Millionaires vs. Billionaires (Ep. 23)

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(photo: Nic McPhee) Are we heading for an NFL lockout? Probably.

Millionaires vs. Billionaires: Five things you don’t know about the NFL labor standoff.

Are you ready for some … labor negotiations? Yes, the National Football League held a nice Super Bowl just a couple weeks ago – the Green Bay Packers beat my beloved Pittsburgh Steelers, sadly. Still, it was the most-watched TV program in U.S. history. So: everyone in the NFL family must be happy, right?

Not quite. The owners have opted out of their collective bargaining agreement with the players and are threatening to lock out the players for the upcoming season. At issue: money, of course. The league produced about $9 billion in revenues last year. The owners think the players get too big a share. So, for now, they’re taking their ball and going home.

That’s the topic of our latest podcast episode, “Billionaires Vs. Millionaires.” (You can download/subscribe at iTunes, get the RSS feed, read the transcript, listen live via the box above or read the transcript.) Our mission was simple: whether you’re a football fan or don’t know the first thing about the game, we wanted to tell you five interesting things you probably don’t know about this most unusual labor standoff.

As of this writing, team owners and the players’ union are behind closed doors with a federal mediator. And nobody’s talking to the press. Fortunately, we spoke to everyone last week. So in this podcast, you’ll hear from a variety of NFL insiders, including: DeMaurice Smith, the head of the players’ union; Mark Murphy, the president and CEO of the Super-Bowl champion Packers; Richard Trumka, biggest labor leader in the country (he runs the AFL-CIO, with whom the players’ union has strongly aligned itself); Eric Grubman, the NFL’s executive vice president for business ventures and finance; and a couple of NFL players: Drew Brees, the MVP of last year’s Super Bowl (and a member of the union’s executive committee), and Brandon Jackson, who has spent four seasons with the Packers but currently has no idea what his future holds — and is expecting a third child in a few weeks.


Barton Silverman/The New York Times Drew Brees, last year’s Super Bowl MVP and a strong union man.

The arguments that unfold in the podcast are both very blunt and very nuanced. The blunt part: the owners argue that the players got too good of a deal last time around, and with costs rising, they need to get some money back. Here’s Murphy from the Packers:

Murphy: [A] couple things have changed that have impacted the current agreement. I think the biggest thing is stadium financing. It used to be that municipalities, and cities, and communities would pay for the building of stadiums. And you go way back and, you know, they were combination baseball-football stadiums that cities would build. Now, there are football-only stadiums, and they’re being built by the individual owners. So that’s a big expense that, you know, we didn’t have in 1993 when the agreement was, our system was agreed to. …

You know, the current agreement started in 2006 — and I don’t want to get into too many of the details, it will just bore everybody to death — but just from a broad perspective, our player costs have grown at eleven percent from — well, since 2006, while our total revenue has grown at an annual rate of about 5.5 percent, so just about twice the rate of the growth in player costs relative to revenue. It’s obviously not a healthy situation, it’s not sustainable.

Here’s how the owners and players currently split revenues: the owners get $1 billion off the top; of the remainder, roughly 60 percent goes to player salaries and benefits. What the owners want in a new agreement is another $1 billion off the top every year, over a seven-year term. Here’s Smith, head of the players’ union:

Smith: The owners have asked me to put my name on a $7 billion check back to some of the richest people in the world. My guess is that if I had the choice between being vilified for not having football or for writing a $7 billion check without any economic justification, I’d choose the former and not the latter.

I then asked Smith to describe the league’s business model:

Smith: It’s a monopoly. It’s a non-profit monopoly. The National Football League is a 501(c)(6) non-profit entity, that has been able to enjoy substantial benefits, and every player would admit that it’s a phenomenal business model. Revenue in the National Football League was an astounding $9 billion last year. We had record viewings for not only the Super Bowl, but regular season games. More people watched the NFL draft than playoff games in other sports. So, you know, for people who watch football on TV and love it like I do, there is an economic juggernaut that continues to operate both before and after you turn your TV off.

SJD: What does the public think about the players that from your perspective now you think is all wrong?

Smith: I think there’s a misperception about the business of football. And that cuts across two or three general categories. One, our players only play for an average of 3.4 years, and most of our fans actually think that our players play for a longer period of time. Second, virtually all of our fans believe that if you get hurt playing football, you have post-career health care to take care of the injuries that you suffered as a direct foreseeable consequence of engaging in the business of football.

So the owners claim to need a bigger share of the revenue pie to keep things working for them. The players claim they’re happy with the old deal but, now that the owners are asking for a give-back, their union makes the case that the players deserve and need every dollar they’ve been getting, in part to deal with life after football.

The most interesting moment of the podcast, to me at least, is when I asked Packers CEO Murphy about life after football. Murphy is in an unusual position: he spent eight seasons as a player (with the Redskins) and even worked for the players’ union — but now he’s on the owners’ side. Here’s his quote:

Murphy: You know, right now our current players if they’re vested, and you vest if you play three or more seasons, you get health insurance coverage for five years, which is great. But I look at it, too, and the transition for players from playing in the NFL to finding another career and establishing themselves is very difficult, and I really wonder, sometimes, if we do too much for the players. They’ve got severance pay and a 401(k) plan. I guess what I’m saying is that sometimes it’s not all bad, and going back and talking to some of the players who played for Lombardi in the ’60s — you know, they worked in the off-seasons, and they made a very smooth transition into their second careers because they had to. And so I’m a little worried that if we do too much for players in terms of compensation after their career’s end, and health insurance — it’s not all bad to have an incentive to get a job. And, so those are just some of the things we’re thinking through and talking through.

If I were a betting man, I’d say it’s likely there’ll be a lockout (Vegas and InTrade think so, too), but with so much money on the table, I’d be surprised if it lasted very long. There are 9 billion reasons to reach an agreement relatively soon. Have a listen and let us know your thoughts.


Barton Silverman/The New York Times

Brother, can you spare a billion? NFL commissioner Roger Goodell and DeMaurice Smith, head of the NFL Players Association.

Michael Radosevich

What's deplorable is that the players, almost all of whom had some college, and many were excellent students in college, haven't planned ahead and formed a league of their own. The "owners" bring nothing to the table - nothing. Most of the stadiums are built and owned by cities. A teams administrative offices could be built in a matter of a few weeks, especially in this economy with many highly qualified accountants, office workers, and the like looking for work.

The players are the game. Nobody pays $75 a ticket - or $150 or whatever - to see Jerry Joan or Danny Snidely. The TV contracts could easily be created with networks desperate for programming - and again, the TV networks don't pay billions so people can watch "owners" in their luxury boxes.

If the players continue to go along with the "ownership" system, they have no one to blame but themselves for the periodic lock-outs and other maltreatment under this modern slave-owner system. If not this year, when?



I agree with Michael that the owners are the least important part of the football apparatus. The players should form a non-profit organization and buy a team, then another, and another . . .


NFL, WFF not much difference. The actual football game is a now distraction to the NFL, gee to bad you have to play right! 2 hr pre game show then Kickoff Commercial, Play commercial, Play commercial, play, commercial, Punt commercial, TD Commercial, PAT Commercial, Kick off, Commercial. and on an on. I can't see where the players get winded. You might actually cut down on injuries if the players weren't so rested in between play. And the game announcers are mind numbing to listen to so pay them too.

Forget the Strike lets just pay em all for showing up.


The problem with this statement:
"I'd be surprised if it lasted very long. There are 9 billion reasons to reach an agreement relatively soon. Have a listen and let us know your thoughts."

When they NFL negotiated their last round of TV rights, it stipulated they get paid, lockout or no lockout.

The owners can site back and collect checks from the networks. They just cut out their biggest variable expense, so they can continue to make a profit, while the players get nothing.

Unfortunately, I think there will be a lockout, the players will hold out as long as they can (with a significant amount of football missed), but they will end up caving.


The last guy says this, "But I look at it, too, and the transition for players from playing in the NFL to finding another career and establishing themselves is very difficult, and I really wonder if we do too much for the players."

Hello?! Earth to to guy completely out of touch with reality. Those players are the ones doing too much FOR YOU. They are not only 100% of the product but also risking their futures.
Doing too much for the players!
You mean you are doing too LITTLE in comparison.


@Michael Radosevich

"The players are the game."

A player without a stadium isn't very entertaining. The owners are good for something.
Also, a player without associated Mythology is nothing. Fans don't go to watch generic football, they go to watch *their* team - their _heroes_.

If you abandoning the existing league you lose all the history, mystique and myth of the existing teams. And that's what keeps people addicted to the game - the story behind it. After all, a touchdown has to *mean* something or it's pretty mundane.

Why else is there 4 hours of pre-game show for the Superbowl?

It's interesting that the last league to try and challenge (the XFL) tried to reconnect and associate their league with the history of the game - "We're going to *bring back* smash-mouth football." A clever painting of the XFL as a true heir and the NFL as an illegitimate usurper.

Dan Jiddish

Both of Murphy's points are off the mark.

No one is putting a gun to the owners' heads and demanding new stadiums. You invest in a new infrastructure if you think the benefits out-weigh the cost; since they can't rip off the municipalities any more with false promises of tourism, they're looking for their next target.

Additionally, comparing the NFL in the 60s to now is ridiculous. I'm sure mandatory pre-season practices start much earlier today, and the game is incredibly more intense, requiring much more attention to keeping yourself in shape and improving in the offseason, as opposed to pulling down a part-time white collar job.

If the owners had a real case to make, they'd open their books and prove what kind of financial shape they're in. The fact that they don't do that has me skeptical at best in regards to their plight.

Joshua Northey

"The owners can site back and collect checks from the networks. They just cut out their biggest variable expense, so they can continue to make a profit, while the players get nothing."

Actually they need to pay all that money back, so it really is only a loan for 9 months.

Also the real problem with this statement "I'd be surprised if it lasted very long. There are 9 billion reasons to reach an agreement relatively soon." is that the writer is all confused about who the audience is.

No one gets $9billions dollars. The owners get some, the players get some, staff gets some, et cetera et cetera.

The owners get say $5 billion, but then they have costs that may somewhat or entirely offset that $5 billion. If the reduction in costs from not having a season makes them lose less money than the losses they were taking on having a season then it ABSOLUTELY makes sense to walk away from the 9billion.

Income is what you care about in the end, not revenues, and so much business journalism screws this incredibly simple point up.

Sure everyone who is getting paid from that $9 billion and all the ancillary people at ESPN and the NYT et cetera who make a living off of the NFL care deeply about that money getting spent. But it only makes sense for the owners to spend it if they are going to come out ahead of where they would if they didn't spend it.


Dan Jiddish


College Football stadiums could easily replace owner stadiums.

I wonder what kind of revenues the players would see if they came to an agreement with large state schools to contract out the stadium and operation of stadium-related activities. The schools need the money too (supposedly).

Additionally, I personally would rather see Eli Manning playing for the neon green and black "Gigantes" than watch some UFL cast-off under center for the Giants. I'll take a quality product any day over the history.

I like the idea of the players controlling 100% of revenue and cutting the owners out of the equation and it would likely win out over a league composed of second rate players under the NFL brand.


I'd have to work 20 years to make the average salary in the NFL. WIth that kind of annual salary, you are basically self-insured for all but the most casastrophic of injuries/illnesses. If a player can't put aside a portion of their paycheck to cover post-retirement expenses, that's really nobody's fault but their own. With exceptions of debilitating spinal injuries or head trauma, most injuries sustained while playing will not incure significant long-term medical expenses. Median salary over the last few years: about $800,000. Average time in the league: 3.4 years. So you are 25 years old, unemployeed, and you just grossed $2.4 million, not including any endorsement deals. Pay for your own arthroscopic surgeries after the 5-year limit and get a new job with health benefits. That's what the rest of us do, only without the $2.4 million.


I don't agree with Murphy's assertion that players are being paid too much. In comparison to the 60's, I can only imagine that the time required to stay competitive in the NFL equates to a full-time job. The complexity of offenses and defenses that need to be prepared for, the tens of thousands of hours of video that are available for research, the difference in terms of physical fitness... Comparing the current NFL to the 60's version is apples and oranges. How would you feel if Big Ben missed OTAs because he decided to spend his time promoting an R&B group that his music label is producing.


"Smith: It's a monopoly. It's a non-profit monopoly. The National Football League is a 501(c)(6) non-profit entity, "

Slightly Off Topic: Why, when everyone is hollering about federal/state/municipal budget shortfalls, isn't the NFL paying their fair share? If they're worried about how to spend $9B, they should start worrying about paying their fair share of taxes, too.


You might want to verify Mr. Murphy's facts about owner's paying for their own stadiums....especially since he's from Wisconsin where there's a whole lot of union busting going on. Wonder how the Tea-baggers would like to see the Packers on the picket line?

OTH...Out here in California....I guess Santa Clara doesn't need to fight with Jerry Brown over the rescinded California redevelopment funds they were planning to use to build the 49ers a stadium???

Finally.....while football stars are paid well, the conditions for the "others" continues to be really sad and it would have been nice to have seen more attention paid to those players who are cut before they qualify for the 5 years of medical care. Or who "retire" with significant medical problems after a career that didn't qualify for big bucks. Fat chance they'll be able to purchase health insurance with football related pre-existing conditions.


Steven Bignell

Instead of "non-profit" I wish writers would use the term "tax exempt" to underline the full impact of that bogus status. The NFL, as with all similar non-charitable tax-exempt organizations, are allowed to make huge profits. They can use it to pay huge salaries, bonuses, buy big pensions, purchase buildings, charter trips and it is almost impossible to go after them. I agree with Ray that we should be asking NFL owners to pay their fair share of taxes. Providing health care and other long term benefits to their players would reduce their profits and help them lower their taxes so maybe they would be more open to sharing their wealth.


Mark Murphy said: " Now, there are football-only stadiums, and they're being built by the individual owners. So that's a big expense that, you know, we didn't have in 1993 when the agreement was, our system was agreed to. "

Wait a minute: Heinz Field, in Pittsburgh, was built in 2001 with $185.5 million of taxpayer dollars. Not the whole cost, obviously, but a big chunk. Think the city will be repaid?


I can feel for both sides...but I can't quite reach either of you.

p.l. greene

I went to high school in McLean, Va... a neighbor(who was a Federal Mediator in the first strike)said to me..."know this, never trust a man with a tan in the middle-of-winter". He-of course-was talking about Rozelle. I met Alan Page(Minn Purple People Eater)at the home.

The owners were full-of-it then...this just-in, Nothinz Changed.

Anybody that listened to the Baseball Owners in the 90's heard that it wasn't about 'busting the union'. Fay Vincent has repeatedly said in the last few years "Of course it was about busting-the-union"..."they were more formidable than we thought".

Anybody that can't see the owners have the leverage and ARE GOING TO just stupid. It will be a lock-out, it will be 'settled' with the owners getting a significant portion of the 1Billion extortion effort. The players will lose badly and people don't see the cumulative affects that their collective sacrifices cause them as they age.

Clearly, many(players) do not take full advantage of the opportunities that would better themselves apres futbol...but the owners can & SHOULD provide more.

The owners don't give a rodents rear-end about them or the fans. Period.



tdh Montana

Packers CEO Murphy is exactly the kind of turncoat guy who will say anything to his new bosses. I get a lump right here when I hear his thoughts.


If they cancelled the NFL season tomorrow, I would never miss it, basketball go ahead on, baseball who cares, hockey-silly game, soccer fun to watch but only when kids play.
I go to the gym and exercise everyday, and when I was younger, I played sports, but have always been bored to tears watching (except may Ali and Marvin Hagler in their prime)

Math Teacher Bob

A classic scenario which illustrates the economic obscenity which is our country.