“How many people here know the National Football League is a non-profit?”

Southpaw · July 2nd, 2009, 04:35 AM

Hmmmm.

Quote:

* The Wall Street Journal

* JULY 2, 2009, 8:13 A.M. ET

Mr. Smith Gets Down to Business
New Union Chief Tutors Players on NFL Economics; $8 Billion on the Line

By MATTHEW FUTTERMAN

The new union leader’s quiz of some of the best-educated professional athletes in the country proceeds like this:

“How many people here know the National Football League is a non-profit?” DeMaurice Smith, the longtime Washington, D.C., lawyer asks 75 members of the Seattle Seahawks. No hands rise.

“How many people here know that the NFL has a special antitrust exemption granted to them by Congress?” Again, no hands. “We all understand the difference between a strike and a lockout?” Silence and blank stares.

A look at new NFL Players Association executive director DeMaurice Smith’s trip to introduce himself to the Seattle Seahawks.

Mr. Smith, elected in March to replace the late Gene Upshaw and lead the NFL Players Association, then asks how many players saw the news about the league’s new deal with DirecTV, which guarantees teams an additional $4 billion through 2014. They didn’t. He asks how many of the league’s new and renovated stadiums were paid for with tax dollars. They shake their heads in disbelief when he gives them the answer–virtually all of them.

These men, like many National Football League players, are essentially in the dark on the basic underpinnings of their league’s $8-billion juggernaut, even in an era when teenage phenoms speak of themselves as brands and approach their careers as sophisticated businessmen.

That’s about to change. After two months of visits with nearly every NFL team, Mr. Smith met Tuesday with the league’s player representatives to plot strategy for the upcoming negotiations in what may become the NFL’s most intense labor standoff in two decades. Team owners last year set the stage for this showdown when they voted to terminate the current collective-bargaining agreement after the 2010 season, two years ahead of schedule. Owners say the players’ share of the pie—about 60% of total revenues—is too large and needs to be scaled back.
‘Potential for Battle’

“There is an urgency,” says New Orleans Saints quarterback Drew Brees. “We’ve been in a period of labor peace for a long time, and this is the first time you really feel the potential for a battle.”

The NFL Players Association’s approach is to educate players about how the league operates. That’s why Mr. Smith was in Seattle with the Seahawks last month.

“I’d say the learning curve for both the players and for me is pretty steep right now,” said Mr. Smith who has no previous experience in sports or labor.

His rank-and-file doesn’t disagree.

“I didn’t know any of this stuff until I met De a month ago,” said T.J. Houshmandzadeh, who signed with the Seahawks as a free agent during the offseason. “I don’t ever remember hearing stuff in depth like that.”

Mr. Houshmandzadeh was a player representative for the Cincinnati Bengals before signing with the Seahawks earlier this year.

The NFLPA was founded in 1956 but exerted little power during the next three decades. Players abandoned a strike in the middle of the 1987 season, and two years later the union decertified so it could take the league on in court on antitrust grounds. Only after it won a series of legal rulings did the NFLPA become a union again in 1993, reaching a collective-bargaining agreement with management that year. It now represents nearly 2,000 current players and thousands of retirees.

Mr. Upshaw, who led the Players Association for 25 years, took a top-down approach to his organization, sharing information only when he felt it necessary. The short length of the average player’s career—just over three seasons —and the league’s annual turnover rate of about 30% also make it difficult for the NFLPA to develop consistent leadership among players.

“The re-education process is a constant battle,” said Jeff Kessler, who was a close friend of Mr. Upshaw’s and is the chief labor counsel for both the NFL and NBA players unions. “You have to start over every year, and you hope some of the veterans bring the newcomers along.”

Most NFL players have spent at least four years on a college campus, unlike athletes in the other major professional sports leagues in the U.S. But NFL players say Mr. Upshaw told them that he would take care of their business—and in large part they let him—with decent results. Mr. Upshaw took over the Players Association in 1983, when the average player earned about $90,000 a year and players didn’t have the right to free agency.

After years of litigation, players won the right to free agency in 1992. By the time of his death in 2008, the average salary had grown to $1.75 million, though unlike in other sports, contracts are not guaranteed. Meanwhile the value of an NFL franchise has grown to more than $1 billion, and the owners own a cable channel, the NFL Network, valued at roughly $1.5 billion.

“For so long, I didn’t really want to get involved in that side of football,” said LaDainian Tomlinson, the San Diego Chargers’ running back and league’s most valuable player in 2006. “You listen to De, it’s very enlightening.”

Seahawks lineman Patrick Kerney said Mr. Upshaw’s visits to the team camps would occasionally descend into mudslinging, as players would challenge everything from his $6 million annual compensation package, to whether he flew first class or on a private jet to meet them.

“He’d get defensive when we would start asking questions,” Mr. Kerney said.

Jason Belser, a top lieutenant to both Mr. Upshaw and Mr. Smith, acknowledged that his former boss could be curt when players challenged him on the trappings of the position. “How do I say this diplomatically?” Mr. Belser asks. “That’s what comes along with the space you occupy and the time you occupy it.”

Mr. Smith is a former assistant U.S. Attorney and litigation partner at Patton Boggs who grew up in a family of ministers and attended Cedarville University, a Christian college in Ohio. He earns less than half of what Mr. Upshaw used to earn and flies economy class on his visits to NFL camps, which come at a crucial time for the players.

Just three months into his new job, Mr. Smith is mobilizing roughly 1,900 players for a fight against some of the most powerful businessmen in America.

Owners are seeking to slow the growth of the cap on players’ salaries, which has been going up from $5 million to $12 million per team each year. If the league doesn’t get a new deal before March there will be no ceiling or floor on player salaries for the 2010 season. Also, in the final year of the agreement, the league does not have to provide most player benefits.

As part of his effort to make the players conversant in the issues, Mr. Smith is stressing their value to their industry. Considering no one in the world can do their jobs as well as they can, that value is fairly high.

So, each time his questions meet blank stares—as they did at team meetings this spring—he follows up with basic lessons in the business of football.

Wearing his inside-the-Beltway pin-striped suit, he explains the basics of antitrust law, describing how The Home Depot and Lowe’s can’t get together and decide the price of a hammer, but NFL teams can jointly decide how much to sell the television rights for. He mentions that the NFL spent millions lobbying Washington legislators last year.

He explains how NFL teams secured billions in public subsidies for their stadiums because they promised the projects would produce jobs and their games would produce tax revenues. Then he argues that if the owners ultimately lock the players out and prevent the 100,000 people who work in those stadiums from doing their jobs, then they’ve gone back on their deal, and people need to know about it.

“This is how we need to start talking about our business,” he tells the players during the meeting with the Seahawks.

NFL officials say the league is not going back on any promises. Owners are simply focused on fixing a financial system they claim has been broken since 2006, when they agreed to boost the players’ share of total revenues from 57% to 60%.
Seeking Fairness

“Our goal is an agreement that is fair to the clubs, the players and the fans,” said Brian McCarthy, a league spokesman.

About 75 minutes into Mr. Smith’s seminar, the lessons begin to sink in.

Mr. Houshmandzadeh raises his hand and asks if it’s OK to start talking about the public funding for the stadiums and the anti-trust exemptions when sportswriters interview him in the locker room. Mr. Smith tells him he should, and if writers don’t publish his sentiments he shouldn’t talk to them anymore.

Then another player, veteran free safety Brian Russell, raises a question about the so-called voluntary spring workouts, known as Organized Team Activities, which are voluntary in name only. Mr. Russell says the coaches have been putting the players in one-on-one drills, which, as Mr. Russell recalls, aren’t supposed to take place during the pads-free spring workouts.

“Maybe you guys could stay around for practice?” Mr. Russell suggests. Mr. Smith and the four other NFLPA executives he has come here with do just that. No one-on-one drills take place, which doesn’t surprise Mr. Smith.

“The attitude from management to the players in the past has always been ‘Hey, you guys like this game, right?’ It’s pretty good, isn’t it,” he says, watching the Seahawks practice through his dark sunglasses. “I’m just trying to get these guys to think about more than fourth and one, or third and long.”

Write to Matthew Futterman at matthew.futterman@wsj.com

CardLogic · July 2nd, 2009, 05:18 AM

Somehow I doubt that Mr. Smith even likes football...

And for clarification: yes, the National Football League is a non-profit entity, meaning the organization itself makes no profit. Of course, that is entirely a different topic than whether the individual member teams are for profit, which they obviously are.

The suit, Mr. Smith, uses the old and well known tactic of "framing the question."

RonF · July 2nd, 2009, 06:02 AM

I think the players and their representative Mr. Smith will be playing hardball with the owners who cry poverty but have everything going their way. Also, it's important to keep in mind that the real value of any business, football included, is when you sell it. Some of these teams are valued around a billion dollars, these owners are laughing all the way to the bank. You can start to smell the blood in the water now, wait till these players are really focused on getting what they feel is their true share.

MadCardDisease · July 2nd, 2009, 08:41 AM

Quote:

“Our goal is an agreement that is fair to the clubs, the players and the fans,” said Brian McCarthy, a league spokesman.

I'm sure that both parties will really care about the fans when this gets ugly.

NuttinButTDs · July 2nd, 2009, 08:51 AM

Quote:

Originally Posted by RonF

I think the players and their representative Mr. Smith will be playing hardball with the owners who cry poverty but have everything going their way. Also, it's important to keep in mind that the real value of any business, footbail included, is when you sell it. Some of these teams are valued around a billion dollars, these owners are laughing all the way to the bank. You can start to smell the blood in the water now, wait till these players are really focused on getting what they feel is their true share.

GM, Chrysler all had values of billion plus. The real value is controlled by the consumer (fans).

If the consumer cartel decides not to go to the game or watch NFL on TV, the value will drop drastically and both the owners and players will come to their senses.

MigratingOsprey · July 2nd, 2009, 08:51 AM

Quote:

Then another player, veteran free safety Brian Russell, raises a question about the so-called voluntary spring workouts, known as Organized Team Activities, which are voluntary in name only. Mr. Russell says the coaches have been putting the players in one-on-one drills, which, as Mr. Russell recalls, aren’t supposed to take place during the pads-free spring workouts.

“Maybe you guys could stay around for practice?” Mr. Russell suggests.

maybe you should get to work brian ......... if anyone could use a couple extra live reps it's you

Buckybird · July 2nd, 2009, 03:32 PM

I see a work stopage coming that could last a whole season. Mr. Smith aint playing.

Shogun · July 2nd, 2009, 04:04 PM

Smith sounds like a BAMF. Should be interesting to say the least.

40yearfan · July 2nd, 2009, 04:06 PM

Sometimes negotiating an agreement strictly based on the value of the monies available might work against the players. If this recession goes into a depression, the available money pool could drop drastically. If the CAP is based solely on income, salaries could go back to pre 80's levels.

Of course that means ticket prices would drop and more fans could make the games.

slanidrac16 · July 4th, 2009, 08:57 AM

I get the feeling we had better enjoy this 2009 season. It may be the last one as we now know it.

It's sad, but like any corporation there is $$$'s always "hidden". The day owners are willing to open their books is the day I will believe them. On the other hand the players had better look at things and appreciate how far they have come.

I think one major decision could help this situation and that is some kind of rookie salary cap. That doesn't mean less money for the players. It just means more realistic dollars for rookies coming into this league allowing more money to put toward retaining players for their entire career like it use to be.

Bottom line is the NFL has BILLIONS of dollars coming in every year. TV, radio, concessions, parking, tickets, luxury suites, and the most unfair of all idea, personal seat licensing. If these millionaires ( and billionaires) can't come to some kind of an agreement they deserve everthing they get.

azsportsfan01 · July 4th, 2009, 09:05 AM

I truly believe there will be no work stoppage. The players and owners know exactly what would happen should they lose a season. Both sides are going to make concessions. The owners know that if they go into a season without a cap they will never get it back. Something will happen this year.

LoyaltyisaCurse · July 4th, 2009, 10:07 AM

This is gonna get real ugly; we'd all better hope the Cards win the SB this year becuase this by the time a deal gets hammered out the team is gonna look a lot different...

RavensSuck1989 · July 5th, 2009, 12:37 AM

Quote:

Originally Posted by LoyaltyisaCurse

This is gonna get real ugly; we'd all better hope the Cards win the SB this year becuase this by the time a deal gets hammered out the team is gonna look a lot different...

Yea, you're telling me... Imagine the Titans a couple of seasons from now... could get ugly.

Perfectionist · July 5th, 2009, 03:45 AM

Quote:

Originally Posted by MadCardDisease

I'm sure that both parties will really care about the fans when this gets ugly.

As I have stated before, I gave up baseball after their last strike and I gave up hockey after theirs. My plan is to give up football if their is no season played. With all the money involved someone better realize that without the fans they would all have to make a living working like the rest of us.

abomb · July 5th, 2009, 02:15 PM

I have my popcorn ready, as this should be verrrrrry interesting.