Major league sports facing a turbulent 2011
MONDAY, 03 JANUARY 2011 12:05
BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
It is rather silly making any sort of sports predictions. The predictor is generally wrong and does not have the best available data on hand to accurately come up with what is going to happen particularly in National Football League and National Basketball Association business in the next few months.
The 2011 big time sports calendar has two rather significant dates that could throw hard core National Football League and National Basketball Association fans into a depressed state. The National Football League owners and players will have no collective bargaining agreement (CBA) in place on March 4 unless there is major movement and the National Basketball Association owners and players will have no collective bargaining agreement in place on July 1 unless there is major movement.
Major League Baseball owners and players will have a full 2011 season as that industry's CBA does not expire until December and the National Hockey League will continue playing games until the 2012 Stanley Cup final game as the league's owners and players have an accord until then.
The National Football League owners and players have been practicing saber rattling for a while. The owners are well fortified to do battle with an enormous war chest built on over-the-air, cable and satellite TV revenues that FOX's Rupert Murdoch, GE's Jeffrey Immelt (NBC), Sumner Redstone's CBS, Robert Iger's ESPN division of Disney and DirecTV have endowed. The owners can withstand a lockout of players; meanwhile the National Football League Players Association Executive Director DeMaurice Smith has been urging his players to save money because there might not be a 2011 NFL season.
Smith has filed a protest with the Special Master who was appointed by a federal court to oversee NFL matters about the use of television money to assist the owners through a trying time. Smith may also decertify the association in an attempt to circumvent an owners lockout and claim the players are independent contractors with valid working agreements with the teams. If the Special Master, Stephen Burbank, sides with Smith — the owners could cave because there will be no money in the bank and the owners lose significant leverage.
The decertifying process may take a long time. That would take the dispute to another battlefield, the judicial system.
The NFL owners and players dispute is all about money. The owners, who are 31 of the biggest captains of industry in the country (Green Bay is run by a board of directors) want to reduce salaries by 18 percent and cut the players share of the football generated revenues from 59 to 48 percent. It appears Carolina Panthers owner Jerry Richardson, a former player with the Baltimore Colts in 1959 and 1960 and a major player in the fast food industry until his retirement from that line of work in the 1990s, is leading the lockout charge.
Richardson is not the only one. The owners want to change certain elements of the collective bargaining agreement including rookie's salaries. The NFL has a hard salary cap but teams have been about to devise ways of getting around it.
The owners have a wide gap between the big markets and small markets in terms of generating local revenues. The old "Leaguethink" idea pioneered in the 1960s by NFL Commissioner Pete Rozelle (who, in 1960, co-opted the notion from American Football League founder Lamar Hunt who borrowed it from Branch Rickey after Rickey was establishing the Continental Baseball League in 1958, a league that never got off the ground). The "Leaguethink" idea was simple and in a way was a form of socialism. All the teams shared equally in TV revenues and shared gate receipts (Rickey, who was a sports business genius, understood the role TV was going to play in sports back in the 1950s even though his fellow baseball executives disdained the idea of TV because potentially it could cut into home attendance — Rickey understood that TV could be both a money maker and marketing tool).
The owners are now divided between the "haves" NFC East, Dallas' Jerry Jones, the Giants Mara/Tisch, Philadelphia's Jeffrey Lurie, Washington's Dan Snyder, half of the AFC East, New England's Robert Kraft and the Jets Woody Johnson, and a few other owners like Houston's Robert McNair and Denver's Pat Bowlen and the smaller market owners. The big boys no longer want to share local revenues with Buffalo's Ralph Wilson, Cincinnati's Mike Brown, and Jacksonville's Wayne Weaver to name three teams. But if the 32 NFL teams hold together, the thought is the can extract concessions from Smith and make up lost revenues to players by expanding the season to 18 games.
The dispute will be all about money and it will be interesting to see if the players try and collectively bargain a much better health care plan for the present players and the retirees.
One of the buried issues in all of the owners-players labor talks is that a good many former players are under 65 but a getting handouts from the government in disability and Medicare — it is rather interesting that Tea Party members shouting about entitlements have not bothered to look at the afterlife of football players and how many of them have been abandoned and are cared for by government programs.
The NFL off-season will include the annual draft but if there owners lockout the players out, the players will have to scramble to be insured by COBRA as the owners will be cutting off NFL benefits. There will be no free agency, no mini-camps, no organized team activities, no training camp and no games until the two sides work out an agreement.
The NBA dispute is also about money. Commissioner David Stern wants to get about $800 million in concessions from his players and give small market teams a chance for profitability. The league wants to cut guaranteed contracts (the NFL does not have guaranteed contracts), trim the number of years on a contract, harden a loose salary cap and get cost certainty. There is no real revenue sharing between the haves (Los Angeles Lakers, New York Knicks) and the have-nots (the league-owned New Orleans Hornets, Memphis Grizzlies). The league will lockout the players on July 1 and that means Carmelo Anthony and other free agents cannot shop around their services and may in fact be caught in a new system which could cause them to lose millions of dollars.
It is unlikely that small market owners (who have been asking Stern for years to address the revenue sharing issue) will go along with any new deal that does not produce a hard salary cap and a reduction of revenue to the players.
Like the NFL owners, the NBA owners will have a war chest from Iger's ESPN and from Time Warner's Jeffrey Bewkes (Turner Sports). NBA owners will also be getting revenues from regional cable TV networks (the Knicks owners, the Dolan family, are a multiple system operator with Cablevision and their assets include the Madison Square Garden Network, the Philadelphia 76ers owner, Comcast, is a multi system operator and the company's assets include regional cable sports networks in Philadelphia and other outposts including Washington, Boston, the San Francisco Bay Area and Chicago). The owners will be getting money and can withstand a lockout.
The cable TV issue is one that needs to be addressed by Congress. House Speaker John Boehner and Senator Majority Leader Harry Reid, if they are truly doing the business of the American people, need to grill NFL Commissioner Roger Goodell, NBA Commissioner David Stern, Iger, Bawkes, Comcast's Brian Roberts, MSG's Charles Dolan (although it would be a comedy to watch Dolan's son James testifying in a Congressional hearing) and ask them if it is just for the leagues to have their lockout war chests funded by cable TV basic expanded tier consumers — many of who never watch sports but are forced to buy ESPN, TNT, regional sports networks because of tiering.
While House Speaker Boehner and Senator Majority Leader Reid are at it, they should call down Murdoch, Immelt and Redstone and ask if they believe that it is a proper use of a television license to use monies generated on the public airwaves (FOX, NBC and CBS) to underwrite a lockout.
Local municipalities should also be checking into their agreements with cable franchises (Cablevision, Comcast, Time Warner and the others) to see if they plan to offer rebates to consumers if programming (NFL and NBA games) has been canceled due to a lockout — after all consumers are paying for the programming.
No cable system has ever refunded money for missed games from the 1994-95 baseball strike, the 1994-95 NHL lockout, the 1998-99 NBA lockout and the 2004-05 NHL lockout.
Local municipalities that have built stadiums and arenas may not be sitting on the sidelines in these potential labor disputes either. Cash poor governments cannot allow owners to skip payments on rent in the event of a lockout. After the 1998-99 NBA lockout, Oakland went after Golden State Warriors owners Chris Cohan after he refused to pay rent on the arena because his Warriors didn't play games. Cohan lost an arbitration hearing and had to pay rent for missed games.
Local governments should be diligent and not sit on the sidelines if they are doing business for the people. They need to force owners to live up to their leases even if there is a lockout.
Major League Baseball owners and players have been rather quiet about the end of the industry's CBA in December. MLB has been in a good spot in that they have been third in the CBA derby since 2004. Both sides watched the 2004-05 NHL lockout when the owners shut down the industry. The NBA's CBA came up during the NHL lockout and the players and owners came up with a deal to avert an NBA showdown and soon after that, MLB Commissioner Bud Selig and the Major League Baseball Players Association Executive Director Don Fehr worked out an agreement with no work stoppage. Fehr has left the baseball players and is now trying to straighten out the mess at the National Hockey League Players Association. Fehr has many more problems to solve in his new post with his constituency than to worry about what NHL Commissioner Gary Bettman and his owners are planning for 2012. Once Fehr reins in the various players association factions, then he can deal with Bettman and the owners.
The posturing will continue in the NFL through the Super Bowl, and the barbs from the players and the owners in the NBA will continue through the NBA Finals. The big game for both sides is not the Super Bowl or the NBA Finals. It is winning the battle for the CBA crown.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com, Barnes and Noble or amazonkindle. He can be reached at email@example.com