The Major Issues in the NFL Lockout

All of the talk of will they, won’t they is over. The NFL players union decertified (giving them the right to sue the owners, which they did) and the owners fired back by imposing a lockout. While the owners will lose money from gate receipts, they are saving on salaries and operating costs. They are still able to collect nearly $4 billion from broadcast contracts next season even if there are no games played courtesy of an antitrust exemption.

Players and owners will both contend that there is no middle ground. Someone must relent or there will be no football this fall. Yes, it is a brutal fact but it is reality. One of the most profitable entities in the sports industry is dangerously close to shutting its doors for a season. And you’ll all have to learn to love hockey as much as I do….

There are three major issues on the table: revenue split, extending the season, and gaining control of rookie salaries. I’ll try to keep this short but let’s be honest, there won’t be any actual football to talk about any time soon…

Revenue Split

In 2010, the NFL generated over $9 billion in revenue. Under the current collective bargaining agreement, the owners are given a $1 billion cut of that revenue to cover costs such as stadium maintenance and construction, promotions and other operating costs. After that $1 billion, the players receive around 60% of the remaining revenue (which is about half of total revenue). They are eager to keep this structure the same, while the owners want $2 million for their cut to help build arenas in Los Angeles, Minnesota and Atlanta, among other places. Management has said that the current growth of the league does not mean much because of increases in player salaries and operating costs. Players want to retain their 50% share, which could mean more money given the current rate at which the league is growing.

Extending the Season

Management wants to cut the preaseason from four games to two and increase the number of regular season games to 18. For the owners, this means more money from gate receipts, broadcast contracts and perhaps even sponsorship. Players are pushing back, stating that extending the season will cut already short careers even further. This, in essence, means more money for the owners and less money for the players. In a related issue, players are complaining about benefits for retired players. Longer, more grueling seasons will only exacerbate the issue by worsening players’ post career health and decreasing their career earnings.

Rookie Contracts

Both sides agree that rookies make too much money and that their contracts are too long. Let’s call this the Jamarcus Russell complaint. Owners are saying that the lack of a rookie wage scale is leaving them out to dry. They have to throw too much money at players with no proven skill. This should be the simplest issue in the bargaining. Where the owners and players differ is what to do with the money that will be saved in implementing a rookie wage scale.

The Compromise

The owners should implement a rookie wage scale, similar to that of the NBA with available team and player options. Some of the money they save, estimated at over $100 million, should be distributed to retiree pensions. This assuages the worries of the players and soothes the woes of owners who are concerned with spending too much on guaranteed contracts for players without guaranteed skill *cough* Jamarcus Russell *cough*. As for the revenue split, the players should see their cut of the pie increase as the pie grows larger. This keeps the owners honest. If there is no revenue growth then the players’ cut doesn’t grow.

But I guess it isn’t that simple…