3, the NFLPA could well decide to go ahead and enter 2007 as an uncapped year. That's a decision that the union could make unilaterally since the current CBA calls for it. If the Rooneys, Wilsons, and Packers think that they have trouble staying even now, wait until they have to compete for talent in such an environment.

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