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The Wages of Greed

by Jon Stonger on 6 March 2010

NFL Strike 1982 Sports Illustrated CoverIt’s easy to take the wrong lesson from recent events on Wall Street.  A bunch of greedy CEOs used shaky mortgages and fancy math tricks to make a huge pile of money in the housing bubble.  When the economy collapsed, millions lost their jobs, but the CEOs all got bailed out by the government.  As punishment for being greedy and wrecking the economy, the CEOs are now again getting million dollar bonuses.

So I can understand why people in sports are looking to Wall Street for a model.  They figure that maybe if they try to destroy a given sport, Washington will bail them out, and then they’ll get million dollar bonuses too.  What could possibly go wrong?

The NFL

The NFL is heading towards a lockout in 2011.  As opposed to a strike, where the players refuse to play, a lockout is when the owners refuse to let the players play, resulting in a cancelled or shortened season.  The owners opted out of the Collective Bargaining Agreement, which included a salary cap for teams and revenue sharing for small market franchises, at the end of 2009.

“On a scale of 1 to 10,” Smith said Thursday, “it’s a 14.”

With that, the executive director of the NFL Players Association painted perhaps the bleakest picture yet regarding prospects of labor strife in the league, which could be looking at a 2010 season with no salary cap and, if the collective bargaining agreement expires as scheduled in March 2011, a lockout that year.

While the players would suffer, the owners would get by just fine with the $5 billion in television contracts.  Still, some of the owners are crying poverty.

Baltimore Ravens owner Steve Bisciotti said Wednesday that several NFL owners are facing a financial shortfall that could create “long-term problems for the league” and ultimately result in a lockout.

Here’s where the greed comes in.  NFL franchises are worth hundreds of millions of dollars.  The Dallas Cowboys and Washington Redskins are worth $1.5 billion.  Many of the men who own football franchises are billionaires, and those NFL franchises have increased their wealth.

This chart shows the value, revenue and operating income of each franchise. [Operating Income is earnings before interest, taxes, depreciation and amortization]

Of all the teams, only two, the Seattle Seahawks and the mismanaged Oakland Raiders, are losing money.  Even the perennially terrible Detroit Lions made $18.5 million.  True, they still have to pay taxes on that, but I can’t feel too bad about a team with $10-12 million left over.

It is true that the value and revenue of some teams declined in 2009.  Then again, we are in a recession.  Everyone’s revenue has gone down (except for those bailed-out bankers).  The NFL is still making piles of money.

The players also make a lot of money, but they do it by sacrificing their bodies, and they do it for a short time.  Retired players face the dangers of past concussions, which can lead to mental problems, dementia, depression and even death.  The wear and tear on player’s body can lead to a lifetime of medical problems.

I would suggest that they start by looking at the knees of Dobler, a guard for the Cardinals, Saints and Bills, who made three Pro Bowls and earned $450,000 in 10 seasons, ending in 1981. His knees are more road maps than functioning joints, part of the 34-surgery nightmare he endured to be a football player.

The NFL has a good thing going.  Billions of dollars in revenue, a rabid fan base, and a deep place in American culture.  The owners of 31 teams (Green Bay is publicly owned), the poorest of them still multi-millionaires, are willing to risk all of this to increase their incomes by a few more millions.

I, for one, will be watching college football in 2011, and more so if the NFL cancels or shortens the 2011 season.  When the NFL returns from their labor spat, I might still tune in.  Then again, I might not.  I expect a lot of fans will feel the same way.

The NCAA

March Madness is just around the corner, and it may be the only sporting event outside of football (and maybe the World Series) to truly capture the nation’s attention every year.  There will be office pools, upsets, Cinderellas, last-second shots and heartbreaking losses.  It’s the perfect end to the college basketball season.

The NCAA is well paid for putting on its yearly tournament.  It has an 11-year, $6 billion contract with CBS, which it can opt out of this year.

Far from content with having a lucrative sports icon, the NCAA is considering expanding the tournament to 96 teams.

There are plenty of reasons this is a terrible idea: it would make the regular season even less important; there would be fewer Cinderella teams because all of the weaker teams would have to survive an opening game (if you’re 15 seed Richmond, you don’t get to play 2 seed Syracuse in the opening round; you have to beat an 18 seed first); even more mediocre teams would get into the tournament (if you’re on the bubble, it’s probably because you suck- any team that goes 18-12 in a major conference cannot claim to be good); millions of people would risk carpal tunnel and writers cramp from filling in the enormous brackets; the brackets probably wouldn’t fit on one page, etc.

So why is the NCAA contemplating a major overhaul of America’s spring obsession?  It’s all about the money.

The NCAA is also dealing with the reality that its current 65-team tournament is unlikely to fetch as high a price tag as its current deal, struck in 1999 when both the economy and network television were in far better shape. While still hugely popular, the tournament has seen its viewership decrease over the years.
One way to maintain or increase existing rights fees is to move some or all of the games to a cable network, which isn’t dependent on advertising dollars like a traditional network.

It stands to reason, then, that the addition of a cable outlet would allow the NCAA to add more games, and in turn, presumably garner more revenue. A 96-team field would add 31 games, bringing the total to 95. It’s easy to envision ESPN spreading those games across its various channels, or CBS moving the surplus games it currently licenses to DirecTV (for its “Mega March Madness” package) to TNT and/or TBS.

Here, as in the NFL, we have executives looking to maximize their short term profits at the expense of the fans.  What they fail to realize is that if they destroy or dilute their product, or if they alienate their fans, then all their projected future revenue won’t mean a thing, because people will just stop watching.

After all, I’m sure there are other sports out there.  Rugby is fun, although it could use a forward pass . . . there’s Australian Rules Football, that’s an interesting game . . . curling . . . lacrosse . . . jai-alai . . . professional badmitton . . .

About Jon Stonger

Jon Stonger is a novelist and short story writer. His first book, The Adventures of the Delineator: The Slimy and the Sentient, is now available. He currently resides in Suwon City, Korea.

{ 1 comment }

1 Trumwill 30 November -0001 at 00:00

Re: NFL

Major League Baseball never recovered from 1994 until the home run derby that has become the curse of the league. The NFL has a ton of momentum right now while MLB struggles with steroids and the NBA is struggling with irrelevance. It would be a shame for the league to lose that.

Re: NCAA

The NCAA tournament is one of the reasons why I am so apprehensive about even a sensible-seeming, small playoff. Playoffs, once instituted, expand. I don’t know if any league anywhere has avoided this. NCAA Basketball may be going from 64 to 96. FCS football is going from 16 to 24. While I could live with an 8-team playoff, it won’t stay at 8 teams. It probably won’t stay at 16.nn1

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