Shut Up and Deal
I'm sure if you are reading this, you are football freak enough to know the NFL owners proposed a new Collective Bargaining Agreement (or "CBA") to replace the current expiring contract. There are many modifications to be considered by the players and their union, the NFLPA, but the one generating the most media attention is the proposal to add a 17th game to the current schedule. Before we go any further, here's the bottom line.
The Bottom Line:
The deal would increase players' share of revenues to 48.5% from 47%. The players' aggregate share would increase as a total but not be very impactful on a per game basis because the increase in games more than offsets the increase in revenue sharing rate. Also, the NFL cannot impose a 17th regular season game; the power to do so seems to rest only with the NFLPA. If there were a 17th game the players would have a very low benefit for the increased work load (increased 1% financial benefit for a 6.25% increase in work for players).
Let's Make Sense of the Numbers
Based on the CBA Proposal Fact Sheet provided by the NFLPA (seen here at Darren Heitner's Twitter page) there are two factors related to the 17th game:
- Salary Capped - The proposal says if there is a 17th game, players will receive 1/17th of their regular "Paragraph 5" salaries...up to $250,000. So, guys scheduled to make more than $4.25 Million in that year would get somewhat screwed and would make "only" $250,000 which would make larger contracts worth a bit less. [UPDATE - The owners have removed the cap in the latest version.]
- Revenue Share Media Kicker - The players split revenue with the league, currently getting 47% of the designated funds. In 2021, that amount will increase to 48% AND if the NFLPA consents to 17 games, that amount has the "ability to increase to 48.5% share through a media kicker". This revenue is projected to reach as much as $5 Billion dollars over the 10 years of the proposed CBA length.
The owners had to know the first item would be met with not a lot of excitement by the players...
The second item is a bit more complex. The language "the ability to increase to 48.5%" indicates that there are potentially some qualifying events related to this nebulus "media kicker" that would have to occur to reach that threshold. And I'm not sure if anyone outside the of the negotiations teams knows those details, as I have not seen them anywhere online. But hypothetically, let's take a look at how the 48.5% increase might look.
How Much Revenue Are We Talking About?
The NFL is a private organization and so their financial details do not have to be made available to the public. Fortunately for nosy guys like me, the Green Bay Packers are the only non-individually owned team in the league and, due to the owner's softness for the feel-good story of the Green and Yellow, they remain owned by the people of Green Bay. Which means it is a public entity that has public financial disclosures.
So, in 2017, the Packers reported their share of NFL revenue was $277 Million. Multiply that by 32 teams and we see the owners' 53% take of revenue was $8.864 Billion. Working backwards, we see the players' share was $7.861 Billion. I looked through the current CBA and being a complete slacker, I couldn't find how the NFLPA distributes the players' share of revenue from the league, but for the sake of simplicity let's just give each player on the 53 man roster an even cut. So, each man is looking at $289,671 per game for his share of revenue in 2017. Remember, 2017 is based on 16 games.
What if We Have 17 Games?
So, given the 2017 numbers, let's assume those base figures for our 2021 projection meaning, instead of the $16.7 Billion pool of funds to be split between owners and players, that pool grows to $17.8 Billion assuming 17 games instead of 16 (this is admittedly understated because additional playoff games proposed in this version of the CBA would increase the revenue pot but I haven't any idea how to weight playoff games vs. regular season games so I will ignore this challenge for now). The proposed CBA will increase the players' share of revenue to 48% (from the current 47%) which would be equal to $295,834 per player or about 2.3% more than the amount we calculated for 2017.
Recall, if the NFLPA consents to that magical 17th regular season game and the "media kicker" is kicked to its fullest potential, the players can add another 50 bips to their take, increasing their share of overall revenue to 48.5%.
The casual observer might say, "well, if the players get 48% of revenue for 16 regular season games, that works out to 3% per game so shouldn't their share be 51% if they go to 17?" The casual observer in this case was my teenage son who is by no means a 7 figure union lawyer, the type of which the NFLPA might hire to negotiate their contract. But we can all agree that 51% is a majority and it would be doubtful rich owners would consent to giving up a majority of anything. At any rate, that simple pro-rata arrangement is not on the table so looking at the additional 0.5%, we see the per player share of revenue increases to 298,916/player which is 3.3% more than 2017, however, it would only be an additional 1% more revenue to play 17 games than to play the 16 game schedule under the proposed contract. When you consider the players would be adding 6.25% to their workload by adding another game but would only see an increase in their upside of 1%, it's pretty clear why a good number of players have been vocal in stating the deal is unacceptable...and why the owners rushed to approve it.
Would You Give Up Your Saturdays for $50?
Looking at pure numbers in cases where they are in the billions can make it difficult to understand what is really happening so let's bring it down to ground level...
Joe Schmo works for a manufacturing company with a union that has secured a piece of the pie for all employees so, in addition to his regular salary, Joe gets a bonus at the end of each year based on the performance of the company.
This year, a new contract is negotiated which requires him to increase his 40 hour work week by 6.25% so now he has to come in each Saturday for 2.5 hours. Kind of a pain, but hey, he'll take the extra money since they get paid based on their regular rate...unless, of course, they make over 6.5% of the company's average salary which is $47,000...Joe makes just over $50,000 so he gets paid at the average salary rate for the additional Saturday hours. Weird, but he'll go along because, with the additional hours of productivity, he figures the company's profits will skyrocket which will make up for the inconvenience at bonus time, right? Not exactly. Although the rate their bonus is paid out for Monday through Friday work increased by 2.3% , the rate applied for bonus on the work done on Saturday is at only a 1% additional differential. So, he has to commit to giving up half his Saturday mornings (and make sure he's in bed at a decent hour Friday night to get up in the morning) for an extra $50 on the $5,000 bonus he will now earn under the new structure.
I Know, I Know...
You may be thinking the NFL player league minimum is not exactly $7.25/hour, however when you are talking in the realm of billions, large numbers can mask low percentage rates such as in the case of the incremental benefit of the proposed 17th game. A professional athlete who makes millions is not the same as a guy working in a factory for $50,000 but on a scale basis, the situations are congruent. Just because the market can support large numbers comparing rates is more appropriate than actual dollar amounts.
Final Thoughts
I have to say, there are a lot of positive things in the proposed CBA...
- There are all sorts of increases in terms of salaries and bonuses for players, including the base revenue sharing.
- Expanded benefits for former players including setting up hospitals in current NFL cities where they can get free basic check ups, mental health counseling and outpatient orthopedic services...not all encompassing for men who are often physically broken after retirement, but it's a start.
- Implementation of a "neutral" decision maker to be involved in Commissioner disciplinary cases which makes sense since the Commissioner represents the owners.
- More player friendly training camp rules/requirements.
- Increased playoff teams (I am still processing this, so likely another article on this impact will follow).
Despite all that, I would think the players likely want to have the 17th game valued at the same basis of each of the other 16 games for revenue sharing purposes which would put them at or above 50%. If there were ever going to be any 17th game, the players would mandate some form of lifetime medical program and/or establishment of some Long Term Care facilities for players paid for by the league. Also, I have heard talk about working to eliminate cannabis testing but I think the relaxed testing and penalites is the best they are going to get.
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| They won't be relaxing it this much, however. |
In the end, the players could elect to just take the 2.3% increase on the Revenue Sharing side and just not ever vote to permit a 17th game. Keep in mind, nothing in the CBA is tied to forcing the additional game; everything I've read says only the NFLPA can elongate the season and there doesn't seem to be financial incentives proposed by the league to compel them to do that.
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