We all are going through hard economic times, but there seems to be mixed signals coming from the NFL. For example, your TV ratings are up, but you're laying off employees and teams are laying off employees. Going back to the other direction, you're paying some coaches a lot of money – $20 million dollars in one case – to not coach for the next three years. Just how do you assess where the NFL is at this point economically, and what the future may hold?
"Well Dave, I've been very clear that we're not immune to what's going on out in the economy. There's a tremendous amount of uncertainty; uncertainty clearly breeds fear. And I've said to you before, it's in three buckets for us: First, what's happening for our business partners? They're all going through difficult times. Some have, obviously for us, significant financial commitments and they're being stretched. We hear from them every day, and it's important to us how we manage through that. Clearly our fans, which is the most important thing. For people who've lost their jobs, can they continue to afford to come to an NFL game, or to any other event? The good news for us is that we have a tremendous product. People want to continue to be associated with that. People want to continue to be involved with the game and get emotionally involved with the game, and I think that's to the benefit of the NFL. There's a healthy quality to times like this. I also believe, very firmly, that in a time like this, the NFL can become an extremely invaluable escape for people. This Sunday will be a great example of it. As you see, we have a lot of issues in our country and around the globe, and we have to be able to deal with those aggressively. I think for a few hours Sunday, hopefully we'll all be able to come together and enjoy a great football game and come together as Americans around a great event."
When the celebration is over on Monday, what are some of the specific things that the NFL will do to address the impact of the economy?
"We're not part of the economic crisis in the sense that we have any specific steps that we can take for the broader economy. As it relates to the NFL, we have announced, very aggressively, that we are going to look at all of our season ticket prices. Each team is doing that evaluation. I believe about three quarters of the league will hold their ticket prices flat. They're going to have to work harder and be more creative and offer extended terms in some cases to our fans to allow them to try to get through this difficult cycle. We'll continue to work with our business partners, who are facing challenges on their level, to figure out what we can do to help them during this time. Unfortunately also, we're doing our own cuts at the league level. You're seeing it across the league. Many of our clubs are having the difficult process of letting go employees. We're doing that at the league level, and it's incredibly difficult to do. But it is a difficult period of time. There is uncertainty out there, and we have to cut our costs so that we can continue to keep this business a successful business and grow this business at some point."
The union released an economic study this week that concluded essentially that the clubs remained financially healthy and profitable and contending that the players, therefore, should not have to take less in terms of revenues in this next labor negotiation. You have some owners that feel otherwise. How difficult and contentious do you feel this negotiation will be, and are you wary at this point that you're looking at the labor peace you've had for so long could be interrupted in 2011?
"Let me start with your first point. I haven't had the chance to review the report in great detail. But, I've seen some of the broader summaries of the report and let me just say there is a lot of fiction in that. That report is not accurate. We are very clear and we understand our system, we understand the numbers. The ownership has spent a tremendous amount of time evaluating the current collective bargaining agreement. They came to the conclusion that it was better to terminate that agreement and go into a negotiation where we could work to try to come up with something that would work for all clubs and our players rather than continue on with that system. The economics were difficult prior to the economy turning south on us. What's happened now with the economy turning difficult for all of us, I think that it just accentuated the negatives in that collective bargaining agreement. I think the owners feel that it's critically important for the future of the game, for the future of the business, that they re-evaluate this. It is being done all across the country in every industry. We're evaluating our product. Labor unions and management have to work together to address this. In many cases, labor unions have voluntarily come in saying, ‘We'd like to avoid layoffs. We'd like to give concessions because we understand the circumstances.' I am optimistic that we're going to be able to sit down with the union and reach an agreement that will continue labor peace and allow the players to continue to flourish, but most importantly, allow the owners to continue to invest in the game."
Is the league concerned that the lease is up on the Vikings stadium and will force the team to relocate, and would Los Angeles be an option for the Vikings?
"I know that Zygi Wilf and Mark Wilf want to continue to have the Vikings in Minnesota and a new stadium and I share that. They have worked very hard to be able to get to that point. They have understood the priorities of the community. They have stood by and allowed the baseball stadium and the Gophers stadium to move forward because they recognize those priorities and there are all these priorities in the community. I think we have to continue to work with the governor and the leadership in that community to understand those priorities and figure out how we get a new stadium built. That is necessary for the Vikings and we all want the Vikings to be there in the long term successfully. They need a new stadium. That's clear. I think it's recognized by all parties and we need to get down to the difficult business to figure out how to do it."
In the meeting, Mr. (Richard) Berthelsen talked about — in the extended CBA from a couple years ago — there was a mechanism in there that adjusted to revenues going up or down, that if in our economy … revenues were down, then the players would get an adjusted amount. But because the owners opted out, that got thrown out and that doesn't apply. Is that fiction or non-fiction? If it's non-fiction, was that a mistake opting out in retrospect because of what's happened?
"I'm glad you asked the question because it is fiction. There is a rule in the Collective Bargaining Agreement that says the cap can't go down. It's a long-standing rule since we started this new collective bargaining system back in the early nineties. The cap continues to increase. It will be up to $123 million per club this year. The players do a great job, and deserve to be paid fairly. In 2008 and 2009, they will be seeing an increase of $500 million, just in those two years. That averages about $250,000 per player over those two years, so those are pretty significant increases. But I would tell you that the cap can't go down is the long-standing rule."
You said that there was a lot of fiction in the NFLPA's report. In another answer, you said that they know your finances down to the penny, because they're a partner with it. Considering those two statements, where's the fiction if they know your finances so well? Second question is, what are your concerns with their election of a new leader coming up in March?
"You're going to have to address a lot of the first part of your question to the union. I said they know our revenue to the penny. Our finances, they know the cost side, the most significant of all our costs are the players. About $4.5 billion goes to our players. They know all of that. The also know a great deal about the costs that are associated with building stadiums. As I said, I haven't studied their report yesterday. It was not done by them. It was done by somebody independently, and I don't know how much knowledge they have of the NFL. But I do know our finances, and our ownership knows our finances. And I think our players know enough to know that adjustments need to be made so that we can continue to grow this great game. Second part of your question was union leadership, I believe? Well, you know, eventually whoever is selected as the head of the NFLPA is an important decision for us. We will obviously work closely with that individual. We'll rely on that individual to set their priorities and make sure that they're giving us feedback. Their leadership will be critical in making sure we continue to grow this great game, and we do what's right for our players as well as the game, as well as for the ownership."
I know you haven't seen details of the economic report by the union, but off the cuff could you comment on their finding that the average team is making $24.7 million in profits a year?
"The best way to answer that is it's completely inaccurate."
The solution they seem to come up with in the CBA is you better share revenue among yourselves rather than cut into their pie?
"Let me address that because I think it is a very important issue. The National Football League shares more revenue amongst their teams than any other league by far. It has been the foundation of the success of the NFL and they do it in a way that I think has created a tremendous product. It has made it a tremendous gain. It goes back to my original point. It's about hope. It's what allows teams to compete against one another. We have a great game and a large part is due to those types of policies. Our ownership continues to evaluate how to share revenue. We have done it more and more over the last several years, including when we realigned, including when we extended the last agreement. More money went into revenue sharing. I think we exceed any expectation about revenue sharing. That is not the issue. The issue is the collective bargaining agreement and what the economics are to our ownership and our players."
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