Tuesday, May 20, 2008
NFL owners opt out: early wake-up call for a new CBA
The NFL owners today unanimously opted out of the current Collective Bargaining Agreement two years prior to its previously-stated expiration, ending their present agreement with the NFL Players following the 2010 season rather than following the 2012 season. Its stated reasons revolve around the raised stakes of doing business in the NFL due to rising player costs, debt incurred upon the building of stadiums or other potential costs incurred to produce additional revenue.What to make of this? Not a lot beyond the obvious point: NFL owners and the NFLPA now have started the clock on negotiating a CBA that works for both sides. Owners had until November 8 of this year to start that clock; it could, of course, be started anytime prior to that, which made today's announcement merely an earlier version of what was to be announced in November. Having another 6 months of potential bargaining time as we approach a potentially uncapped year in 2010 makes some sense here.What are the issues? They are really all from the league perspective, as the primary objective of the NFLPA will be to not come away with a lesser deal than the one presently in place. In the event the league proposes terms inferior to the status quo, that will obviously be a nonstarter in the union's eyes.Ownership's primary issue is to spend less of overall revenues on players. Teams are dissatisfied with the present model that focuses on team revenues rather than overall profit. Some teams have high revenues yet also high debt. Some teams have low revenues to little to no debt. One would think with the intellectual horsepower present amongst the league and its teams that a reasonable and appealing formula that accounts for revenues and stadium debt could be devised, yet it obviously has not to this point.To this point, Gene Upshaw and the union have encouraged ownership to work out its own revenue-sharing/debt issues amongst themselves. He also notes that no matter how much debt or operations losses that teams have, the asset value of these franchises appreciates so dramatically that their concerns are minuscule compared to the owners' ultimate profit upon transfer of ownership. The recent sale of the Dolphins underscores his point. Ownership counters, however, that it is not that simple.As the only publicly-held franchise in the NFL, our numbers at the Packers were public for all -- including the union -- to see. We consistently showed around 15-20 million of profit each year against no debt. The union and others have used that model extensively. However, for a variety of reasons, the Packers are unique. Packer nation extends far and wide, with Pro Shop revenues that dwarf that of other teams. Simply, the Packers are not a representative model for the NFL.Every team, of course, receives the same amount from the primary revenue source, national television. Beyond that, however, revenues are skewed depending on a team's market and diligence in securing other revenue sources, as some teams gross up to 300 million per year with other teams grossing half that amount. With player costs ranging from below 100 million per year up to 140 million, depending on the team, one can see how dramatic the curve can be in a revenue/player expense model. The billion dollar question is: how to fix it?Again, the union says that it is the owners' issue to fix, not theirs. I vividly recall when this deal was hammered out in March, 2006. There had been several delays in the process, Commissioner Tagliabue was retiring, Upshaw was leaving on a plane to Hawaii, all of which created an immense -- and perhaps false -- sense of urgency. The meeting did not deal with the pressing issue of player costs; rather, it was about a revenue-sharing model to address the inequities that are still being -- or not being -- addressed. Every time I checked in with our president at the meetings in Dallas that day, all I heard was there were ongoing discussion about team revenues. When I asked about the player deal, I was informed that was not really part of the discussion.Gene Upshaw did a masterful job of having the focus of that meeting center of team revenue-sharing issues while a beneficial collective bargaining agreement was quietly sliding through. The deal was ultimately ratified by all but two owners (those opinions from Cincinnati and Buffalo were ridiculed at the time; they are now heartily echoed). The ink was barely dry on this CBA before ownership started complaining about the deal they voted for. Today represents the formal denouement of what happened in Dallas that March afternoon in 2006.There will be other issues besides overall player costs. Ownership is still smarting over a few legal decisions that have dramatically affected teams' ability to recover money from players -- forfeiture of bonus -- in the event of bad behavior. The recent cases involving Michael Vick, Terrell Owens and Ashley Lelie have given players a license to retain bonus money with immunity against immoral activity. Ownership hopes that the union will relent on this issue but, as with everything else, it is now a negotiable item with the leverage tilting the players' way.Another flash point issue will be the Rookie Pool and the possibility of a more defined income level for entering players. Far too much is made of how much rookies make, considering it is quite reasonable past a couple dozen of the 250 rookies, but the disparity of compensation levels at the top of the draft has become a topic for discussion.A month ago at the draft, each NFL team had its turn to be on the clock. As of today, each and every team, the league, and the union are all on the clock to fix the labor situation in the NFL and continue football as we know it beyond 2009.
Monday, May 19, 2008
Recent Column in Sports Business Journal
Today’s NFL free agents trace their good fortune to White
Published April 14, 2008
I vividly remember my first day with the Green Bay Packers in mid-February 1999. As I walked in the office, I held the door open for a larger-than-life, raspy-voiced man who walked past me out the door.
It later occurred to me that at the moment I began my nine-year career as vice president of the Packers, Reggie White was ending his six years with them, freshly signed retirement papers in hand as he exited the building.
How ironic it was that after being the marquee free agent in the NFL six years earlier, the man whose name became synonymous with freedom for NFL players was walking out the Packers’ door on the eve of free agency in 1999. White was retiring (he would later return to play for the Carolina Panthers) and clearing cap room for the Packers to re-sign a couple of their prospective free agents.
Operating system
The operating labor system in football, a collectively bargained codification of the Reggie White v. NFLsettlement, can be boiled down to four words, two each for the bargaining parties.
For the owners, the two words are “salary cap,” a league-imposed mandated maximum on player costs that, despite creative maneuvering by teams around it, promotes and protects the competitive balance the league so desperately seeks.
For the players, the two words are “free agency.” After watching the windfalls of baseball players since the 1970s and basketball players since the ’80s, NFL players in 1993 could finally shop themselves and enter the previously forbidden world of bidding.
With the new system in place, the first weekend of March has become the NFL version of March Madness, the mother lode for those skilled players who have reached the end of their contracts.
Reggie White was a plaintiff in a lawsuit thatled to the NFL’s free agency system.
Whether being active in free agency actually helps a team’s performance is subject to debate. Three of the four teams in the conference championship games this season (the Packers, Chargers and Giants) had little to no activity in free agency a year ago, and little to none so far this year.
Spending and winning
There is an axiom that some teams apply toward the profligate spending in early free agency: that winning in March has little to do with winning in January. To each his own, though, and philosophies differ.
This offseason is illustrative of the process. Before the opening bell of free agency, teams pruned their rosters of players previously at the top of salary scales whose worth had not equaled their recent performance.
Interestingly, some of these players (Jevon Kearse, Mike Wahle, Rosevelt Colvin, Fernando Bryant) were the marquee, first-day free agents a couple of years ago. Two or three years later, they are agate transactions of terminated contracts.
After the terminations came the windfalls: the free agent class of 2008 (Asante Samuel, Alan Faneca, Calvin Pace, Gibril Wilson, Bernard Berrian, to name a few). These are certainly not the best players in the NFL, yet due to scarcity of the market and cap room aplenty, they are paid as such.
Just below these free agents are those at the precipice of free agency (Flozell Adams, Dallas Clark and Tommy Kelly), the most leverage the players will ever have, who are re-signed by their incumbent teams.
And this year, with more teams flush with cap space, there was a third group of fortunate players: those traded to new clubs with a contract extension as part of the trade terms, whether implicit or explicit. These players (Corey Williams, Shaun Rogers, Kris Jenkins, DeAngelo Hall) used the leverage of expiring contracts to their full advantage while receiving fresh starts with new teams.
Watching all the preceding activity were players taken off the market due to the application of the franchise tag, the tool in the CBA that clubs use to maintain rights to an otherwise top-of-the-market free agent. This group is highly compensated in guaranteed money for one year but misses out on the blockbuster contracts that were negotiated for the above fortunate few.
These players (Albert Haynesworth, Jordan Gross, Terrell Suggs and Karlos Dansby among them) can only watch and wait, their spirits certainly buoyed by the new market standards set by their freer brethren.
Guaranteed contracts
A disturbing trend for the management side in this free agent flurry of 2008 is the slow creep of guaranteed contracts. What has previously separated NFL contracts from MLB and NBA pacts has been the lack of appreciable guarantees beyond signing bonuses.
Now, however, many NFL teams are flush with cap room and desiring a pay-as-you-go model rather than loading future signing bonus proration. With that combination, there appears to be a willingness to spread guaranteed money over future years, previously hallowed ground immune to NFL contracts.
In judging NFL free agent contracts, it is less instructive to view the total value of these contracts (which often represents money never realized) than it is to analyze the guarantee numbers. That money is fixed and loaded regardless of whether a player, like the ones mentioned above, ends up in an agate termination transaction in a couple of years.
Free agency took a new turn in 2008, but with the same result since Reggie White started it all in 1993: wealth for the chosen few who find themselves in high demand.
Every year since White’s name appeared in the settlement that led to this system, the players who have profited from their free agent status — now armed with this new trophy of guaranteed money — are a testament to that large, dignified man who passed me on his way out the Packers’ door in 1999
Published April 14, 2008
I vividly remember my first day with the Green Bay Packers in mid-February 1999. As I walked in the office, I held the door open for a larger-than-life, raspy-voiced man who walked past me out the door.
It later occurred to me that at the moment I began my nine-year career as vice president of the Packers, Reggie White was ending his six years with them, freshly signed retirement papers in hand as he exited the building.
How ironic it was that after being the marquee free agent in the NFL six years earlier, the man whose name became synonymous with freedom for NFL players was walking out the Packers’ door on the eve of free agency in 1999. White was retiring (he would later return to play for the Carolina Panthers) and clearing cap room for the Packers to re-sign a couple of their prospective free agents.
Operating system
The operating labor system in football, a collectively bargained codification of the Reggie White v. NFLsettlement, can be boiled down to four words, two each for the bargaining parties.
For the owners, the two words are “salary cap,” a league-imposed mandated maximum on player costs that, despite creative maneuvering by teams around it, promotes and protects the competitive balance the league so desperately seeks.
For the players, the two words are “free agency.” After watching the windfalls of baseball players since the 1970s and basketball players since the ’80s, NFL players in 1993 could finally shop themselves and enter the previously forbidden world of bidding.
With the new system in place, the first weekend of March has become the NFL version of March Madness, the mother lode for those skilled players who have reached the end of their contracts.
Reggie White was a plaintiff in a lawsuit thatled to the NFL’s free agency system.
Whether being active in free agency actually helps a team’s performance is subject to debate. Three of the four teams in the conference championship games this season (the Packers, Chargers and Giants) had little to no activity in free agency a year ago, and little to none so far this year.
Spending and winning
There is an axiom that some teams apply toward the profligate spending in early free agency: that winning in March has little to do with winning in January. To each his own, though, and philosophies differ.
This offseason is illustrative of the process. Before the opening bell of free agency, teams pruned their rosters of players previously at the top of salary scales whose worth had not equaled their recent performance.
Interestingly, some of these players (Jevon Kearse, Mike Wahle, Rosevelt Colvin, Fernando Bryant) were the marquee, first-day free agents a couple of years ago. Two or three years later, they are agate transactions of terminated contracts.
After the terminations came the windfalls: the free agent class of 2008 (Asante Samuel, Alan Faneca, Calvin Pace, Gibril Wilson, Bernard Berrian, to name a few). These are certainly not the best players in the NFL, yet due to scarcity of the market and cap room aplenty, they are paid as such.
Just below these free agents are those at the precipice of free agency (Flozell Adams, Dallas Clark and Tommy Kelly), the most leverage the players will ever have, who are re-signed by their incumbent teams.
And this year, with more teams flush with cap space, there was a third group of fortunate players: those traded to new clubs with a contract extension as part of the trade terms, whether implicit or explicit. These players (Corey Williams, Shaun Rogers, Kris Jenkins, DeAngelo Hall) used the leverage of expiring contracts to their full advantage while receiving fresh starts with new teams.
Watching all the preceding activity were players taken off the market due to the application of the franchise tag, the tool in the CBA that clubs use to maintain rights to an otherwise top-of-the-market free agent. This group is highly compensated in guaranteed money for one year but misses out on the blockbuster contracts that were negotiated for the above fortunate few.
These players (Albert Haynesworth, Jordan Gross, Terrell Suggs and Karlos Dansby among them) can only watch and wait, their spirits certainly buoyed by the new market standards set by their freer brethren.
Guaranteed contracts
A disturbing trend for the management side in this free agent flurry of 2008 is the slow creep of guaranteed contracts. What has previously separated NFL contracts from MLB and NBA pacts has been the lack of appreciable guarantees beyond signing bonuses.
Now, however, many NFL teams are flush with cap room and desiring a pay-as-you-go model rather than loading future signing bonus proration. With that combination, there appears to be a willingness to spread guaranteed money over future years, previously hallowed ground immune to NFL contracts.
In judging NFL free agent contracts, it is less instructive to view the total value of these contracts (which often represents money never realized) than it is to analyze the guarantee numbers. That money is fixed and loaded regardless of whether a player, like the ones mentioned above, ends up in an agate termination transaction in a couple of years.
Free agency took a new turn in 2008, but with the same result since Reggie White started it all in 1993: wealth for the chosen few who find themselves in high demand.
Every year since White’s name appeared in the settlement that led to this system, the players who have profited from their free agent status — now armed with this new trophy of guaranteed money — are a testament to that large, dignified man who passed me on his way out the Packers’ door in 1999
Friday, May 16, 2008
My former client Ricky Williams, now a team leader
My old friend Ricky Williams appeared in the news today --http://www.miamiherald.com/616/story/535271.html -- speaking about topics ranging from his fortuitous decision to not join Cedric Benson on his day of boating and brush with law enforcement last week and his burgeoning relationship with the Dolphins' new boss Bill Parcells.
I spent two years with Ricky, representing him in 1997-1998 as a professional baseball player in the minor leagues and eventually, as a player about to be a top 5 pick in the NFL Draft. He is one of the more interesting people in sports I have encountered. He has a childlike sweetness about him that endears him to people, with an ability to draw people to him even after pushing them away. He was always a bit different than other players and never chose to hang around the football crowd. I never saw the drug use that he has spoken so openly of, but I did see a wanderlust that made his decision to venture to India, Asia and other uncharted terrain not at all surprising.
I remember that after a year of working with Ricky and his family he decided that he would enter to the NFL after his junior year. In December 1997 we filled out the proper paperwork and had it notarized at a hotel in Orlando while there for the ESPN College Football Awards. Had I sent that paperwork in right away, a part of the NFL landscape would have played out differently, with Ricky probably drafted in 1998 by the Chicago Bears instead of Curtis Enis and, of course, the Saints never having to mortgage their 1999 draft and their future for Ricky.
I knew Ricky needed more time with his decision, and when he went home to San Diego for the holidays, he hung out with some young NFL players -- Bryant Westbrook, Darrell Russell, etc.-- who advised him that professional football was not as fun as college. I remember him saying "I know in two year I'll have to go where I have to go, but why should I go to Chicago or St. Louis when I can stay another year in Austin?" Of course, there were a lot of professional and injury-related reasons to do so, but it was refreshing to see the logic in staying in a place he liked to live.
After signing him following the Cotton Bowl game and following him to banquets, all-star games and the like, I noticed a different group of guys hanging around him. Eventually, Ricky informed me that he wanted me to work with a music producer, performer and impresario named Master P. Ricky, as most now know, does not like to fall in line with the mainstream, and wanted more than a traditional football agent.
I did not think I fit the Master P demographic. Although it was a consideration as Ricky was to be the watershed client of my career, I chose the Green Bay Packers over Master P at that time. Master P hired another negotiator to work on Ricky's contract with the Saints -- who asked me many questions about Ricky prior to their monumental trade -- and, the rest, as they say, is history.
Ricky has remained an inquisitive type that always looks for more in life. His sudden departure from the Dolphins to travel the world was certainly not the best-timed move but it showed the impulsive and constantly-curious side to a person that always wanted to experience more. The day he left the Dolphins and the country in 2004 was the day my colleague at the Packers in the next office, our Player Personnel Director Mark Hatley, died of a sudden heart attack. That time represented a jumble of emotions for me but part of me thought maybe everyone else had it wrong in criticizing Ricky for his "life is short" attitude.
Now experiencing what appears to be a warmer side to Bill Parcells, it is interesting that -- whether compared to Cedric Benson or to the young roster on the Dolphins -- he is becoming somewhat of a respected elder, exercising the reasonable judgement that many have accused him of ignoring in the past. Interesting that my old friend who left me for Master P is now a respected veteran.
I spent two years with Ricky, representing him in 1997-1998 as a professional baseball player in the minor leagues and eventually, as a player about to be a top 5 pick in the NFL Draft. He is one of the more interesting people in sports I have encountered. He has a childlike sweetness about him that endears him to people, with an ability to draw people to him even after pushing them away. He was always a bit different than other players and never chose to hang around the football crowd. I never saw the drug use that he has spoken so openly of, but I did see a wanderlust that made his decision to venture to India, Asia and other uncharted terrain not at all surprising.
I remember that after a year of working with Ricky and his family he decided that he would enter to the NFL after his junior year. In December 1997 we filled out the proper paperwork and had it notarized at a hotel in Orlando while there for the ESPN College Football Awards. Had I sent that paperwork in right away, a part of the NFL landscape would have played out differently, with Ricky probably drafted in 1998 by the Chicago Bears instead of Curtis Enis and, of course, the Saints never having to mortgage their 1999 draft and their future for Ricky.
I knew Ricky needed more time with his decision, and when he went home to San Diego for the holidays, he hung out with some young NFL players -- Bryant Westbrook, Darrell Russell, etc.-- who advised him that professional football was not as fun as college. I remember him saying "I know in two year I'll have to go where I have to go, but why should I go to Chicago or St. Louis when I can stay another year in Austin?" Of course, there were a lot of professional and injury-related reasons to do so, but it was refreshing to see the logic in staying in a place he liked to live.
After signing him following the Cotton Bowl game and following him to banquets, all-star games and the like, I noticed a different group of guys hanging around him. Eventually, Ricky informed me that he wanted me to work with a music producer, performer and impresario named Master P. Ricky, as most now know, does not like to fall in line with the mainstream, and wanted more than a traditional football agent.
I did not think I fit the Master P demographic. Although it was a consideration as Ricky was to be the watershed client of my career, I chose the Green Bay Packers over Master P at that time. Master P hired another negotiator to work on Ricky's contract with the Saints -- who asked me many questions about Ricky prior to their monumental trade -- and, the rest, as they say, is history.
Ricky has remained an inquisitive type that always looks for more in life. His sudden departure from the Dolphins to travel the world was certainly not the best-timed move but it showed the impulsive and constantly-curious side to a person that always wanted to experience more. The day he left the Dolphins and the country in 2004 was the day my colleague at the Packers in the next office, our Player Personnel Director Mark Hatley, died of a sudden heart attack. That time represented a jumble of emotions for me but part of me thought maybe everyone else had it wrong in criticizing Ricky for his "life is short" attitude.
Now experiencing what appears to be a warmer side to Bill Parcells, it is interesting that -- whether compared to Cedric Benson or to the young roster on the Dolphins -- he is becoming somewhat of a respected elder, exercising the reasonable judgement that many have accused him of ignoring in the past. Interesting that my old friend who left me for Master P is now a respected veteran.
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