St. Louis Should Back NFL Owners, Some Say
St. Louis should back NFL owners, some say
BY JIM THOMAS
Wednesday, April 6, 2011
After 3½ weeks of posturing, PR spin and name-calling, the dispute between NFL owners and players gains traction once again in a Minnesota courtroom. U.S. District Judge Susan Nelson will hear a motion today by the players for a preliminary injunction to block the current lockout, which began March 11.
So as the legal battle officially begins, whom should St. Louis be "rooting" for? Some league insiders familiar with the St. Louis situation suggested at the NFL owners meetings last month that an "owner-friendly" labor deal is better for the long-term viability of the Rams in St. Louis, particularly with a stadium lease issue accelerating early next year.
For several years after the Rams moved to St. Louis in 1995 their new stadium and favorable lease situation in what's now called the Edward Jones Dome made them one of the league's most profitable teams. But as bigger markets built newer and fancier stadiums, the Rams slid steadily down the league rankings in terms of revenue and profitability.
"There is no question but that the labor disputes going on in the NFL and the NBA this year are more important to the small-market clubs than to the big-market clubs," said Marc Ganis, president of the Chicago-based SportsCorp Ltd., consulting firm. "They need labor-cost relief in order to be able to not just survive but also thrive."
Ganis has done business with NFL teams for years, is a regular at the league's owners meetings and was a consultant for the Rams when they moved here from Southern California.
"It's very important to a market like St. Louis to have a (football) labor deal that provides cost relief for the owners and provides mechanisms for investment in stadium construction and (upkeep)," Ganis said.
Even if labor costs were just slightly lower, Ganis says small- to mid-market NFL teams are more likely to be competitive. And that lessens the need to ask for government and taxpayer help and lessens the temptation to consider relocation.
Even in an era of record revenue in a $9 billion-a-year league, the NFL's small-market teams are finding it increasingly difficult to keep up financially with the (Jerry) Joneses — or (Robert) Krafts, or (Dan) Snyders — of the NFL world.
In 2009, the last year of the salary cap, the per-team cap for player contracts was $128 million. The Washington Redskins had revenue of around $340 million that year, so the labor costs (represented by the $128 million cap) amounted to about 38 percent of that total. The Rams, on the other hand, with revenue of around $180 million, had about 71 percent of that total going to labor costs.
Two NFL sources, both with lengthy experience in the league, confirmed that those revenue figures were "in the ballpark."
"You're hitting on the fundamental issue," Ganis said. "When you have a salary cap, and your revenues are substantially lower than the top clubs — or even below average — you have less money to spend on other things that make you competitive — like facilities or coaches. Or you have to look for another revenue source, or cost reduction."
In such a climate, a team like the Rams has little margin for error. If they miss on a high draft pick, or have to take on a lot of "dead money" by jettisoning under-performing players, they feel the financial crush much more than Snyder's Redskins, Jones' Dallas Cowboys, or Kraft's New England Patriots.
Lower labor costs might help the profitability of the smaller-market teams. But there are some in league circles who suggest that's really not the issue because the big-market teams would also benefit from the lower labor costs.
On another level, it's not so much an owners vs. players (labor cost) issue, as it is an issue of the increasing revenue gap between big-market and small-market teams. The growth of non-shared revenue has made it increasingly tougher for smaller markets like St. Louis to keep up. Owners such as Jones in Dallas have become masters of maximizing non-shared revenue, which comes in the form of local radio and television rights; advertising, sponsorship, and stadium naming rights income; luxury suite leases; and, to a lesser degree, club seat premiums.
That's all money that NFL teams don't have to share other than what goes into the salary cap pool. And in markets such as Dallas, New England, New York and Chicago, teams can sell more premium seats in their stadiums and can charge more for them.
"If all things are equal, wouldn't you think you could make more money in Chicago and New York than St. Louis?" said one of the aforementioned league sources, speaking on the condition of anonymity. "I mean, there's a reason why St. Louis is the 21st market. And New York's the first. There's a reason that St. Louis is 21st and Dallas is eighth.
"Now if you're happy being 21st, that's OK. But if you're trying to be top rung and you're not, then you're always going to be frustrated."
There was a time when only about 12 percent of NFL annual revenue was of the non-shared variety. Now, it's about 23 percent.
"It doesn't sound like that big a change," said the second league source. "But an 11 percent shift when you're talking about $9 billion (a year), that's about $30 million a team."
Caught in the middle of such vexing NFL economics is Rams controlling owner Stan Kroenke. Will a more favorable labor deal make him less likely next year to insist on the stadium lease provision that calls on the Rams to have a first-tier (top 25 percent) facility? And conversely, will a less favorable deal make him more likely to look west — in the direction of Los Angeles?
All of which might give St. Louis a rooting interest in the NFL's labor struggles.
"It does," Ganis said. "The public may not know it, but it does have a rooting interest — as do all small- and mid-sized markets."
Re: St. Louis Should Back NFL Owners, Some Say
I don't buy it.
Under the old sytem, the Cardnials, Packers, Rams, and Ravens have made it to a Superbowl--where were the Cowboys, Redskins with their large statiums, deep pockets in the last 10 years? Fact is revenue sharing has worked to keep teams viable.
Right now there is a risk that the NFL could take a page out of MLB--that is those large markets just dominate. The fact that there is an element of "risk" in draft picks going bad actually helps keep the game at a high level. One need looks at previous years regarding the Lions--poor FO, poor leadership, poor coaching made them the laughing stock of the NFL (0-16). That point was ever so evident with the Rams.
The Rams are not a deep pocket, mega statium team but 2010 season shows there was/is promise that in 2011 or 2012 the Rams will be contenders. If the Rams could get a fanatical following like the Packers do, there will be many more Superbowls in the Rams future.
Right now its a battle of players pitted against other players, Players against owners, owners against other owners--in general its a free-for-all with each side trying to get a bit more. This labor dispute needn't have happened. The previous contract that has serviced the NFL so well could have easily served as a model for the new CBA with a tweak here and there.
The real issue isn't who gets what, but the game itself that is at issue. Having the owners get their way likely will change the game for the worst; then the Jones and Snyders will be able to buy a Superbowl. Its a lesson to see jsut how much value fans of MLB place on the World Series these days
Re: St. Louis Should Back NFL Owners, Some Say
That's why I was sooo hard on Bradford to get it done, and also on Bulger before him. As QB of the Rams, the time is always Now to lead and get things done. Failure is not an option. If The NFL is nevermore, History will reflect the Failing career of the Rams quarterback. All Apologists may now reply!