http://mvn.com/nfl-raiders/2008/03/28/the-coming-strom-nfls-labor-unrest-is-a-disaster-waiting-to-happen/By Patrick Patterson | March 28th, 2008
There are loud rumblings that the NFL is going to opt out of their collective bargaining agreement with the NFL Players Association. The last agreement was reached with the help of Oakland Raiders’ owner Al Davis bringing the sides together in the eleventh hour. This was a deal that neither side could truly claim victory, which means it was pretty fair. If the owners chose to opt out of the current cba, it will very likely lead to a either a strike or a lockout which will be a complete disaster to the NFL. The thing that is very peculiar to this potential labor standoff is that the true disagreement is not between labor and management, but between factions in management as large and small market clubs are disagreeing over the current system of revenue sharing and which revenue streams feed into the salary cap. The players are essentially caught in the middle of that debate, as it directly effects the size of the pool that becomes payroll for the players.
What follows is my rough outline of the issues at hand. If you would like to read the CBA in full, click here:
http://blogmedia.thenewstribune.com/media/CBA_Amended_2006.pdfRevenue Sharing
For a capitalist organization, the NFL has a very socialistic structure. The vast majority of the revenue streams are shared equally among the 32 teams. Even merchandise sales are shared among the 32 teams. Any NFL licensed product, regardless of the team emblem, goes into a pool for all of the teams to share. This helps teams like the Lions and Cards, which don’t have much of a national following. On the other hand, teams like the Raiders and Cowboys who are usually among the top selling teams in terms of merchandise, they don’t get anything extra. Those monster TV contracts are also split evenly.
The hot button issue in this potential disaster is that stadium revenues are not shared. A team with one of the new state of the art super stadiums are going to be able to get a much larger chunk of cash, because they don’t have to share their luxury box, concession, or seat monies. The owners of the large market teams are happy with that, as they get that bigger chunk of the pie. On the other hand, owners like Ralph Wilson of the Bills are not happy, as they feel they are being religated to being second class citizens of the NFL.
Salary Cap
The NFL has a hard salary cap, which means that no team may spend more than a certain amount on player payroll. This is a measure to prohibit a Major League Baseball type situation where a few teams can buy up the top talent and leave the other teams to be essentially Major League level farm clubs. The current NFL salary cap is approximately $116 million. The salary cap is determined by the collective bargaining agreement in that it will be a set amount of revenue:
Subject to the adjustments and credits set forth below, the amount of the Salary Cap for each NFL Team in years that it is in effect shall be (1) in the 2006 League Year, $102 million; (2) in the 2007 League Year, $109 million; (3) in the 2008 League Year, 57.5% of Projected Total Revenues, less League-wide Projected Benefits, divided by the number of Teams playing in the NFL during such year;
What this means in plain English is that for 2008 the salary cap is equal to 57.5% of the TOTAL revenue of the NFL. Before the 06 extension, it was based on the shared revenue, which explains the rapid rise of the cap in recent years.
FULL story at link.
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