Although his Park Avenue office is as quiet as an empty stadium, NFL Commissioner Roger Goodell sits atop a seething volcano of fans who will erupt if training camps do not open in July. Fans care nothing about the details of the labor dispute that threatens to keep stadiums empty into September and perhaps beyond: There were meetings between the two sides last week, but apparently there have been no formal negotiations since March 11; the court hearing held Friday might — weeks from now — result in a decision that will restart negotiations. Even if, however, you think football is one of America’s dispensable frills, the NFL’s agony is a fascinating illustration of how things can spin out of control.
Explaining why the NFL — a hugely popular $9.3 billion enterprise — needs fixing, Goodell sounds paradoxical: Costs are growing faster than revenue, stadiums are the biggest costs and they must be made better because most fans never enter them. Most NFL fans have never been to a game; more than 90 percent never or rarely go. They watch at home on wide-screen televisions, with super-slow-motion replays and close-ups of linebackers’ collisions and cheerleaders’ cleavages. The television experience will be diminished, Goodell says, if the stadiums are not full. And the parlous condition of state and municipal budgets means that taxpayers are resisting building them.
Under the previous agreement, owners took $1.3 billion of league revenue off the top before players got about 65 percent of the remainder. This time, owners began by demanding that an additional $1 billion of revenue — subsequently reduced to less than $400 million — be set aside for stadiums and other investments, before the players get their portion. But players, whose careers average about six years, according to the league, resist sacrificing earnings so the league can make long-term investments that might benefit players now in high school. Furthermore, because fans — especially season-ticket holders — resent having to buy tickets for two home preseason games, the owners want to reduce those games from four to two and lengthen the regular season from 16 to 18. Players say this means more work and risk of injury for less pay. Owners say players would get a smaller slice but of a bigger pie.
These are splittable differences. But the players union responded to the owners’ lockout of its members by dissolving itself (“decertification”). This created a situation in which, without a collectively bargained agreement, all players would be free agents — independent contractors. So the players, whose pay and benefits increased 85 percent over the past 10 years and who began by playing defense against the league’s demands, now might threaten to unravel the draft, team salary caps and other arrangements by which a sports league contrives to produce competitive balance.
Because 43 percent of NFL revenue comes from national television contracts and is shared equally among the 32 teams, and almost 80 percent of all NFL revenue is shared in some way, teams in smaller markets can prosper: The teams in the past two Super Bowls were from Pittsburgh, Green Bay, New Orleans and Indianapolis. The combination of revenue-sharing and the salary cap means it takes a perverse genius for a team to lose money.
The owners, by decrying the current system, desperately want the union resurrected so they can bargain with it to preserve most of the system. Currently, the owners propose a salary cap of $141 million per team, meaning $4.51 billion in league-wide compensation. The players want $151 million, meaning $4.83 billion. It is ludicrous to risk even part of a season over so little, and both sides probably would, if they could, erase the past three months of staking out improvident positions and agree to extend the current system.
Any labor dispute is a test of the two sides’ pain thresholds. The owners think the players’ serious pain will begin when they miss the first of their 17 paychecks. The owners may, however, be forgetting a pertinent fact: NFL players — pain is part of their job description — are NFL players because they are intensely competitive and hate to lose at anything. After decades in which economic sectors much larger and more essential than the NFL — e.g., the steel and automotive industries — were laid low by mismanaged labor relations and as the role and rights of organized labor are being hotly debated, the NFL’s current crackup suggests that both sides are slow learners.