NFL Lockout Projections

The NFL season is going strong, and earlier in the season many teams had unanimous votes to decertify the player’s union, a move which would allow players to sue the league if a lockout occurs.

The current collective bargaining agreement (CBA) is set to expire on March 3rd, 2011 and the owners want to put a new agreement into place.  The Wall Street Journal reports that the NFL has claimed that the league will lose about $400 million in March when season ticket packages and renewed, and a further $500 million if preseason games are canceled (doing the quick math that comes out to about a $4 million a game average revenue per team for preseason football).  In all, the NFL projected total losses of over $1 billion.  That said, there are things the NFL is not mentioning, including how the league is guaranteed at least $1 billion from DirectTV whether games are played or not.    The NFL Player’s Association came out and said that the owners announcing these projections was a publicity move, and that the owners had no one but themselves to blame for the current financial status of the league.

Looking at the numbers, it is clear that the NFL has seen a decline in profits since the most recent CBA was put into effect in 2006.  The previous CBA adjusted the percentage of revenue which players received to the current split of 60% for players and 40% for owners.  The owners are not looking to actually change this percentage as they had done in previous CBA’s, rather the owners want to reduce the size of the pie that is split between the players and owners.  Currently owners deduct about $1 billion of revenue before it is split to cover costs, the big sticking point with this new CBA is that the owners want to increase the amount pulled out to cover costs by 18% as stated in the graphic to the right.  As pointed out by poster DP, the graphic to the right is somewhat misleading, as owners will have a  130% increase in their deduction, and the 18% refers to the amount by which the pie will shrink.  This would mean where the players and owners are splitting $8 billion now, the agreement the owners want would have them splitting the about $6.5 billion in 2011.

Both sides seem pretty locked in for battle over this CBA, and both sides seem set to lose quite a large chunk of potential revenue in not having a new CBA negotiated.

Image Courtesy from the Wall Street Journal.

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2 Responses to NFL Lockout Projections

  1. DP says:

    There is some poor phrasing in the Journal’s infographic that found its way into your post. The graphic’s text leaves the impression that the proposed owners’ deduction would be increased by 18% (to 118% of its previous total). This would mean a new deduction of $1.18 billion and only a $108 million impact to the players share. What is actually being proposed is a deduction amount that includes an additional 18% of the gross league revenues. The owner’s deduction would go from roughly 1 billion to 2.3 billion or an increase of ~130%.
    Just wanted to clarify.

  2. nickwatanabe says:

    I’ve updated the post to help clarify it for those who don’t read the comments. Thanks.

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