NFL Armageddon 2011 – billion dollar babies
New England Patriots owner Robert Kraft, regarded as one of the league’s more respected owners, told the media attending Tuesday’s meetings he believed it remains a realistic goal to reach a new CBA before the end of the season. At the conclusion of the league's fall meetings, Kraft said "we're moving ahead. I'd like to see this get done before the season ends." Asked if that was a realistic objective, he added "to me it is."
And Kraft was not the only owner who expressed optimism. Indianapolis Colts owner Jimmy Irsay suggested he too believes there are no worries. The Colts and Indianapolis are scheduled to host the 2012 Super Bowl (which would of course be cancelled if the season wasn’t played)
"It's taken a lot of time and energy to build the league into what it is and we want to keep it going," Colts owner Jimmy Irsay said. "I don't think it's doomsday, and we're taking it a day at a time. Everybody is engaged, and from my perspective the key thing is to find a solution. That's where both sides are.
"I know that energy (to reach a deal) will be there."
The one day meeting was not an “NFL War Counsel” as NFL commissioner Roger Goodell suggested.
Goodell, according to S.I.com’s Don Banks, decided to not discuss any specifics about the leagues contingency plans with the media. He did admit that team owners spent part of their day hearing about how to prepare for the worst-case scenario next year.
"I wouldn't say a big part of (the day was spent on) it,'' Goodell said.”I would put it as we're prepared for all alternatives. That's what we've focused on for the last several years. Our hope and our plan is to reach a collective bargaining agreement before the expiration. But we're prepared for all alternatives, like any business would do or any management. You have to make sure you're prepared going into a negotiation for those alternatives.''
NFL owners awoke Wednesday morning to a Wall Street Journal report that suggested if indeed there is a lockout the NFL could take a financial hit unseen in sports business history - what can only be termed a financial Armageddon.
According to the WSJ, at Tuesday meetings (the same meetings both Robert Kraft and Jimmy Irsay believed a labor solution will be found in the next 90 days) owners learnt “the lack of progress on a new contract with the players union had already begun to create financial losses—and that even if a deal were reached late next summer that allowed the league to play the entire season, total losses could reach $1 billion.”
As unimaginable as it might sound, if the NFL owner’s lockout the players in March when the current collective bargaining agreement ends and the two sides were to reach a new agreement before the start of the 2012 season (in other words no games are missed) the league will still lose $1 billion.
How is it possible for professional sports most powerful league to lose $1 billion even if games are never missed? According to the WSJ: EA Sports, a top merchandising licensee, has already requested a $30 million reduction in its scheduled payments because of the labor uncertainty. An EA Sports spokesman confirmed to the WSJ that discussions with the NFL are underway.
If there is no deal in place by March 1, the NFL report said the league could expect to lose $125 million. Existing corporate partners have demanded discounts on sponsorship deals and others simply decided not to sponsor late-season events like the Pro Bowl.
The report said owners could expect to lose $400 million in March alone, the prime month for fans to renew their season tickets and for the league to organize games abroad.
And consider this – five games on Sunday were faced the blackout blues. Tampa does not expect to sell-out a home game this year, the Buffalo Bills are facing serious ticket selling issues and the last time the Oakland Raiders sold-out a home game Howie Long was a member of the Raiders. The league is facing serious ticket selling issues, but at the end of the day the league is selling more than 90 percent of their overall ticket inventory. The issue the league needs to address is their blackout rule.
From April through August, the WSJ reported losses from labor Armageddon could climb by an additional $500 million as preseason games are missed. NFL officials said each team could expect to lose about $8 million for every cancelled home game. Remember each NFL team plays two home playoff games and charge their season ticket holders full regular season ticket prices for each pre-season game.
Grubman, told the WSJ the truth. "People think we can have a knock-down drag-out fight and settle on March 1, and everything will be fine, and it's not true."
And the NFLPA’s reaction to the WSJ report? DeMaurice Smith, executive director of the NFL Players Association, and George Atallah, the union's deputy executive director, didn't dispute the report's figures.
They accepted even the thought; the idea of a lockout is already upsetting sponsors and causing financial problems for the league. But the officials said the figures would not have any effect on the union's bargaining approach and that the disclosures were an attempt to put the onus on the union and make it look like it is the players' fault that these losses are going to happen.
Grubman raised a very important issue that few fans realize (and let’s be honest few NFL reporters whose prime focus is on who wins and loses on Sunday, not the dollars and cents of the NFL) the debt on many of the new stadiums being built by teams is being carried by the league (not the individual teams) and that has increased in the past decade to nearly $1 billion according to the WSJ report.
And what of Patriots owner Robert Kraft who is seemingly filled with cockeyed optimism following Tuesday’s meeting. Well not so fast as the WSJ reported. Ask Kraft, a member of the NFL’s management council executive committee, and he admitted the league is holding back on business endeavors such as building new stadiums without government funding or upgrading existing buildings with features like digital access from every seat.
"We're not going out and doing things and being entrepreneurial," he said. "So we lose and the players lose." Kraft tried to send a message to the players union believing it is essential the league and the NFLPA agree on a new CBA soon or deal with the consequences. "It'll be less of a deal the more time that goes by," he said. "If we go down the road of a lockout and losing games, we all lose."
Now if anyone believes the NFLPA is looking for a lockout and thinks it will make for good business is not following the story properly.
"There's too much at risk for all of our partners for any type of lockout or interruption in business,” DeMaurice Smith, executive director of the NFL Players Association said. "We would love nothing more than to have a new CBA soon."
NFLPA president Kevin Mawae, who recently retired after a 16-year playing career, also called for an early agreement.
"We should recognize the business we are both in and for our fans and workers, let's wrap this up by the holidays," Mawae told The Associated Press in an email. "I agree on both time and energy. Since 2006, the players contributed almost (US)$3 billion to stadium construction and improvements, so our investment is at risk, too. The players are the ones losing their health care, and yet it was the owners who opted out of this deal and are threatening a lockout."
As Foxsports.com reported after visiting the Houston Texans, NFL players are being told its time to batten down the hatches – there’s rough weather ahead
“We talk to the guys about saving as much money as you can from this year’s salary,” Texans NFLPA player representative DeMeco Ryans said. “I think guys are doing it because they actually see that it’s for real and a lockout actually is going to happen. You have to take measures into your own hands and plan ahead so you’ll be ready.”
In a nearby locker room stall, offensive lineman and 13-year NFL veteran Ephraim Salaam painted a different picture.
“They don’t get the magnitude of the situation yet,” he said. “The league is filled with a lot of young players ... Hopefully, everything can be resolved and we can keep working.”
Salaam then shook his head. He wonders how a league enjoying unprecedented popularity and revenue – the NFL generated $9 billion in 2009 – could be in this situation.
“Of course it’s frustrating because we have such a great league right now,” he said. “To have a work stoppage or the problems we’re having is crazy.”
Each NFL team is voting on whether or not to decertify the NFLPA if union officials believe that is the best decision the players could make. The players are acting as one and following the advice of their union leadership. Despite Goodell’s suggestions, NFL owners did not spend very much time talking about the impending labor issues Tuesday or if the NFL has a plan in place if there is a lockout.
Both sides are well aware the spectre of a labor dispute is hurting the league. Seemingly the two sides are both doing a great deal of posturing at this point in time. Each side is waiting for the other to blink in the game of ‘chicken’ with the hearts of football fans and NFL sponsors. The signs are everywhere, lock yourselves in a room and negotiate a new CBA NOW and avoid what will be monumental financial loses and a tremendous damage to the image of the National Football League.
The last word goes to a member of the Football Hall of Fame, a player, a Super Bowl winning coach and now an NFL broadcaster.
"Ain't no one going broke in football," Mike Ditka who was at the meetings said. "Greed is a great sin."
For SportsBusinessNews.com this is Howard Bloom. Sources cited in this Insider Report: The Wall Street Journal and FoxSports.com
Labels: DeMaurice Smith, Howard Bloom, National Football League, National Football League Players Association, NFL Aramageddon 2011, Robert Kraft, Roger Goodell, sports and labor, Sports Business News