Why won't NFL owners open their books to players?

By Amy Shipley
Washington Post Staff Writer
Friday, March 11, 2011; 12:46 AM

As the NFL's labor dispute drags on, the league's owners face the increasing threat of billions of dollars in lost revenue, the tarnishing of the NFL's gold-plated brand and a lengthy fight in federal court.

Yet they have remained unwilling to open their financial books to scrutiny by the NFL Players Association, despite the union's pleas as talks neared an impasse Thursday that such information is critical to reaching a deal.

Instead of full financials, NFL owners have offered what they say are sufficient data and an unprecedented level of financial information to support their key claims: that the NFL is operating an unsustainable business model, and that players should relinquish about $800 million annually to stave off dire financial consequences for the league.

The owners contend that as private businesses, they are not obligated to lay out all their financial data. Experts say, however, their reticence is likely driven at least in part by a desire to avoid the controversy or embarrassment that could result from giving players access to detailed and specific data on how each team spends its money.

That concern may have increased after detailed financial records from seven Major League Baseball teams became public last year, revealing questionable expenditures and apparent accounting tricks by team owners.

"The details in some of the books from some of the clubs could result in some embarrassment," said Andrew Zimbalist, a noted author on sports economics and a professor of economics at Smith College. "They might be paying themselves or their consulting companies healthy salaries, or maybe they're paying their sons and daughters or aunts and uncles and first-cousins some good money, too.

"There's just going to be some dirty laundry, and they don't want to have it revealed."

Because of the league's current revenue-sharing agreement with the players, the union receives data on all the league's revenue streams, and the collective bargaining agreement defines how revenue can be counted. But players have no access to the figures that sit on the expense side of the ledger for each team.

Only the publicly owned Green Bay Packers release their financial data annually; much remains unknown about the other 31 teams.

"You're making the claim that you're losing money," said David J. Berri, an associate professor of economics at Southern Utah University. "You have to establish that. You are obviously not required to do that, but the players are not required to give you a billion dollars either."

Yet some question whether full disclosure is necessary or appropriate.

"If you get everything, does that mean you get to question how much to pay the coaches?" asked Marc Ganis, president and founder of the Chicago-based sports consulting firm SportsCorp. "Or how much to pay the marketing people? Do they then have the right to start questioning every expense?"

NFL owners have offered to provide financial data for all teams to an independent third party, so that party could verify the claims to the union. The union, however, doesn't think data about profits itself is enough to justify economic concessions, even if independently verified.

"We've offered to make even more information [available], including information that we do not disclose to our own clubs," the NFL's lead negotiator Jeff Pash said Wednesday. "So I don't think there should be any issue of disclosure."

NFL officials have pointed out that the NBA's owners provided detailed financials for each of their teams to the National Basketball Players Association, yet have made no progress in their collective bargaining discussions.

Major League Baseball, meantime, took a public relations hit when financial information about several of its teams was released last year. In May, divorce court records showed that two sons of Dodgers owner Frank McCourt were on the payroll for a combined $600,000, though one was reportedly enrolled at Stanford business school and the other worked for Goldman Sachs in New York.

Records also showed the team was charging itself $14 million in rent on land it already owned; and that a consulting company known as the John McCourt Company had raked in some $4 million over 18 months, according to published reports.

More disclosures followed in August, when _blankdetailed financial statements from the Florida Marlins, Pittsburgh Pirates, Tampa Bay Rays, Los Angeles Angels, Texas Rangers and Seattle Mariners were posted on the Web site Deadspin. The records showed that some teams that had been operating shoestring payrolls, collecting large sums from the league's shared revenue pool and begging for publicly funded stadiums had, in fact, been making significant annual profits.

Some experts say detailed information about expenditures, even if it is offensive, is not necessarily relevant to the central issues of profitability that the NFL owners have raised. Ganis said even even a host of eyebrow-raising transactions - however inflammatory they might be - would be unlikely to affect the bottom line of a $9 billion a year business.

Yet the appearance of a lack of transparency drives emotions.

"The union can use it to bludgeon the NFL time and time again," Ganis said. "It's an emotionally effective tool."

© 2011 The Washington Post Company