NFL Labor News ..
April 5th 2011
FACT CHECK: DeMaurice Smith at the University of Virginia’s Darden School of Business
NFL Players Association Executive Director DeMaurice Smith recently spoke with MBA students at the University of Virginia’s Darden School of Business. Smith discussed a wide range of issues on the NFL’s labor negotiations.
Following is a FACT CHECK on a selection of Smith’s answers:
Smith: “You never stop being a trial lawyer. So, really that is the posture of the case. The league is opposing the injunction. If they win, the lockout continues. 1,900 players and their families will be out of work. Their health insurance has been cancelled.”
FACT: All NFL players are eligible to continue their current NFL health insurance under the federal law known as COBRA, under which affected employees are entitled to continue their employer-provided health insurance coverage at their own or their union’s expense. To date, 1,192 players have signed up for COBRA and they have until May 10 to do so.
Smith: “Not even possibly” – answer to question: “At the end of that two-year negotiation period before the lockout, you called the NFL’s final offer possibly the worst deal in sports history?”
FACT: The proposal owners made to the players on March 11 would have paid players $19-20 billion in cash and benefits over the next four years (2011-2014) – a 14 percent increase representing an additional $2 billion compared to the past four years. In addition, the proposal would have:
* Reduced the offseason program by eliminating five weeks and cutting OTAs from 14 to 10 days.
* Put limits on full-padded practices in the regular season.
* Increased days off.
* Increased retirement benefits so that more than 2,000 retired players would have received almost a 60% increase in their pension benefit.
* Offered players the opportunity to have lifetime coverage in NFL medical plan.
* Offered for the first time to revise disciplinary system so that a third-party neutral arbitrator resolves all drug and steroids cases.
* Offered improvements in the disability plan, the 88 Plan, and post-career benefits, including education and career transition programs.
Smith: On how much the March 11 NFL proposal would reduce the players’ share of revenue: “The day that you sign that deal, the 50 percent number that we had since 1987 goes automatically before the ink is dry on the deal to 45 percent. In Year 1. The deal that we would have signed with the owners would have probably been about a 10-year deal. The ultimate result of us signing this deal would be that within 10 years that 50 percent would be down to 40 percent of all revenue. As you march forward from that point, by the time we got to the 15th year of a deal, you could see players getting shares of revenues that were in the 30 percent range.”
FACT: Smith’s statement is based on the flawed assumption that the current deal — which everyone agrees was one-sided for the players — would have stayed in place and just marched ever onward with no re-balancing. It assumes revenue growth that may or may not materialize. No one knows how many, if any, new stadiums will be built, as one example. There are none currently in the pipeline. The statement ignores the explicit commitment in the NFL’s March 11 proposal to a “true up/reset” in 2015, the same year the union wanted to reset the share coming off a player cost of $161 million per club in 2014, which was the union’s requested number for that year. The March 11 proposal had the 2011 cap at $141 million (union was at $151 million; NFL at $131 million; NFL clubs said “we’ll split the difference”), rising to $161 million in 2014 (meeting the union’s demand for 2014). That’s a 14 percent increase in three years ($20 million per club) and $2 billion more in player costs than was spent in the previous four years. Then the cap would be mutually re-set in 2015. The clubs would guarantee those 2011-2014 numbers even if revenue did not meet projections. Clubs actually spent $140.6 million in 2009 and $138.4 million in 2010 on salary and benefits. So the $141 million proposed cap for 2011 was higher than the actual cash spending of 2009 and 2010.
Smith: “This lockout will cost every team’s city $160 million in lost revenue for a year. $160 million.”
FACT: Those numbers were conclusively refuted by independent economists in a story by Eric Stirgus of the Pulitzer Prize-winning Politifact.com and the Atlanta Journal-Constitution. Stirgus consulted a number of experts and posted links to four of the economic impact studies he reviewed. He concluded: “Each independent expert we talked to believed there will be little economic impact if there is no NFL action next season, since they believe people will find other ways to spend their money. We rate the NFL Players Association’s claim as False.”
Smith: “The fundamental principle of our business model necessarily includes that every player only plays for an average of 3.2 years.”
FACT: The average career length for a player who spends at least three games on the active and/or inactive rosters and/or injured reserve is 5.3 years. In addition, the average career length for a first-round draft pick is 9.3 years.
Smith: “You have a group of owners who don’t want financial transparency, who don’t want us to understand the true financial picture of football.”
FACT: The NFL publicly released its proposal to the players on March 11. We offered to show the union five years (2005-2009) of year-by-year league-wide operating profits based on audited club reports reviewed and confirmed by Deloitte & Touche. We offered to show the union the number of clubs that had declines in operating profits from 2005-2009, and by how much on a cumulative basis, again based on audited financial statements. We offered the NFLPA the ability to review Deloitte’s work. We also offered to give five years (2005-2009) of audited individual club financial statements to a third-party accounting firm to verify for the union the profitability data provided to the union. And there were no conditions put on the information offered, meaning that they could have asked for more. But the union’s concern was giving up its public relations position. As linebacker Hunter Hillenmeyer wrote in an NBC Chicago blog post on April 1, “It’s true, the NFL did offer some financial info towards the end of mediation. We rejected it, not because nothing is better than something, which it is not, but because the perception would then be that we got what we needed.”